Mexico’s Election: It’s the Economy Stupid

If ever there were an election pre-ordained as a result of a country’s economic performance, it would be that of Mexico. The ruling PAN party was destined to lose because it presided over a profound economic failure for more than 11 years. Almost any government in the world would have lost under such circumstances.

While some have noticed that the economy has played a role in the election, almost no commentators seem to appreciate the depth of Mexico’s economic failure. Let’s start with the basics: Since 2000, when the PAN was first elected, income per person in Mexico has grown by just 0.9 percent annually. This is terrible for a developing country, and less than half the rate of growth of the Latin American region during this period – which was not stellar. The numbers are even worse if we just look at per-capita growth since the 2006 election: Mexico finishes dead last in Latin America.

But it is even deeper than that. Mexico, like the region as a whole, suffered a record-breaking economic growth collapse in the two decades prior to the election of the PAN (1980-2000). If the Mexican economy had simply continued to grow at the rate that it did prior to the 1980s, the country would have European living standards today. There would be relatively few Mexicans seeking work north of the border. And there is nothing implausible about this possibility: Mexico’s growth prior to 1980 was very good, but it was not at the level of China during the last 30 years, or anything record-breaking.

It is not fashionable among the punditry these days to mention that Mexico’s economy has performed so abysmally for more than 30 years. That is partly because this is also the period in which Mexico drastically shifted its economic policies to what in Latin America is called “neoliberalism”: abandoning state-led industrial and development policies, tightening monetary and fiscal policies, liberalization of foreign investment and trade. The 1994 NAFTA treaty was just one step in this transformation, but Washington had a big “invisible hand” in the process since the 1980s, both directly and through institutions such as the IMF and World Bank. And today, 80 percent of Mexico’s non-oil exports go to the United States.

Of course, not all of these policies were mistaken – but the overall result is an unqualified failure. The same thing happened in the region from 1980 to 2000, where per capita GDP grew by 6 percent, as compared with 92 percent over the prior two decades.

The vast majority of the region responded to the long-term economic failure of the 1980s and 90s – the worst such performance in more than a century – by electing left governments: Argentina, Brazil, Venezuela, Bolivia, Ecuador, Paraguay, Uruguay, Nicaragua, El Salvador and others. These candidates and parties ran explicitly against what they called “neoliberalism.” Why then, did Mexico move to the right?

Part of the answer may be found in Mexico’s electoral and especially media institutions. The left PRD candidate is widely seen to have had the 1988 election stolen from him. The 2006 election was too close to call: PAN’s Calderón was declared the winner by 0.58 percent, but the electoral authorities did a recount of 9 percent of the votes and never released the results; a comparison of the recounted precinct results with the original totals indicated that Calderón’s margin disappeared.

More importantly, the monopolized TV media was found to have played a significant role in the 2006 elections, more than enough to prevent the PRD candidate Andrés Manuel López Obrador from winning. With 95 percent of TV broadcasts controlled by just two media outlets with a strong and documented bias, a left-of-center candidate really has little chance. Barack Obama would not be President of the U.S. today if he had faced a similar media in 2008, because most Americans would believe that he was a Muslim who was not born here.

More than half of all Mexicans are living below the official poverty line, but the new government has little to offer the poor majority or even to produce the long-term growth that Mexico once had. Sadly, Mexico’s economic progress will probably be quite limited until there is a more level playing field for elections.