Newsgroups: soc.culture.mexican
From: DowJones@andrew.cmu.edu
Subject: Mexican Program - Development -2-: Privatization Program
Date: Fri,  8 Jan 1993 09:33:53 -0500 

  

  Opportunity is all that Solidarity beneficiaries such as Ramon Contreras
say they want. Contreras was one of hundreds laid off from northwest
Mexico's huge Cananea copper mine after the government sold it to private
investors in 1990. So, he combined his own savings with venture capital
from Solidarity to open a small garment-making shop.  

  His evolution from superfluous public employee to self-employed entrepreneur
is the realization of economic theories that Mexico's current leaders
have been refining for two decades. Finance Minister Aspe wrote extensively
on wealth distribution as a college professor during the 1970s. At that
time, Mexico's government was rapidly expanding its role in the economy,
acquiring everything from steel mills to movie theaters. Aspe, a lonely
voice of skepticism, was contending that it was absurd for the government
to be operating airlines when it couldn't even provide running water
for 30% of the population.  

  The debt crisis of the 1980s vindicated Aspe's criticism, and he was
brought into the government to clean house. As finance minister, he has
sold or liquidated all but 200 of the 1,155 companies the government
owned in 1982. He has used the $14 billion proceeds from privatization
to reduce the government's borrowings on the Mexican market. And the
interest savings are being used to raise social spending, which now takes
up 50% of the budget, compared to about 25% two decades ago.  

  But historically, Mexican social programs had often spent money in
ways that benefited the bureaucrats who ran them more than the poor who
needed them. That, anyway, was the unconventional wisdom espoused by
a young graduate student named Carlos Salinas de Gortari, who wrote his
university thesis on a government road-building program during the 1970s.
His conclusion: "The state must delegate to responsible local officials
the resources necessary to guarantee the timely and complete execution
of projects involving public spending." And he warned: "A state which
does not permit the participation of its citizens runs the risk of losing
not only instrumental efficiency but also its very legitimacy."  

  By the time Salinas became the presidential candidate of the ruling
Institutional Revolutionary Party in 1988, the political system's legitimacy
had become so shaky that he almost didn't get a chance to try out his
theories. He eked out a narrow, disputed victory.  

  The embattled president's very first act in office was to create Solidarity
-- amid much skepticism. When Oscar Levin, the municipal official in
charge of the barrios around San Angel, tried to drum up support for
the program, he faced catcalls, threats and a kidnapping attempt. But
the abuse stopped the day the first cement was delivered to the barrios.
"Then, people got right to work," he says.  

  The program caught on so quickly that now 60,000 Solidarity committees
are building everything from scenic roads for tourists in mountainous
Michoacan to recycling centers in the heavily polluted capital here.
And the price has been a bargain. Solidarity road-building projects,
according to Carlos Rojas, who heads the Solidarity program, cost just
70% of what the government used to pay to do the jobs; the programs'
school-repair costs average only 60% of earlier outlays. While Mexico
has set up Latin America's largest social program, it also has attained
its first federal budget surplus.  

  The main criticism of Solidarity is that it has become yet another
tool for the ruling party to win elections. The program has been especially
active in leftist strongholds, analysts say, to co-opt opponents.  

  Government officials say they aren't buying votes but are simply Mexicans
on the benefits of the party's policies.   
    9 33 AM
Newsgroups: soc.culture.mexican