Mexican President Enrique Peña Nieto announced a new initiative to establish Special Economic Zones (SEZ) in the southern Mexican states of Guerrero, Oaxaca, and Chiapas.Which conjures up How China Became Capitalist by Ronald Coase and Ning Wang;
Among the four marginal revolutions [in post-Mao China], the Special Economic Zones were the most controversial. They were established to coopt capitalism to save socialism. The idea was to allow them to experiment with the market economy, importing advanced technology and managerial know-how, selling goods to the global markets, creating jobs and stimulating economic growth. But the experiments were confined to a few enclaves and strictly controlled so that they would not undermine socialism elsewhere, and if the experiments failed, their damage to socialism would be negligible.Instead, the market release (rather than reform) succeeded beyond anyone's imagination...and did considerable, rather than negligible, damage to socialism. As we wrote before about Coase and Ning's book;
One amusing vignette being Deng Xiaoping's protection of one Nian Guangjiu from persecution as an 'economic criminal'--while some 30,000 other Chinese weren't so fortunate--for selling baked watermelon seeds in the street. Nian, illiterate and twice imprisoned under Mao's reign, developed a recipe for the popular Chinese snack that produced a unique flavor. It became wildly popular with the people, who would form long lines to purchase Nian's treats.So, while the details of Mexico's plan aren't promising;
Like any alert entrepreneur, he decided to expand production and distribution. So he began hiring employees; i.e. to exploit workers. That so worried his wife she begged him to give up his business (the Fool's Watermelon Seeds), and in fact, someone did report him to higher authorities. But, Deng was intrigued by the example, and said, 'Let's wait and see.'
Nian became one of post-Mao China's first millionaires. Without Deng's protection he would have been imprisoned. Deng, and other Chinese leaders, drew a valuable lesson. And China became capitalist.
Given the long-term economic development benefits implied by the SEZs, Nieto has taken more immediate steps to boost the Mexican economy. The President is set to launch his Temporary Employment Plan, which aims to directly benefit more than 300,000 Mexican families through infrastructure projects.
The plan will allocate MEX$2 billion (US$142 million) in credit to small and medium businesses (PYMES), and MEX$4 billion to fund agricultural initiatives, including a renovation of the coffee industry. Finally, the plan includes measures designed specifically to breathe economic life back into Acapulco, one of the world’s most violent cities.
For its part, the National Commerce Bank (Bancomext) will provide low-interest, long-term credit loans to businesses interested in investing in the new SEZs.Which sounds more like more of the problem Mexico has now; crony capitalism (aka, state socialism). However, we suppose if El Presidente Nieto had come right out and said, 'Our people are proving that they can be successful entrepreneurs by emigrating to the freer market USA, so let's see if we can let them do the same by emulating the Norte Americanos.', there would have been a political storm there he wouldn't have survived.
Better to let someone grow some watermelon. And wait and see what happens mañana.