It’s six a.m., I am sipping my first cup of coffee on the small balcony near the tall coconut tree. It’s still dark but I can see a short stocky woman sweeping the ground of the open space in front of the hotel next door. Right away, I detect that something is wrong in the picture although I am not fully awake. The broom the woman is using is too short, its straw end is frayed. She is bending over more than should be necessary; some of her energy is being misspent because she pushes harder than she would have to with a newer broom. No big deal! Except…
Mexico is the kind of country where the dentist kisses you when you leave. (This particular dentist is a pretty willowy blonde.) Perhaps, Mexico is the only country of its kind. I don’t know; I have not been everywhere. No American dentist has ever attempted this maneuver on me, or on my attractive wife either. I have avoided French dentists since 1960. A dentist in Morocco once gave me a root canal with no anesthesia whatsoever. I forgave him long ago but I wouldn’t let him kiss me if you paid me. The universal amiability of Mexicans might color everything I say below. You are warned.
I just spent three weeks in Mexico, in the pleasant resort city of Puerto Vallarta. With a population of 250,000, it does not feel much larger than Santa Cruz, California with its population 4/5 smaller. Still it’s large enough to be considered a real place, not a boutique resort. I was staying in a small hotel on the beach, of course, which limits observation. But my wife and I did most of our own cooking and therefore, we had to shop often in an ordinary supermarket located in an ordinary commercial center. This is important as a kind of regular and forced immersion into normal local life. We did not have a car so, we took taxis several times a day. This is important too because cab drivers everywhere are a rich fount of information if you manage to steer them from small talk. Yes, I know Spanish, and not only in my imagination as described in my masterful “Foreign Languages and Self-Delusion in America” (if I say so myself) but for real. I understand everything that is said to me in that language; I am able to eavesdrop on conversations between strangers; I can read the newspaper; I listen to television news without effort.* In brief, I was in a reasonable good position to observe, interpret and ask questions.
This stay in Mexico was like a refresher course on a topic that occupied me professionally for about twenty-five years: Why some countries are poorer than others. (When you begin thinking seriously about this simple question, you quickly discover that the plausible answers are numerous and complex.) I used to do it in a rigorous, quantitatively based manner, estimating statistical models and the like. This time, I am indulging myself frankly in pop-sociology. It does not imply any rejection of my past endeavors.
Comparisons between the way things are done in Mexico and in the US come naturally because the surface similarities between there and here are obvious. Mexicans want what we want and they work openly for it and, in time, they get it. Material progress usually takes a familiar American form, from shopping malls to cineplexes, to the Discovery Channel…, you name it.
Mexico’s GDP per capita is less than one third of the American equivalent (about USD 16,500 vs 52,000, Purchasing Power Parity, a formulation which makes the two figures comparable) Mexico is a poor country but not one of the poorest by a long shot. Why would it be poor?
Mexicans are not a short on entrepreneurial spirit. Every nook and cranny shelters a business of sorts. I enter a tiny corner shop in a non-touristy part of town selling I don’t know what. A toddler sleeps on a blanket on the cold floor. (It’s hot.) Against one wall, three cramped stalls offer Internet access. The owner, the toddler’s father, tells me he is opened from 7 am to 10 pm. He charges me forty cents to recharge my cellphone battery, not an especially low price considering his cost and the little labor involved. There are restaurants everywhere, also far from the tourist tracks. Some have only four tables. Most are still empty at 8 pm. Two social mechanisms seem at work. One is simple mimicry: The guy across the street has one. What does he know about birria that I don’t know? The other is a version of the Chinese eating place economic rationale: If people don’t come to dine here, my family can always eat the food; I have many children anyway. Nothing is going to go to waste. The economic risk is small. It can’t hurt. Perhaps, rents are low because there is not much alternative use for the relevant spaces.
Food is everywhere anyway. If someone goes hungry in Mexico, it’s somewhere else. Yet, food prices are low but not very low. Rice is cheap, avocados are cheap; apples are the same price as in California perhaps because they come from afar. This is an undeveloped capitalism, with poor infrastructures; moving foodstuff is still expensive. A cup of reasonable good coffee costs USD 1,40; that’s probably more than in an Arkansas diner. That’s what it means to be poor: Your money does not reach very far.
Three facts of possible economic relevance strike you quickly; two are concrete and easy to verify; the third is intangible, or kind of unsubstantial, but that does not make it irrelevant. First, nearly every shop is overstaffed by a significant factor. That’s easy to see when people perform identical jobs with identical technologies as in the US. There are twice or more salesladies in the clothing area of a department store as there would be in KMart, the perennially failing chain. In the butcher section of the supermarket, employees are waiting for you. That’s nice but it’s probably superfluous. I could wait two minutes instead, so could Mexican housewives. In the restaurants that actually have some business, the waitpersons (waiters and waitresses ) seem to be spending most of their time standing still.
The second observation concerns low individual productivity. It’s not that Mexicans don’t work hard. In Mexico as in the US, Mexicans are remarkable for working hard for long hours. They seem to know no coffee breaks and little even by way of lunch breaks. The problem is that you see everywhere people doing work for which they have received little or no training. I watched with increasing fascination, several times a day, a laborer failing to finish a simple brick path. He did not manage to complete in three days what I am ready to bet an American bricklayer would have done in less than a day. (Yes, I know something about bricklaying too.) That’s a big productivity differential. Even the pharmacists filling my prescriptions seemed hesitant. They did not exude the authority of American pharmacists with an advanced education. Since Mexicans in general rarely lack in personal authority and, by elimination, I am forced to hypothesize that my pharmacists where just sort of learning their job as they went along.
Incidentally, I have reasons to believe that this shortage of training does not extend to superior occupations: Mexican doctors and Mexican engineers are not inferior to their American counterparts, I am guessing. (The fast development of medical tourism into Mexico from both the US and Canada testifies to the quality of the former, I think.)
The third observation, which I called intangible is difficult to render, of course. It’s almost only an impression but one that is redundantly encountered. The information dispensed by the conventional Mexican media seems very thin. The nightly news program on major channel serves poor fare as compared to the Spanish language but American Univision. If there are new or substantive programs on radio, I have not discovered them. (I may very well have missed such.) I mean that I almost missed National Public radio there ( a difficult admission for me, obviously). Whether you read the daily newspaper or not does not make much difference in your level of information. Here is a test case.
On a weekend day, there is a massive protest march in Mexico City. The demonstration is to protest the disappearance of 43 young people from the same teachers school. Everyone except their parents knows they have been murdered. The demonstration is both very large and quite orderly as compared to anything of the same kind in the US. The police uses tear gas but only sixty people are arrested. There is no mention of anyone seriously hurt.
I buy the Sunday version of what has been designated to me as the best national daily newspaper in the country (“El Excelsior“). A description of the demonstrations and photographs cover the front page, as you would expect. The two innermost pages are devoted to the same events. In addition to eyewitness accounts are included serious interviews of government officials, of protest march organizers and of several pundits. I make myself read every word. At the end, I have learned close to nothing and I have no new perspective on the crime, sociologically, politically or otherwise. I just get confirmation of the fact that the mayor of the town where the young men disappeared and his wife have been arrested. I turn to the “global” page and get a reading of events in Iraq and Syria that I would probably not understand absent my previous familiarity based on American media. In three weeks, I see and hear not a single reference to President Obama’s executive order concerning illegal immigrants about half of whom are of Mexican origin.
I think that Mexicans, included well-educated Mexicans are not well informed unless the Internet makes up for the obvious deficiencies of the conventional press, which is hard to believe. I would be hard put to explain how this affects Mexican economic development except that it may result in a blindness to new economic opportunities. Mexican entrepreneurs dedicate themselves to old pursuits or they imitate the gringo model late and imperfectly, perhaps (perhaps). Even where a Mexican industry has experienced notable global success such as the brewery industry, it did not innovate much, if at all. No innovation, no temporary super-profits, no generous wages (as we see in Silicon Valley, for example). This is all speculation. Others may have written on the relationship between the general level of information of a population and its overall productivity and it may have escaped my attention or, I may have forgotten it. Maybe readers will come to my rescue on this.
So, here you have it: skimpy training of ordinary workers, inferior tools, a poor physical infrastructure, an under-informed populace, together make for much lower gross productivity than what we are used to in the US. But, overall, in a sort of rough way, wages follow productivity. Mexican workers produce little and they get paid accordingly little. Note that the same factors of poverty interact with one another: Low pay encourages the hiring of a surfeit of workers; modestly paid workers may not be perceived as deserving good tools; an underdeveloped infrastructure buffers business decision-makers from all kinds of competition, including competition for workers, thereby keeping wages lower than they need be. Workers may not be well informed enough to struggle for higher wages. And, of course, workers with low pay make poor consumers. Among other things, they fail to fill the restaurants their entrepreneurially inclined neighbors open for them.
By now, you may wonder why something is missing from this story. I mean corruption, small corruption and especially, big corruption. Two reasons for this absence. The first is that, naturally, corrupt behavior is not readily amenable to casual observation. The second reason is that I am not convinced that corruption of any kind goes much way toward explaining Mexican underdevelopment.
Low level corruption first. In Mexico, it’s common to deal with an ordinary traffic transgression by asking the policeman who stopped you to pay the fine on your behalf because “I am too busy, sorry.” I am told that any amount of cash close to half of the amount of the official fine will do the trick. This sort of practice pervades Mexican life, I am still told. (I have not had a personal experience of it for twenty years myself.) It’s not clear to me that it has any relation to underdevelopment. In the above example, what is basically a tax gets diverted from the government to private pockets. Likewise, when building permits are sold by building inspectors rather than earned and deserved, a relaxation of anti-growth regulations takes place, doesn’t it ?
I don’t know, incidentally, that there is much private corruption in Mexico. I must have taken more than sixty taxis while I was in Puerto Vallarta. They have no meters but rates are fixed by zone. Only one tried to take me, for about USD 3. That’s an extremely low hit rate as compared to say, New York City.
Now, on to big-time corruption. By its nature, it’s hard to observe except if you read the paper carefully and with great, diligent constancy. (See above.) Here is one possible case that came to my attention while I was in Mexico. A big house on a golf course comes up for sale for USD 1.5 million. The seller is a police official described to me as not very high on the totem pole. Someone I know makes an offer. The asking price shrinks to USD 750,000 if he will pay cash. How did a police official get his hands on that house? Did he inherit a pile of money from his father, from a rich aunt? By insisting on cash, is he simply trying to avoid taxes or does he have a more sinister reason? I don’t know and here again, I am not sure it matters. Perhaps, it does in relation to the accumulation of capital; I wouldn’t know which way though.
People of libertarian inclination have to choose: If government is inimical to happiness in general and to economic prosperity in particular then, the suspension of government efficacy, as with corrupt government practices, must be for the better. Or, another, more benign theory of government must be developed.
* If you wonder at my linguistic prowess, don’t. First, Spanish is a dialect of Latin, like French, my native language. Second, I have been studying Spanish for a straight sixty years. It stands to reason that I have made some progress.