An enemy

Last week, in a conference at the Business Summit, Jonathan Heath, deputy governor of the Bank of Mexico, pointed out that the prospects for economic growth for this year are quite pessimistic; the consensus among analysts is that the economy would grow this year by around 2 percent. Heath pointed out that Mexico lacks growth engines, highlighting the lack of private investment and, in this regard, pointed out that “the problem is that we have a government that sees the private sector as the enemy to defeat.”

It is clear that with this vision that the president has, private investment is simply not going to pick up. The latest data, that of November 2021, shows that gross capital formation experienced a monthly fall of 0.1%, with which three consecutive months are linked with total investment falling and its level was 16.7% lower than the maximum reached in September 2015 and is equal to the level it was in March 2011, a decline of a decade. It is more than obvious that without investment there is no way for the economy to achieve a sustained growth process, both in the short and medium term.

It really amazes me that there are many people (and I don’t think this is the case with Heath) who are still surprised by the president’s attitude towards private companies, that of seeing them as “the enemy to defeat” when that has been precisely his attitude since before assuming the presidency. I suppose that the president knew that the cancellation of the airport in Texcoco, using the result of a rigged survey as a justification, would have a negative impact on private investment precisely because of the signal sent of his contempt for the rule of law, for the formal rules of the game, that is, the legal framework; Obviously he didn’t care. It is from that arbitrary decision in October 2018, almost two months before assuming the presidency, that private investment began to show a clear downward trend, negatively impacting economic activity and growth.

The contempt for private companies was seen again with the other illegal consultation that he used to justify the decision he had already made to cancel the brewery in Mexicali. And we saw it again when, in the face of the crisis generated by the pandemic, he decided that there would be practically no government support of a fiscal nature and social security payments towards companies and, as he said, that those that had to go bankrupt will go bankrupt, without giving a damn the impact this would have on employment and poverty. We have already seen the result of such a decision: the Mexican economy was one of those that contracted the most in 2020 and recovered the weakest in 2021, a rebound that did not last long.

And we continue to see it with the intention of limiting, if not finally achieving the disappearance of private companies in the energy sector. It does not matter to him that the changes to the legal and regulatory framework in this sector transgress various international treaties.

Another example that the president sees the private sector as his enemy that must be defeated is his contempt for the middle class, the one he calls conservative, “aspirational” and even a traitor, those families that are willing to sacrifice current consumption to allocate those resources to the education of their children as the mechanism for a future improvement of their level of well-being. The president, for the same reason, is fighting for quality education at all levels; he despises meritocracy. Furthermore, he despises technological progress as a source of improvement in the well-being of the population.

Almost three and a half years have passed since the decision to cancel the airport and if there is one thing that is clear, apart from the fact that the president has always seen the private sector as his enemy, it is that he does not really care about economic growth; no longer show surprise.

Twitter: @econoclasta

isaac katz

Economist and professor

Point of view

Knight of the National Order of Merit of the French Republic. Medal of Professional Merit, Ex-ITAM.

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