Out of Control Policy Blog

Whatís Mexico to do?

Amid all the hubbub about immigration there are many calls for Mexico to right itself so that fewer folks will want to flee the nation. But when talk turns to what Mexico should actually do, the discussion often gets bogged down in vague references to "fighting corruption."

How nice it is to when someone points to specifics. Jorge G. CastaÒeda, a former Mexican official, points to various obstacles that stand in the way of Mexico's success.

Take monopolies:

    The oil (Pemex) and electric power (Federal Electricity Commission) firms owned by the state are untainted by competition; the private virtual monopolies in telecommunications (Telmex), television networks (Televisa), cement (Cemex), bread and tortilla manufacturing (Bimbo and Maseca, respectively) and banking (Banamex/Citigroup and Bancomer/Banco de Bilbao) face only tepid competition at home, thanks to their cozy relationship with the state. Prices, supply, service and quality suffer as a consequence, and today these monopolies are stronger than ever.

Another obstacle:

    the unions that have controlled the Mexican labor movement since the 1930s. They were granted immense leverage in workplaces, tremendous resources and political power. The power of such organizations as the teachers union (the largest in Latin America), the oil workers union (the richest in Latin America) and the Social Security employees union (that has thwarted any attempt at pension or health reform for years) remains largely unchecked to this day. These unions obtained all their perks in exchange for 70 years of support for the PRI. They retain those perks, though they no longer owe any support to the government.

I'd also put land reform near the top of the to-do list.

More here.

Related: How Mexico scores on Heritage's Index of Economic Freedom

Ted Balaker is Producer


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