On July 1, for the first time in over four decades, Mexican voters elected a left-wing president. Before Andrés Manuel López Obrador’s 30-point victory, Mexico had six consecutive administrations that embraced a free-market model while almost every other country in Latin America took a left turn.
The electoral result has been chalked up as a referendum on a presidency that oversaw rampant corruption, worsening cartel violence and a doubling of the national debt. But given the economic indicators, the election of a president who promises to confront inequality was well overdue. After average yearly growth rates of over 3 percent from the 1930s through the 1970s, per capita GDP growth has averaged less than 1 percent since 1980. Fifty-three percent of Mexicans live in poverty, the same proportion as in 1992. Over the same period, the wealth of Mexico’s 16 billionaires has grown more than fivefold.
Given this drain of wealth upward, why did Mexico lag so far behind the rest of Latin America in electing a leader aiming to change the economic model?
To answer that, it’s important to recognize that labor unions and other working-class organizations — typically the backbone of left-wing parties — have remained loyal to the Institutional Revolutionary Party (PRI), long the country’s dominant party. The relationships that López Obrador builds with these groups will have important implications for economic policy, particularly renegotiations of the North American Free Trade Agreement (NAFTA).
[interstitial_link url=”https://www.washingtonpost.com/news/monkey-cage/wp/2018/07/11/women-won-big-in-mexicos-elections-taking-nearly-half-the-legislatures-seats-heres-why/”]Women won big in Mexico’s elections, taking nearly half the legislature’s seats. Here’s why.[/interstitial_link]
How did the Mexican economy get here?
When examining everyone from the industrial giants of the last century to the Koch Brothers today, researchers studying U.S. politics blame the upper-class bias of economic policy on big business’s outsize influence. The wealthy have the resources and connections to lobby effectively for policies that preserve their privileged economic positions. Organizations representing the poor and the working class are typically handicapped in policy battles, trying to mobilize massive numbers of ordinary citizens who are more concerned with making ends meet than with the finer points of tax policy or foreign trade agreements.
For decades, Mexico has been in an amplified version of this same pattern. Groups representing the most precarious, such as urban squatters or the rural poor, campaign for political parties — most commonly the PRI — in exchange for state handouts ranging from concrete floors for housing to farm tools. As my own research shows, these commitments to electoral campaigns squeeze out demands for infrastructure, high-quality public education and health care, or policies to generate remunerative employment.
López Obrador’s resounding victory may tear down the PRI’s electoral machinery. But what will his party, or Morena, build in its place? Will lower-class organizations have a voice in party leadership and economic policy? Or will he rebuild a PRI-style machine under a different party banner, leaving the economic policy decisions to technocrats and business lobbyists?
[interstitial_link url=”https://www.washingtonpost.com/news/monkey-cage/wp/2018/07/06/whats-next-for-mexico-here-are-5-things-you-need-to-know/”]After AMLO’s victory, what’s next for Mexico? Here are 5 things you need to know.[/interstitial_link]
Where will López Obrador take NAFTA – and the Mexican economy?
We should get some clues to these questions right away. When AMLO takes office on Dec. 1, resuming NAFTA talks with the United States and Canada will be high on his agenda. President Trump announced that negotiations, underway since August 2017, would pause until after the November midterm elections. How López Obrador’s team approaches these negotiations will signal his administration’s economic policy goals.
U.S. citizens may be surprised to hear that NAFTA isn’t criticized only by the Bernie Sanders left and the Trump right; it has a quite mixed reputation south of the border as well. The deal has accelerated the Mexican economy’s concentration at the extremes, with clearly defined winners and losers.
Some Mexican groups have indeed profited from NAFTA. Domestic firms with the capacity to export or to provide services to foreign investors saw new markets open up. Wages have increased in the country’s northern states, where foreign-owned factories are concentrated. And middle-class consumers — who, courtesy of NAFTA, today can shop at Walmart and the Gap and dine at Applebee’s and Outback Steakhouse — are generally fond of the deal.
The losers are concentrated in the poorer and more rural south. Highly subsidized U.S.-grown corn has poured into the Mexican market, reducing the price of Mexico’s most widely produced crop by an estimated 66 percent – helping consumers but hurting farmers. Most farmers don’t have the access to credit, skills and infrastructure that they’d need to shift to higher-value export crops. A lack of opportunity in the countryside has driven thousands of impoverished young men and women from the Mexican countryside to try to migrate to the United States or to join drug cartels.
Outgoing President Enrique Peña Nieto has seemed content with the NAFTA status quo. While the average maquila (factory) worker earns less than $20 a day, the Mexican negotiating delegation has been fighting against a joint proposal by U.S. and Mexican labor groups to increase the factories’ minimum wages. And as Trump has instigated a trade war, the Mexican administration has punished U.S. corn exporters by importing corn from Argentina and Brazil rather than bolstering domestic production.
López Obrador has already offered two important clues about his approach to NAFTA. On the one hand, he has praised Peña Nieto’s negotiating team and promised to work with them during the transition. It is unclear whether such statements signal a genuine preference to stay the course or are geared to soothe investors’ concerns for the time being before he pivots once in office.
[interstitial_link url=”https://www.washingtonpost.com/news/monkey-cage/wp/2018/06/30/mexico-votes-tomorrow-heres-how-the-country-will-be-radically-transformed-when-the-pri-loses”]Here’s how the PRI’s overwhelming defeat will radically transform Mexico[/interstitial_link]
In his acceptance speech, the president-elect pledged to create a Mexico where “all Mexicans can work and be happy where they were born … and that whoever wants to emigrate does so of their own will and not out of necessity.” That would require a clear change of direction.
If López Obrador plans to follow through on this promise, we should see representatives of organized labor, small business and peasant associations at the NAFTA bargaining table. Provisions for foreign investment would be geared to not only factories that employ low-paying manual labor — jobs that are increasingly under threat by automation — but also technology and service-sector firms that promise to train and employ high-skilled workers. And negotiators would pursue agricultural terms that favor Mexican exports of high-value crops such as avocados, coffee and tomatoes. These trade provisions would be accompanied by domestic policies that enable small businesses and small-scale farmers to obtain the financing they need to reach more lucrative markets.
Brian Palmer-Rubin is an assistant professor of political science at Marquette University.