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 Editorials | April 2005 
It's The Institutions, Stupid!
 Kenneth Emmond - El Universal
| | It's the lack of strong institutions that is Mexico's biggest barrier to prosperity, and not any abnormal tendencies toward corruption among the citizens. |
Every day Mexico's newspaper readers and television viewers are bombarded with an endless, mind-numbing stream of stories about corruption and scandal.
Listeners and readers are so inured to hearing about corruption among businessmen, politicians, and government officials that items about massive sums of money that mysteriously disappear from public accounts - stories that would make screaming headlines in your columnist's native country, Canada - barely raise an eyebrow here.
"Así es!" say members of the scandal-hardened public. "That's the way it is! Mexicans are a corrupt people."
"Whoa, wait a minute!"
Your columnist has had this discussion over many a cup of coffee. "Not so!" he avers.
Greed, like generosity, is an intrinsic part of human nature. Given the opportunity, Canadians will dip into the public till just as quickly as Mexicans.
The difference is to be found not in any "propensity to corruption" gene, but rather in the opportunity or lack thereof - the self-correcting tendencies of public institutions.
Proof of this can be found in the annals of Canada's election results.
Unlike a Mexican or U.S. president, a Canadian prime minister can run for re-election as many times as he wants.
However, the long-term pattern that emerges over 130-odd years of Canadian history is that a party rarely stays in power more than 10 years because it tends to be turfed out by an electorate incensed by one or more financial scandals.
This is equally true of Liberals and Conservatives, and, while the left-wing New Democrats have never been in power at the federal level, the pattern runs true to form for their track record leading provincial governments.
A case in point is the crisis faced by the current government of Prime Minister Paul Martin. Martin has been in office for little more than a year but his Liberal party has been in power since 1993.
In the late 1990s Martin's predecessor, Jean Chretien, set up a massive $200-million-dollar pro-Canada public relations campaign in the Province of Quebec, following a province-wide referendum in which Quebecers narrowly voted down separation from Canada.
In 2003, the Auditor-General reported that the publicity campaign involved some shady dealings. As one of his first acts as Prime Minister, Martin cancelled the program and appointed Judge John Gomery to head a commission of inquiry into its operations.
During the commission hearings, statements by senior civil servants, businessmen, and even a former cabinet minister, all testifying under oath, confirmed and amplified the government's worst fears.
The program was shot through with shoddy accounting, contract tendering irregularities, and multi-million-dollar payments for work that was never done. Many beneficiaries were generous donors to the Liberal Party.
The hearings are still going on, so it's too early to know the outcome, but those involved are likely to face hefty fines or litigation - the government has launched more than $40 million of lawsuits against suspected wrongdoers - and perhaps prison time.
So far, no evidence has emerged suggesting that Martin, who was finance minister at the time, knew what was going on. Even so, indications are that he will pay the political price: despite disarray among the opposition parties there is a better than even chance the Liberals will be defeated in an election this year, perhaps as early as June.
The Conservative government of former Prime Minister Brian Mulroney suffered a similar fate in 1993 when scandals emerged after it had been in power nine years.
One lesson from this is that Canadians' propensity to greed and corruption is as strong as anybody else's.
Another is that in Canada, this propensity is held in check by a set of institutions that, like anti-bodies in a healthy specimen, do a serviceable job of preventing corruption from gaining a permanent beachhead.
Among these institutions are an imperfect but excellent court system with a level of corruption that approaches zero; a powerful auditor-general who reports to parliament and not to the executive; a well-paid, highly-trained police force; and an electoral system that reflects the will of the people.
The result: stability, accountability, fundamentally honest government, and a system that tends to self-correct when things go awry.
In the United States, when corporate corruption ran rampant, Congress responded with the Sarbanes-Oxley Act, which demands new levels of accountability to shareholders and the tax department by senior company officers and board members.
In Mexico, few institutional checks are operational, though many are elegantly enshrined in the constitution and the law. Good laws and rules exist on paper, but enforcement mechanisms are sadly inadequate.
Rigorous internal government audits are a novelty introduced by the present administration, and while they serve to identify fiscal anomalies, they result in few convictions because of inadequacies in the justice system.
If Canadians in government tend to corrupt themselves within 10 years, imagine what must have happened in Mexico, with flawed institutions, a political party in power for 70 years, and political actors protected by parliamentary immunity!
That, I tell my Mexican friends, is why foreigners are so keen to see institutional reform move forward in Mexico.
It's the lack of strong institutions that is Mexico's biggest barrier to prosperity, and not any abnormal tendencies toward corruption among the citizens.
Kenneth Emmond is a freelance journalist and economist who has lived in Mexico since 1995. Kemmond00@yahoo.com |
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