Federico Reyes Heroles
Before, before—a “before” that seemed eternal, but wasn’t. The “before,” used to justify all our ills by blaming the previous leaders, is rapidly fading. Let’s take a broad view. The demographic dividend—that exceptional condition in which young workers abound and which lasts a couple of decades—was there when they came to power.
They did nothing to strengthen a pension system that would take advantage of the fleeting years of that abundance—which, if squandered, becomes a nightmare for governments. The examples were right under their noses—Italy, Spain, and China itself—countries that drove their population growth rates so low that they fell below the replacement rate: 2.1 children per woman of childbearing age. Now we’re already at 1.6, and recovering that rate is very difficult.
But of course, with an aging population, all societies face an explosive need to finance care. For infants, international standards call for one caregiver for every eight infants—about 1.2 million caregivers. For older adults, the ratio is exactly the same—1 to 8—but in Mexico it stands at 1 to 51. Again, this means more than two million people are needed to care for those over 65. Spain and other countries have home-care systems that avoid building nursing homes and hospitals. The focus is on providing ongoing care for older adults. For people with disabilities, the ratio is one caregiver for every two people. We would need nearly 3 million caregivers. Total: with 46% of Mexicans falling into one of these categories, we would need around 5.5 million people dedicated to caregiving. Mexican humanism, where are you? Add to this the disappearance of full-time schools and school cafeterias—which freed up time for working mothers—and the outlook is bleak.
Because we have failed to build robust pension systems seriously, 72% of income tax revenue now goes toward pensions. Once again, we rank last in tax collection among OECD countries. Income tax—a major revenue source—is propping up the lack of long-term planning. There aren’t many solutions: either raise the retirement age or impose a special tax. But nothing—do the poor come first? It’s worth reviewing the cost of pensions for the IMSS, ISSSTE, and, of course, Pemex. These three entities alone make the institutions unsustainable. That is why, during Fox’s administration, the first steps were taken toward a universal health care system—a project now on hold. That is why the gap in health care coverage rose from 18.8% in 2016 to 44.5%. In Chiapas, it stands at 76 percent.
Back in the seemingly endless “old days”—in 2006—Mexico was exporting more than two million barrels a day. Today, we’re back at the level of five decades ago: just over one million. We import 75% of our natural gas. Sovereign? The leaders of “back then” pulled us out of the nightmare of our trade deficit with the U.S. and made us the leading exporter to that country. But today, Mexico has a trade deficit with China of more than 123,000 mdd. And the promising nearshoring—which, by sheer geography, was positioning us in a privileged spot—is stalled for two key reasons: the demand for renewable energy, which those in the glorious “now” have failed to address. Brazil derives 91 percent of its energy from renewable sources, while Mexico gets 22 percent.
Argentina, Vietnam, Peru, Chile, and Colombia are far ahead of us. None of them share a border with the United States. And what about the justice system? More than 90% of intentional homicides go unpunished, and only five pesos per person per day are spent on it. As a result, investors are fleeing a country that invented a justice system subject to a strange “vote.” On the Rule of Law Index, we fell 2.8% and now rank 121st out of 143. And on the Chapultepec Index of Freedom of Expression, we are among the “highly restricted” countries. Whichever way you look at it—growth, school dropout rates, formal jobs, social mobility, etc.—
The “before” is collapsing.
Image: Onypix on Shutterstock
Further Reading: