Priorities

In a visit to Mexico at the end of the eighties, the head of a delegation of businesspeople presented himself with a pithy phrase that left the audience cold:  “I introduce to you the new Chilean business community, because the old ones no longer exist”. In Mexico, it would be difficult to make such a statement. Although many businesses have closed in the past decades, what is impressive is the small number of companies that have risen as leaders and bellwethers in a competitive market. Could it be that we have gotten the priorities wrong here?
Many categorize the decision of the government to launch a “war against the narco” as foolhardy. This criticism is not very different from that which is mustered against European and North American governments with respect to the capitalization of banks at the beginning of the crisis. The truth is that, when confronted by a chaotic and threatening moment, decision-makers in the government do not have the benefit of the retrospective view: they have to act, and to do so in the best possible way. But there is no reason for this urgency in themes of development, which can only come into being as the product of a long-term plan that creates the conditions necessary to achieve it along the way.
This has not been our case. For years, financial crises earmarked the priority; what was important was to recover stability. Then came political change, and now we have a security crisis. Successive governments have suffered from a lack of clear, long term, vision. It is indispensable to resolve a crisis situation, but it is not a substitute for development. However, in Mexico we have become accustomed to resolving crises as if this were an end in itself: for example, having healthy public finances has become an objective in and of itself.  Fiscal equilibrium is a necessary condition for economic growth, but is not sufficient in itself. On occasion, above all if the manner of achieving this entails excessive costs, the means culminate in eradicating the end. The same can be said for public security: it is a means to accomplish a superior objective.
The government is indispensable for attaining development, not running businesses, but as a key factor of social organization. To use a soccer metaphor, Mariano Grondona affirms that “if there were no referee, a player like Maradona would kick all his goals in by hand”. The function of the government is to create conditions for growth to be possible, not for it to substitute for the society in the process. The government’s priority must be to construct means for development to come about, and this is of particular transcendence at present.
We are confronting a moment of global redefinition: today, it is recognized that many of the things and activities that economies, both developed and developing, were previously engaged in are no longer those that are suitable for sustaining the next stage of development. This redefinition originates under circumstances such as the recent financial crisis, global warming, and Chinese competition. The entire world is speculating on which industries will be relevant tomorrow, or on how governments should conduct themselves in order to generate prosperity. This has led to some governments becoming shareholders in banks and companies, but those that are generating far more interesting perspectives are those that promote qualitative, far-reaching transformations that achieve exactly the opposite: creating conditions for the establishment and development of new businesses and entrepreneurship feasible. For example, in Nordic countries, governments are advocating an escalation in the efficiency and productivity levels of their economies, facilitating the transition of enterprises that are no longer able to compete under the new circumstances to new opportunities of development and creating mechanisms for the establishment of technological companies characterized by high turnover.
While this is happening, we continue to be anchored to a paradigm that has been evidencing its impracticability for 40 years. Every country must finds its own way to be successful in this world, but the great lines are well-known by all: the key resides in adding value, raising productivity, and establishing rules of the game that work. In plain language, the latter means transforming the educational process so that people can develop their creativity; drastically improving the quality of the physical and human infrastructure; and creating a framework of rules that are clear and equitable.
What have we been doing in Mexico? Exactly the opposite: we have an educational system that becomes more retrograde daily; although there has been much investment in highways, the quality of the infrastructure and access to same become progressively worse, and in matters of rules, capriciousness is the norm. There is the absence of effective mechanisms for damage control and conflict resolution in contract disputes; in a word, arbitrariness. There is no way to create more and better jobs if there are already three strikes up on the scoreboard when the ballgame begins.
The Chilean entrepreneurs whom I mentioned at the start are all concentrated in “new” industries and activities, even though these were “old”. Many were associated with agriculture, but had nothing to do with the traditional way of cultivation. Their true business was service: added value in the time-honored agricultural and cattle raising activity. In this fashion, they created spectacularly successful industries in fruits, wines, fish, and wood, becoming kingpins in each of these. The process for arriving at this new state of success took some years of penury and many changes in the structure and practicability of the enterprises that had existed formerly. That is, change was not free, but those enterprises were transformed in less than a decade. In Mexico, we have been correcting the macro for forty years, while we protect industries that are no longer economically viable, as if they were museums.
At present, diverse initiatives of the law are being debated that range from one extreme to the other. On the one hand, these are attempting to make the Commission on Competition autonomous, conferring upon it enormous discretional powers. On the other hand, there is a proposal to approve legislation of public-private associations, which would give the government opportunities to choose the winners and the losers, not on an international battleground, but rather, in the assignation of public resources.
It would be better to develop clear, simple, and fair rules, without discretional faculties, so that an individual who saves, or the entrepreneur, or the investor would know what to expect. In parallel, we must understand the context: in very large markets, there can be many participants, but in small markets, the only way to avoid monopolies is with a true market opening. We have, for forty years, been betting on a past that will never return. It is time to begin to construct the future.