December 4, 2015

Political Report # 1095 Debt and the Punishing of Mexico’s Working Classes By Enrique C. Ochoa, El BeiSMan

Alejandrina Castillo, 12, picks chile peppers near Teacapan, Sinaloa. An estimated 100,000 children toil in Mexican fields for pay. Some work for farms that export produce to the U.S. Photo: Los Angeles Times/ Don Bartletti
By Enrique C. Ochoa, El BeiSMan
In her 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, journalist Naomi Klein demonstrated how from Buenos Aires to New Orleans political leaders in alliance with national and global capital fabricated and manipulated crises to plunder the gains won by working class movements. These crises varied widely from guerrilla insurgencies and popular protests to economic meltdowns and natural disasters. In almost all instances, the method was the same: segments of the elite hyped the crisis while masking its origins in order to grab greater economic and political power. The results varied, but in nearly all cases free-market reforms were imposed and state companies privatized enriching a few. Meanwhile social programs were slashed, unions smashed, and social movements repressed.
In Mexico during the early 1980s, the crisis that was used to shock and plunder Mexico was a debt crisis. The 1982 debt crisis had its roots in the global economic crisis of the 1970s when U.S. banks lent sizeable amounts of money to oil rich Mexico. Government and capitalist mismanagement became all too apparent as the price of oil plummeted in 1981, and Mexico was unable to pay back the loans. Suddenly, there was a crisis that would only be “corrected” through restructuring Mexico’s economy. The new narrative, constructed by neoliberals, the IMF, and World Bank, was that the Mexican economic strategy that focused on internal development needed to be dismantled and opened up to the world economy. Mexico was seen as a debtor nation that had to repent and be punished in the process.

Debt, according to David Graeber, is portrayed in Western society as a moral failing which should be punished and that punishment, if not prison, should be poverty. However, debt is about power and imposition and is more accurately seen as a coercive instrument used by foreign powers to impose their will on debtor nations, render submission, and extract wealth. [1] At the same time, it can also be used by local elites to deepen their control on local society. Debt in the 1980s becomes an ideal “crisis” for capital to tighten its global grip by prying open new markets for capitalist investment.

This essay explores the impact of the neoliberal policies that Mexico employed as an answer to the debt crisis of the early 1980s. It examines how these policies were used to transform the economy to one that has created an ultra-wealthy class and severely weakened working classes, thus exacerbating poverty and inequality. The impact of poverty and inequality can especially be seen in Mexicans’ daily struggles for nutritious foods. Neoliberal policies have helped a few elites capture Mexico’s food supply while millions suffer from poor nutrition. Thirty years after the debt crisis Mexico’s working classes are still being punished.

With the fall of the price of oil in the early 1980s, Mexico’s political and economic rulers, under pressure from the World Bank and the IMF, began to restructure the Mexican economy. Liberalizing the economy through cuts in government spending, privatization, and trade liberalization, policymakers argued, would deepen Mexico’s integration into the world economy and improve the lives of all Mexicans. Throughout the 1980s and 1990s, government policies shifted away from supporting a complex of social programs to reducing social expenditures, privatizing state companies, and weakening unions.Mexico’s neoliberal response to the economic downturn played a crucial role in strengthening and expanding Mexico’s capitalist class at the expense of large segments of the population.

The debt crisis and the neoliberal response provided Mexico’s neoliberal elites the opportunity they were waiting for: to insert themselves as the drivers of economic policy while reaping the benefits in the form of billions of dollars. The number of Mexicans on the Forbes billionaire list grew from 1 when the list began in 1987 to 24 in 1994 with a combined net worth of $2.4 billion, and by 2011 there were 10 Mexicans on the list who had a combined net worth of $124.1 billion dollars. In 2015, there were 16 Mexicans on the Forbes list of billionaires, including Carlos Slim Helú who was ranked #2 with an estimated worth of 77.1 billion dollars, with a combined net worth of $144.5 billion.[2] In a few short years, Mexico’s business elite have come to exercise a profound influence throughout the country making them the “Amos de México” (masters of Mexico).[3]

Mexico’s food industry has grown significantly over the past two decades. Mexico is home to some of Latin America’s and the world’s largest food companies. These companies include: Grupo Bimbo, the world’s largest baked goods and packaged bread company and fourth largest food company in the world; Grupo Maseca, the world’s largest tortilla producer; Grupo LALA, Latin America’s leading dairy company; and OXXO, Latin America’s largest convenience store. In addition, the world’s leading retailer, Wal-Mart made Mexico the showcase for its international expansion through it alliance with and later acquisition of Mexican retailer CIFRA. These companies are dominating and transforming the basic food market in Mexico, Latin America, and the U.S. They all have deep multinational links and have been expanding across the globe, making a small group of Mexican capitalistsand their allies very wealthy.

Mexico’s food companies were well positioned to take advantage of the government’s shifting move towards neoliberalism. Through a combination of their longevity in the market, their distribution networks, their political ties, and marketing strategies, they each developed brand name recognition and became national companies. They took advantage of economic downturns to buy out local competitors and expanded throughout the Americas and beyond.

Mexico’s food corporations have been instrumental in transforming what Mexicans eat and are among the greatest traffickers of processed, calorie-laden foodstuffs. Marketers have exclusive deals with producers and sell much of their products through large retail outlets like Wal-Mart, with its nearly 2,000 stores in Mexico and its operations in 400 cities in Mexico and Central America. OXXO, with its more than 10,000 stores throughout the country, is the largest distributor of Coca Cola products and serves as a major distributor of Bimbo products, including its numerous bakery goods such as gansitos and pingüinos. In addition, Bimbo’s highly developed marketing routes throughout the country places its products on the shelves of even the most remote stores. The long shelf-life of processed foods and its relatively low price ensures that they are the foods to which working people have access.

As a result of the transformation of Mexico’s food industry, the countryside has been restructured in ways that exacerbate rural poverty and increase Mexico’s food dependence on the U.S. Beginning in the 1980s, Mexico abandoned post-revolutionary policies that sought, albeit erratically, to base Mexico’s food consumption largely on campesino production. This led to a brief period of Mexican self-sufficiency in basic grains. However, with the neoliberal reforms, policymakers shunned subsidizing small farmers and campesinos and instead urged the privatization of the ejido and encouraged the growth of large private producers. The results have led to an abandonment of much of the countryside by small producers and to the growth of large agribusiness producing for the Mexican market and for export. Mexico has become dependent on imports of basic grains while becoming a major exporter of tomatoes, avocados, pork and numerous other products.

Market-oriented policies have increased rural poverty and led to the expulsion of peasants from the countryside at significant rates. Although this process is as old as the Spanish conquest, it has greatly sped up with capitalist expansion.By the late 1980s increased migration within Mexico’s borders and across borders came from non-traditional sending areas including many indigenous communities in Southern Mexico. Indigenous migrants from Oaxaca, Guerrero, and Puebla often have little choice but to leave their communities. According to Miguel Martínez Peralta a Guerrero native, who worked for twelve years in the fields of Sinaloa, “It’s the truth: it is migrate or die. We are forced to go to work in Sinaloa.”[4] It has been disastrous for communities.

Mexico’s economic restructuring has exacerbated social and economic inequality. Scholars have demonstrated that this process has led to a decline of higher wage unionized jobs and public sector jobs in exchange for lower wage maquiladora work. In the process, union busting tactics and the search for more flexible labor policies have fueled inequality and insecurity. Economists James Cypher and Raúl Delgado Wise argue that this neoliberal shift “is carrying the nation to higher and higher levels of disarticulation, stagnation, and migration.”[5] For Sociologist Sergio Zermeño, “the open economy is the enemy of our times,” and has exacerbated despair characterized by the rise in violent crime and drug trafficking as working people are dislocated and forced into increasingly desperate situations.[6]

The neoliberal response to Mexico debt crisis has led to growing rates of economic inequality and plummeting real wages. The economist Julio Boltvinik’s analysis of poverty demonstrates that it has grown from about half the population in 1981 to 80 percent in 2000 and climbed to 83 percent in 2010.[7] Real wages plummeted in the 1980s by nearly 50 percent and continued to fall over the next two decades. By 2010, Mexico’s real minimum wage was 30 percent of its 1980 amount and wages for federal employees and industrial workers were 47 and 80 percent, respectively.[8] Mexico’s current minimum wage is 70 pesos or $4.38 a day. According to the economist Marcos Gutiérrez, of the 52 million workers in Mexico, 1.5% earn less than the minimum wage, 37.7% receive the minimum wage; 23.2% earn between one and two minimum wages (between 70 and 140 pesos a day); and 36.6% earn more than two minimum wages (over 140 pesos day).[9]

Labor union protections have declined over the past three decades. Between 1984 and 1994 there was a 9 percent dropped in union membership throughout the country. Some sectors experienced as much as a 38 percent decline in membership. This decline continued over the next two decades. Between 1984 and 2013, the rate of union membership dropped from 14.5 percent of the economically active population to 8.8 percent. According to labor scholar Graciela Bensusán, “very few people have real unions in this country, and this is especially noticeable when their voices are not heard at critical moments...”[10] While labor unions nominally exist in most industries, the majority of these are “ghost unions” established by the private sector to protect itself, control workers and skirt the law. The number of ghost unions skyrocketed following the liberalization of the economy and NAFTA. Workers pay union dues that go to a union that does not represent them and employers ensure that workers will never strike since in Mexico a strike has to be approved by the union. It has been estimated that these protection contracts make up to 90% of the approximately 600,000 collective agreements.[11] Consequently the number of strikes have declined precipitously. Employers and their collusion with political elites have yielded a very strong control over labor and a weak labor movement. In 2012, the president signed into law a labor reform that eviscerated what remained of Article 123 of Mexico’s Constitution, furthering weakening worker rights and strengthening employer control over workers.

With nearly two-thirds of the working population earning less than two minimum wages access to fresh healthy foods is virtually out of reach. Mexico’s minimum wage leaves millions of Mexicans malnourished. The basic food basket of 20 food items costs 1,284 pesos a month per person in urban areas while the monthly minimum wage is 2,240 pesos, approximately 60% of the minimum wage. To feed a family of four requires 2.3 minimum wages and that doesn’t count rent, clothing and other basics of everyday life. According to a recent study published by Great Britain’s Overseas Development, the price of fruits and vegetables nearly doubled between 1990 and 2012. In contrast, the prices of many industrially prepared foods fell by 20 percent during the same period.[12] Consequently, between 1999 and 2013, Mexico’s per capita consumption of ultra processed foods and drinks increased from 160 kg to nearly 220, leading all Latin American countries in the consumption of these foods.[13] Access to inexpensive calorie-laden processed foods fills the stomach but does not provide a healthy nutritious diet.

Poverty and malnutrition rates are notoriously worse in the countryside. According to one recent study, eleven of Mexico’s municipalities in the primarily indigenous regions of the states of Chiapas, Oaxaca, Veracruz, and Guerrero are among the world’s poorest. Five of these eleven were added to the list during the Fox administration (2000-2006) and another 122 other municipalities are only slightly better.[14] Hunger deeply affects all aspects of lives in rural areas, according to Abel Barrera, Director of the Centro de Derechos Humanos de La Montaña Tlachinollan,

Here the problem is hunger. The government does not guarantee the nutrition of the people who live in the countryside. With what a family in the mountain sows, it harvests 400 kilos of maize. And this is enough food for a family of eight for three months; but this assumes that they don’t get sick, that they don’t have to invest in clothing or in their children’s schooling. And when this runs out, they don’t have anything to eat. [15]

Chronic malnutrition among indigenous populations persists in many areas of the country. This is especially deleterious for infants and prenatal malnutrition. Oaxaca, for example, leads Mexico in the number of birth defects due to a lack of folic acid in the diet. While government programs and private companies have fortified foods, these foods are not accessible in rural areas. Consequently, there are high rates of malnutrition in the countryside especially among children. For example, in Chiapas, the poorest and most indigenous state in Mexico, 25% of children under 5 in the state are malnourished.[16]

Coupled with persistent hunger, a growing portion of Mexicans suffer from a modern junk food diet. The combination of “free” trade, food dependency, and the rise of cheap, nutritionally poor foods have flooded the markets and have entered the diets of poor and working class Mexicans in epidemic proportions. This has led to the growth in consumption of salt and carbohydrate-laden ramen noodles, international chain fast food restaurants and a decline in traditional food consumption. Beginning in 2012 Mexico became the largest consumer of sodas in the world. Since the 1970s, Mexico had been number two consumer, behind the United States, however the pro-company policies of the neoliberal era paved the way for an even greater consumption of sugary drinks as the real price of these drinks dropped. Between 1999 and 2006 adolescents obtained 22% and adults 20% of their energy intake from sugary drinks.[17] The result has been a growing obesity crisis that is reaching epidemic proportions. A 2013 FAO study found that nearly one in three (32.8%) adults suffered from obesity. President Felipe Calderón acknowledged in 2011 that Mexico has the world’s highest obesity rate for children age 5-14 and other studies confirm that diabetes is a leading cause of child death.[18] In general, many Mexicans are increasingly questioning the quality of the food that they consume or even refuse to call it food, as the cartoonist Rius has put it “La basura que comemos” (“The garbage we eat”).[19]

Mexico’s 1982 debt crisis ushered in a radical restructuring of the Mexican economy. This has led to economic growth and to a drop in the debt ratio but it has come at a high price. It has exacerbated existing inequalities and punished Mexico’s working poor. In the process it has forced millions off the land and to migrate in search of work only to often find a hostile environment, poor working conditions, and meager wages. Their ability to improve their health and nutrition is often out of reach. Diets have been transformed over the course of a few decades, such that “people can’t afford beans but they can afford Coke and chips.”[20] In the meantime, Mexico’s elite are growing their wealth and power, furthering the divide that was created in the name of debt.

Enrique C. Ochoa is Professor of Latin American Studies and History at California State University, Los Angeles. His publications include Feeding Mexico: The Political Uses of Food Since 1910 (2000), Latino Los Angeles: Transformations, Communities, and Political Activism (co-editor, 2005), and several articles on immigration, globalization, food history, and teaching history and ethnic studies. He is a founder of the Latina/o History Bee and a past board member of the Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA).

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