-Analysis-
MEXICO CITY — The 19th-century French economist Frédéric Bastiat made a distinction between visible events, which he termed “what is seen,” and their consequences down the line or “what is not seen.”
What he meant was that one can easily take decisions based on convictions or in a conceptual vacuum, but that in ignoring your society’s customary forms, your decision could unleash forces and perceptions beyond any statesman’s control.
Today, in Mexico, society is precisely facing the consequences of the decisions of several governments, and those taken outside our borders — and the combination of both is fueling enormous uncertainty in our country.
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It is not the first time Mexico faces a momentous challenge, even if specific circumstances keep changing. In the 1970s, 1980s and 1990s, the country lived through a string of economic and financial crises, extraordinary inflation rates (including a moment in 1984 when it entered into full-blown hyperinflation), and the population’s unrelenting skepticism about the future.
Today, people are satisfied, the new president, Claudia Sheinbaum, is highly popular and everything suggests our present reality has nothing to do with those troubled years. But appearances can be deceiving.
Anchor of stability undone
Everything indicates we’re reaching the end of an era in Mexico-U.S. relations, a period in which Mexican governments became complacent, living off conditions they believed had become permanent and stable. Yet U.S. President Donald Trump is sweeping them aside without palliatives to cushion the blow. NAFTA and its successor treaty allowed for the growth of a competitive, productive and successful industrial base in our country.
This was of enormous relevance in terms of job creation, foreign currency inflows and the country’s overall stability. Exports became our country’s chief engine of economic growth, in spite of enormous obstacles that remained in place from before — and new ones, like runaway crime, crumbling infrastructure and increasing treaty violations, notably in the last government headed by Andrés Manuel López Obrador (AMLO). Some of his decisions were not far from malicious vandalism.
What is not seen will force us to think about the enormous slope we must climb.
What is seen, as Bastiat might have said, is showing us radically contrasting circumstances; but what is not seen will force us to think about the enormous slope we must climb. The population is happy enough because their real income and thus purchasing power, have grown significantly, for which one must credit the last and present governments of the socialist, MORENA party.
On the other hand, the economy is not growing, investment both private and public is not arriving, and that anchor of stability we have depended on for years, mostly based on NAFTA, is being questioned in this second Trump presidency.
Fragile foundations
Migration, which Mexicans consider an inalienable right, separately helped us avoid a massive social crisis. It meant a flow of cash and remittances to the country. It also allowed, as an easy safety valve, a string of governments to ignore some real problems like crime, employment and the state of education and healthcare. But like exports, migration may be curbed now, leading us precisely to that socio-economic and political crisis. The NAFTA deal was a means to create conditions for sustained economic growth.
More political than economic in its original conception, the treaty became a mechanism that provided, with institutional support from the United States, certainty to savers, businessmen and investors in Mexico.
Without a doubt, it was a successful instrument, but our big failing was to assume it to be permanent: it was in fact the U.S. government’s way of giving Mexico support to build up institutions, the rule of law and checks and balances that could aid its ‘takeoff,’ both in economic and social terms.
The future depends not on our ties with the northern neighbor but on Mexico’s institutional health and strength.
Certainly, there was a more or less continuous effort from the 1990s to create institutions that would do this, but so far, they clearly have not attained the legitimacy and functionality needed to effectively reach the objective. The vulnerability of independent institutions has taken with it those certainties essential to a prosperous economy, and the objectives our governments have claimed to pursue.
Whatever we may or may not negotiate with Trump, you would have to be blind not to see that the future ultimately depends on Mexico’s institutional health and strength — not on ties with our northern neighbor.
Thus Sheinbaum’s popularity rests on fragile foundations, and we need far more solid ones to support the state and our economy. They need to withstand the day Trump wakes up in a bad mood or when the rating agencies decide they’ve had enough playing coy with Mexico and looking the other way.
To build our future, we need to be clear on one thing right now: it won’t be done abroad — the solutions have to be found in Mexico.
