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From: David Barkin <dbarkin@igc.apc.org>
Mon, 30 Jan 1995 23:12:50 -0500
To: Multiple recipients of list <lasnet@mcfeeley.cc.utexas.edu>
Subject: A comment on Mexico
Here is an article I wrote to Globe that was not accepted for publication!
An Alternative Vision of Mexican Development
David Barkin*
As a Mexican academic, temporarily in Cambridge, I am gratified by
the excellent coverage that the Boston Globe has been giving to
crisis in Mexico. Your stories offer superb coverage of the tragic
consequences of more than a decade of mistakes in management by a
team of skilled economists. These highly-educated and
highly-placed technocrats, as they are labeled, have fallen into
the trap of transforming dogma into science, an error that others
before them also committed, with similar results: Mexico's peasants
and working classes endure declining real incomes and a
deteriorating quality of life, while the economy is becoming less
capable of supplying the basic needs of our people. Today, the
purchasing power of the average wage is less than one-half what it
was in 1976 and more than two-thirds of the households have incomes
below the nation's poverty level.
For the last few years, the pundits have been proclaiming Mexico as
the great success story of globalization. Increasing exports and
declining reliance on petroleum were said to be indicators of
progress, while we were assured that exploding imports strengthened
the nation's productive capacity. The virtual flood of foreign
capital offered an opportunity for a small elite to enrich itself
through speculation and manipulation of the stock market, and for
the government to postpone the day of reckoning by offering juicy
returns to well remunerated money managers in the world's financial
centers. The pundits are now pompously asserting the inevitability
of present problems. They are just as audacious in recommending
caution today as they were in urging investors into the heady
waters of international finance in yesterday's markets.
The huge devaluation of the peso will lead to substantial inflation
in Mexico, as your reporters have noted, and prices of imported
goods will rise quickly and dramatically. Changes of recent years
led to a massive displacement of local production by imported
goods. Years ago, the technocrats decided that Mexico's peasants
and indigenous population were not only too independent but also
very inefficient; they had to be removed from the countryside to
"free" them from their traditional communities, putting their land
at the disposition of more resourceful social groups and making
them available for other tasks. Today, some of the corn for our
tortillas, milk products, and animal feed, to name only a few
essential items, are among the imported goods that were formerly
produced at home.
Similarly, small and medium sized industries were squeezed and many
forced to close. The widely heralded trade "opening" led to an
avalanche of cheap imports, a costly and unsustainable way to fight
inflation and stimulate competition at the cost of domestic
industries and jobs; aggravating the problem, the banking system
was too busy fueling the speculative binge in the financial markets
to address the complex task of supporting and strengthening the
weakening industrial and agricultural base.
The bipartisan "rescue" package from the US does not address
Mexico's fundamental problems. By throwing "good money after bad",
the proposed bailout will only further deepen the crisis, by
raising the foreign debt and the cost of debt service. It will
offer a very small group of people in Mexico the opportunity to
continue to engage in financial acrobatics for personal gain. It
will also provide the necessary funds for important financial
groups in the US and elsewhere so that they can avoid the
embarrassment of paying the real cost of their ill-considered
investments: the guarantees will provide funds as a temporary
fillip to financial markets that will facilitate an orderly (and
profitable) redeployment of foreign assets.
The massive injection of new credits into Mexico will also reduce
pressures to face up to the urgent task of rebuilding capacity to
satisfy our basic needs. To undertake this alternative path, we
must mobilize people to plant crops and raise the animals needed
for work and food, while artisans and small-scale entrepreneurs are
encouraged to rebuild the myriad small industries and workshops to
produce other basic consumer goods. This is the only way that we
can defend our standard of living: by producing products which
create jobs and incomes so that people can buy these products. This
alternative cannot be undertaken without a serious democratization
of the political arena.
In today's world, a strong domestic economy cannot be shaped in
isolation; but without explicit policies and resources to define
such an approach, international economic integration will surely
continue to exclude people from effective participation in
governance and erode their capacity to supply their own needs,
condemning them to a deteriorating quality of life. This is not an
option which Mexicans can continue to accept: the example of
Chiapas is still an important part of the Mexican scenario, and one
that could be emulated.
*David Barkin is Professor of Economics at the Xochimilco Campus of
the Metropolitan University in Mexico City on leave as Senior
Fellow for Latin America at the Lincoln Institute. His latest book
in English is Distorted Development: Mexico in the world economy.!
Prof. Chris Chase-Dunn
Department of Sociology
Johns Hopkins University
Baltimore, MD. 21218 USA
tel 410 516 7633 fax 410 516 7590 email chriscd@jhunix.hcf.jhu.edu