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Return of the PRI in Mexico

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MEXICO CITY -- At the beginning of December, Nathan Gardels and I were in Mexico to promote our book Intelligent Governance for the 21st Century at the Guadalajara Book Fair and to attend the inauguration of Mexico's new president, Enrique Pena Nieto. The timing was propitious since President Pena Nieto's new administration marks the return of the once autocratic party -- the Institutional Revolutionary Party (PRI) -- that ruled Mexico for 71 years until the 2000, when open democratic elections ousted it from power.

As we point out in our book, the strength of autocracies like China -- or the old PRI -- is their ability to forge consensus and unity of purpose with the institutional capacity to implement long-term policies. But lacking accountability, transparency and free expression they become hidebound and corrupt, giving way to the power of vested interests and eroding what they have been able to accomplish.

The strength of democracies like the U.S. is that everyone has a voice and can contend for power. But the inability to forge consensus out of cacophony has created gridlock and paralysis. Its adversarial political system has decayed into partisan rancor and divided the public against itself. The short term mentality and special interests have captured the formal accountability mechanism of one person, one vote elections.

The central question we pose in our book is how the unity of purpose and long-term institutional capacity usually associated with autocracies can be balanced by transparency and democracy so that governance can both be effective and accountable as well as inclusive.

Mexico today is in the middle of this dilemma of governance. During the PRI rule, the novelist Mario Vargas Llosa once called Mexico the "perfect dictatorship" because it had the trappings of democracy, but was in fact ruled harshly by one party. The challenge of the PRI under Pena Nieto is to perfect democracy -- and still address the daunting challenges the country faces today.

In spite of the bloody drug war that drags on, Mexico is poised to join the ranks of the fastest growing world economies. It grew nearly 4 percent overall this year, and Pena Nieto promises to get it up to 7 percent in the coming period. As China's wages rise, the manufacturing that once fled Mexico is coming back. Mexico's average hourly wage is $2.10 while in China it is now $1.63. The costs of fuel and transportation to get goods from China to the United States means that Mexico now has the upper hand in producing for trade with the world's largest market just north of their border.

Mexico also has a strong skill base, which has led to the establishment and expansion of large manufacturing operations in Mexico from General Electric to Bombardier, creating hundreds of thousands of high-wage jobs.

While the U.S. has been endlessly debating Obamacare, Mexico, under President Calderon who just left office, has established a model of universal health care -- Seguro Popular -- that covers nearly everyone in the country, whether they have a job or not.

It is no surprise that a recent Economist cover was titled "The Rise of Mexico." American consumers will soon be seeing "Hecho in Mexico" as much as they are used to seeing "Made in China" labels on the goods they purchase.

To take advantage of Mexico's new opportunity, Pena Nieto must make some tough reforms and take on many of the vested interests that have historically been the very pillars of the PRI -- the teacher's union, the state oil company (PEMEX) bureaucracy and the various monopolies in telecommunications and television.

It is surely a good sign that in his inaugural speech, admirable in both its scope and specificity, the new president frontally raised all these issues -- with the head of the powerful teacher's union and the Mexican monopolists all sitting right there in the audience a few feet away. He appointed Emilio Lozoya, a long term advocate of modernizing PEMEX by opening it up to outside investment as the head of PEMEX itself. The loudest applause Pena Nieto received in his speech was when he said he would end the practices of the teacher's union that allows them to sell jobs and appoint teachers themselves.

Whether Pena Nieto succeeds or not in taking on his own political base will tell us whether this is the new PRI or the old PRI. He clearly understands that the Mexican president today is no longer all powerful, but only as powerful as his party -- which got only 38 percent of the vote and holds only that proportion of seats in the Congress. For this reason, the day after his inauguration he announced a "compacto" -- a long list of policy agreements with the other left and right parties in the Congress they promise to pursue together. He also announced he would form an independent citizen's commission on corruption.

Such a "consensus building" and transparent approach is precisely what is needed to move toward good governance. Transparency is key to balancing autocratic tendencies; "consensus building" is what is needed to balance the adversarial contention, discord and diversity that democracy inevitably generates.