Why Mexico is heading towards serfdom

by Sergio Martinez

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

When you hear opinions expressed for the second time or measures advocated that you first encountered twenty or twenty-five years ago, they take on new meaning as symptoms of a clear trend. They suggest, if not the necessity, then at least the likelihood, that developments will follow a similar course.

Parallels in Spanish America

Latin America has experienced numerous manifestations of totalitarian rule, making it easy for people from the region like me to sympathize with Hayek’s warnings. Since President Andrés Manuel López Obrador (AMLO) came to power 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 beliefs, published a book in 2018 denouncing corruption as Mexico’s biggest problem. What seemed like an innocent explanation masked a dangerous belief: for Obrador, corruption was synonymous with privatization and private ownership.

Economic failure and political success

Obrador’s government initially promised high economic growth; yet Mexico’s per capita GDP growth has barely changed during his six years in office, remaining close to zero. Despite these mediocre performances, his party won a landslide victory in the recent presidential election, with Claudia Sheinbaum, a loyal ally, securing the presidency. Not only that, but Morena, Obrador and Sheinbaum’s party, has also secured a legislative majority capable of enacting deep constitutional changes.

Their success lies in a strategy to increase government transfers to the young and old, effectively buying their electoral support. Politicians like Obrador thrive when a country’s economic culture is weak, where short-term gains obscure 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 constitutional reform of the judiciary. During Obrador’s term, Mexico’s judiciary blocked several government proposals, including an electricity sector reform that sought to benefit the state-owned Comisión Federal de Electricidad (CFE). However, on September 11, despite widespread civil opposition, the Senate passed the reform.

This reform forces Mexicans to vote for hundreds of judiciary candidates 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 obey not the law, but the dominant political power.” The government will have the power to prosecute, censure or punish judges who defy its interests.

The future under Sheinbaum

With the reform, Mexico’s next president, Claudia Sheinbaum, will have the opportunity to put forward a wide range of laws that advance Obrador’s state vision: greater control over the energy sector, increased centralization of political power, protectionist measures and stricter regulation of private activities. . Obrador believes in the fallacies of economic policies that have historically led to impoverishment, such as import substitution, redistribution and wealth confiscation. The reforms threaten to strain Mexico’s trade ties 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. However, Obrador’s policies complicate these relationships. As a Mexican, economist and 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 reforms are enemies of the people.

Institutional setbacks

Since the 1990s, Mexico has made significant institutional efforts to open up to trade, denationalize companies, 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 government has done more to exacerbate, rather than solve, the country’s most pressing problems (i.e. criminal gang violence and a hyper-regulated labor market).

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 reform of the judicial system, Mexico appears to be moving backwards and embracing the very policies that have long hindered its development.

My hope

I hope that the educational efforts we do at organizations like FEE will warn the public about the dangers of a government that concentrates too much power. It is critical that citizens recognize the risks and advocate for 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 among my fellow Mexicans to continue fighting for individual freedom.

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