The Frozen Revolution: Mexico from Mid-Century to the Present

The Frozen Revolution: Mexico from Mid-Century to the Present

I. Cardenas and the "PRI"

A. Corporatism
- 1. Ruling party reorganized on corporate lines
- 2. Leads ultimately to corruption and non-responsiveness
B. Import-Export Substitution
- 1. Program to encourage local industrialization through tarrifs, state intervention
- 2. Heavy state involvement in economy - investments, state-owned industry, regulation
- 3. Produces 6.5% rates of growth 1940s-1970s
- 4. But meant high prices for low quality goods
- 5. Increasing economic disparity
  - a. 1958 - richest 5% of population had 22 times the wealth of poorest 10%
  - b. 1980 - richest 5% of population had 50 times the wealth of poorest 10%
C. Increasing autocracy in government
- 1. Coporate political structure led to corruption
- 2. 1968 Olympics
  - a. First "Third-World" Olympics
  - b. Government eager to show off Mexican accomplishments
  - c. Built heavily -- construction seen by leaders as sign of success
  - d. But regarded by many as a mockery, particularly by students
- 3. The Massacre
  - a. growing student unrest in 1968
  - b. government dealt with unrest with unprecedented repression
  - c. government desperate to end protests before start of Games
  - d. October 2, 1968
    - i. Plaza of Three Cultures at Tlateloco
    - ii. hundreds killed as Army trapped them
    - iii. Octavio Paz declares the Revolution is dead

II. The Boom Years

A. New oil reserves discovered
- 1. By 1976 - Campeche, Chiapas, Tabasco, Veracruz, Tamaulipas
- 2. 200 billion barrels, at least
B. Changed national self-image
- 1. No longer the poor man of North America
- 2. nation goes on wild spending spree
C. Conspicuous consumption
- 1. Rich bought real estate in U.S; got Swiss bank accounts
- 2. President built himself a four-mansion complex
- 3. Middle class bought like crazy
  - a. houses, cars, electronics, etc.
  - b. Vacations in Miami, Disneyland
D. Poor suffer
- 1. For most, more misery
- 2. 1976-1982 saw 100% inflation
- 3. Boom did not bring jobs to poor - high-tech work, not unskilled labor
- 4. Drilling brought ecological disasters
F. Debt
- 1. Failure to invest in peasant agriculture
- 2. Began importing food in mid-1970s, more than value of all imports
- 3. PEMEX (state oil company) expanded so rapidly, it did not make money
- 4. Banks willing to loan -- $80 billion by 1982
- 5. Drop in oil prices made debts unpayable

III. The Crash

A. Oil prices crash in 1982
- 1. Credit dries up for government, industry
- 2. Many projects abandoned
- 3. Many in middle class destroyed
B. Emergency measures (de la Madrid government - 1982-1988)
- 1. Foreign currency accounts frozen (but later deregulated)
- 2. Privatization of state-owned industries (many thrown out of work)
- 3. Mexico joined the GATT (forcing it to reduce tarrifs)
- 4. lifted price controls on 4700 items
- 5. Import-substitution abandoned
  - a. protections removed, many businesses failed
  - b. 800,000 out of work
C. Social costs
- 1. By 1986, 2/3 of Mexicans living below the poverty line
- 2. Six million landless peasants could find work only 1/3 of year
- 3. Unemployment doubled
- 4. Inflation rose to 159% by 1987
- 5. Minimum wage lost half its value while subsidies removed
D. De la Madrid institutes austerity program
E. Many good effects of austerity eliminated by 19 Sep. 1985 Mexico City earthquake.