Mexico's New President

Mexico has a new President. Felipe Calderon was inaugurated, amid a chaotic scene in Congress, where PRD deputies attempted to impede him taking the oath of office by trying to block entrance to the chamber, on December 1st.

His will be an administration ripe with opportunity, but he will face many challenges. Mexico needs much more of the two things this blog is concerned about: liberty and knowledge.

The country has come a long way from the times of the PRI's "Perfect Dictatorship" that lasted 70 years. It has free elections, a more accountable government, greater openness and economic freedom. Yet there are a lot of things left to put right. The country is dominated by entrenched monopolies. Not just the obvious monopolies such as Telmex, the overwhelming local telco, or Pemex, the state owned and run oil company that has a monopoly on prospecting, production and distribution of Mexico's substantial oil resources. There are a lot of other monopolies.

Political parties are state funded and have the monopoly right to nominate people for election. The small parties are often controlled by cliques and they are in effect unaccountable.

Unions have had a very long monopoly over labour representation. In Mexico, many industries have compulsory union membership rules, but Unions are controlled by just a few, dubiously elected leaders.

To make Mexico competitive on the world market Calderon will need to break these monopolies. He will need to push through labor reforms. Three reforms are key in this area:

1. Unions need to obey the same rules for their decision making as the other collective organizations in the country: free and fair elections of their representatives through secret ballot, secret ballot votes for all major decisions, especially to authorize strikes.

2. Membership in unions should not be obligatory, nor should a single union have monopoly rights within an industry.

3. Union membership dues should be voluntary for all employees, and they should not be taken directly from their paycheck, but rather offered up voluntarily.

Such reforms will be a first step toward modernizing labor relations in Mexico. But they would be unfair if not accompanied by reforms directed at the other monopolies, both private and public, that serve as a dead weight on the country.

The new administration should also make the following reforms:

1. Begin aggressive anti trust proceedings against the private sector giants that monopolize certain industries. Telmex, the national telcom, charges monopoly prices to consumers. Mexicans are paying five times as much for their domestic and international calls as do American consumers, yet Mexicans enjoy only one fourteenth the per capita income of their northern neighbors.

2. Open up the energy sector to private (including foreign) investment and to competition. Pemex, the state owned oil company, is much less efficient than other international oil companies and CFE the state run monopoly electricity generator is a prime example of waste and inefficiency. Pemex needs investment, but it also needs to shed a good deal of its businesses that are not core, for example, its distribution business. CFE needs to be split up into regional companies and investment opened up to the private sector.

On the knowledge front, the administration needs to correct the course of Mexican education. Mexican children are being cheated of their opportunities by an educational system that is dominated by a powerful, politicized and corrupt national teachers union. Moreover, Mexico invests very little in higher education, and where it does, university politics have led the government to abdicate quality for political expediency. As a result of this, Mexican public universities have dismal graduation rates and poor students that cannot afford private education are condemned to attend public universities where they get a second rate education.
The irony is that it is precisely the populist ideology that has reduced admission requirements to public universities that is contributing to trapping Mexico's disadvantaged students in a vicious circle of mediocrity.

Mexico has many challenges ahead. Other issues, for example, public safety, the environment, taxation policy among others need to be addressed. However, were the Calderon government to do nothing but take on these three issues it will have made a lasting contribution to the well being on Mexicans.