How Mexico Became So Corrupt

From Sicily to Tijuana, how monopolies and governments perpetuate one another.
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A protester gestures next to traffic police outside Mexico's Federal Electoral Institute (IFE) in Mexico City on July 4, 2012. The placard reads, "Comrades, to your trench, to the theatrical trench. Because this is a festival, the people have awakened and will fight for their people." (Edgard Garrido/Reuters)

Grupo Televisa, the world's largest Spanish-language media company, is famous for its logo, a gold-colored eye gazing at the world through a television screen. According to The Guardian, this logo "captures the company's success at controlling and dominating what Mexicans watch".

In a country where newspaper readership is tiny and the reach of the Internet and cable is still largely limited to the middle classes, Televisa -- and its rival TV Azteca -- exert a powerful influence over national politics. Through its scores of stations and repeater towers, the former accounts for roughly two-thirds of the nation's free-to-air television; most of the rest belong to Azteca.

Accused for decades of politically slanted news coverage, Televisa represents another rarely spoken fact: modern Mexico has never functioned without corruption, and its current system would either collapse or change beyond recognition if it tried to do so.

Just before the 2012 elections, Mexican news magazine Proceso and The Guardian released evidence of a series of shady deals struck between Televisa and the nation's powerful Institutional Revolutionary Party (the "PRI").

In return for multimillion dollar payouts, the network provided the PRI's candidate a special "public awareness campaign" that gave him glowing coverage on its flagship news and entertainment shows; "hushed" criticism on the network's talk shows; and "subliminal" promotion to strengthen his overall image.

In its typically artful way, the PRI had managed to secure a lock on the nation's airwaves.

Although the exposé provoked widespread student protests for weeks leading up to the election, it barely made a blip in the results. The PRI's candidate, Enrique Peña Nieto, won by a landslide.

In the aftermath, Peña Nieto immediately clinched a deal -- again, in typical PRI fashion -- called "Pact for Mexico," a set of 95 vague proposals that gathered together powerful actors from every political party under one broad tent.

***

In the early 1960s a psychologist named Douglas McGregor observed two basic theories of management. Theory X assumes that most people are naturally indolent and seek to get away with something for which they are not entitled. Theory Y assumes the reverse -- that most people are basically honest and hardworking and, if provided with reasonable expectations of satisfactory performance, strive to achieve it.

It may come as no surprise that Mexican companies are overwhelmingly theory X organizations.

Why this is true is deeply rooted in the nation's past. One telling sign is the way business came to rely on government; not just in terms of policy decisions (which affect business in every nation) but personal relations with government officials.

Since the nation's founding, few private fortunes were made without colmillo ("fang" or cunning), the owner's ability to cultivate ties to the right officials and master the art of "mutually convenient" relationships.

In this scheme, the mindset of politicians drove (and was driven by) the mindset of business leaders: wary, secretive, suspicious, and cynical. Each group deeply distrusted the other, yet both intermingled in the same tight-knit social and business circles.

An entire foundation supported this symbiosis: classism, Catholicism, a gulf between pre-Hispanic and European values, strong authoritarian and elitist traditions, and, of course, corruption. On all sides, trust was minimal. Most transactions were made between family, friends and neighbors.

In time, the sense of "us versus them" gave rise to deep-seated paranoia, subtle and often unspoken expectations to keep outsiders outside -- the knowing wink, the sealed lips.

***

Across the Atlantic, this same deep mutual distrust morphed into an entire way of life; what the Sicilians call omertà -- a rigorous code of silence and non-interference in the illegal acts of others.

Back in the 1920s, a famous Italian official named Cesari Mori was appointed prefect of Palermo, the capital of Sicily. Mori was a model police officer, later chosen by Mussolini to lead his national campaign against organized crime.

For years, Mori lived in Trappini on the western part of the island. In his writings, he claimed to have "penetrated the Sicilian mind" which he found to be:

"Simple and kindly, apt to color everything with generosity of feeling, inclined to deceive itself, to hope and believe; ready to lay all its knowledge, affection and cooperation at the feet of a powerful figure who assumes their legitimate need for justice and redemption," according to Cosa Nostra: A History of the Sicilian Mafia.

The key to the Mafia's success, he argued, was its ability to understand this complex dynamic and exploit it.

***

And so in Mexico: the entrenched power of monopolists, party bosses, cardinals and mafias are reflections of something much deeper -- a perspective that arose from what Cosa Nostra calls the "painful scars of... tyranny and oppression."

Not just in terms of crime, as in legendary mafiosos who steal from the rich and give to the poor, but as way of life; a way of facing adversity and relying bravely on your own people.

Just as in Sicily, these cultural norms required centuries to coalesce, punctuated by watershed moments when outsiders came to be viewed with deep suspicion. Imagine the Aztec natives' reaction when the Conquerors showed up off the coast of Vera Cruz.

The PRI was founded in the late 1920's by a generation of leaders whose ranks were not only influenced by the Conquest and everything this implies, but also decimated by revolution and anarchy.

In the midst of the Mexican Revolution, a multi-sided civil war with dangerously shifting power struggles, the PRI decided to bridge wildly divergent ideological and political gaps by putting "everyone under one roof" -- in effect fusing the party and the Mexican nation-state.

To this end, any means became justified: Between 1929 to 1982, the PRI won every presidential election by margins of over 70 percent -- which were obtained usually by massive electoral fraud. The party also held an overwhelming majority in the Chamber of Deputies, every seat in the Senate, and every state governorship.

During its long reign, the PRI learned not only how to buy votes but also how to corrupt the army, exploit the media, buy off criminals and absorb the opposition.

Loyalty, discipline, discretion and silence -- already deeply rooted in society -- became essential to the political system's survival.

Although the "oil and glue" that held the working parts together was based on what Westerners call "corruption," many Mexicans (just like Sicilians) didn't always see it that way. To most of the nation's political leaders, corruption was an aberration of law, but not of society.

According to Alan Riding, author of Distant Neighbors, the system that emerged in the twentieth century merely institutionalized what was already there: a ruling class with absolute authority that rewarded unquestioned loyalty with favors and patronage.

"Many old habits," wrote Riding, "including conflict of interest, nepotism and influence-peddling, were not even considered wrong; and since power rather than law dominated society, honesty itself was seemingly negotiable."

Call it what you will -- paternalism, savior-ism, patronage, protectionism -- many Mexicans came to depend upon the strength and reliability of monopolists.

For ordinary business people who dealt with these companies -- Telmex, Cemex, Televisa, Modelo, Ocesa, Femsa, Pemex, et al. -- the imperatives of order, trust, and what the Sicilians called "our thing" (the knowing wink and sealed lips) made it possible.

Monopolies and monopolists are a deeply-rooted part of Mexico : This truth is close to the hearts of Mexican officials (many of whom grew up in the PRI) involved in several major antitrust claims currently before the Federal Antitrust Commission.

Has the PRI's historic embrace of monopoly -- and its "see no evil" approach to criminality -- really changed?

As The Economist said: "The fear is that the PRI's fundamental instincts remain the same: to shun openness in favor of media manipulation, to conflate public and private interests and to shield corrupt union bosses."

In truth, nobody really knows. Peña's decision to arrest the head of the teacher's union last February sent a powerful (and unexpected) message to anyone planning to block the government's proposed reforms.

Maybe the PRI is serious this time about "asymmetric regulation" and rules that force dominant companies to divest. The PRI realizes as much as anyone that monopolies have become a heavy drag on the nation's economy; a recent OECD study makes this crystal clear.

But maybe not. Many powerful interests are vehemently opposed to cutting off the head of a goose that has laid golden eggs for so long. According to one Mexican journalist: "The PRI and PAN parties are largely responsible for preserving Mexican monopolies, as their owners are both associates and campaign backers".

My own guess is that Peña will attempt to play each monopolist off the other. As the heat turns up, he will try to keep infighting at acceptable levels under the "big tent". And when things boil over, he will use his colmillo and unfailing PRI "finesse" to the party's advantage. As long as Carlos Slim's interests remain counter to those of Televisa and TV Azteca, all the better.

Ultimately, the PRI -- like any true monopolist -- wants to play it both ways. And if Peña succeeds, it will have gone a long way to silencing its critics.

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Lawrence Weiner is a business consultant and teacher living in Mexico City.

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