In the middle of the six-year term, the 4T proclaims itself post-neoliberal. With this he boasts of having finished with the “Long neoliberal night” and to give way to the implementation of policies that empower the State and put the needs of the poorest at the forefront.
It is true that López Obrador has changed the government for the better in many aspects. His Administration has increased by 73% the minimum wage that benefits six million workers, has increased by 13% social spending on provision and provision of public services, as well as social programs and subsidies, and has increased historically IMSS-Bienestar health spending. It has also regulated outsourcing to the point of reducing it by 75% in the manufacturing sector and has increased by 37% of the collection of large companies.
However, even despite these changes, in this essay I show that we are far from having left behind the worst abuses of neoliberal policies.
To do so, I define what neoliberalism is and how it was implemented in Mexico, I describe the so-called “post-neoliberal” policies that the Government is implementing, I show that these policies have not been enough to leave behind the greatest vices of Mexican neoliberalism and I propose what kind of politics we need to do it.
The long neoliberal night
Capitalism and neoliberalism are not the same, and not every capitalist is neoliberal. Capitalism is an economic system where demand and supply freely set prices motivated by profit-making from private individuals.
Neoliberalism, on the other hand, is simply a way of doing things within capitalism. That is, a series of rules that dictate how governments and private parties should act to, supposedly, maximize economic growth. For the private, these rules are deregulation, trade openness and the free flow of financial capital. For governments, the rule is to reduce the size of the state through privatization and austerity, that is, by minimizing the collection of taxes, fiscal deficits and public debt.
Neoliberalism is a dogma and a theory, it is not a proven mechanism to achieve the growth or well-being of people. In fact, neoliberalism it has been a failure, generating too little economic growth and a gross widening of inequality.
Furthermore, in Mexico, the implementation of the neoliberal agenda it was hypocrisy. Deregulation applied to some, but not to a handful of companies close to power. Capital only flowed to the largest, while small companies continue to receive expensive loans from uncompetitive and abusive banks.
As has shown the work of Charles Calomiris and Stephen Haber, professors from Columbia University and Stanford, respectively, many of the largest companies in Mexico in the 1990s were favored with bank loans as a way, millionaire bailouts and development policies that only worked for them, and not for medium-sized or medium-sized companies. little. The deregulation was more like regulation by way. The small state existed for the majority, but not for the richest.
For its part, austerity was a killer. For decades neoliberals assassinated the state to turn governments into witnesses to social problems that they could not solve.
Obrador’s post-neoliberalism
Today López Obrador has told us that he ended neoliberal hypocrisy, but the reality is that few of the prescriptions of neoliberalism have been eradicated.
The reasons are various. Some prescriptions, such as trade openness, are not bad ideas and there would be no reason to end them. Others do not depend on Mexico, such as the free flow of capital. Still others, and this is the most worrying thing, simply have not finished because the Government has not considered it a priority.
Thus, the protection of large companies continues. On López Obrador’s advisory council are the great potentates of Mexico, the same ones who have been favored by their closeness to power for decades. Our ultra-rich extractives, non-competitive and exploiters.
The state is collecting more from the richest, but not enough to eliminate neoliberal austerity. In fact, López Obrador currently only collects 1.1 percentage points of GDP more than Peña Nieto. On the other hand, Peña Nieto during its first three years increased its collection by 4.4 percentage points. Keeping the collection low, the role of the state with López Obrador has been sufficient.
With regard to the preferential treatment of ultra-large entrepreneurs, although in the face of the 2020 crisis the Government did not support them, it did not significantly support almost anyone, and with this, it was allowed that, once again, only the largest entrepreneurs would survive. . Thus, 80% of the companies that before the pandemic were the most important in Mexico, according to the ranking of Expansión magazine, continued to be after the pandemic. Instead, a million small and medium-sized businesses went bankrupt during the pandemic.
Not only that, the banks abused us during the pandemic because the regulation remained intact. Between March 2020 and February 2021, the interest rate for personal loans was 43.3%. This is 4.7 points higher than the rate in the same period a year earlier, according to official data from Banxico. Mexico is the country with the highest interest rates for personal loans of 15 countries included in a study published by the Belisario Domínguez Institute of the Senate.
The conformity of post-neoliberalism
The balance of keeping things almost the same as before has been called post-neoliberalism. That is, public policies that act outside the neoliberal economic model, assuming that a more ambitious and innovative change is impossible.
Post-neoliberalism is a term coined during the rose tide and is used mainly in Latin America. It refers to public policies that can be established, conditional on neoliberalism. Assuming its presence as insurmountable.
Thus, post-neoliberalism in many cases has lent itself to promoting incomplete and shallow solutions to the main problems that afflict our country. For example, there is talk of use austerity to combat austerity. That is to say, that being austere with the salaries of senior government positions will create greater resources for the State, when in reality salaries are marginal cuts and Mexico, even with them, continues to be the country with lower OECD social spending.
There is also talk of using banks, in particular Banco Azteca, to distribute government cash transfers, thereby accepting that millions of low-income people are banked with an institution known for charging extremely high interest rates. According to Banxico, the average rate for personal loans in Azteca is 60%, a phenomenon that occurs primarily because there is no smart banking regulation that allows more competition in the sector. A more ambitious government would better regulate banking instead of just promoting its use as it is.
Likewise, post-neoliberalism has justified having a government that only grants cash transfers, instead of seeking to have a state that provides first-rate public services. The fact that social policy is limited to giving cash is part of that same neoliberal minimal state that not even nurseries want to manage anymore.
The only reason we talk about post-neoliberalism is because we have no way of imagining a different country. Our Government has been co-opted, dwarfed, and unable to imagine or aspire to a different Mexico.
The pending task
López Obrador or our future governments must have the courage to change Mexico at its roots, to change the rules of the game, not just take them for granted. This means changing the way we work, do business, and pay taxes.
The rules will have to be changed so that there is a new labor law that responds to current needs and that eliminates social security contributions to replace them with progressive taxes on income and capital. It is also necessary to better regulate banking, implement delinquency laws and professionalize the entrepreneur through specialized education. Finally, taxes on wealth should also be implemented, on inheritances greater than five million dollars, increase the ISR rates paid by the ultra-rich and reduce the ability of the rich to avoid paying taxes.
But, above all, we will have to banish the idea that the market regulates itself, because what we call “market” is not an independent entity, but rules of exchange and cooperation created by us. The market is actually a series of formal and informal interaction mechanisms that, in the case of Mexico, have been made to favor a few, to the detriment of the rest. And that it is time to change to make the middle classes grow and reduce poverty.
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