Things are Not Getting Better in Mexico

by Alan S. Miller

(Published in the October 2004 issue of the Pacific Ecologist)

The most abrupt transition on our planet, from the First World to the Third World, from an overdeveloped to an underdeveloped country, takes place at the border crossing from San Diego county in California to the city of Tijuana in Mexico.

Mexico is one of the nations that has been a testing ground for free market policies and the new international economic order.

Within a few miles, one goes from the posh suburbs of San Diego, where an average house costs upward of $ 600,000, to a city of more than a million people where one-third of the residents do not even make the minimum daily (not hourly) wage of $ 3.70.

Dozens of foreign owned companies (called Maquiladoros in Spanish) line the border producing everything from cell phones and clothing to television sets, jeans and automobiles for export to the U.S., Japan and other more privileged parts of the world.

As the workers toil for low wages, unions are effectively outlawed, environmental regulations ignored and worker health and safety standards winked at by both producers and those consuming the products.

The vaunted North American Free Trade Association (NAFTA) has not helped Mexico (where modest new job creation has been undercut by a total disregard for the welfare and well-being of the workers). It has not helped working people in the U.S. (where large numbers of better paying American jobs have been lost to the low wage sector of the Mexican economy).

Mexico is one of the nations that has been a testing ground for free market policies and the new international economic order. Because finance capital has been much more flexible in recent decades than labor (which tends to be more static and relatively immobile), there is always a tendency for money to move to areas where labor is cheap. All it takes Is the touch of a computer button.

Examples abound! Banks, food supply outlets, and the industrial sector in virtually every major Mexican City are now largely owned by either foreign capital or compliant Mexican partners. Even Mexico's President Vicente Fox became famous due to his service as chief executive for Coca-Cola of Mexico, one of that company's most profitable business venues.

PEMEX, the state owned petroleum company that was created by President Lazaro Cardenas in 1938 after the nationalization of American owned production and refining assets, has now been largely turned over to private managers and investors. Although still pro forma a Mexican national conglomerate, a variety of multi-service contracts have now been signed with several foreign owned companies to provide all of PEMEX's services from exploration and drilling to production. The private sector is back in the saddle again in Mexico's state owned company.

The factories along the U.S./Mexican border basically mass produce all the little things that the middle class global consumer desires but that cannot be produced inexpensively enough at home. One interesting new development is that many of the low wage jobs that were transferred under NAFTA from the U.S. and Canada to Mexico have now moved on to China. Between 2001-2003, 500 of the 3700 Mexican Maquiladoros closed with the loss of more than 200,000 jobs. Virtually all of those positions have gone to China.

NAFTA has always been an investor rights agreement rather than a free trade pact. Its intention was (and is) to drive the economies of the sponsoring nations down to a kind of low wage, low growth equilibrium. Even the New York Times, a NAFTA supporter from day one, noted that the association would benefit the private sector but was "bound to harm semi-skilled workers: women, Blacks, and Hispanics."

The statistical data that detail the deteriorating socio/economic structure in Mexico provide a grim picture in late 2004.

• 70% of the Mexican population live in poverty while the upper 10% receive 90% of the total national income. The current minimum wage is 38 pesos per day. At the current peso valuation of 9.5 to the dollar, that means the lucky few who actually earn the minimum wage still cannot make ends meet.
• There is no universal social safety net in Mexico. There are no health plans, retirement programs, nor social security benefits for the vast majority of the people. It is no wonder that Mexico's primary export in the past fifty years has been its people. Having given up hope for any kind of decent future, both poor and middle-class Mexicans have looked to the United States as a place of economic refuge.
• Mexico City has what some say is the worst air pollution in the world. Of the 25 million people living in and around the city, many millions have no access to toilets. Accordingly, many tons of dried human feces are distributed throughout the city's ambient air every day.
• Five million cars and trucks daily prowl the streets of Mexico City. With little infrastructure (roads, parking, services) to support this number of vehicles and with no efforts to control exhaust emissions, air quality and urban congestion become worse day by day.
• More than 50% of births in Mexico are unattended by any kind of medical personnel. Everyone knows that drinking from the public water supply any place in the country subjects one to cholera, typhus, diarrhea, and/or a host of other infectious diseases.

Accordingly, Mexicans consume more soft drinks per capita than any nation in the world. Mexican soft drinks have double the sugar and caffeine than similar drinks in the U.S. Sugar is a common energy substitute for more nutritious but also more expensive and thus unavailable foods.

• The tax burden is focused on the middle class. While the wealthy 10% have very low tax rates, everyone in Mexico pays a 15% sales tax on every product, a regressive tax burden that falls harshly on lower income people.
• In the past decade, Mexico has paid $ 64 billion of interest on its foreign debt. To pay back the enormous loans incurred by previous governments, the country has had to cut back on all social services and increase the tax burden on the poor and middle classes. Very little of the initial debt was used for services for the general population. It was rather initiated at the behest of the banks and financial services sectors that found themselves strapped by a declining economy and interest rates that rose to over 100% in the late 1990's.
• After grade 6, only those children whose families can afford to buy textbooks, school uniforms and supplies—and pay hidden academic fees$#8212;can attend school. Television—historically totally controlled by the government—is for most people the principal supplier of information.
• Although narcotics money has infiltrated politics on every level, most informed people agree that governmental leaders have been principal recipients of narco-traffic contributions.. Drug deals corrode every level of government. Economists at the University of Mexico now estimate that 1/3 of Mexico's total gross domestic product of $ 300 billion is drug related. A large chunk of the billions taken in by the drug people goes to buy off politicians and the police.

As one Mexican journalist told me a few years ago, the common expression used to describe the bind politicians are in when offered bribes to keep quiet about the narcotics traffic, is "plato or plomo," silver or lead. If a politician refuses a bribe, he is told that he and his family will be killed. So he'd better take the bribe and keep his mouth shut. Many follow orders and the drugs move on to supply the American demand for cocaine and heroin.

• The disenchantment with the economic situation throughout Mexico led to an increase in the 1990's in the number of anti-government, pro-peasant groups around the country. Although the Zapatistas in Chiapas are the most well-known, other militant groups still operate in several sections of the nation. Although the Zapatistas have now melted back into the jungles of southern Mexico after the recent "cease fire" arrangements with the government, they are a reminder to those in power that the poor of Mexico are angry.

As late as 2000, the Mexican government still stationed thousands of troops in the state of Chiapas hoping to contain the struggle of the indigenous people there for economic and political rights. Rumors abound that U.S. military personnel have trained Mexican government forces in Chiapas.

By the year 2000, it was clear to everyone that It was time for a major political change in Mexico. After 71 years in power, the presidential candidate supported by the long-established Institutional Revolutionary Party (the PRI) was defeated by Vicente Fox, the candidate of the right-wing National Action Party (the PAN).

For decades, the PRI had operated as the party of the bosses and the privileged. Its agenda was simple: to consolidate state power over every aspect of the larger society. Along the way, it learned that it could steal from the poor with impunity and consolidate political support by providing lavish economic advantages to the upper classes.

Several of us who work with VAMOS!, an NGO serving the poor in Mexico, were in Cuernavaca during the national elections in 2000. It was a delight to see the hope and expectation in the faces of poor and middle class people who genuinely believed that there was a possibility that life might get better.

For the first time in many decades, the polls were open to all and the vote count seemed relatively honest. Banners were everywhere and trucks with loud speakers prowled the streets of the city proclaiming the virtues of local, regional and presidential candidates.

After the election, Vicente Fox, then the President-elect, stated clearly that he would work to improve the quality of life for Mexico's poor. It was never certain, however, that he had either the will or the means to do so. With PAN a minority party in the national legislature, and a political history of supporting the well-to-do, its leaders quickly aligned themselves with the corrupt PRI to form a working legislative coalition. Fox's promises soon turned to ashes.

While there have been a few cosmetic changes for the poor since Fox's election, the traditional burdens of violence and oppression have continued. Mexico is now second only to Colombia in the number of kidnappings of both wealthy and middle class people.

In spite of promises to help Mexico's poor, President Fox has now extended the 15% sales tax on items previously exempt from taxation: food, medicine and books. Prices for the basic goods every family needs for survival—tortillas, beans, rice, drinking water and transportation—have continued to spiral almost out of control.

Sadly, for both Mexico and the United States, more and more people are fleeing Mexico to find work in the United States, leaving family members behind to raise the children. More and more Mexican workers die in their attempts to cross the border and find employment in the states.

While the living conditions of the poor continue to decline, Mexico's two largest banks—Banamex and Bancomer—have now been acquired by America's Citibank and Spain's Bilboa bank. 70% of Mexican banking is now controlled by foreign companies. Commercial profits, which should stay in Mexico, continue to be exported to international investors.

Although the peso has not been subject to the wild speculation of the 1990's, the strength of the Mexican currency—underwritten by the U.S. bailout— now makes Mexican goods more expensive on the world market. Even President Fox has acknowledged the loss of hundreds of thousands of industrial jobs since he took office. Much of this is the result of a slowdown in the U.S. economy and a declining market for Mexican products that are now relatively higher price-wise than they were when the peso was weak.

Current under and unemployment still exceeds 50% of the employable population. Economists have now reduced their growth estimates for the Mexican economy from 4.5 % to 2.0 % for the current year. Mexico now collects in taxes only 9.9% of its gross national product compared to the United States that collects 29.6% and Canada 35.8%.

Critics all acknowledge that the continuing economic dilemma is not strictly the consequence of President Fox's policies. No one expected that the entrenched corruption in all sectors of the Mexican society inherited by Fox after the decades of misrule and mismanagement by the previous government could be quickly remedied. But his support for the poor has been more promise than policy.

Many observers feel that Fox is, at best, a transitional figure in Mexican politics. Most people still hope that he may at least be able to pave the way for other leaders in the future to complete the construction of bridges to a more just and democratic Mexican society.

On Sunday, June 27, 2004 millions of people, many dressed in white, marched in protest against governmental policies in many cities throughout Mexico. More than 100,000 people jammed the Zocalo, the huge central plaza in the governmental sector of Mexico City. The cathedral bells welcomed the demonstrators.

The marchers came to protest the country's violence, kidnapping, police corruption and the inability and unwillingness of the government to do anything about their problems. This was the largest march in the city since the peasants from the coastal states undertook their "long march" on the city in 1995.

The poor and the middle class have much to complain about. Jobs are scarce, unemployment is rising and the period from 2001-2004 was the worst in Mexico's economic history since the Great Depression. Although one million people a year are entering the job market, 365,000 jobs were lost during 2003.

The immediate political future of the nation is still uncertain. With troubles besetting President Fox and the PAN, reform candidate and Mexico City Mayor Andres Manuel Lopez Obrador of the leftist Party of the Democratic Revolution (the PRD) seemed to be well situated to win the presidency in 2006. Both the corruption in the PRI and the irrelevance of the PAN seemed to boost the chances of a third party candidate.

The common life of Mexican politicians has now, unfortunately, intervened for Obrador. His chief of staff was secretly videotaped in March of 2004 receiving huge amounts of cash from a wealthy businessman. The program, moderated by a host dressed in a clown costume, was widely seen on Mexican television. The consequences of this embarrassment to Obrador are not yet clear.

It now seems likely, however, that the PRI, the party that ruled Mexico from 1929 until 2000, will make a comeback in both state and national elections in 2006. President Fox has shown himself to be simply another emperor with no clothes. This retired Coca-Cola executive now serving as President has simply been politically inept in dealing with Mexico's problems and unwilling to stand up for Mexico in its dealings with the Bush administration.

With Fox's party, the PAN, playing only a minor role in the national legislature, the President's lack of a strong political presence and his isolation from the needs of the Mexican people suggest that the next chapter in Mexico's future will be as bleak as those past.

Mexico's 100 million people, of course, are far better off than those in many other parts of the developing world. Some of their dilemmas are the result of a too close and a too dependent connection with the empire just north of their border. Some are the consequence of the governance by corrupt elites for generation after generation.

Hopefully, the combination of the strength, patience and humanity of the Mexican people in their struggle for a just and decent future will someday be realized. In the meantime, those of us who love Mexico and its people will continue to assist our neighbors in every way we can.

Copyright © 2005 Alan S. Miller
Last updated: March 17, 2005