Andres Manuel Lopez Obrador’s presidency will likely be a failure in most respects.
Let’s be clear, the problem here is not Lopez-Obrador’s character (he seems to be a good man with positive intentions), but rather the policies (with the possible exception of his salutary and feasible proposed crackdown on corruption) Lopez-Obrador is proposing. For a start, the former Mexico City mayor wants massive spending on national infrastructure projects. But while Mexico does need investment in economic productivity, Lopez-Obrador has a troubling lack of concern with where the money will come from. He has suggested he can pay for his multi-billion dollar infrastructure endeavors simply by reducing corruption and waste. And while those are laudable goals, they cannot provide the saving offsets that Lopez-Obrador needs. That means big deficit spending in the years ahead.
Yet the president-elect also takes an unbalanced approach to trade and structural social spending. Here, Lopez-Obrador has skirted a line between protectionism and remaining in NAFTA. But Lopez-Obrador also wants a dramatic increase in social security payments and a hike in the minimum wage. Again, where does he intend for this money to come from? Mexico’s economy depends on being attractive to multinational companies seeking lower wages than the U.S., what effect would a wage hike have on foreign investment? I would venture a less than positive one.
Then there’s the drug war. With Mexico riven by continuing gang violence and a deep vein of associated political corruption, Lopez-Obrador needs to be resolute in his approach to dealing with the cartels. Unfortunately he wants to take a soft-soft approach that replaces police operations with social programs. That might sound good on paper but it will give the cartels more space to strengthen their position and degrade Mexico’s struggling institutions. The drugs aside, it will make corruption worse, not better.
Ultimately, however, Lopez-Obrador’s central challenge might not be what he intends to do but rather what he does not intend to do. Because the soon-to-be president doesn’t seem to want to do that which would make Mexico more economically productive and efficient: Boost marginal infrastructure spending on capital projects such as major airport upgrades, cutting Mexico’s bloated government payrolls, reducing industry barriers to entry, and making Mexico more attractive to foreign investment.
I hope I’m wrong, but I fear Lopez-Obrador won’t be much of a Mexican success story.
