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The Weekly Standard, USA, June 21, 2006

Down Mexico Way
Corruption is the reason Mexicans keep coming to America.
by James Thayer
06/21/2006 12:00:00 AM

EDUARDO had just graduated from the police academy and had been sent to a station on the outskirts of Mexico City. On his first day as a patrolman he was assigned to a senior beat cop, José, who seemed delighted to act as the tutor.

They walked around a corner and came upon two young men sitting on a bench drinking beer. José and the rookie Eduardo took the men to their patrol car, and drove around town for a while. Then the patrol car turned onto a quiet street, and stopped on the side of the road.

José turned to the young men. "All right now, boys, would you like me to alleviate your problem of drinking in the public right of way, or would you like to spend 36 hours locked up?"

"No, officer," one of the men replied

"Well," the senior officer asked, "what are you going to do?"

"All we've got on us is ten pesos," the man said.

"What do you mean only ten pesos?" José demanded. "What I want is money, but not ten pesos. I suggest you guide me to your home. In all likelihood your relatives have a little more money."

When they reached the family home, José told the rookie Eduardo to stand against the patrol car's door to hide the car's number. José spoke briefly with the father, who quickly produced 50 pesos. On his way out of the house, José reminded the father to keep his eye on his children to keep them out of trouble.

And the patrolman then summarized the lesson for Eduardo, "Never doubt anything that seems suspicious to you, because it is doubtless suspicious. Go check it out, because it's money."

This little episode was reported in Nexos magazine by National Autonomous University of Mexico sociologist Nelson Arteaga Botello and sociology student Adrián López, who joined a police force to investigate corruption. Artful variations of this scenario happen tens of thousands of times a day in Mexico. The shakedown is emblematic of the country, where corruption and cronyism are so deeply imbedded that the economy is profoundly and permanently crippled.

AS AMERICANS DEBATE illegal immigration, we tend to focus on the magnet that is the United States. We readily understand why people want to come here. But the pull of America is only half of the equation. The push of Mexico is the other half.

It is with good reason that Mexicans flee their own country.

We have two neighbors, of course. Our friends to the north happily export hockey players, timber, and Molson. The only Canadians waiting in line to get into the United States are seniors on crutches coming here for new hips. Canada "abounds in oil, natural gas, gold, silver, beaches, seafood, water, historic treasures, museums, industrial centers, and wonderful people."

Wait. That's College of William & Mary Professor George Grayson's description of Mexico, not Canada. Mexico has the same advantages Canada has. Why, then, does Canada work, while Mexico is so broken that its citizens flee en masse?

Let's start with corruption. In its entire history Mexico has seen only one peaceful regime change, six years ago when Vicente Fox of the National Action Party won the presidency, with hopes of ending what his advisor Sergio Aguayo termed "70 years of corruption." The Economist pointed out that Mexico was, in Nobel Prize winner Mario Vargas Llosa's words, "a perfect dictatorship." It had the superficial appearance of a democracy, but the president could choose all the party's candidates, and so enjoyed nearly absolute power. There was no incentive to clean up the system.

"There is a total lack of control over the police forces," says Hiram Escudero, a representative in the Legislative Assembly of Mexico City. In a University of Wisconsin--Madison paper, Valentine Anozie and his colleagues note that 60 percent of crimes in Mexico involve policemen, that a survey indicates 90 percent of Mexico City residents have little or no trust in the police, and that 78 percent of Mexicans say it is normally necessary to pay bribes to resolve issues with the government. "Mexicans do not trust their police either to protect them from harm or to solve crimes," said National Secretary of Public Security Alejandro Gertz Manero, quoted in the BBC. Nelson Arteaga Botello and Adrián López conclude that "corruption in Mexico is by now thoroughly institutionalized and operates at the local and state as well as federal levels."

And if a Mexican can't work it out with the police, he's condemned to the court and prison systems. The BBC says, "Torture, intimidation, and coercion of detainees are entrenched practices in Mexico's criminal justice system." The Heritage Foundation in its 2006 Index of Economic Freedom uses these words to describe the judiciary and police: unprofessionallism, inefficiency, and corruption.

IN MEXICO, it's called mordida, the bite. It's as common in business as it is in dealing with the police. Professor Grayson says that "a study by the highly respected Private Sector Center for Economic Studies estimates that 34 percent of business made 'extra-official' payments to legislators and bureaucrats totaling $11.2 billion in 2004." He adds that Transparency International ranked Mexico as tied for 65th place among 158 countries in corruption, below Bulgaria and Cuba. Joachim Bamrud in the Latin Business Chronicle notes that the giant chipmaker Intel chose Costa Rica over Mexico for its new plant partly because of corruption in Mexico.

State-owned Pemex--the world's fifth largest oil company--controls every refinery and gas pump in the country. Tim Weiner in the New York Times says that Pemex loses at least $1 billion a year due to corruption. He says that part of the plunder is the thousands of gallons of jet fuel sold to drug smugglers for flights to the United States, which generates huge sums for Pemex and union officials. Another part is the collection of wages for no-show jobs. Weiner quotes Tony Cantu, who worked nine years for Pemex: "People who didn't work at the refinery still came in to pick up their money every two weeks. You had to give a cut to the union boss--30 percent." Pemex--which sells almost as much oil to the United States as Saudi Arabia--generates 40 percent of the Mexican government's revenue.

Corruption grinds away at Mexican business, and so do layers of government regulation, often promoted in the guise of nationalism. Foreigners cannot own property in Mexico within 100 kilometers of the border or 50 kilometers of the coast. To register the purchase of property takes, on average, five steps and 74 days. Mexican law limits foreign investment in certain industries, such as telecommunication, and sets the ratio of foreign-to-Mexican employees in foreign companies doing business in Mexico. Foreign money cannot be put into the electricity or petroleum industries. To start a business involves nine separate procedures and takes 58 days.

These and an ocean of other regulations make doing business in Mexico complex, slow, and risky. The World Bank lists Mexico as 73rd out of 155 countries in ease of doing business (Canada is first), 125th in the ease of hiring and firing workers, and 125th in the ability to protect investors.

For much of the world, education and a job are paths to advancement. Not so for most Mexicans. Twenty-nine percent of Mexican youth don't finish high school. Half of all Mexican 15-year-olds are illiterate or only semi-literate. Mexico spends only $1,415 per year on students in elementary and secondary schools. (America spends $7,397 per student.) Professor Grayson says that "corruption, cronyism, crookedness, and feather-bedding suffuse the 1.3-million member" teacher's union.

Why no money for schools? Endemic corruption severely limits the Mexican government's ability to collect taxes. Sang Jin-Wei of the International Monetary Fund writes, "This may arise through outright theft by tax officials, through hiding of taxable income by taxpayers, or through practices whereby tax inspectors collaborate with taxpayers to reduce the latter's tax obligation in exchange for a bribe."

FOR MOST MEXICANS the only way to get a job or to advance in a career is to know someone. David Luhnow and John Lyons in The Wall Street Journal say, "Latin American culture tends to emphasize advancement through personal relationships rather than merit," and note that "Corporate executives and tortilla grinders alike hand their jobs down to the next generation in their families." Eighty percent of Latin Americans say connections are the most important ingredient of success. In such a system, education means less. Luhnow and Lyons say that a Mexican blue-collar worker has only a 10 percent chance of climbing to a white-collar job.

New jobs in Mexico tend to be in the sidewalk economy, where entrepreneurs can earn only a meager living selling CDs or phone cards or tomatoes. Marla Dickerson in the Los Angeles Times reports that "as many as half the nation's workers eke out a living in subsistence jobs such as street hawkers and day laborers because there is nothing for them in the legitimate economy." These folks usually work off-the-books, not paying business or income taxes. Dickerson points out that between 2000 and 2003 the Mexican sidewalk economy grew by 40 percent, whereas no new jobs were created in the formal economy. But, of course, the vendors do make payments: to the corrupt police who make their rounds.

SO WHAT'S THE PROBLEM? If corruption and cronyism are ways of life--if everyone does it--who's the loser?

The World Bank concludes that corruption is "the single greatest obstacle to economic and social development" because it "undermines development by distorting the rule of law and weakening the institutional foundation on which economic growth depends." Valentine Anozie and his colleagues sum up a number of studies "that show that, all else equal, high levels of corruption are closely associated with lower investment, growth, and income; less government spending on education; higher child mortality, and a weak political support system."

While campaigning for the presidency in 2000, Vicente Fox urged Mexican voters to support him so that change "will permit us to stop being a loser country." Fox promised to root out corruption. But the Institutional Revolutionary Party (PRI), which held the presidency for 70 years prior to Fox's victory, still has a plurality in the Mexican Congress. Attempts at meaningful reform have died.

And so have Mexican hopes for a better life. A 2005 Pew Hispanic Center study showed that 46 percent of Mexicans would come to the United States, given the chance. One in five Mexican men between the ages of 26 and 35 is already here.

Nothing is getting better for those who remain, and so there will be no end to the waves of Mexicans trying to enter our country illegally.

James Thayer is a frequent contributor to The Daily Standard. His twelfth novel, The Gold Swan, has been published by Simon & Schuster.

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