The neo-liberal disaster
* Mexico The neo-liberal strategy adopted in 1982 has had disastrous results for peasants, workers and a large part of the middle classes. The misery is still increasing. Eric Toussaint IN 1982, PRESIDENT MIGUEL DE LA Madrid launched a massive wave of privatisations. Only. 100 corporations (of 1,550 registered in 1982) are still state-owned. [Monde Diplomatique, 8/96] public sector enterprises. Privatisation has enabled the concentration of capital. Ten groups now control 71.2% of the shares listed on the Mexican stock exchange. Under President Salinas de Gortari (1988-94) over SUS 100 bn. flowed into the country, mainly to buy stocks and bonds. Foreign, mainly US capitalists were able to buy privatised companies at low prices. Foreign capital now controls companies in
The money which flowed into Mexico didn't create jobs. It was used to buy companies, and then to "rationalise" them. Much of this money was speculative anyway: the shares thus acquired could be sold easily, and the proceeds repatriated without formalities if more interesting possibilities" emerged in other markets.
Most of this capital left Mexico between April and December 1994 (Dossier CADTM #12, Sep. 1994]. The outflow started well before the elections in August, and is a major factor contributing to the financial crisis of December 1994 /WB - IMF - WTO: The Free Market Fiasco, NSR 24/25, 1995].
By December 1995, US banks held $US 24.6 bn. of Mexican origin — twice as much as at the end of 1994. Mexico's current President, Ernesto Zedillo, makes the outrageous claim that the SUS which flowed into Mexico under President Salinas were only speculative, and never really belonged to Mexico anyway ['It isn't
La Jornada, 7 August 1996]. What he doesn't say is that, to attract this speculative capital, the Mexican state organised a fire sale of nationalised companies, which certainly did belong to
Privatisations, together with the application of the North America Free Trade Accord (NAFTA), have increased Mexico's dependence on US imperialism.
Management of the foreign debt crisis has been equally disastrous. Mexico paid SUS 125 bn. in debt servicing in 1988-92. Some of this money was the proceeds of the privatisation wave. After paying out this money, Mexico finds itself even deeper in debt. By 1994 the country owed foreign creditors SUS 140 bn, 50% more than in 1988. By the end of 1995, debt reached about SUS 180 bn, according to the independent research centre FAPRODE.
Mexico's debt payments are a massive transfer of revenue from the workers, and the small and medium farmers towards the capitalists who own the debt. Some of these creditors are Mexican capitalists, who have "invested" in Mexico through capital they hold in foreign banks.
It gets worse. Since the December 1994 crisis, a portion of Mexico's oil revenues are pass through a US bank account, to which the US government can demand access if Mexico ever misses a repayment of its foreign debt. An eloquent symbol of Mexico's new relationship of submission to
The neo-liberal strategy implemented since 1982 has increased Mexico's structural jobs deficit. To absorb the growing workforce, 12 million jobs should have been created between 1982 and 1994. Only 2.4 million jobs were created. And the capital flight in December 1994 destroyed 850,000 jobs (production dropped 6.9% in 1995).
Twenty million new jobs are needed to create full employment in Mexico today. And things are getting worse. Official statistics suggest that for every ten jobs destroyed in 1995, only seven new jobs will be created this year.
The purchasing power of the working population has dropped sharply.
Teachers in the countryside earn only
$US 200/month. The minimum monthly salary has dropped to SUS 100. In real terms, this is about the same as when
General Lazaro Cardénas introduced the minimum wage in 1935. The buying power of the minimum wage has dropped 81% since 1977. The labour time needed to assure even the 1970 level of consumption is 3.16 times longer than in 1970. Wages represented
40.3% of GDP in 1976, but only about
25% today.
Some people prefer to count in dollars. Three out of ten Mexican workers earn SUS 100-199/month, and another 35% of the workforce (but only 20% of women workers) earn SUS 200 or more. In other words, the minimum wage is the average. Almost half the workforce earn less. Three out of ten workers earn SUS 1-99/month, and the remaining five million men and women earn no cash salary whatsoever. Most of this group (3.185 million) work in agriculture. [statistics published by the employers association Coparmex, cited in La Jornada, 21 July 1995]
The middle classes, farmers, entrepreneurs, artisans, and members of the liberal professions have also suffered from these neo-liberal policies, particularly since the crisis of December 1994. With interest rates now around 45%, personal debt is reaching explosive levels.
Four million private account-holders are in arrears. They represent one third of the banks' clients. This is one of the factors behind the development of the El Barzon "debtors' movement." Barzon leader Juan José Qurino claims that his group of middle class people who's relative comfort is threatened now has 1.8 million members. (La Jornada, 21 July 1996).
Unemployment, collapsing real wages, and rocketing debt is only part of the picture of misery. Over 21 million Mexicans have no access to primary education. Fifteen thousand schools have only one teacher.
Half the population has no social security cover. One in five children is malnourished.
CEPAL estimates that the number of
Mexicans in poverty increased from 48.5 to 66 million between 1982 and 1992
(the country has about 100 million inhabitants). In 1982, 16.2% of the poor lived in extreme poverty. In 1992, 48.6% were classified as extremely poor.
Something is rotten in the land of
Zapata. very rotten. *