The Devil

Over the past few days, I have outlined what I believe should be Mexico’s objective after this third attempt to build an authoritarian, corporatist regime—a project that has now begun to unravel. I have done so by describing the role the government ought to play through the only thing that truly matters: the budget. My proposal is that society’s resources should be concentrated in three areas: security, education, and healthcare. It is no coincidence that these three activities fall within what William Baumol identified half a century ago as the “cost disease.”

Baumol observed that activities requiring large amounts of human capital would become increasingly expensive relative to those that rely primarily on materials or energy, whose costs tend to decline over time. That is exactly what has happened. The costs of security, education, and healthcare have risen dramatically around the world. Since governments assumed responsibility for a large share of these services during the twentieth century, they were forced to collect more revenue. Even that proved insufficient, and once pensions are added to the equation, the result has been deeply indebted governments throughout the Western world.

Consequently, great care must be taken in translating these government responsibilities into concrete programs.

In the case of security, the first priority is to draw a clear distinction between national security and public safety, eliminating the grotesque hybrid that exists today. The armed forces should focus exclusively on their proper mission, equipped and trained in a way that allows them to take pride in defending the nation’s security. The chain of investigation, adjudication, and administration of justice has been damaged at what was arguably its least dysfunctional link through the judicial reform. At the two ends of the system, we have more than 95% impunity alongside overcrowded prisons. The country needs much more funding, but above all, much greater human capital and better organization.

In education, the government should concentrate on providing a strong basic education—roughly the first ten years—that equips students with the tools needed for higher levels of learning. Beyond that, the government should not be the principal provider, but perhaps support students through scholarships. Those essential tools are, fundamentally, the skills needed for civic life and mastery of languages: Spanish, English, mathematics, music, the arts, and logic.

In healthcare, by contrast, the government should intervene from the opposite end of the system: by covering catastrophic medical expenses, rather than necessarily providing first-contact care. This is even more important today, as healthcare systems are increasingly burdened by chronic diseases rather than the relatively simple infectious diseases that predominated decades ago.

In every case, the most important factor is human capital. Across all three sectors, the habit of paying peanuts produces disastrous results: wages remain low, but so does performance.

If we want these three areas to become the foundation of a reasonably fair and competitive country, they must attract the very best people.

And that costs money.

In each of these sectors, Mexico has already had experiences that worked, despite their shortcomings. The Federal Police succeeded in recruiting highly capable personnel but eventually deteriorated because it retained already-corrupted officers and failed to maintain proper oversight. Seguro Popular effectively financed catastrophic healthcare, but in some states it was manipulated through the same old corruption schemes. The Educational Reform created a labor framework capable of transforming education, only to be dismantled by López Obrador.

This must be stated plainly.

If these activities are to become the foundation of a competitive and just country, their human capital must be almost completely renewed.

This is especially true in education and security, and perhaps somewhat less so in healthcare. But old wineskins have spoiled new wine more than once.

It is impossible to achieve public security without cleaning up the prison system, local police forces, and much of their leadership.

It is impossible to achieve quality education with the CNTE, and with a large portion of the SNTE, in their current form.

That is the devil in the details. It will demand its price.

And that price will have to be paid.