NINE |
Death of a Dream |
By 1982, Mexico’s empresarios and politicos, with the enthusiastic help of outsiders, had made a mess of the Mexican economy. They then proceeded to throw the baby out with the bathwater, tossing away a domestically oriented blueprint in order to resurrect Adam Smith’s old ideas, now packaged as mathematical axioms. Ronald Reagan, the Hollywood actor, and Margaret Thatcher, the fire-eating right-wing English prophet, had orchestrated its revival. These preachers bamboozled the public into believing in the sham of laissez-faire and free trade, that somehow struggling against one another and elbowing and shoving would create efficiency and progress. So died the remnants of the dream.
Under the revived gospel, technocrats replaced politicians at the rudder, basking in the glow of the national spotlight with the election of the colorless Miguel de la Madrid (1982–88). The technocrats, business majors from the University of Chicago, Harvard, and Stanford, quaffed the neoliberal nectar and hurried to woo the old sweetheart of the export economy, once again thought to be the tonic for Mexico’s ills.1 These graduates of elite American business schools had sat at the feet of the oracles who trotted out the hoary theories of David Ricardo, saying that a country does best by allowing the market, Adam Smith’s “invisible hand,” to determine its comparative advantage. Their Mexican disciples came to believe that every time the oracles spoke, something extraordinary would come out of their mouths.
Tragically for the peripheral world, this free market ideology collided with the facts of history. The United States, now the paragon of open markets, had from early on imposed high tariffs to bar textiles, steel, and other English goods, over time becoming the world’s minister of the gospel of protectionism. Not until after World War II, when the American economy had overwhelmed all others, did Washington become the patron saint of “free competition.” This new gospel had dire consequences for the peripheral world, encouraging one and all to cultivate salable crops as well as to dig out of the bowels of the earth coveted minerals, and so there arose a deadly competition for the markets of the West. As surpluses piled up, buyers paid less, resulting in a drop in the terms of trade for countries on the margin. The empresarios, who it seemed at first glance would be hit hardest by this return to the past, acquiesced, much like ladies of the night at a bordello when told by the madam to take to bed an especially unappetizing but wealthy client.
Economic growth, said the savants at the International Monetary Fund (IMF), to whom the technocrats paid allegiance, required a competitive and untrammeled free market, guided by the notorious “invisible hand.” Following this advice had foreseeable consequences: inviting wealthy and powerful transnational corporations into the Mexican home was tantamount to putting the fox in the henhouse. Mexico, so this thinking went, could not make it alone, but must look beyond its borders for allies. How to account for Mexico’s capitulation? An old Mexican saying—“de tal palo tal astilla” (a chip off the old block)—is a good place to start. This was Mexico, the descendent of four centuries of doing things in this same way, following an export formula that dated from the discovery of silver in the sixteenth century. To fall back on the wisdom of Samuel Ramos, in evidence was the Mexican sense of inferiority before North Americans and Europeans. This was also the nature of the classical liberalism that had been adopted wholeheartedly by the Mexican Liberals of the nineteenth century; in its renewed form it was essentially unchanged. More than likely, the empresarios who watched over industrial policy had come to believe that if they climbed into bed with American capitalists, big profits awaited them. That this behavior would destroy small and medium-sized industry mattered little; money in an alliance with foreigners superseded national unity. This decision cost Mexico dearly, because growth at a snail’s pace, if at all, ballooning trade imbalances, and worsening social conditions colored the neoliberal era.
What exactly was this liberalism? Webster’s Dictionary tell us that “neo” stands for a “revival or adaptation” of a system or formula employed earlier. This was a revival of nineteenth-century dogma, to which modern-day economists added new frills. The goal was to eliminate barriers to the free flow of capital across the globe, as well as to guarantee profits. The removal of those barriers, so goes this theory, allowed a country to concentrate on what it did best; Mexico needed to focus its efforts on mining, a commercial agriculture for export, and, to give one other example, the manufacture of cement. With profits from these sales, Mexico could then purchase what it needed and, with the surplus, build roads, enhance port facilities, and even build factories. One more reason given to pursue the neoliberal revival was the stagnant domestic and global economy of the 1970s, whereas the 1980s for all intents and purposes was a “lost decade” for Mexico. Yet judging by the economic performance of the major Western nations, as well as Japan, the 1950s and 1960s had been something of a golden age for capitalism.
An article of neoliberal faith held that exports, if they eclipsed the value of imports, pumped fuel into the engine of economic growth. Exports had to be diversified and, by whatever measures necessary, made to grow, even by lowering the price of Mexican petroleum below that of the Organization of Petroleum Exporting Countries (OPEC). As Amiya Kumar Bagchi points out, since most world trade originated as exports to and imports from capitalist countries, trade integrated the peripheral countries more fully into the economies of the advanced nations.2
But exports alone would not do the job; foreign investment was also needed, and the more the merrier.3 Mexico had to be made supremely attractive for foreign capitalists. It was like a bordello: attractive ladies entice paying customers. But the capitalists came to make money, so they invested in the industrialized zones of Mexico and polarized regional differences. Then, too, foreign money tended to generate debt and cause currency crises, mostly because of heavy borrowing by peripheral countries and the repatriation of profits. Direct foreign investment is a two-edged sword: it reduces the need for internal taxation but provides fewer government funds for social expenditures, and it becomes a drain on local resources through the repatriation of profits.
Neoliberalism also meant deregulation, putting the private sector at the helm, on the assumption that private ownership was some kind of magic elixir. It meant fighting inflation, no matter what the cost, holding back wages, and privatizing municipal services.4 These measures, to cite Bagchi, simply aped the techniques and methods of advanced capitalist nations.5 As the Mexican economist Victor L. Urquidi observed, they were “contrary to the country’s best interests”; they weakened “national sovereignty because the borrower sells out to the lender.”6 Neoliberalism came with cuts in welfare, education, and health care and eliminated food subsidies for the poor. Austerity, an old tenet, held that hungry creditors, among them Mexico, should curtail government spending as a cure-all for chronic inflation. When the World Bank perversely insisted that Mexico tighten its belt, it was, said Arturo Escobar, as “if the majority of its inhabitants had not known anything but hardship and self-discipline as a fundamental fact of their daily life.”7 Austerity and the market jeopardized small and medium-sized industries, which required protection for their survival and employed the largest number of industrial workers.
In 1983, the signing of the General Agreement on Tariffs and Trade (GATT) told the world that Mexico, pressured by Washington, had resurrected the export-led model.8 Mexico had unlocked its doors, and since the United States was the country’s chief provider, it would decide the fate of the Mexican economy. In 1983, nearly all imports were subject to duties; less than a decade later, the number of import duties had dropped to just under a tenth of their total value.
When the curtain fell on the Soviet Union, the stage was set for globalization, a system anchored in Ricardo’s geriatric doctrine of free trade. For Mexico, globalization was introduced via the North American Free Trade Agreement (NAFTA), a deal engineered by Carlos Salinas, president of Mexico (1988–94). Salinas was a technocrat who had been educated in the United States and who had never before held elective office; he dedicated himself to proselytizing emotionally and politically on behalf of the trade deal. A darling of American capitalists, Salinas, who learned his economics at the Massachusetts Institute of Technology, coveted Washington’s blessings. A pied piper of the traditional school of economics, he is remembered for his boast that Mexico had become a “first-world country.” NAFTA opened the gates to American multinational corporations and financial behemoths to Mexico. Dubbed “globalization” by economists, NAFTA eliminated trade barriers between Mexico and the United States and tied Mexico’s economy more firmly to that of its powerful neighbor. With GATT and then NAFTA, Mexico had some of the lowest tariff rates in the entire world. At the same time, NAFTA shut the gates to Mexican labor; capital could cross borders, but workers could not. NAFTA also blunted environmental legislation and severely hampered the government’s ability to regulate international corporations. With NAFTA, Salinas sought to ameliorate internal economic ills by expanding the foreign rather than the domestic market.9 For Mexico, globalization brought a limited integration into the global economy: only some sectors of its economy were integrated; the rest, the poorest and most backward, stayed out.
Slogans abounded: “free enterprise,” “private enterprise,” and “no state interference,” among others. All were sacred, and all were employed to justify the return to the past. The most popular was the ancient cry on behalf of “international competitiveness,” counted on to spur development. Countries had to be ready to compete in the international marketplace and, by implication, at home too. This was a ruthless world where big and powerful corporations with access to the president and cabinet officers ran roughshod over small fry, reaping government largesse beneficial to them. Foreign investment, so crucial for peripheral countries such as Mexico, it was proclaimed again and again, depended on the rate of profit for the investor; a high rate of return dictated a high rate of investment, money needed for home development. The state, no longer the role fixer, had merely to ensure the well-being of the capitalist order.
Sympathetic pundits, especially in the United States, heaped praise upon Mexico for one of the fastest and most “successful divestitures of public assets anywhere” in the world.10 The club of the rich nations hailed Mexico as a shining example of economic lessons learned. Salinas turned privatization into a holy crusade, selling off some of the country’s biggest paraestatales, among them public television, the telephone system, airlines, and banks. Over 80 percent were sold or dissolved.11 Under Salinas’s successor, Ernesto Zedillo (1992–2000), another U.S.-trained technocrat, even the national railway system, the pride of the Porfiristas, felt the axe. By the mid-1990s, Mexico, in order to finance its operations, was borrowing almost 20 billion dollars a year.12 Since its credit standing stood high in the financial capitals of the United States and Western Europe, loans and credit came easy. To woo foreigners, Salinas placed tesobonos on the stock exchange; these were highly speculative short-term bonds with high interest rates, redeemable at a moment’s notice. For a while, the borrowing paid off; between 1990 and 1993, some 91 billion dollars entered Mexico, one-fifth of the flow of money from core countries to those on the periphery.13 But much of it was speculative capital, ready to flee Mexico at the first sign of turbulence.
Meanwhile, monopolies, the age-old nemesis, survived. Open competition found no home in Mexico, despite calls from the World Bank, which believed monopolies put a brake on growth and hurt the consumer. But Mexican consumers, unlike their counterparts in other Western countries, neither complained nor took steps to organize themselves. Telephone fees, for instance, were among the highest in Latin America, but users simply paid them.14 Mexican industry, as always, was the story of monopolies, once again treated to old-style reverence, despite Article 28 of the Constitution, which had banned them. A handful of families in cahoots with foreign capitalists, reported the Los Angeles Times, controlled most of Mexico’s beverage sales, cement, and even flour for tortillas. The telephone service, sold off to one of the richest men in the world, became Telmex, a national monopoly controlling most of the country’s landline phone service as well as nearly three-fourths of the cell phone market. Televisa, a private company, controlled the nation’s television. Cementos Mexicanos, shielded by high tariffs, had more than 80 percent of the cement market, though Mexicans controlled only a fraction of its stocks. Grupo Vitro ran the glass industry, Grupo Visa produced much of the beer made in Mexico, and Grupo Maseca produced most of the corn flour and tortillas. Bimbo, a company owned by one man, controlled 90 percent of national bread sales. Free to dictate prices, these monopolies drove up the cost of nearly everything.15
This was the golden age of transnational corporations that established production facilities in Mexico in order to retain old markets and win new ones. A goodly share of international trade arose from movements of raw materials and goods between these firms and their subsidiaries.16 By 1996, Wal-Mart, the biggest of the big-box corporations, had scores of stores in Mexico, followed by Costco. Procter & Gamble and Anheuser-Busch were also doing business in Mexico, as was McDonald’s, its hamburgers available in every town of any size. These were joined by seemingly every pizza franchise operating north of the border as well as Kentucky Fried Chicken (“para chuparse los dedos”), while Nestlé, another giant, sold almost all Mexican powdered milk and Carnation sold an equal percentage of condensed milk. General Motors, Volkswagen, Chrysler, and Nissan accounted for 80 percent of exports. It was cheap to assemble autos in Mexico and then ship parts and autos by truck or rail to the biggest market in the world.17
Hailed as a savior, neoliberalism proved niggardly, and for some it was a global nightmare. For a while, the Mexican economy headed for better times, largely because of low inflation rates, partly as a response to low wages, but growth soon bogged down. For the first twenty years, growth rates hovered at 0.32 percent, the lowest of the twentieth century.18 Nor was Mexico’s experience unique: sister Latin American republics that hewed rigorously to the neoliberal dogma also felt a sharp drop in macroeconomic indicators. Private ownership did not give birth to greater efficiency, more competition, or a better life for ordinary Mexicans; private owners turned out to be no better than the old bureaucrats. With privatization, sixty-five thousand Mexicans lost their railroad jobs; when Altos Hornos, the huge steel foundry in Monterrey, shut down, nearly twelve thousand more were lost. Privatization cost four hundred thousand Mexicans their jobs. Nor were the new owners more responsive to the public. The service of Teléfonos de México, once run at a profit by the government, did not change one bit: on any given day countless consumers had no service.
Nor did free trade reduce poverty or diminish the gap between the poor and the rich. On the contrary, the poor lost nearly half of their purchasing power, and unemployment ran rampant in the cities and countryside. In Latin America, only Ecuador, Costa Rica, and Honduras had lower per-capita incomes. Poor families somehow stayed alive with an income of less than twenty-six pesos a day. To pour salt on the wound, even subsidies on tortillas were thrown onto the trash heap. Less money was spent on education, health, and welfare; earlier, 24 percent of public funds had gone to them; less than a decade later, only 9.5 percent. Mexico, Proceso reported, spent less funds on social welfare than did Zambia, Bolivia, and Colombia, which had smaller and weaker economies.19 To quote one facetious minister of hacienda, when asked about the state of the economy: “The economy is great, it is the people who are hurting.”
Change, too, had come to Mexican society. The population, now over 100 million, had exploded: by the end of the century, Mexico was the eleventh most populous country in the world. Three out of four Mexicans had become urbanites, millions of them in Mexico City, one of the largest cities in the world. Middle-class families of physicians, lawyers, merchants, and managers, dwelling largely in the more dynamic northern and central states, made up nearly a fifth of the population. Birth rates had fallen in the cities, but not in the countryside. Aging Mexicans were plentiful, but only a minority had either pensions or old-age insurance. Thousands of Mexicans, unable to find decent jobs at home, fled to the United States. Each year during the 1960s, some twenty-seven thousand Mexicans had left; by 1999, that number had multiplied tenfold.20 Unwilling to help their poor, Mexico’s elite had chosen to rely on Uncle Sam to give the poor jobs and to feed them, and equally important, to avoid a potential social explosion of the restless.
Amiya Kumar Bagchi, writing about the capitalist classes in the peripheral world, chastised them for being “weak.” They suffered from a “profound ignorance of their own economics,” and he spoke of their “almost hereditary state of dependence” on the advanced capitalist countries, evidencing a tunnel vision that led them to “look at the potential for development . . . partly with an eye on their masters.”21 For Mexico’s empresarios, that was surely true. For them, and for their allies in politics, nothing could be done without an influx of dollars, francs, or yen. So courting foreign capitalists became a religion of its own. To ensure that they came, policy was liberalized; no longer were foreigners barred from owning Mexican firms outright. In the 1990s, foreign investment, mostly American, exploded, rising to an average of nearly 11 billion dollars a year. The Mexican economy became increasingly dominated by United States capital, reverted to being more export-oriented, and became home to more and more transnational corporations, while the country’s exports were increasingly controlled by American firms.22 Earlier, most foreign investment had been in autos, petroleum, pharmaceuticals, and textiles; in the 1980s, investment moved to the export-processing industries, the maquiladoras, headquartered from Tijuana to Matamoros, responsible for the assembly of electronics, auto parts, clothing, furniture, sports equipment, and toys. Even in 1998, when foreigners owned only about 2.5 percent of Mexico’s industrial firms, they produced nearly a third of its industrial exports.23 While Mexico basked in the glow of the petroleum bonanza, Mexican auto assembly plants, geared largely to the U.S. market, had nevertheless sold some of their output in Mexico. When the economy collapsed, so did local sales. Not until ten years later did the industry return to its precollapse levels.24
These were turbulent decades. Beneath the glamour of the well-off, and although some claim it was a time of rising mobility, many Mexicans did not move up the economic ladder.25 The middle class enjoyed better days, but nearly a fifth of Mexicans lived in conditions of extreme poverty, barely making it from one day to the next, even rationing the tortillas they ate. Alongside glittering shopping malls, bulging with upscale boutiques, were moats of open sewers and the putrid stench of rotting carcasses of dogs and cats. The rich, for all that, did well for themselves; they too had their problems, but of a different type altogether. During economic downturns, empresarios had rushed to sell off enterprises that had gone belly up: telecommunications, textiles, tourist havens, and hotels among others. The big empresarios, nonetheless, survived, joined together in Coparmex, Concanaco, and the Cámara Nacional de la Industria de la Transformación.
Mexico, whatever the pundits of neoliberalism might allege, had one of the most lopsided distributions of income in the entire world, an unapologetic barrier between the blessed and the damned. Everything, apparently, favored the better-off, even school scholarships: the top 10 percent of society monopolized most of them. The tax structure was similar: the less favored carried the brunt of the fiscal burden; wage and salary workers, along with small shopkeepers, paid 62 percent of national taxes, while empresarios just 38 percent. To make up for tribute not collected, in 1980 the Congress passed the IVA, a regressive sales tax that included food and medicine. Everyone, poor and rich, paid it, but its weight fell on the backs of the less well-off.26 No one, however, enforced the collection of the income tax; between 1921, when it was adopted, and 1977, only two persons had been jailed as tax evaders.27
Race, skin color, and physical profile rounded out this picture. Racial bigotry, as old as colonial times, reinforced a social and economic hierarchy: those with lighter skin who did not look “Indian” fared better.28 A shameful correlation existed between class and color; the middle class, as expected, skewed to the lighter end of the racial spectrum, and the rich, most often than not, were white as white can be.29 The psychiatrist Santiago Ramírez asserts that mestizos and criollo types equated Indians with weakness and passivity. I recall once having breakfast with Miguel de la Madrid and telling him that I thought it shameful that television anchors and reporters, as well as soap opera actors, were almost entirely fair and Spanish looking. He thought so too and promised to speak to Emilio Azcárraga, Televisa’s owner, but since nothing has changed, I surmise that De la Madrid either failed to keep his word or that Azcárraga ignored his advice. In his memoir, Miguel de la Madrid, himself fair of skin, had this to say about the sorry plight of the poor in the heavily Indian states of southern Mexico: “Most likely [their] chronic underdevelopment” can be traced to “their racial composition.” The population of Indian descent, he believed, had held back mestizaje, the blending of the Indian (the inferior race) and the Spaniard (the advanced race) and, by implication, progress.30 Count Gobineau could not have said it better.
Where did the internal market fit into all of this? Not at the top of Mexico’s priorities, especially if we take into account the buying power of workers. Between 1939, the last of the Cardenista years, and 1955, real wages had fallen, but not dramatically, but between 1982 and 1987, they plummeted.31 Low wages hampered the growth of an internal market, although exports were spurred by lower production costs. By the year 2000, one-tenth of the labor force earned less than the minimum wage. Some estimates placed 40 percent of the working class in the “informal sector,” the self-employed who earned a subsistence living bereft of benefits.32 Less than a fifth of labor was unionized, but as Octavio Paz noted, unions, nearly always at the beck and call of Partido Revolucionario Institucional (PRI) officials, were but one more example of an institutional structure in which “form everywhere masquerades as substance.”
Urban Mexico, moreover, had higher indexes of absolute poverty, and unlike earlier times, this was more so than the countryside. Campesinos had greater relative poverty, but more of the poor resided in cities. This rise in poverty was primarily urban. Women, in particular, felt the brunt of the rising poverty of the 1980s, the “lost decade,” when neoliberal panaceas took hold.33 More and more women went to work, nearly always in low-paying, unskilled jobs—if they could find them—to feed and clothe their children and not infrequently their own fathers and mothers. The employment of women had grown rapidly, but their wages had not; most earned less than men for doing the same job. They were also the first to be let go. The drive to export and “compete” became a drive to lower wages, for both men and women. In the poorest households, the need to buttress the man’s labor fell on women, though children and teenagers also had to become wage earners. Households headed by women, perhaps as many as 5 million of them, were the most vulnerable, and so the chance of permanent poverty increased. In these homes, especially those headed by a woman, one tended to find undernourished children and higher levels of hunger. The more poverty, the higher the level of violence; women, whether wives or girlfriends, were the usual victims.34 In some states, women had become the backbone of the subsistence economy because their menfolk had gone off to work in the United States.35
Agricultural policy, although not new, hammered more nails into the internal market’s coffin. Under Salinas, changes in Article 27 made possible the sale of ejidos as well as the private ownership of as many as six thousand acres. Yet the largest percentage of the country’s workers depended on agriculture for their livelihood. As Rodolfo Stavenhagen, a leading agronomist, said, instead of making campesinos the centerfold of their blueprint, the technocrats set out to favor a small elite of big landlords, to channel private investment into a commercially profitable agriculture.36 Next came a dependence on imported corn and beans.37 Mexico, once self-sufficient, had to import them and at the same time become the best customer of American dairy products. Included in this scheme was a cattle industry for export but also to supply meat for the tables of well-off Mexicans, prone to eating steaks, prime ribs, and pork. Yet over a third of the poor never ate meat.38
These changes were not entirely new; they had been on the drafting table since the days of Miguel Alemán, but they exacerbated the plight of campesinos. Denied federal aid, and faced with the advent of NAFTA, which opened the gates to imports of cheap corn and beans, campesinos, unable to compete, abandoned their plots to become sharecroppers or wage laborers. An untold number of villages and small towns, inhabited mainly by old men, women, and children, had to make do on money sent from the United States by the menfolk who had fled there. Armchair critics, who cannot tell the difference between a plow and a harrow, delight in putting the blame for this misfortune on the backs of campesinos. That is nonsense. As Lázaro Cárdenas knew, campesinos, given technical help, access to water, fertilizers, a bit of credit, and outlets to markets, turn out to be highly productive farmers. Until 1969, with less than a fifth of the federal aid distributed nationwide, campesinos had produced 38 percent of the Republic’s harvests.39 That was forgotten by Salinas and his technocrats. In the Laguna, where Cárdenas broke up the cotton haciendas, alfalfa and feed crops for the dairy industry now covered much of the land. Ejidos had become real estate developments, land for assembly plants, or golf courses. Many of the families who had lived off the cultivation and sale of cotton now labored in the assembly plants.
In the judgment of the sociologist Armando Bartra, the plight of corn under NAFTA was worse than was readily apparent. Bartra cites an old Mexican saying: “Sin maíz no hay país” (Without corn there is no country). Corn is culture; corn is identity. The traditional corn milpa of the campesino was abandoned to its fate, and thus the food sovereignty of Mexico was turned over to foreign transnationals, a move that was out of touch with native needs. Imported transgenic corn would contaminate Mexico’s native varieties, to the ultimate harm of the country’s culture. According to Bartra, “It appears that policy makers think it makes more sense to export Mexicans and import food than to support Mexicans who grow it.” Why jettison the native corn of campesinos?” he asks. Beyond simple economic dogma, Bartra asserts, lies a racial prejudice. The welfare of native corn is cast aside because Mexican burgueses look down on the languages, cultures, and food of Mexico’s pre-Columbian inhabitants. Only when a rebellion erupts do the rich and powerful share a concern for the hunger of the Indian, identified always with corn.
Salinas and his neoliberal cohorts, to the thunderous applause of Washington and the Mexican burgueses, were sailing along with the wind at their backs until January 1, 1994, when hundreds of lightly armed Indian campesinos captured San Cristóbal de las Casas, a small city, and three adjacent towns in the state of Chiapas. The uprising occurred with the signing of NAFTA that, along with the Salinistas’ emasculation of Article 27, spelled disaster for the Indian. In Chiapas, 1 million Indians, the majority of the population, toiled on coffee plantations and cattle ranches, their trials and tribulations depicted in the novels of Rosario Castellanos, with hardly anyone to turn to but the Virgin of Guadalupe. Until a few years ago, it was said, Indians had to get off the sidewalks to allow criollos and mestizos to pass by. A poor state, Chiapas was nevertheless rich in natural resources. Its subsoil held vast quantities of petroleum and much of Mexico’s drinkable water reserve, and the land sheltered forests, nurtured corn, and gave life to coffee trees. The state also produced over half of the country’s hydroelectric power, but it ranked at the bottom of the totem pole in education. Corn flour, tortillas, and wood furniture constituted 40 percent of its industry.
The rebels demanded the overthrow of the Salinas regime. “We have nothing to lose, absolutely nothing,” ran their communiqué, “no decent roof over our heads, no land, no work, poor health, no education, no right to chose our leaders freely . . . no independence from foreign interests, and no justice for ourselves and our children.”40 Bishop Samuel Ruiz, head of the local diocese and one of a handful of church prelates to take up the cause of the Indians, explained to an incredulous nation that the uprising “was caused by a society structured in such a way that the level of poverty . . . brings about an almost suicidal situation.” How true! The per capita income of Indian campesinos stood at approximately 230 dollars a year—just over 19 dollars a month. In Chiapas, Mexico’s leading coffee producer, some 60 percent of the farmers were Indians, but big landowners and rancheros monopolized the best lands, paid their workers poorly, and, with the cooperation of the PRI, ran local politics and corrupted justice. As the Salinistas, avid apostles of deregulation, dismantled safeguards and international coffee prices unexpectedly tumbled, the Indians rebelled. With the Chiapas uprising, the tattered remnants of miracles and boasts of first-world status by Salinas and his technocrats faded away. Salinas sent the army to quell the rebellion; the soldiers, mostly Indians themselves, killed nearly 150 of their compatriots.41
All the same, perennial headaches did not vanish. Despite a drop in the value of the peso, imports skyrocketed, but the value of exports rose by just 8 percent, and half of that from a temporary rise in oil prices. At the end of 1989, the trade deficit stood at 3.5 billion dollars, the highest it had been since 1981. For nearly a decade, Mexico’s internal market had either stagnated or shrunk. At the same time, Western nations had erected barriers to shield their economies while, concomitantly, the peripheral world competed for a slice of the same pie. This led to a glutted world market and the lowest commodity prices in half a century.
Worse still, the bogeyman of perennial debt displayed prodigious staying power. The debt had not shrunk but, to the contrary, had ballooned, increased by the need to cover payments on interest and capital borrowed, thus serving as a self-perpetuating mechanism of poverty and a barrier to development. The rescue package of 1982 merely postponed Mexico’s fall from grace. Debt renegotiations, for the same reason, became the watchword, and new agreements were signed in 1983, 1984, and 1985. Between 1981 and 1991, Mexico received thirteen structural and sectoral adjustment loans from the World Bank and endorsed six agreements with the IMF, all tied to demands to embrace free trade and open doors to foreign investors.42 The debt stood at 102 billion dollars, and yearly payments ran from 12 billion to 16 billion dollars, down from 20 billion during the petroleum era. Mexico spent over half of its national budget to cover the interest. To no one’s astonishment in the fall of 1988, Mexico welcomed yet another 3.5 billion dollars from Washington, earmarked to pay interest on bank loans. At the behest of the IMF, spending on social services, already among the lowest in Latin America, felt the knife again. The goal was to right Mexico’s balance of payments and reduce inflation. As the value of the peso fell, the rich sent their money out of Mexico, worsening its payment deficit. No less real were the skewed prices for food and clothing.
The blunder of 1994–95 dwarfed the earlier one. As the New York Times reported, one of the favorite Latin American success stories had been about a “closed economy thrown open by technocrats trained in the Ivy League, with investments pouring in, the inflation circus run out of town, and democracy taking root.”43 That fairy tale aside, the financial debacle of the 1990s, perhaps the biggest in the history of Latin America, occurred when real economic growth was a negative 6 percent, the worst since the Great Depression. News of the collapse broke in December, just as Ernesto Zedillo, picked by Salinas to succeed him, devalued the peso when he found his country bankrupt. The “peso crisis” shook Wall Street’s faith “in Mexico’s transition from a debt-ridden third world country to a prosperous free market economy.” However, investors had already started to abandon the sinking ship. As this occurred, Mexico’s store of foreign reserves shrank. Yet stories of the overvalued peso were hardly news; economists had been warning that Mexico’s trade deficit would eventually compel a peso devaluation. Mexico had required, as the New York Times reported, “continuous injections of foreign money” (“tens of billions” of dollars). The money serviced the ballooning foreign debt and paid for the imports of the rich. Salinas, who thought of himself as something of an economist, had scoffed at worries of Mexico’s financial health, but he had neglected to explain that the bulk of investments coming into Mexico came from speculators gambling on the Mexican stock market.44 One of the worst decisions made by Salinas and his technocrats had been to offer foreign speculators, always on the lookout for easy profits, to invest in Mexico with tesobonos, short-term high-yield treasury notes. When the economic bubble burst in 1994 and speculators took their money out of Mexico, their appetite for easy profits from purely speculative investments turned the stock, currency, and real estate markets upside down, bringing on the Mexico peso crisis, as well as its Asian counterpart. Salinas’s naiveté cost Mexico dearly. The peso’s value dropped by half, interest rates went through the roof, and inflation jumped sky high. Bankruptcy weighed upon the nation like the plagues of ancient times. Countless small businesses closed their doors, and the jobless rolls nearly doubled. Hit hard by the peso’s fall from grace was the middle class, its numbers decimated and its median income dropping by a whopping 40 percent. The debacle threatened the pocketbooks of American speculators and lenders, among them banks, mutual funds, and individuals who had purchased Mexican tesobonos.
Fearful that the crisis might spread and undermine the newly signed NAFTA, for which Americans had lobbied heavily, Wall Street and Washington had the IMF lend Mexico 50 billion dollars, 20 billion to stabilize the peso and put off a Mexican default.45 It was essentially a bailout of American banks, which had lent billions to Mexico. Mexico had to hock its oil revenues, deposit them until the loan was paid off in the Federal Reserve of the United States, and allow American bankers to buy Mexican banks. And so petroleum, that national symbol of Mexican sovereignty, ended up in foreign hands. Once again, like a naughty child caught with its hands in the cookie jar, Mexico had to swear to cut out “wasteful public spending” and bless austerity. So ended the Salinas regime’s dance with destiny.46
Zedillo, the last of the technocrats, not only accepted the loan but paid it off in the wink of an eye. He did this by slashing public spending on education, scientific and technical schools, and health. The burden of paying off the “rescue package” fell upon the shoulders of everyday Mexicans. Zedillo, however, behaved differently with the bankers, also caught up in the collapse of the economy. Previously nationalized by José López Portillo, the banks had been returned by Salinas to their former owners, who had foolishly lent money to their executives, stockholders, and to brothers, sisters, cousins, and friends and had doctored their books. Evidence surfaced of insider trading, self-lending by the bankers, and crony capitalism. Some 8 billion dollars of the so-called rescue package went to pay off loans that were highly irregular or just plain illegal. When the economy collapsed, so did the banks. Without consulting Congress, Zedillo bailed them out, using public funds, leaving Mexican taxpayers to foot the bill of 71 billion dollars. The bankers and speculators reaped a whirlwind of profits. By the end of the century, all but one bank had been sold to foreigner bankers, who used their expertise to market credit cards and auto loans, but proved niggardly with small businesses, the country’s chief employers.47
This experience makes clear that peripheral states are rendered powerless by ensnaring themselves in debt adjustments and privatization schemes. Whatever financial clout they may have had goes out the window because of their indebtedness. With rising debts and depleted revenues, these countries have to turn, like beggars, to the World Bank, the IMF, or other satraps. Inevitably, they become trapped by the terms imposed by the lenders. By 1985, such was the condition of Mexico, one of the world’s biggest debtors.
In 1992, Roger Bartra published La jaula de la melancolía: identidad y metamorfosis en el carácter del mexicano, an examination of Mexican thought and culture. Bartra suggested that Mexicans, in their efforts to fit themselves into Western culture, were undergoing a traumatic passage. But it had to be made. The colonial years, independence, and the Revolution had only partially integrated Mexico. It was time to get beyond nationalistic nonsense in order to forge an identity based on multicultural norms. This interpretation essentially reflected that of urban Mexicans, particularly the better-off, the well traveled and educated. But Bartra, others could reply, suffered from what they described as the adulation of intellectuals of an underdeveloped country for the United States and Western Europe. Because this love affair distorted their perspectives, it became virtually impossible for them to come up with adequate answers to questions raised by their own country. This had not been so with early European intellectuals, who were unable to imitate more advanced countries. More likely, too, Bartra’s views, whether consciously or not, reflected the bigotry of a society that prized blue-eyed güeritos (blonds). Intellectuals may speak proudly of pre-Columbians, but they see contemporary Indians as a stone around the neck of modern Mexico.
The opinion of Bartra and his allies, unsettling echoes of the past, clashed with the duality of Mexico, one living in the present, and the other, in many ways, part of the past. That duality should have reminded them that culture and modes of thought change ever so slowly. How different, after all, were Bartra’s conclusions from those of Francisco Bulnes and other Porfiristas? This rush to endorse the idea of a Mexico unrelated to its past seduced a host of writers, among them Carlos Fuentes, who, in the La muerte de Artemio Cruz, had laid bare the tragedy of the Revolution. Yet he came to praise the “economic reforms” of Carlos Salinas, who in his view had stabilized the economy, controlled inflation, set the state free from bloated responsibilities, and unlocked to world trade a formerly closed economy.48 These intellectuals forgot that no newspaper in Mexico sold more than a hundred thousand copies, no weekly political journal more than eight thousand copies, and no monthly cultural magazine had twenty thousand readers.
Not all Mexican intellectuals worshiped at the neoliberal shrine. Critics had harsh words to say about current trends. Carlos Monsiváis reminded Mexicans that millions of their children still dropped out of school, that their parents viewed reading negatively, perhaps because of a Catholic belief that it corrupted the soul or that college-educated men and women took advantage of the poor. As long as poverty persisted, warned Monsiváis, more and more children would drop out of school. David Huerta, known as Mexico’s Pablo Neruda, was a leftist who wrote with candor; his poetry of hope, battle, and despair exposed the brutality of capitalism. Elena Poniatowska, a writer and novelist, published a scathing account of the De la Madrid regime’s callousness during the Mexico City earthquake of 1986, when the president and his aides did little to ameliorate suffering.
A barometer of these days was the Mexican film industry; its golden age had become history. No longer the beneficiaries of government largesse, directors and producers were left to fend for themselves and to scrounge for funds. The beloved dream of José Vasconcelos, secretary of public education in the 1920s, that the state must be a patron of the arts was tossed into the ashcan. The effects were catastrophic, especially because no tradition of private funding existed in Mexico. According to the country’s Film Institute, once a hundred films were made yearly, but then just twenty-five. Most of the films that were made were of poor quality and dealt with sex, violence, and vulgarity. Critics said filmmakers lacked the money to make good films and decent movie houses to show them. Nor could Mexican filmmakers compete with Hollywood; they were the victims of changing tastes and government censorship.
Yet here and there, against the tide of mediocrity, filmmakers turned out remarkable dramas. One of them was Alejandro González’s Amores perros, a story of a violent contemporary Mexico, which was nominated for a foreign-language Oscar. Guillermo del Toro made The Devil’s Backbone, a horror story set against the drama of the Spanish Civil War, while Salvador Carrasco, in The Other Conquest, probed the tragedy of the Spanish conquest of ancient Tenochtitlán. La Ley de Herodes, a satire risking the ire of the government officials, takes place in a small village and explores the corruption of the PRI. Como agua para chocolate, produced by Alfonso Arau and based on the novel of the same name by his wife, Laura Esquivel, is set against the backdrop of the Revolution of 1910. Tina, the youngest of three daughters, is required by tradition to forgo marriage in order to care for her widowed, cold-hearted mother. Her lover, who wants to stay near her, agrees to marry the older sister in order to remain near the woman he loves. The title refers to that moment when water reaches the perfect temperature for melting chocolate. Danzón, a film by María Novaro, is a musical romance about the Caribbean-Mexican ballroom step and was one of the best women’s films of 1991. The subject, played by the actress-politician María Rojo, is a woman trying to find herself. In El crimen del Padre Amaro, a young priest finds himself in a corrupt church bureaucracy that collaborates with local drug lords who rob villagers of their lands. Priests who dissent risk excommunication. Father Amaro, once a priest on a holy mission, ends up the portrait of a corrupt individual who sells himself so as to keep his job.