Why Mexico Is on the Road to Serfdom

As a Mexican, an economist, and a libertarian, I cannot help but feel disheartened by the direction my country is heading.

by Sergio Martínez

Eighty years ago, Friedrich Hayek watched in anguish as Western liberal democracies seemed to embrace the authoritarian tendencies that had given rise to Nazism in Germany. In The Road to Serfdom (1944), he dedicated his work “to socialists of all parties,” warning that both left-wing socialism and national socialism were branches of the same tree. Hayek feared England would repeat the history he had witnessed in Germany when he wrote the following:

When one hears for a second time opinions expressed or measures advocated which one has first met twenty or twenty-five years ago, they assume a new meaning as symptoms of a definite trend. They suggest, if not the necessity, at least the probability, that developments will take a similar course.

Parallels in Hispanic America

Hispanic America has experienced numerous manifestations of totalitarian government, making it easy for those from the region, like myself, to sympathize with Hayek’s warnings. Since President Andrés Manuel López Obrador (AMLO) took office in 2018 in Mexico, my Venezuelan friends have repeatedly warned of the authoritarian similarities between Obrador’s government and those of Chávez and Maduro. Obrador, a politician with strong socialist convictions, published a book in 2018 that denounced corruption as Mexico’s main problem. What seemed like a harmless statement masked a dangerous belief: for Obrador, corruption was synonymous with privatization and private property.

Economic Failures and Political Success

Obrador’s government initially promised high economic growth; yet over his six-year term, Mexico’s GDP per capita growth barely moved, remaining close to zero. Despite this mediocre performance, his party won a landslide victory in the recent presidential elections, with Claudia Sheinbaum, a loyal ally, securing the presidency. Not only that, but Morena, the party of Obrador and Sheinbaum, secured a legislative majority capable of making profound constitutional changes.

Their success lies in a strategy of increasing government transfers to youth and the elderly, effectively purchasing their electoral support. Politicians like Obrador thrive when a country’s economic culture is weak, where short-term benefits obscure the long-term sacrifices required to finance these programs.

Threats to the Judiciary

With a legislative majority in hand, one of Obrador’s final authoritarian acts was proposing a constitutional reform to the judiciary. During Obrador’s tenure, Mexico’s judiciary blocked several government proposals, including a reform to the electricity sector that sought to benefit the state-owned utility, Comisión Federal de Electricidad (CFE). However, on September 11, despite widespread civil opposition, the Senate approved the reform.

This reform forces Mexicans to vote for hundreds of judicial candidates selected by the executive branch, rigging the process from the outset. Former President Ernesto Zedillo criticized the reform, saying: “There will be judges and magistrates who obey not the law, but the dominant political power.” The government will have the power to persecute, censor, or punish judges who defy its interests.

The Future Under Sheinbaum

With the reform, Mexico’s next president, Claudia Sheinbaum, will have the ability to advance a wide range of laws that promote Obrador’s statist vision: greater control over the energy sector, increased centralization of political power, protectionist measures, and tighter regulation of private activity. Obrador believes in the fallacies of economic policies that have historically led to impoverishment, such as import substitution, redistribution, and wealth confiscation. The reforms risk straining Mexico’s trade relations with the United States and Canada, as investors fear their investments will be poorly protected.

A Return to Economic Isolationism?

Mexico depends on healthy trade relations with its neighbors to reap the benefits of specialization and exchange. However, Obrador’s policies complicate these relationships. As a Mexican, an economist, and a libertarian, I cannot help but feel disheartened by the direction my country is heading. Collectivism is gaining ground, and the government has convinced millions of Mexicans that critics of its reforms are enemies of the people.

Institutional Setbacks

Mexico has made significant institutional efforts since the 1990s to open up to trade, denationalize businesses, protect property rights, and ensure a participatory democracy with stronger checks and balances. The autonomy of the central bank has shielded the country from severe inflation, and international economic integration has improved living standards. However, the current government has done more to worsen the nation’s most pressing problems (i.e., violence from criminal gangs and a hyper-regulated labor market), rather than solve them.

The institutional conditions necessary for Mexico’s economic growth and poverty reduction require a government that respects property rights and avoids arbitrary actions. With the recent judicial reform, Mexico appears to be regressing, embracing the very policies that have long hindered its development.

My Hope

My hope is that the educational efforts we do at organizations like FEE will alert the population to the dangers of a government concentrating too much power. It is crucial for citizens to recognize the risks and to advocate policies that foster economic freedom. Mexico is on the verge of becoming a collectivist regime. But not everything will be lost if there is enough courage in my fellow Mexicans to keep fighting for individual liberty.

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