Why Mexico is on the Road to Serfdom – OpEd

By Sergio Martinez

Eighty years ago, Friedrich Hayek watched with fear as Western liberal democracies seemed to embrace the authoritarian tendencies that had given rise to Nazism in Germany.The Road to Serfdom(1944) he dedicated his work “to socialists of all parties,” warning that both left-wing socialism and national socialism were branches of the same tree. Hayek feared that England would repeat the history he had seen in Germany when he wrote:

“When one hears for the second time opinions or advocates measures that one first encountered twenty or twenty-five years ago, they take on new significance as symptoms of a certain trend. They suggest, if not the necessity, then at least the probability that developments will follow a similar course.“

Parallels in Spanish America

Hispanic America has seen countless manifestations of totalitarian governments, making it easy for people from the region like myself to sympathize with Hayek’s warnings. Since President Andrés Manuel López Obrador (AMLO) took office in Mexico in 2018, my Venezuelan friends have repeatedly warned about the authoritarian similarities between Obrador’s government and that of Chávez and Maduro. Obrador, a politician with strong socialist convictions, published a book in 2018 denouncing corruption as Mexico’s biggest problem. What seemed like an innocent statement masked a dangerous belief: for Obrador, corruption was synonymous with privatization and private property.

Economic failures and political success

Obrador’s government initially promised high economic growth; however, during his six-year term, Mexico’s GDP per capita growth barely budged, remaining close to zero. Despite this mediocre performance, his party won a landslide victory in the recent presidential election, with loyal ally Claudia Sheinbaum securing the presidency. Not only that, but Obrador and Sheinbaum’s party, Morena, won a legislative majority capable of pushing through far-reaching constitutional changes.

Their success lies in a strategy of increasing government transfers to the young and the elderly, effectively buying their electoral support. Politicians like Obrador thrive when a country’s economic culture is weak, where short-term benefits mask the long-term sacrifices required to fund these programs.

Threats to the judiciary

With a legislative majority in hand, one of Obrador’s last authoritarian acts was to propose a constitutional reform of the judiciary. During Obrador’s tenure, the Mexican judiciary blocked several government proposals, including a reform of the electricity sector that would benefit the state-owned utility,Comisión Federal de Electricidad(CFE) Despite widespread civil opposition, the Senate approved the reform on September 11.

This reform forces Mexicans to vote for hundreds of candidates for the judiciary selected by the executive branch, manipulating the process from the start. Former President Ernesto Zedillo criticized the reform, saying, “There will be judges and magistrates who do not obey the law, but the dominant political power.” The government will have the power to prosecute, censor or punish judges who challenge its interests.

The Future Under Sheinbaum

The reform would allow Mexico’s next president, Claudia Sheinbaum, to implement a wide range of laws that promote Obrador’s statist vision: greater control over the energy sector, greater centralization of political power, protectionist measures and tighter regulation of private activity. Obrador believes in the fallacies of economic policy that have historically led to impoverishment, such as import substitution, redistribution and wealth confiscation. The reforms risk undermining Mexico’s trade relations with the United States and Canada, as investors fear their investments will be poorly protected.

A return to economic isolationism?

Mexico depends on healthy trade relations with its neighbors to reap the benefits of specialization and exchange. But Obrador’s policies complicate these relations. As a Mexican, an economist, and a libertarian, I can’t help but be discouraged by the direction my country is heading. Collectivism is gaining ground, and the government has convinced millions of Mexicans that critics of its reformsenemies of the people.

Institutional setbacks

Since the 1990s, Mexico has made significant institutional efforts to open up to trade, denationalize businesses, protect property rights, and ensure a participatory democracy with stronger checks and balances. Central bank autonomy has protected the country from severe inflation, and international economic integration has improved living standards. However, the current administration has done more to exacerbate the country’s most pressing problems (i.e., criminal gang violence and a hyper-regulated labor market) than to solve them.

The institutional conditions necessary for Mexico’s economic growth and poverty reduction require a government that respects property rights and avoids arbitrary actions. With the recent judicial reform, Mexico appears to be going backwards, embracing the very policies that have long hampered its development.

My hope

I hope that the educational efforts we are making in organizations like FEE will alert the population to the dangers of a government that concentrates too much power. It is crucial that citizens recognize the risks and advocate policies that promote economic freedom. Mexico is on the verge of becoming a collectivist regime. But all will not be lost if there is enough courage in my fellow Mexican citizens to continue to fight for individual freedom.

• About the Author: Sergio Martínez is Content Editor at the Foundation for Economic Education. He has taught courses on economics and the history of economic thought.
• Source: This article was published by FEE