Mexico: Why a Few Are Rich and the People Poor

9. Death of a Dream

180 NINE Death of a Dream i By 1982, Mexico’s empresarios and politicos, with the enthusiastic help of outsiders, had made a mess of the Mexican economy. They then proceeded to throw the baby out with the bathwater, tossing away a domestically oriented blueprint in order to resurrect Adam Smith’s old ideas, now packaged as mathematical axioms. Ronald Reagan, the Hollywood actor, and Margaret Thatcher, the fire-eating right-wing English prophet, had orchestrated its revival. These preachers bamboozled the public into believing in the sham of laissez-faire and free trade, that somehow struggling against one another and elbowing and shoving would create efficiency and progress. So died the remnants of the dream. Under the revived gospel, technocrats replaced politicians at the rudder, basking in the glow of the national spotlight with the election of the colorless Miguel de la Madrid (1982–88). The technocrats, business majors from the University of Chicago, Harvard, and Stanford, quaffed d e a t h o f a d r e a m 181 the neoliberal nectar and hurried to woo the old sweetheart of the export economy, once again thought to be the tonic for Mexico’s ills.1 These graduates of elite American business schools had sat at the feet of the oracles who trotted out the hoary theories of David Ricardo, saying that a country does best by allowing the market, Adam Smith’s “invisible hand,” to determine its comparative advantage. Their Mexican disciples came to believe that every time the oracles spoke, something extraordinary would come out of their mouths. Tragically for the peripheral world, this free market ideology collided with the facts of history. The United States, now the paragon of open markets, had from early on imposed high tariffs to bar textiles, steel, and other English goods, over time becoming the world’s minister of the gospel of protectionism. Not until after World War II, when the American economy had overwhelmed all others, did Washington become the patron saint of “free competition.” This new gospel had dire consequences for the peripheral world, encouraging one and all to cultivate salable crops as well as to dig out of the bowels of the earth coveted minerals, and so there arose a deadly competition for the markets of the West. As surpluses piled up, buyers paid less, resulting in a drop in the terms of trade for countries on the margin. The empresarios, who it seemed at first glance would be hit hardest by this return to the past, acquiesced, much like ladies of the night at a bordello when told by the madam to take to bed an especially unappetizing but wealthy client. Economic growth, said the savants at the International Monetary Fund (IMF), to whom the technocrats paid allegiance, required a competitive and untrammeled free market, guided by the notorious “invisible hand.” Following this advice had foreseeable consequences: inviting wealthy and powerful transnational corporations into the Mexican home was tantamount to putting the fox in the henhouse. Mexico, so this thinking went, could not make it alone, but must look beyond its borders for allies. How to account for Mexico’s capitulation? An old Mexican saying—“de tal palo tal astilla” (a chip off the old block)—is a good place to start. This was Mexico, the descendent of four centuries of doing things in this same way, following an export formula that dated from the discovery of silver in the sixteenth century. To fall back 182 d e a t h o f a d r e a m on the wisdom of Samuel Ramos, in evidence was the Mexican sense of inferiority before North Americans and Europeans. This was also the nature of the classical liberalism that had been adopted wholeheartedly by the Mexican Liberals of the nineteenth century; in its renewed form it was essentially unchanged. More than likely, the empresarios who watched over industrial policy had come to believe that if they climbed into bed with American capitalists, big profits awaited them. That this behavior would destroy small and medium-sized industry mattered little; money in an alliance with foreigners superseded national unity. This decision cost Mexico dearly, because growth at a snail’s pace, if at all, ballooning trade imbalances, and worsening social conditions colored the neoliberal era. What exactly was this liberalism? Webster’s Dictionary tell us that “neo” stands for a “revival or adaptation” of...