Mexico

WHILE the world at large has suddenly become enthusiastic about the social and economic progress of Mexico, Mexicans themselves, like adolescents still doubtful of their powers, are sometimes subject to attacks of the jitters. During the first few months of the administration of Gustavo Díaz Ordaz, who took over last December, the economy slowed down, the stock market slumped, and there was a vague atmosphere of foreboding.

There are various reasons for this, but the one that immediately leaps to mind — that a change of helmsman produced doubts among the passengers — is less pertinent in Mexico than elsewhere. The whole government apparatus has been for decades in the hands of the Party of Revolutionary Institutions (PRI). While the President of Mexico appears as untouchable as the British monarch and as powerful as a czar, he must nevertheless work within the framework of his abiding party. Politics as a career is not an electoral obstacle race as in the United States, but an appointive zigzagging up through the ranks of government. Díaz Ordaz, formerly Minister of the Interior, came to the presidency with the high regard of all Mexicans; since assuming office he has shown himself both firm and deft.

Paradoxical as it may seem, the chief reason for the slowdown is last year’s prosperity. Outgoing presidents in Mexico like to write large their names across the land, and President López Mateos outdid them all. Roads, dams, museums, schools, hospitals were inaugurated in 1964 in a breathtaking marathon. Officials, vying for the public eye in hopes of being tapped for the top job, threw fiscal caution to the winds. In the department of social security alone, the incoming administration found debts of $220 million, or nearly 75 percent of its annual income.

The new government has had, therefore, to pay for the old one’s prodigality before undertaking projects of its own. Because of a basically sound economy and a tax reform last year which raised revenues 10 percent above the budget estimate, it has evidently been able to do this in relatively short order. Díaz Ordaz, in his annual message to Congress on September 1, announced that the government had already resumed its investment in public works.

A major reform in the technique of government investment has also had a braking effect on the economy. Previously the “decentralized agencies" — the national oil company, the railroads, the electric power company, and so forth — borrowed and spent money as they saw fit. Now all their financial activities are channeled through the Treasury. This procedure guarantees future fiscal responsibility, but it has involved re-examination of old commitments before authorization of new ones. It may even clear up persistent accusations of corruption.

Furthermore, the slowdown has been, to some extent, induced. The influx of new money in 1964 generated inflationary pressures. The Díaz Ordaz administration, jealous, above all, of Mexico’s reputation for monetary stability, took definite measures to cool off the economy, restricting credit and fixing maximum prices for basic commodities, both unpopular measures in business circles. Inflation has indeed been curbed: while prices rose 3.8 percent during the first six months of 1964, the increase this year is only one percent.

Finally, it should be emphasized that although Mexicans talk about a slowdown, this is by no means a recession. The growth rate during the first six months of 1965 was a healthy 6 percent. Only by comparison with last year’s 10 percent is this growth rate disappointing.

The braceros stay home

Internally this is a period of wholesome readjustment, but externally the picture is not quite so bright. The major adversity is the closing of the frontier to Mexican migrant laborers, the braceros, who harvested the fruit and vegetable crops in the border states of the United States for wages which, while low by American standards, seemed a bonanza to them. The sober Mexicans brought most of these dollars home, some $200 million annually in recent years. Mexicans have never been proud of the situation — the “export of poverty" they called it. Nevertheless, the decision not to renew the contracts leaves a gap in Mexico’s foreign income, and a certain despair in the countryside, where a chance to earn American wages was almost as good as a winning lottery ticket.

World prices for many of Mexico’s commodity exports are lower than last year. Also, the campaign to reduce the deficit in the American balance of payments is having an effect on Mexico’s trade balance, although Mexico, as an underdeveloped country, should not be subject to investment restriction. American companies are, nevertheless, seeking to finance their activities in Mexico with local funds. Mexico’s success in increasing agricultural production enough to permit the export of wheat and corn has led the U.S. government to cancel Food for Peace shipments, worth some $20 million annually. Mexico plans to continue many of the food distribution programs itself, but will therefore have less grain to export.

Dollars from tourists

There are, however, favorable factors. Mexico’s chief source of foreign exchange has always been its “industry without chimneys” — tourism. And tourists are pouring in in ever increasing hordes. With new facilities planned to take care of the crowds expected for the 1968 Olympic Games, and a new air treaty to augment the present overcrowded flights, the tourist dollar should continue to underwrite the economy. An increase in Mexico’s sugar quota in the high-priced American market will help counteract the lower price for coffee. Furthermore, the growing success in the drive to export manufactured and semimanufactured goods will make the country less dependent on world commodity prices.

Mexico is one of the most fervent supporters of the Latin-American common market. Its businessmen roam the continent looking for markets; the government has set up a credit agency to finance exports. The southern republics are now complaining that Mexico is reaping the lion’s share of the benefits: its trade balance in the area is overwhelmingly favorable, and has been for the last three years.

Mexico’s reserves have never been higher, nor its credit better. It was one of the sixteen countries that increased its contribution to the International Monetary Fund beyond the obligatory 25 percent. The peso is officially ranked among the hard currencies of the world. The foreign debt, mostly in longterm loans, is of manageable size and has increased less than the national wealth.

The war against poverty

Even if 1965 proves to be less brilliant than preceding years, there is nothing seriously wrong with the economy except that so many Mexicans live outside it. Fifty-five percent of the population makes its living — if in many cases it can be so called — from the land. While the factory workman and the office employee live in the modern world, people in the backlands have only a faint glimmer that it exists. Millions of them still speak an Indian tongue; many others who speak Spanish cannot read it. There are, indeed, “many Mexicos,” and the essential problem is undoubtedly integration.

The previous philosophy has been, in some degree at least, to start at the top, building a modern industrial complex, with its attendant social and government services, in the hope that the benefits would filter down. They have to some extent, but the process is painfully slow. Only 15 percent of the people receive social security benefits; less than half have electric light. With Mexico’s appalling birthrate (3.1 percent, higher than China’s or India’s), it sometimes seems that for every newly “integrated" Mexican, half a dozen more have sprung up in the mud huts back home.

Yet Mexico is making a gigantic effort to educate the people. In the last six years the sums spent on schooling have tripled — they represent more than a quarter of the budget — and a special one percent tax on salaries is devoted entirely to technical education. But education without opportunity is no solution either. Industrial jobs require immense investment, some $4000 a job; Mexico needs to create 400,000 jobs a year.

The key to the problem of poverty thus remains the land. The government’s five-year development plan will not be ready until the end of this year, but certain new trends can be discerned.

Distribution of land is no longer considered a panacea in itself. After four decades of “agrarian reform” there remains very little to distribute to the millions still clamoring for land. More attention is therefore being paid to increasing production. Mexico’s agricultural institute at Chapingo is one of the best in Latin America and has recently received various grants and loans to expand both its experimental work and its training of agronomists.

One of the most successful Alliance for Progress programs anywhere is a scheme to make credit for improvements available to small farmers through local banks, hitherto uninterested in the small change and big risks involved in such loans. The original $20 million invested in this project has recently been doubled. However, this program only reaches those who have something to mortgage. The communal ejiditario, forbidden by law to rent or sell his plot, is thus excluded. Furthermore, titles and boundaries, after years of revolution and sometimes haphazard distribution, are often muddled.

Basic, therefore, to rural development is the cadastration of all holdings which the Díaz Ordaz government has already undertaken, a gigantic and politically delicate task which will prudently proceed a region at a time. Even so, the holdings of individuals within the ejido will still be subject to local political influences, unless the much debated question of granting them title to their plots rather than simple membership in the ejido is resolved in favor of private property.

Free food for work

Community self-help programs have been strikingly successful. These give a modern twist to the ancestral tradition that members of a community should chip in with their labor to forward local projects — a road, a school, a water system. Since in many parts of Mexico men have work for only a hundred days a year, they have plenty of time to donate. The government provides technical guidance, such building materials as are not available locally, and most important, food for a family for each day’s labor. Last year, 8.5 million days of work were thus contributed.

Another development, which may prove as important as economic measures in furthering the participation of rural Mexico in national life, is the timid but evidently sincere effort of the ruling PRI to make local politics more “democratic.” One of the banes of the countryside has been the local political boss, or cacique, drawing his power from higher-ups in the party and wielding it quite untrammeled for his personal profit and that of his friends. Since the party candidate always wins, nominations are now supposed to be held by secret ballot instead of, as previously, by acclamation of a designated favorite. This reform is not likely to take place immediately, but the declaration of intent is an important straw in the wind.

Mexico’s success in the first stages of building a modern nation has been spectacular. The next, imperative stage, that of enlarging it to include all the people, may be more difficult. But at least the foundations have been well laid, and there are not now any serious social or political tremors to hamper further construction.

The American presence

In the pretentious new embassy Ambassador Fulton Freeman, a career diplomat with wide LatinAmerican experience, has been successfully pursuing the soft sell. Mexico disagrees entirely with our policies in Cuba and Santo Domingo. Yet, thanks to commendable restraint on both sides, the disagreement has never gone beyond an honest difference of opinion between friends. Our intervention in Santo Domingo aroused inflammatory denunciation elsewhere. In Mexico, except for one well-policed student march, it was merely deplored.

Two grave issues, festering for years, have been settled amicably: the border dispute about a plot of land in El Paso which the United States lost in arbitration fifty years ago and has hung on to until now; and the increased salinity of the Colorado River as it reaches Mexico’s irrigation system, due to leaching desert land upstream in the United States.

Mexico has sometimes seemed to consider the Alliance for Progress a mere supererogation of its own blueprint for development. The phrase has been conspicuously absent from official pronouncements, to the annoyance of Washington. Díaz Ordaz broke precedent this year in his message to Congress by saying a kind word not only for the Alliance but also for the Community Development Foundation and for the now defunct Food for Peace program. Indeed, in spite of major policy differences, Mexican-American relations have never been better.

The American business community is perhaps not quite so happy. The automobile companies are displeased at what they feel to be an excess of government controls, particularly in regard to production quotas and prices. And the sulfur mining companies were appalled to have a ceiling placed on their exports, a conservation measure to protect Mexican reserves and to encourage the manufacture in Mexico of sulfur compounds particularly for fertilizer.

Owing to tax and other incentives, American companies are increasingly working in association with Mexicans. All public utilities have long since been mexicanized, and the recent acquisition of a majority interest in the Mexican operations of American Smelting and Mining removes from American control another of the big companies exploiting what Mexicans call “nonrenewable resources.” Such companies — “they leave us nothing but a hole in the ground” — are always a sore point in Latin America.

Mexicans, for their part, with only 5 percent of the huge capital investment last year coming from foreign sources, can afford to be relaxed, neither courting the almighty dollar nor snarling at its mightiness.