Capitol Ideas/The Mexican Kleptocracy

Bethell, Tom

CAPITOL IDEAS THE MEXICAN KLEPTOCRACY by Tom Bethell T hose who worry about the integrity 1 of our southern border rarely pay attention to the economic conditions in Mexico. They ought to. The...

...Nonetheless, it was reported that "despite their philosophical commitment to private ownership, most American bankers applauded the nationalization as a much needed step to bolster international confidence in the Mexican banking system...
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...The effect of this expropriation was to permit the Mexican government to steal about one half the value of $12 billion in dollar-denominated deposits...
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...Then, quite unexpectedly, we begin to hear growling noises from the lion's den...
...But this is not the real cause at all...
...As the Wall Street Journal pointed out in an editorial two years earlier, "the big mistakes of the past—bank nationalization, oil nationalization and the ejido system of land tenure—have been too big to tackle...
...Those who work THE AMERICAN SPECTATOR JULY 1989 11 hard perceive that their efforts merely benefit the lazy...
...Now at last the problems will be addressed...
...True, import barriers have been reduced...
...And hurry up about it, loan officers...
...In the summer of 1986, Helms had the temerity to suggest that a Mexican presidential election had actually been stolen...
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...It attributes it to a population growth that has outstripped the capacity of the Mexican economy to provide sufficient jobs...
...But these need to be dismantled...
...Only then will they have no choice but to give up their socialized kleptocracy and start creating more wealth than they consume...
...Perhaps this explains, if nothing else does, why U.S...
...The wave of Mexican migration is a recent phenomenon, beginning only in the 1970s...
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...The ejido is a system of rural welfare that both discourages people from working and yet ties them to the land...
...The timespan for such a transformation, then, is not the time required to construct a new economy (thought of as a material entity) but the time it takes for the government to enact new laws...
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...After 21 years, Nathaniel Branden tells the story of his years with Ayn Rand...
...Unlike his predecessor, de la Madrid did not find it necessary to go into European hiding with his loot...
...They are being asked to reduce the Mexicans' interest bill by $4.5 billion a year...
...The cartoonist's stereotypical "lazy Mexican," sitting in the sun with a sombrero over his eyes, is merely behaving rationally given the incentives he faces...
...Soon there will be renewed Mexican promises of reform, which is where we came in...
...This followed a period (1940-65) of comparative stability in the country...
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...Most have simply been reorganized under different umbrellas...
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...Fortune, perhaps, publishes an encouraging article...
...Without them, there can be no economic justice...
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...The point is that something changed down there, relatively recently...
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...Communal property, on the other hand, bred "much discontent .. . for the young men that were most able and fit for labour and service, did repine that they should spend their time and strength to work for other men's wives...
...Not one American banker was identified, but a Bank of America "spokesman," fortunately anonymous, was reported to say that "this is a positive step in that it puts the Mexican government clearly behind its banking system...
...When enforced, they encourage people to behave responsibly...
...not terribly encouraging given the 1986 enactment of sanctions against U.S...
...Nathaniel Branden has never told his side of the story...
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...Few expressed concern about the (mostly) unguarded Mexican border in the 1960s...
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...is, justified...
...He's privatizing fast, we are told, selling off those bad old monopolies, arresting drug kings, stock manipulators, union bosses...
...If such rules were instituted south of the border, Mexicans would almost immediately stop coming to the United States...
...James reports that very few state firms really have been privatized...
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...The new man, Carlos Salinas, has been in office for six months...
...You'll read Nathaniel Branden's firsthand account of the cataclysmic break and its searing aftermath...
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...The system, however, provokes discontent...
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...A period of silence ensues, while the lion digests the sacrificial kid...
...Groups of families nominally "own" land in common, but cannot sell or rent their separate shares...
...For example, "Opportunity Knocks in Troubled Mexico," published one week before Portillo's bank raid...
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...Later he was tortured by doubts...
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...The Wall Street Journal recently chimed in with an amazing editorial, possibly Machiavellian, suggesting that Mexico should be permitted to repay some of its debts in pesos—comparable to making the case for counterfeiting...
...In the 1940s and '50s we actively encouraged temporary Mexican agricultural workers to come north...
...Until now...
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...to travel hundreds of miles to a strange land where he does not speak the language, there to engage in manual or menial labor...
...the government itself has become increasingly lawless, its powers less clearly defined or subject to external restraint...
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...all the while running the risk that he will be arrested, imprisoned, turned back empty-handed, reduced to thumbing rides and trudging miles down dusty roads...
...It could be argued that an additional period of a year or two may be needed to convince an understandably skeptical populace that its politicians really do intend to abide by the new rules...
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...coercion and bribery have more and more displaced contract and law...
...The Mayflower settlers privatized after two-and-a-half years...
...Fire alarms ring triumphantly in the New York Times newsroom, and editorials, news stories, and op-ed pieces will be rushed into print...
...Meanwhile, we will continue to be overrun by the Mexican millions...
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...This shortage arises because transportation to the factories and living quarters near them are hard to find...
...Reform is painful and it will only happen when Mexico knows for sure the banks will be sending no more money...
...This in turn will serve to remind Mexicans that their perennial sense of grievance about the U.S...
...In calling for debt reduction he can only have reinforced the Mexican tendency to believe that they are in the right and we in the wrong...
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...March: 74,501...
...This could change our lives in a far more radical way than we had projected...
...The free market value of the peso has declined by a further 10 percent since Salinas took office...
...The real reason why there has been a massive emigration from Mexico is that, beginning with the leftist presidency of Luis Echeverria (1970-76), and continuing with the kleptocracy of Jose Lopez Portillo (1976-82), there has been a marked increase in the socialization of life in Mexico...
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...Very similar words were used by Governor William Bradford to describe Plymouth Colony in 1623...
...Institute in Washington, D.C., points out that "the arrest of lawless big shots by incoming Mexican presidents is nothing new...
...Some journalism has been downright incredible, as when the Times found, one day after Portillo nationalized the Mexican banks, that "Takeover Pleases U.S...
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...the official taste for expropriating it has increased...
...Since then, private property has become less secure...
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...If the past is any guide they will go along (perhaps reassured by the prospect that taxpayers will make up the difference...
...Now at last, it will be said, Mexico is on the road to recovery...
...And in the "Maqiladora" zone of Mexico itself, where foreign companies are permitted to run factories comparatively free of interference by the Mexican government (parts are assembled into finished goods and then shipped north across the border), there is also a labor shortage...
...February: 54,016...
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...There follows a triumphal phase...
...The Mexican ejido has persisted for seventy-four, with ever-increasing turmoil and endless expropriation...
...We will be reminded how high are the stakes...
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...His book is a no-holds-barred, unvarnished portrait that spares no one— least of all Branden himself...
...Branden recalls private, spirited conversations with Rand on literature, philosophy, capitalism, and many other topics...
...Mexico's government-trade union complex will not permit the necessary free market construction and transportation to fill the need...
...Another $3.5 billion will have to be sent to Mexico this year, folks...
...Must be some mistake . . .) Now what...
...These figures are lower than they have been in recent years—about the same as they were in 1982...
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...Broadlyspeaking, the U.S...
...Alan Riding of the New York Times comes to mind...
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...As FAIR's own immigration report pointed out in May, there is now actually a labor shortage in Hong Kong, with 5.6 million people Tom Bethell is The American Spectator 's Washington correspondent...
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...The "economy" of a country should not be thought of as analogous to physical machinery, or to a hotel or an ocean liner: something that can be utilized only when its construction is complete...
...merican reporters in Mexico rarely tell us any of this...
...bankers cheerfully went on making loans to the Mexican government after the nation's banks had been expropriated...
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...Nathaniel Branden analyzes in detail Ayn Rand's philosophy and the measure of her extraordinary achievements...
...Indeed, they are paid whether there is any work for them to do or not, and whether the ejido has any income or not, as has happened in some of the ejidos of the south east...
...Wage and price controls probably disguise continuing inflation...
...and if the hardworking members perceive one or two expending much less effort but still drawing their shares of the profits, the morale of the cooperative sinks...
...In most cases a collective ejido pays the same wage to each of its members," Paul Lamartine Yates wrote in his excellent 1981 book, Mexico's Agricultural Dilemma...
...Originally a collective, it was privatized that year,each family receiving "a parcel of land...
...Border Patrol apprehension figures: January: 61,175...
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...Other journalists share the generally anti-American outlook of Mexican officialdom, and so are inclined to take an exculpatory attitude toward the country...
...First, there will be token admissions of error in Mexico City, accompanied by promises: Excesses will be curbed, reforms put in place...
...but everything will be okay just so long as they get their deficit down another notch and shift the exchange rate once more...
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...This had "very good success, for it made all hands very industrious," Bradford wrote...
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...April: 80,300...
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...It may be true, as was pointed out by the Wall Street Journal's editor and optimistic Mexico-watcher, Robert Bartley, that de la Madrid was "the first Mexican president in two decades to leave office with the hope that, when history has time to judge, his reputation will rise...
...He brings with him a new, technocratic outlook...
...It is a drastic thing for a man to leave his wife, family, and home...
...The ejido system, incidentally, is one of Mexico's worst features...
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...Then, from our side of the border, will come a little editorial nudging: The stakes are high, the border exposed, drug traffickers wait in the wings, leftists may yet take over from the moderates . . . Better send them some more money then, right...
...Many eminent thinkers are now listening to books as a means of significantly increasing their time...
...When hundreds of thousands do it, there is something seriously amiss...
...It is a disturbing book, bound to provoke controversy and even anger...
...Treasury Secretary, Nicholas Brady, has made this more likely...
...State companies will be privatized, inflation subdued, spending curtailed...
...The shorthand phrase for such rules is "private property rights...
...The Federation for American Immigration Reform (FAIR), which tirelessly lobbies for more restrictive immigration, has misconstrued this human migration...
...Too many journalists look no further than the meaningless statistical aggregates of the Treasury Department and the IMF...
...Box 969, icn please put me in touch with the best minds...
...Even as I write the bankers' arms are being twisted once again...
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...There was no discernible improvement in the administration of President Miguel de /a Madrid (1982-88), whoseterm saw the standard of living drop by 40 percent, and the number of pesos needed to purchase a dollar increase from 150 to 2,250...
...The rules would achieve this by enabling people individually to reap the fruits of their own labor and to experience the consequences of their own idleness...
...You'll learn why and how their affair began:"'I'm afraid of what's happening,' Ayn confided...
...With a little luck, Jesse Helms or someone on the right will come to the rescue with a spot of Mexico-bashing...
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...or eighteen years, Ayn Rand and Nathaniel Branden had an I: intimate relationship that was professional, ideological, and personal...
...But as I write the government is staunching further capital flight with very high domestic interest payments that are not sustainable for more than a few months...
...Columnist George Will has stated, "I go through a book a week using time otherwise wasted in taxis, shaving, or walking...
...Mexican news tends to be cyclical...
...We wouldn't want them to default, would we...
...You'll read Branden's portrayal of Ayn Rand as a brilliant, innovative thinker and at the same time "an exalted and tortured woman:' • He writes later, "What is obvious to me today and was not obvious to me then was that if Ayn was a genius at reasoning, she was no less a genius at rationalizing...
...But the effect can only have been to make American bankers more uneasy than ever...
...For anyone whose life has been touched by Ayn Rand and Objectivism, JUDGMENT DAY demands to be read...
...It should be thought of as a set of rules whose effect ideally is to encourage those within their jurisdiction to work hard...
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...The problem is that little in the way of institutional change took place under de la Madrid, who in fact boasted that in his term Mexico had maintained "its basic institutions...
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...Perhaps this time the Mexicans really will change, but my suspicion is that the old cycle will continue...
...They will demand an immediate end to Mexico-bashing...
...Are you sure—are you absolutely sure— you want to proceed?' 'Absolutely: I said cheerfully...
...Mark Krikorian at FAIR told me that economic reform was indeed the "long run solution" for Mexico, but—"in the long run we are all dead...
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...Miguel de la Madrid made arrests that were "downright spectacular" by comparison with Salinas, including jailing the head of Petroleos Mexicanos for five years...
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...THE AMERICAN SPECTATOR JULY 1989 13...
...Luis Pazos, the outstanding writer on political economy in Mexico, notes that "between 1915 and 1988 more than six times the country's total arable land was 'redistributed.' " Today Mexico spends $2.5 billion importing food...
...Item # Title of Book Rent Purchase Total 12 THE AMERICAN SPECTATOR JULY 1989 while everything is peaceful...
...On Their Personal Relationship During the most productive period of Ayn Rand's life, she was perhaps closer to Nathaniel Branden than to anyone else...
...This too is wrong...
...JUDGMENT DAY is the dramatic story of their years together and their shattering breakup...

Vol. 22 • July 1989 • No. 7


 
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