United States media does a very poor job of measuring up to even nominal standards of international reportage, case in point in this weeks state visit by the Indian prime minister Modi, clearly an emerging advantage for U.S. policy given our current posture throughout Afghanistan, Pakistan and Central Asia. Not a word of it in today’s media. Coverage made it into dominant newspapers, but broadcast television media hardly mentioned it and did absolutely nothing to present our regional comparative advantage with India as a publicly declared ally.
An identical framework handled the June 5th Mexican election that unexpectedly gave the PRI (Institutional Revolutionary Party) of President Nieto a whopping loss. His party lost 7 states to PAN (National Action Party). Remember, it was in 2000 that the 75 year reign of PRI ended with Vicente Fox’s PAN win. But all is not lost. . .
The reigning Mexican Central Banker is an old student of Milton Friedman’s Chicago school and has ushered in profound monetary stability that is the envy of D.C. Mexico now has at least 32 northern states growing at Asian rates. Homeownership has leveled off to trend growth lines that have no historical basis for the Mexican economy. Dr. Augstin Carstens is responsible for this repository of exchange rate stability and growth.
Mexico has begun its Reaganite policy mix of deregulation by seeking a more open, transparent market based political economy through structural reform of energy, labor markets, education reform, banking and telecommunications; all launched by the current Mexican president Mr. Nieto.
So how does one reconcile the June 5th loss?
Mexican citizens are disgusted with crime and corruption. Inflation and its social consequences has been tamed by Dr. Carstens, but the rule of law and cronyism is playing out against a backdrop of weak institutions, drugs and trafficking. The only way for Mexico to win is to re-centralize its governing relation with states. A robust decentralized federalism is the key to capitalizing on the defeat of easy money and inflation that has characterized the Mexican political economy for decades.
Let’s see what happens with upcoming gubernatorial campaigns.
My monies on Hayek, Friedman and his protege student from Chicago, Carstens.