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Monday, June 24, 2013

Mexico's Bottom Class - Denise Dresser

Reforma: Denise Dresser

Did they deceive us? Did they dupe us? Did they measure badly and interpret even worse? All those who announced with great fanfare that Mexico had become a middle-class country. Where the majority could now buy a car. Have a mortgage. Take vacations. Send their children to private school. Over the past six years, Ernesto Cordero repeatedly extolled this supposed reality. There are still those who repeat their assumptions as if they were a mantra: Mexico, the middle-income country; Mexico, the country where the poor are becoming fewer.

The most recent report from INEGI [National Institute of Statistics] was a bucket of ice water. But it was a downpour for some World Bank analysts and some officials of the federal government. A disappointment for some studies undertaken by the United Nations. Mexico is not a middle-class country, but one with a predominately lower-class population. The expectations have not been met; macroeconomic stability has not been achieved. Programs for alleviating poverty have been neither sufficient nor consistent. As revealed by the study "Middle Classes in Mexico", although the middle class saw a slight rebound in the first decade of the twenty-first century, the majority of Mexicans continue being in a low social stratum. Working intensely. Struggling mightily. Surviving weighed down.

More than half of households--55 percent--are in the lower class, in which almost 3 out of 5 Mexicans live. At the other extreme are members of the upper class, only 2.5 percent of households in Mexico, in which only 1.7 percent of the population live. Abysmal differences, insuperable gaps, polar opposites in the same country. As for the middle class, almost 2 in 5 households are in that stratum, i.e., almost 40 percent of the population. The good news is that despite the low growth in the past fifteen years, the middle class is growing. From 2000 to 2010, it increased by 4 percentage points.

According to INEGI, these are people who have a computer, spend about 4,400 pesos [$327 USD] per quarter consuming food and beverages away from home; they have a credit card; they are embedded in the formal labor market; they have at least a high school education; and they work in the private sector. This is the profile of today's middle-class Mexican. This is what Mexico has achieved in recent decades in which there were no constant devaluations [of the peso] and recurrent crises and inconsistent hands at the helm. With hard work, the middle class could grow a little, often in spite of the government, not because of it.

The problem is that this group can't become the majority, and the group that is the majority, the lower class, lives in a precarious situation. Vulnerable. Sinking. Poverty is more likely to occur  for the lower class, which accounts for 55.1 percent of households and 59.1 percent of the country's population. They just have to lose their jobs, face the increase in food prices, suffer a crisis, confront a recession, suffer an accident, succumb to disease--living in a country with few social safety nets and few governmental successes in weaving them.

The reasons for the slow growth of the middle class is directly related to the lack of growth in the economy itself. The reasons have to do with a country that seeks guaranteed incomes and is backward-looking in so many ways. There are the predatory public-sector unions. The entrepreneurs entrenched in monopoly sectors. The peasant organizations making the most of Procampo [government subsidies for agriculture]. The inflated and unproductive bureaucracy ensconced in the public sector.

The dominant actors that behave according to the corporatist logic of the past, and thus sabotage the future. Accustomed to defend privileges instead of accumulating merit; accustomed to extracting guaranteed income--overcharging for their goods and services--instead of competing to reduce prices. And they are all protected by political parties that defend their own turf, their own monopoly, their own cartload of public money. Accomplices of mediocrity, architects of stagnation, architects of a more-of-the-same Mexico.

More in the lower class, fewer in the middle class. The World Bank itself noted in a recent published report--"Changing the pace to accelerate shared prosperity in Latin America and the Caribbean"-- that Mexico will not reach the level of well-being of developed countries until 2025. And the main obstacle is social inequality. Economic disparity. Constant imbalances in living standards.

The same is true of our political class. The urgency of progressive fiscal policies. The need for transparency and institutional effectiveness. The accessibility to markets. An educational revolution. Nothing new, nothing different, nothing that the administration of Enrique Peña Nieto might get to envision. Nothing that helps those in the lower class. They are not "them", but a facet, a part of ourselves.

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