El otro lado

El otro lado is the expression Mexicans use to refer to America. It literally means the other side, as on the other side of the border. 

The first time I visited America I was impressed by the roads, parks, and houses – so different from Mexico. I knew we were not rich, but I never thought of us as poor. The first time I read the words the third world was in my textbooks. America, colored in a light yellow, was the first world; Mexico, colored in dark brown was the third world. Somehow I forgot the second world, mainly communist countries, in red. Without even noticing, the construct of The West was seeded in me. America, el otro lado, was better than Mexico.

On September 1st, 1982, then President of Mexico, José López Portillo, announced the nationalization of the bank system in his last annual report to the public. What I remember most is my parents going crazy. My parents had savings accounts in US dollars in my sister's name and mine to finance our college educations. I didn't know the implications of that; I was 11 years old. The government gave no warning of the devaluation of the Mexican peso against the dollar; it just happened overnight. All the savings accounts in US dollars were converted into Mexican pesos, resulting in a loss of 75% of my parents' savings. It was a Wednesday, and at that time, we were given the day off to listen to the President's speech. The banks were closed, and my parents did not have the chance to go to the bank until the next day. There was nothing to do.

Just the year before, in 1981, oil prices were on the rise. Oil export revenues had been fundamental to the Mexican government to subsidize social welfare and infrastructure for decades. But oil prices experienced the most significant drop late that year and early 1982, increasing the number of international loans to keep national policies on track. By December 1982, Mexico's external debt was 50% of the GDP (1). By 1983, the peso had devalued 160% against the dollar (1). Prices of goods and services skyrocketed, unemployment rose. Maquiladoras laid off thousands of employees. The promise of belonging to the first world never happened. 

My parents worked hard. During the sixties and seventies, economic growth in Mexico averaged 7% annually (1). My family was able to buy a house and two cars. But after the 1982 crisis, everything changed. My family was fortunate; at least I got a Rubik's Cube for Christmas that year, many didn't do as well. 

When President Miguel De la Madrid took office in 1983, international aid came in as a form of a bailout. The International Monetary Fund loaned USD 3.8bn to the Mexican government with the condition it would implement a series of free-market reforms. Those reforms included, among other things, relaxing foreign investment regulations, reforming the tax system to encourage international capital inflows, and initiating a process of financial market liberalization. Also, De la Madrid applied an austerity plan in government spending, which resulted in social welfare cuts. I remember my mom yelling at the TV when the President announced all these measures. Mexico received two more loans in 1986 and 1989, increasing its international debt. 

De la Madrid laid the foundations of neo-liberalism for Carlos Salinas de Gortari, who took office after him. In 1990 Salinas privatized the banking system and opened the country to free markets. He also privatized public companies such as communications, transport, and steel, and approved (but not succeeded in implementing) the privatization of the social security system (2). By the time Zapatistas in Chiapas rose against the Government on January 1st, 1994, I was working in my first professional job; I was 23. The year before, I graduated as a Civil Engineer from a public college. I was lucky enough to have the opportunity to study and get a job. My friends, my family, we all thought the Zapatista Movement would be the beginning of a new revolution. It was not. By December 1994, the Government couldn't contain the crisis. History repeated itself. Prices of goods and services raised, unemployment was at its peak, and the President signed a new bailout. Some of my friends lost their houses, others, their cars. I lost my job. I was one of the more than 2 million that lost their jobs within months in 1995. Without a job and the labor market at its lowest point, I decided to study for a master's. Again, I was one of the lucky ones. 

Neoliberalism policies did not end with the millennium. After a long political battle, the privatization of the state-owned oil sector took place in 2017 during President Peña Nieto's term. In 2018, Mexico voted in a candidate from the left. Right now, hope is high, but we live now in a globalized economy. I wonder when the next big crisis is going to happen. 

As I tried to explain, I experienced on a personal level, almost everything McMichael explains in his piece. Mexico played the Development Project rules during the 1940s and through the 1970s. During the 1980s, when recessions hit first world countries, Mexico suffered the consequences. To manage its international debt, Mexico nationalized its bank system and controlled rate exchange. Several third world countries put into action similar policies. Some effects – the collapse of exports and the decrease in wages – were experienced first hand by my parents. The newly industrialized countries of the third world, including Mexico, were heavily indebted and got loans in the form of bailouts to pay loans. During the 1990s, Mexico opened its markets, following the rules of globalization, but new crises arose, and more bailouts became necessary as international debt piled up. 

One of the biggest economic crises in the history of Mexico broke with my parents' dreams of providing me with an education that they did not have access to when they were young. Ironically, it was an economic crisis that prompted me to seek new professional challenges, i.e. study a master's degree, and get out of my comfort zone. The endless economic crises have an emotional cost on the population.  

(1) The Mexican Debt Crisis
(2) Privatization in Mexico 

References:
Fitting, Elizabeth. Importing corn, exporting labor: the neoliberal corn regime, GMOs and the erosion of Mexican biodiversity
Henriquez, Gisele, and Raj Patel. NAFTA, corn, and Mexico's Agricultural trade liberalization in America's Program Special Report 
McMichael, Phillip, 2012. Development and social change (Chapter 5)