Mexico, about Economic Reforms and Other Myths

Liberal Reforms: Will they work?

In 2013, Mexican and international media applauded (and many others criticized) the sweeping reforms that the current president, Enrique Peña Nieto, passed to the Mexican congress that include structural reforms in the energy, tax, education, telecommunications and judiciary sectors and others. What is even more laudable, is the fact that for the first time in the recent political history in Mexico the main three (3) political parties of the country agreed (through congress approval) on a bold political reform that includes pursuing a new agenda and a change in ideology that many socialist Latin American countries have been against to for a long time: opening the energy sector to foreign investment and paving the road for privatization of the oil sector.

While it is truethat the legal and judiciary framework needs to be reinforced in order for these reforms to actually work in favour of Mexico, and that more work needs to be done at the institutional level in order to have a more efficient tax system, social security and effective distribution of wealth, there is no doubt that Mexico is undergoing through an unprecedented reform of its institutions in order to achieve its desired economic growth while narrowing the gap between the rich and poor.

Nonetheless this is not the first time that the Mexican government has tried to implement bold reforms that, in the eyes of international economists and expert institutions such as the IMF or the World Bank, are key for positioning Mexico in the correct path towards sustained economic development. Many ordinary citizens feel that these reforms are another political move of the governing party for gaining popularity among the elite, and that such reforms will not benefit them at all but on the contrary they see them as a direct threat to their economy, whatever that may mean to them. Some others feel that these reforms will blow the winds towards prosperity.

What is true is that in the past, Mexicans have seen similar reforms as the way out of stagnation and often celebrated the little gains that were made before they finally fall apart giving up in a total loss of hope. Montaner was absolutely right in pointing out that probably “we should begin to talk about a cyclothymic culture”[1] when referring to Latin American cultures (including Mexico), given that in the past they have given one step forward to finally give two steps backwards.

Mexicans keep pointing out at and blaming the government for past economic failures and put all the responsibility of it on their institutions which is not completely wrong. While the new waves of liberal economic policy have gained momentum precipitating in a massive economic reform in Mexico, perhaps Mexicans should start looking inwardly to analyse why changes and progress didn’t come as fast as they wished in the past, or even realized at all. Certainly, in the words of Fukuyama, “this wave of changes will face difficulties in the future which will be likely to be encountered at the level of civil society and at the level of (Mexican) culture, especially in the latter on which such economic and democratic reforms” may hit not a brick, but a concrete wall[2]. If such cultural aspects are not taken into account as part of the current restructuration to achieve new horizons, then we may see another failed attempt to make economic progress.

Carlos Alberto Montaner points out perfectly in “Culture and the Behavior of Elites in Latin America” the role that the elites (the politicians, the military, the businessmen, the clergy, the intellectuals and the left) play in keeping Latin America (and in Mexico, except for the military) in a state of poverty and injustice[3]. Nonetheless, we also must wonder, What about the role that ordinary people play? What about ordinary Mexican citizens? Are they also part of the problem? The following pages try to flesh out the cultural aspects in Mexico that are the Achilles’ heel of its society at a cultural level (or some may say at the street level) that are worth to mention. It is imperative for Mexicans as a society to attend and overcome these culturally embedded issues if they want to make a true change.

Racism and discrimination as a cause of inequality

Surprisingly, one of the main problems in Mexico that inhibits cohesion and a common vision among Mexicans is racism. This is less evident for external observers than for the locals. Mexicans are unknowingly racist and although it is widely condemned in the Mexican society, it is unconsciously practiced. Mexicans would prefer to be called anything except “Indios”, which is a derogative form for referring to the indigenous people living in America (not to be confused with Hindu) that is engrained in the minds of common Mexicans. Being called “Indio” has an offensive connotation for many and yet paradoxically Mexicans feel proud of their origins (probably is true what Miguel León-Portilla said that the “love of Mexicans towards Indians is concentrated in those that have been death for centuries”).

Harrison argues that the explanations of colonialism and racism provided by Marx and Lenin are no longer viable and prove unsatisfactory to explain poverty and authoritarianism[5]. It is true that in modern society colonialism and racism is no longer an excuse for underdevelopment in Latin America. Nonetheless, from an insider’s perspective I can say that somehow they left their footprint, at least, in the ethos of the Mexican society that plays an indirect role.

From a general perspective all Latin American countries are culturally similar; however if we take a close look they have a lot of dissimilarities in many aspects. After living in the Caribbean and travelling around central and South America, I came to realize that Mexicans somehow have marked differences with the rest of South America.

Jeffrey Sachs noticed that Central America was different from the rest of the Spanish colonies (and Mexico is not the exception) given that “these societies had much larger indigenous Amerindian populations which developed with inequalities and social stratification between European-descended whites and native inhabitants plus imported slaves”[6]. This evidently had unintended consequences in the way that Mexican culture developed, and how racism has evolved in a love-hate relationship from its indigenous-European heritage that has shaped the political system and in which the left has found a source for its rhetoric. Everything that is “white” or “foreign” is looked at suspiciously yet Mexicans long to have it. You can see it in the love-hate relationship between Mexico and the U.S.

This racism has its origins in, and is a consequence of, the caste system implemented by the Spanish during the conquest as previously noted. At the top of the hierarchy were the Spanish, and the “Peninsulares”, which included all white Europeans born in the Iberian Peninsula (Spanish, Portuguese, Catalans, etc.), followed by the “Criollos” which were the sons of white Spanish born in America. Criollos, just by the mere fact that they were born in America they were not eligible to hold important posts among the royalty. Many of them possessed wealth and titles, but they could never be on the top posts like Viceroys or the like that were exclusive for the noble Spanish. In Mexican history, the “criollos” was the social class that triggered and lead the movement for independency. After the criollos, we had the Indios (Amerindians), Mestizos (mixed Amerindian and White), Castizos (white with some mestizo), Cholos (Amerindian with some mestizo), Pardos (mixed white, African and Amerindian), Mulatos (mixed African and white), Zambos (mixed Amerindian and African mix) and Negros (African blacks) at the bottom of the classes.

Here I would like to make a special consideration for the third tier which corresponds to the “Indios” or Amerindians. They were “the original inhabitants of the Americas and considered to be one of the three “pure races” in Spanish America, the law treated them as minors, and as such were to be protected by royal officials, but in reality were often abused by the local elites. After the initial conquest, the elites of the Inca, Aztec and other Amerindian states were assimilated into the Spanish nobility through intermarriage”[7].

The latter cannot be ignored. Although this big Amerindian population was decimated during the conquest, a large part was converted to Catholicism and assimilated in society along with its traditions and cultural baggage throughout Mexico and Central America unlike the Amerindians in North America that were often confined to reserves and that did not have a wide interracial mix with the colonies.

It appears that Mexico with its origins as a caste-based society has been unable to shake off this legacy of discriminations. Modern Mexicans discriminate indirectly towards the poor and the indigenous looking-like: it’s seems to be a collective trauma of wanting to be superior that for some reason has not been overcome and has evolved in some sort of narcissist proud. This is evident with some Mexicans that have crossed the Mexico-US border. They look more Amerindian than anyone else, but once they are “on the other side” they feel that they are superiors to Mexicans back in Mexico and other Latinos, (No wonder why so many Latino gang fights in the US), and it is not surprising also to see tones of racism towards other groups (does “brown power” sounds familiar?).

This racism and discrimination between and towards ordinary citizens has an impact in all levels of the Mexican society and the economy, often encasing groups in stereotypes (maids are always from indigenous backgrounds) that have an impact at the conscious level of those discriminated groups, often of a fatalist tone, and that prevent them for pursuing upper mobility given that they don’t have access to a quality education or they just conform with working on low paid jobs to maintain their status quo. Furthermore, this unconscious racism and discrimination also has an impact in maintaining social cohesion and a civic behaviour.

Conformism: penny wise, pound foolish

In 2006 while I was still living in Mexico, I was traveling from my home town to another city for a nice long weekend retreat, and while waiting at the local bus station in my hometown a man in his working age approached to me asking for a coin. At that time I was working in the construction of a local oil refinery. We were experiencing a shortage of labour and as such, I decided that for a poor man like him a job would be a blessing. When I offered him a job as a construction worker his answer was simple: “I don’t want a job, I want money”. For some reason I was not surprised.

Many Mexicans are content and conformed with little what they have or can get, seeking always immediate gratification: a bird in the hand is worth two in the bush (the Spanish version says is worth one hundred flying). Analogously, the “penny wise, pound foolish” expression might as well be applicable for us. This conformism is evident in all levels of the Mexican society and in politics. Mexicans are proud of their “inventiveness” that results from trying to simplify and find shortcuts to any task that will allow them immediate gains. Politicians often promulgate new enactments that patch a couple of holes that in the short run are beneficial for gaining popularity but that do not pave the road for a sustainable economy.

Conformity in Mexico is a factor that keeps it from developing. Bond and Smith found a correlation with conformity in traditional societies and the level of development, and they found that developed societies such as the U.S. and Europe had lower levels of conformity[8]. In Mexico, such conformism makes it difficult to establish social programs such as employment insurance that are common in advanced countries given the fact that many Mexicans will prefer being under the unemployment scheme insurance, get a low pay check and work in the informal sector rather than getting a paid job within the legal framework. This conformist view is evident during elections: some people give away their vote to that party that provides a nice meal, an ipad or free concerts, all providing immediate gains or utility, without thinking what is beneficial in the long run while leaving open doors for corruption.

Corruption as a Utilitarian Instrument

According to the 2014 Corruption Perception Index results from Transparency International ®, Mexico ranks 103 out of 175 countries[9] in perceived levels of corruption in the public sector which is 15.5 points lower than the mean of those countries analysed. Even less economically developed countries like Botswana, Rwanda, Ghana or Cuba have lower scores in terms of corruption perception from the mean.

There is no country with a perfect score and even countries that have reached high levels of economic development suffer from widespread corruption, especially at the political level; such is the case of South Korea and the recent uncovered corruption scandals among business men and politicians that have pushed the country’s premier to resign[10]. In Mexico, corruption is endemic to its civil society.

Mexicans are aware that corruption is one of their major problems to overcome in order to reach a mature and just society. They see corruption as a problem that is imputable only to politicians, business men and the elites, but what they often don’t see is that corruption is a problem that is chronic at the lower levels of society. Many civil organizations and the public in general stage demonstrations decrying corruptive practices from their leaders without realizing that the “elites are a reflection of the broader society”[11].

Corrupt practices happen in the daily life of ordinary Mexicans: students offering money to teachers and professors in exchange for good grades, drivers bribing transit patrols when drunk driving or missing a traffic red light, money offered for “expediting” any kind of bureaucratic transaction, bribing technicians when connecting illegally to the national power grid or even when “unselfishly” performing a good deed (like sharing an excerpt of Mexican history to foreigners in exchange for money?).

Many Mexicans from all social strata either ask or offer a bribe on a regular basis. One could think that it is the result of citizens trying to make ends meet due to low levels of income, but often those with the economic means are the ones that ask or offer bribes the most. In Mexico, corruption seems to be part of the morality of individuals while at the same time condemning it. Certainly, Nietzsche’s view that “moral sensibilities are nowadays at such cross purposes that to one man a morality is proved by its utility, while to another its utility refutes it”[12] is applicable and precise in the context of corruption among ordinary Mexicans.

You need two to tango for a corrupt behaviour, and as long as Mexicans perceive this double morality as acceptable at a cultural level, little can be done to alleviate the modern “crony capitalism” that ravages the country.

Egocentrism, Individualism or Amoral familism?

There is no doubt that Mexico has survived several dramatic events in the past century: a Mexican revolution that overthrew the last dictatorship in 1910, the great depression of 1929, debt crisis in 1982, the country’s biggest currency devaluation in 1994 and the recent economic crisis of 2008. Mexico has achieved a certain level of economic maturity that has allowed it, not only to withstand embattlements like the previous, but to transform itself from an agrarian based economy to an industrial base (aided mainly by the oil sector), allowing higher levels of disposable income for its citizens while at the same time widening the gap between the rich and poor. Neither to say, its steady and slow economic growth is rather disappointing.

While the Mexican economy has not been able to reach the degree of development of its neighbour in the north (not even close), the effects of their level of development have made an unprecedented change in its culture, in part thanks to the migration back and forth between Mexico and the US: ideas of freedom, individual rights and material achievement have a strong resonance in the minds of Mexicans. The problem here is that the positive effects that could lead to Lal’s promethean growth[13] are being offset largely by their negative effects traduced in selfish individualism.

The distorted idea of “individualism” or “individual rights” has given way to a licentious sense of freedom. Divorce rates in Mexico have spiked in the last decades, and it is not uncommon that many of the root causes are the central view of individuals in oneself: excuses such as “because of my career, because I am not longer satisfied, because I deserve something better even though I am not willing to give the best of me” are often in the minds of those going through a divorce. For the Mexican, the word “I” or “I am” is more important above anything else. Families are destroyed pursuing that ultimate freedom and immediate sense of pleasure or gratification that has torn the fabric of society. It shouldn’t be a surprise if most Mexican drug dealers come from broken families.

The conservative Mexican society is being transformed, and is giving way, to a more frightening liberal society. Take a stroll to any main Mexican city and you will see LBGT groups promoting their “freedom” through public displays of their homosexuality in the name of a liberal and free society. I am not trying to sound homophobic or far right conservative here but what I am trying to say is that people in Mexico tend to impose their individual views regardless of who is standing next to them. This is not wrong if such individuality promotes prosperity.

The problem is that Mexicans are not team players; many can be considered amoral familists. Many are like crabs in a bucket trying to be on the top without consideration of who is beneath. Our egocentric ethos for reaching immediate gains and our distorted view of what individual rights and freedom entails prevents us from reaching a civilized society that allows economic prosperity.

It seems that all those unintended consequences that advanced economical countries like the U.S. suffer as a consequence of their development and high sense of individualism have been precipitated towards the Mexican society but without their economic benefits. As Banfield said, “individualism is a very good thing from an economic standpoint, provided it is not so extreme as to render concerted action altogether impossible[14]. It seems that this is the case for the Mexican society.

The problem here is not individualism per se, as it has helped and supported economic development and innovation in western societies, but the problem lies in the lack of a fundamental framework in which individualities and freedom can lead to positive outcomes in Mexico. The main difference with western countries is that they have spent decades if not centuries developing the legal and judiciary system, as well as the social framework that contains and directs these individualities for maintaining a civic life as noted by Deepak Lal and Bertrand Russell in its History of Western Philosophy[15].

Concluding Comments and Path Forward

The previous analysis provides a very brief summary of some particular cultural traits and pathologies that Mexico as a society needs to be aware of, in order to find a common solution for realizing its full potential as a country while increasing the welfare of its citizens. The panacea of applying economic and social reforms that have proven successful in other countries will not work if we do not attend the problems at a cultural level. A deep educational reform is necessary in Mexico, apart from the current proposed economic and social reforms. Moreover, a strong commitment of all sectors (government, private, public) is required to allow positive social changes to happen. A quality education and the elimination of social barriers that promote polarization among Mexicans are the basis for supporting a healthy civil society, transparent institutions and a common ideology that gives opportunity for prosperity.


Ricardo Bielma / MBA, PMP, ASQ CSSBB, CQE.




[1] Lawrence E. Harrison & Samuel P. Huntington, Culture Matters, How Values Shape Human Progress, Basic Books Editorial, Carlos Alberto Montaner, Culture and the Behavior of Elites in Latin America, Page 56.

[2] Francis Fukuyama, The Primacy of Culture, Journal of Democracy – Volume 6, Number 1, January 1995, Page 7 – 14

[3] Lawrence E. Harrison & Samuel P. Huntington, Culture Matters, How Values Shape Human Progress, Basic Books Editorial, Carlos Alberto Montaner, Culture and the Behavior of Elites in Latin America, Page 56 – 64


[5] Lawrence E. Harrison & Samuel P. Huntington, Culture Matters, How Values Shape Human Progress, Basic Books Editorial, Lawrence E. Harrison, Introduction: Why Culture Matters, Page xix – xxi.

[6] Lawrence E. Harrison & Samuel P. Huntington, Culture Matters, How Values Shape Human Progress, Basic Books Editorial, Jeffrey Sachs, Notes on a New Sociology of Economic Development, Page 37


[8] Rod Bond & Peter B. Smith, Culture and Conformity: A Meta-Analysis of Studies Using Asch’s (1952b, 1956) Line Judgement Task, Psychological Bulletin, 1996, Vol. 119, No.1, Page 111-137

[9] Corruption Perceptions Index 2014 Results, Transparency International, Page 5


[11] Lawrence E. Harrison & Samuel P. Huntington, Culture Matters, How Values Shape Human Progress, Basic Books Editorial, Carlos Alberto Montaner, Culture and the Behavior of Elites in Latin America, Page 58.

[12] Deepak Lal, Unintended Consequences: the impact of factor endowments, culture, and politics on lung run economic performance, The MIT Press, Chapter 6, Page 105

[13] Deepak Lal, Unintended Consequences: the impact of factor endowments, culture, and politics on lung run economic performance, The MIT Press, Chapter 6, Page 99 – 123

[14] Edward C. Banfield, The Moral Basis of a Backward Society, Glencoe, IL: The Free Press, 1958, Page 85.

[15] Bertrand Rusell, The History of Western Philosophy, Edit. Simon & Schuster / Touchstone (1967)

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