“First the poor” is still a purely propaganda slogan. What matters least to President López, in reality, is to establish the institutional conditions so that the very high incidence of poverty that our country has had for decades is gradually reduced based on two complementary phenomena. The first, a sustained growth of the economy with the creation of formal jobs with access to social security (IMSS, Infonavit and Afore) accompanied by increasing real wages derived from greater productivity of the primary factors of production.
The second, efficiently designed social programs for government transfers, with a perfectly defined universe of beneficiaries, progressive and, above all, subject to well-defined requirements (examples of this type of social program were Prospera – Oportunidades, a program aimed at the poorest families who received a cash transfer conditional on the boys and girls regularly attending school and the health center.This program, highly rated internationally and adopted in several countries, was arbitrarily canceled by López).
A whole series of decisions that López has taken, even before assuming the presidency, have resulted in lower economic growth and greater poverty. They highlight the cancellation of the airport in Texcoco and the brewery in Mexicali, the cancellation of different programs (besides Prospera) such as Seguro Popular and all the disaster that has been the administration of the health system and the acquisition of medicines, affecting relatively more the poor, the decision not to implement a countercyclical fiscal policy in 2020 during the pandemic, which accentuated the drop in GDP from which we have not fully recovered, the cancellation of the oil rounds, the reforms to the Industry Law Electric and a long etcetera. All these decisions undermined legal certainty and had a negative impact on investment and growth. Thus, it is estimated that by 2024 the GDP per inhabitant will be almost 3% lower than that registered in 2018 with the consequent higher incidence of poverty.
This does not matter to the president since, as he said, the poor are bought with transfers in exchange for loyalty, political support, popularity and, above all, votes. Not surprisingly, his highest approval rating is among the poorest, least educated, and oldest individuals; they can be easily threatened and blackmailed by public officials and Morena.
Since it is not in his interest to reduce poverty and he also has an ossified ideology, the president has now sent Congress a series of reforms to 23 administrative laws. Although the objective is to combat corruption, in reality it goes much further. The real objective is to punish private property and investment and move towards an economy with increasing government participation in the economy; in the extreme and always under the argument of privileging the “public interest” over the private interest, being the dictator in turn who defines what the aforementioned “public interest” is, it could lead Mexico to be a totally nationalized economy.
The modifications that are proposed to the different laws include limits to compensation in case of expropriation (violating Article 27 of the Constitution), expropriations that can also be arbitrary even when there is no real and true public utility (as defined by the Provisional Government Statute). of 1856), eliminate compensation for damages when a contract between the government and a private company is canceled by the government itself even without justification except the indefinable “public interest”, the early termination clause or exorbitant clause in all contracts with private companies (which would allow the government to arbitrarily modify the clauses of the contract without paying compensation and rescind contracts without going to court), as well as favoring government companies, granting government powers in terms of concessions, permits and licenses always under a discretionary halo, without clear, transparent and certain rules.
All these modifications violate individual freedom and the right to private property, to free competition in markets operating in competition and undermine, above all, legal certainty. In addition, they are unconstitutional and violate various international treaties, both trade and reciprocal investment protection, including the USMCA.
Approving them would end the legal certainty required by foreign investors, but also national ones, and as a result would discourage it, to the extreme by canceling it. The consequence: a nationalized economy, in frank contraction and the perpetuation of poverty; the ideal scenario of the “left” radicals in the government. Certainly very worrying.
Twitter: @econoclasta
