Ricardo Pascoe Pierce
Plan Mexico is doomed to failure. Its protectionist conception takes up and complements the worst of Trump’s economic model. The most worrying aspect of the Plan is that it proposes an economic activity involving enormous public spending for Mexico at a time when the public finances are at their worst in many years.
Banamex’s economic studies department predicts ZERO growth for the whole of 2025. Obviously, the government and its spokespeople reacted furiously, denying that possibility. Their reaction is understandable from a political point of view: they cannot accept the extremely critical economic situation they inherited from their godfather, López Obrador. Party loyalty does not allow the recognition of mistakes, nor does it admit, especially given the size of the disaster they received.
But from an economic point of view, not recognizing the reality of the nation is a profound disloyalty of the government to Mexicans and their future. It would be best if the rulers forgot about López Obrador and thought about Mexico. They must talk about the severe economic difficulties to embark on the difficult path to recovery.
I suspect many officials know that the Plan is not applicable. Its only use is when the government can proudly say, “I have a Plan to move forward.”
However, the existence of the Plan raises a clear dilemma: either we move in the direction offered by the Plan’s protectionism, or we make an adequate diagnosis and boldly propose another path, that of openness, to try to save the country.
From an ideological point of view, protectionism is comfortable for the government and the left. It is their comfort zone. To leave it implies questioning too many assumptions, principles, and phobias. For that reason, the Plan received so much applause, even from Mexican business people, initiators of the seppuku (harakiri) tradition in Mexico, applauding their voluntary path to irrelevance and an early death.
The concept of “sovereignty” has been elevated to a pedestal at the altar of the ideological church that governs us. Nobody notices that it is also Trump’s favorite concept. Surprisingly, the United States’s alliances with other nations strengthened it, not its individuality.
Mexico is also strong when it associates with others, not when it isolates itself. The isolationist ideas of “being sovereign in energy, food, technologies, medicines and ideas” will lead us to anticipated failure in all areas. The solution is not isolation, but how to make other friendly nations’ productive and creative capacities serve us to make us strong internally. Weakness is not about importing; the problem is not knowing how to use what is imported, or exported, for the national benefit. That would be the ideal plan, and not one that avoids the task of planning necessary to use the resources of the rest of the world for our benefit.
In addition, there is a real problem of productive capacities. Being “sovereign” implies having a lot of money to create productive capacities. López Obrador bequeathed to this government a fiscal, economic, and educational bankruptcy suffocating the country. On the other hand, he established previous commitments that strangle the investment capacity of the Mexican State.
To be in a position to create the “sovereign state” that the Mexico Plan demands, the government has to cancel many, if not all, of the commitments that López Obrador bequeathed to Sheinbaum. Specifically, it would have to cancel the Dos Bocas refinery and refine outside the country, which is cheaper. It would mean opening up the energy sector to private investment without imposing limits a priori.
The Mexicana airline will also have to disappear, and all the unaccounted funds given to the Armed Forces to operate hotels, tourist centers, nightclubs, and restaurants as private businesses will have to be withdrawn. Furthermore, if it does not disappear completely, the Mayan Train will have to be reduced to a single track between Mérida, Cancún, and Tulum.
The government will have to cut all its social programs, except for support for the elderly, and make it not universal but applicable to those who really need it. The best social program is the economic model that offers a job with a living wage to all its citizens. Giving money away en masse creates demoralized and self-conscious social subjects.
That enormous mass of money should be invested in projects that generate jobs and salaries for Mexicans, create productive and profitable infrastructure, an efficient health system, excellent education for future generations, and the housing programs that the population demands.
“Good governments are not the ones that use taxes from the workers to give them to the lazy… The best governments are the ones that create the conditions for everyone to have a job.” José Mújica
All this cannot be done now because the government’s tax revenues will fall this year. ZERO growth means a significant drop in the government’s tax revenues. If López Obrador’s commitments are followed through, the current government will not even be able to begin to address its “Plan Mexico”, as it will completely lack the required funding.
Trump’s outbursts on tariffs do seriously affect Mexico. Investors will wait a year, two, or three to see what happens with Trump, with the government he leads, and the outcome of the trade war with China. All these conditions will seriously affect Mexico, probably more than the tariffs he imposes on us, because the investments necessary for Plan Mexico will not come.
In a context of crisis, Mexico is sending the wrong signals to the world. When it should invite investors into the country, it is scaring them away with measures such as the judiciary election that calls into question the rule of law in Mexico. If investors are frightened by a Trump who does not obey his judges, imagine what they think of Mexico, where there is a tradition of the government manipulating judicial decisions. The simple fact that a businessman who wants to establish himself in Mexico must first pass the National Palace’s litmus test symbolizes the misguided behavior of our system towards freedom of investment and capital flows. This “approval” is something that authoritarian regimes demand.
” Dear Sancho: I realize with sorrow how the palaces are occupied by scoundrels and the huts by wise men. I was never an advocate of kings, but worse are those who deceive the people with tricks and lies, promising what they know they will never deliver. This country, beloved Sancho, dethrones kings and crowns pirates, thinking that the king’s gold will be distributed among the people, without knowing that pirates only distribute it among pirates”. Moncho Borrajo, wrongly attributed to Miguel de Cervantes Saavedra.
Mexico needs a new language to emerge from the global crisis with any degree of success. It must open to the worldwide market and investment, not shut itself off in a futile protectionist sovereignty. It must liberalize investment in all strategic sectors of the economy, with sufficient regulation to benefit the nation’s tax revenues, generate well-paid jobs, and encourage the creation of many economies of scale at regional and national levels. It is not the time to bow down to our fears and phobias. It is time to transcend what we have been, to build a new country.
If we don’t do something bold about economic opening, we will continue begging for favors from the empire, as Ebrard does in Washington, D.C.
She will have to stop, cancel, or limit all the commitments made by López Obrador to this government. There is not enough money to cover these expenses and solve Mexico’s problems. The decision is obviously political and demands a lot of firmness and decisiveness from the President.
In these times of uncertainty and lack of clarity from so many actors, whoever can define what they want has a good chance of getting it. That subject may be Mexico.
@rpascoep
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