Obama: A lot of Attention

The message regarding Barack Obama’s State of the Union address before Congress this past Jan. 27 is a clear warning for Mexico. The government of Felipe Calderon cannot maintain the same position of passivity while faced with the consequences of the economic crisis and the new conditions that will govern henceforth, if the proposed plan will succeed.

If the dependence of the Mexican economy in relation to the United States is an irrefutable fact and widely accepted by all, then it would be necessary to take it much more seriously and to be active in its function. Whether or not the Mexican economy grows or doesn’t, is not a matter of fate. It is an eminently practical question.

That pragmatic perspective cannot be escaped now and it is necessary to take note of Obama’s warning. Things are not going to be the same. But on the same day of Obama’s address, the governor of the Bank of Mexico presented the report regarding the inflation from October to December of 2009 and the monetary program for 2010.

The analysis and the perspective that it offered are sustained in an irreparable orthodoxy, the same that has marked the character of the political economy, especially in the setting of the prevailing crisis.

It starts with conventional wisdom that is deeply questionable. It puts a lot of stock in the usual indicators and has the same destructive vision of dependence on the U.S. There is heavy reliance that the situation in the U.S. will be resolved and growth will be generated, though be it little.

Given the great influence of governor Carstens, it is probable that the same occurs in the departments of the treasury and economy; there is no evidence to the contrary.

The politics, which is what it’s about, are not static. This crisis is different from what our officials are accustomed to; its repercussions in the formality of public affairs and in the way of thinking are greater than that which is yet realized. They are behind.

Obama has strong political pressure and was fully aware of it upon accepting the poor public image of his administration. Therefore, he offered a plan, pragmatic enough for Congress (which he also condemned for its ineffectiveness).

First and foremost, the emphasis is on employment. The loss of jobs has been vast and still has not come to an end. In order to recover them, he alluded to the effects the stimulus plan has had and emphasized its fundamental position in 2010.

He said that the true driving force of job creation will be American businesses, with emphasis on the small businesses. The precedence for jobs for Americans seems that it will not just be a topic of discussion. The reality is that there is no other choice, be it for conviction or convenience.

He completely abandons the idea that the job market will adjust automatically because of variations in costs and the setting of open foreign competition. Thus, he proposes a version of protectionism that does not stay hidden and that complements the promotion of exports. He set the goal of doubling them in the next five years with a National Export Initiative by assisting farmers and small businesses.

Obama wants to promote a state that intervenes in a direct manner, mobilizing financial resources in order to aid community banks that lend to small businesses in order to remove them from credit restrictions of large banks. Moreover, they will grant them fiscal benefits and they will eliminate the taxes on capital gains.

He wants to export products, not jobs. This is Ross Perot’s old stance during the time when the NAFTA affair was initiated. He spoke of actively participating in establishing commercial agreements but imposed regulations in the framework of the Doha Round and the WTO. It signaled the reinforcement of exchange relations with Korea, Panama and Colombia. All of this is more competition for Mexico.

The model of timid growth, imposed halfway through the 1990s, is distorted, and with the Mexican economy’s great inequality, is already worn out. This crisis is going to finish it off. It will be more difficult to maintain the export of workers to the United States, which was the valve of social escape. It will be more difficult to export factories to that market; competition will be more acute.

Pragmatically, it is necessary to: remove NAFTA’s accreditation and to make the most of all the advantages with clear pacts and requirements; align the domestic economic dynamic with Obama’s proposed adjustments and find other complementary alternatives; remove the central bank’s monetary orthodoxy from within and redefine fiscal politics; promote economic activity with clear approaches and effective measures to produce, finance and employ the people. All of this is referred to as creating wealth and creating it in an obsessive manner.

That means: to turn government stagnation around and to expel that vision that fulfilled what Angel Gurría predicted after the Salinista reforms, when he said they will last for 20 years. He was right, but the reforms of today cannot continue to plunge the country into another two decades of stagnation. We are not in Kansas anymore!