To start with, Mexico’s wealth is distributed unevenly. Scroll to page 2 of this website to see the income disparity between Mexico’s 31 states and the capital of Mexico City. Mexico has the world’s richest man, Carlos Slim, a fair number of really upscale areas that tourists might see, and an awful lot of poor people living in shantytowns, especially in southern states.
Of Mexico’s 113 million people, 52 million live in poverty, says the National Council for the Evaluation of Social Development Policy, the state agency that measures such things.
The balance between the better off among the poor and those who might fall in a category considered middle class is murky. That’s why you get headlines with far different slants like the following:
“Mexico’s new president faces long grind on poverty,” Reuters said in a story this week.
“Mexico’s middle class is fast becoming its majority,” the Washington Post said in a March 17 story. The paper followed up this week with a story headlined, “Returning migrants boost Mexico’s middle class.”
The New York Times last year wrote a story on the dropping numbers of Mexicans migrating to the U.S. It was headlined, “Better lives for Mexicans cut allure of going north.”
I’ve played into this debate as well. In a series on Mexico’s future that ran in June, an article on factory workers carried the headline, “Mexico’s ‘maquiladora’ labor system keeps workers in poverty.”
Very smart people disagree in this debate, including highly skilled economists, academics with decades of experience studying Mexico, and journalists taking a crack at the topic from different angles. It underscores the complexity of the issue.
Those who argue that the middle class is expanding point to improving education levels, shrinking family size, greater availability of cheaper consumer goods, remittances of $22.7 billion last year, and rising per capita income.
All of these factors are backed up with empirical data.
Just as in the United States, though, many people who’ve climbed into what might be considered middle class (definition, anyone?) are “one health emergency away from poverty.” How do you measure those people? Shannon K. O’Neill of the Council on Foreign Relations has a blog post here about the issue.
This issue has given some heated debates in the last couple days on a private bulletin board among Mexico watchers, with valid points by those who say a middle class is growing and those who say the data is skewed or doesn’t match reality.
Chalk me up among the skeptics. Sure, there are pockets of prosperity. See this story I recently did on the aerospace sector, whose workers are solidly middle class, more so than the booming automotive sector.
And returning migrants are also a source of relative prosperity.
But will there efforts be transformative? El Salvador offers an illustrative example. Fully 25 percent of the country migrated to the U.S., beginning with the civil war in 1979. In places like Intipuca, in La Union province, some signs are in English and returned migrants own most businesses. Remittances are huge but a lot of it has gone into commerce, not into production.
Now for some fluffy, non-empirical observations. I’ve lived in Chile in the mid-1980s, and in China last decade. Both are places with powerful forces toward expanding a middle class. Opportunity there is tangible. You smell it. People have dreams, and many are turning into reality. Another place where I lived, Peru, has also gone through a transformation, with poverty levels dropping from the mid-50 percentile to the low 30s today.
Does anyone sense this level of hope in Mexico today? Very few of the people I interact with. And one factor is the state. No broad policy exists at a grassroots level to truly open doors to the poor and the middle class, at least with the intensity I've witnessed in Peru. What’s more, Mexico suffers from what I’d call a predatory bureaucracy. Who can imagine a better live than being a division or bureau boss at a secretariat, having funds to entertain, featherbedding the staff with friends and mistresses, and having iron-clad social ties to godfathers who put you in the post? When that changes, Mexico will transform.
I’d be glad to hear what anyone else thinks about this issue.
In the meantime, I’ll be out of the country till Aug. 12 on holiday.