IS AMLO CORRECT? IS AN APPLE AN APPLE, OR IT IS A BANANA?
IT HAS BEEN SEVEN MONTHS SINCE AMLO LEGALLY TOOK OFFICE IN MEXICO CITY. THE ECONOMIC POLICY HAS MIXED REVIEWS. THE RESULTS ARE SEEN WITH DIFFERENT SETS OF GLASSES.
CNN HAS CRITIZED TRUMP WITH A NOW FAMOUS PHRASE THAT GOES SOMETHING LIKE THIS; ONE CAN SEE A BANANA AS AN APPLE, BUT THE TRUTH IS THAT A BANANA IS A BANANA, NOT AN APPLE. THOSE ARE THE FACTS, AND NO ONE CAN CHANGE THEM.
THE PREMISE OF THE PRE-CANDIDATE TO THE PRESIDENCY OF THE REPUBLIC WAS THAT THE OLD GOVERNMENT SPENDING WAS EXCESSIVE, CORRUPT, AND IT NEEDED A CHANGE (PRI AND PAN GOVERNMENTS BUDGETS WERE TOO BIG DUE TO EXCESSIVE WASTEFUL SPENDING). THAT THE GOVERNMENT WAS IN BANKRUPTCY, OR NEAR BANKRUPTCY, AND THEREFORE, A NEW BUDGET WAS NEEDED. THAT A NEW ECONOMIC POLICY WAS NEEDED TO ATTEND THE NEEDS OF THE POOR AND UNEMPLOYED. THE THIRD AGED PEOPLE WERE IN NEED OF GOVERNMENT ASSISTANCE AND THE YOUNG UNEMPLOYED NEEDED ECONOMIC ASSISTANCE TO SURVIVE AND SUCCEED IN THE ECONOMIC REALITY. POPULAR CLAMOR WAS INSTANTLY TOUCHED, AND AT THE ELECTION DAY, JULY 1, 2018, THE RESULTS REFLECTED THAT CLAMOR. PEOPLE WERE TIRED OF THE OLD PRI AND THE OLD PAN. PRESIDENT, CONGRESS, GOVERNORS, STATE HOUSES, AND MUNICIPALITIES REFLECTED THAT ANGER. FEDERAL CONGRESS INMEDIATELY TOOK OVER, AND STARTED TO CHANGE LAWS. PEOPLE APPLAUDED WITHOUT HESITATION.
THE PREMISE ONE OF THE NOW PRESIDENT WAS THAT GOVERNMENT SPENDING WAS EXCESSIVE AND CORRUPT. PREMISE TWO WAS THAT THE GOVERNMENT WAS ACTUALLY IN BANKRUPTCY, AND THEREFORE THE GOVERNMENT SPENDING NEEDED SPENDING CUTS; AS THE ONES IMPOSED ON PORTUGAL, GREECE, ITALY, AND OTHER COUNTRIES, BY THE EUROPEAN UNION IN ORDER TO KEEP THEIR MEMBERSHIPS IN THE UNION. THOSE CUTS WERE RADICAL, AND THEY REPRESENTED HUGE GOVERNMENT SPENDING CUTS THAT AFFECTED MANY LOCAL SOCIAL PROGRAMS IN THOSE COUNTRIES,
AMLO CLAIMS THAT THE SAVINGS IN CORRUPTION WILL GIVE GOVERNMENT ENOUGH MONEY FOR THE POOR, OLD, AND DISABLED. IS AN APPLE AN APPLE , OR IT IS A BANANA?
LETS START WITH TWO SIMPLE EQUATIONS. ONE EQUATION IS GNP, AND THE OTHER EQUATION IS PROFIT. THE GNP EQUATION TRIES TO DESCRIBE, SIMPLY PUT, THE GROWTH (POSITIVE OR NEGATIVE) OF NATIONS. Y EQUALS THE SUM OF DIFFERENT VARIABLES PROVIDES GROSS DOMESTIC PRODUCT. WHEN ONE ADDS THE DIFFERENCE OF THE EXPORTS MINUS THE IMPORTS, ONE OBTAINS GROSS NATIONAL PRODUCT. THIS PRODUCT CAN BE POSITIVE OR NEGATIVE. BASICALLY, Y=C+I+G+X-M, WHERE C+I+G IS DOMESTIC PRODUCT, AND X-M PROVIDES THE DIFFERENCE TO REACH NATIONAL PRODUCT.
THE PROFIT EQUATION IS USED TO SEE HOW MUCH EXCESS IS PRODUCED IN THE PRIVATE INDUSTRY, AND IT MEASURES WEALTH. THIS EQUATION HAS BEEN USED LATELY, SINCE THE 1970S, IN FEDERAL GOVERNMENTS. THIS EQUATION ALSO CAN BE POSITIVE OR NEGATIVE. IF THE RESULT IS NEGATIVE, THE RESULT MEANS THAT THE BUSINESS, INDUSTRY, OR GOVERNMENT IS IN BANKRUPTCY. THIS EQUATION HAS BEEN USED SINCE THE 70S AS THE BASE OF SOME NEO-GOV AGENCIES IN THE UNITED STATES. THE EQUATION BASICALLY IS LIKE THIS, $=R-C. APPLIED TO THE FEDERAL GOVERNMENT IS SOMETIMES CALLED NEO-LIBERAL. GOVERNMENTS ARE ALLOWED TO SEEK PROFIT.
ALTHOUGH THE EQUATIONS MAY LOOK SIMPLE, THEY HAVE HEAVY IMPLICATIONS IN THIS ARTICLE. MOST OF THE TRADITIONAL GOVERNMENT PUBLIC FINANCE IS RUN UNDER THE CONCEPT OF ZERO PROFIT, $=R-C=0. THAT IS, THE GOVERNMENT HAS THE OBLIGATION TO SPEND ALL $ TO REACH THE 0, NO PROFIT ALLOWED. ONE OF THE POWERFUL REASONS BEHIND THIS CONCEPT IS THE FACT THAT THE REVENUE (R) OF THE GOVERNMENT IS OBTAINED THROUGH DIFFERENT TAX VERSIONS, AND BY MANY LAWS, IT IS THE PEOPLE'S MONEY, THE MONEY BELONGS TO THE PEOPLE, NOT THE GOVERNMENT, AND THE GOVERNMENT HAS DUTY TO SPEND THE TAX REVENUE WISELY. (UNWISE USE OF THIS REVENUE IS SOMETIMES KNOWN AS CORRUPTION).
SO, IS AMLO CORRECT? LIKE WE STATED AT THE BEGINNING, EVER SINCE AMLO STARTED, HIS ECONOMIC POLICY HAS BEEN: A) AN ATTACK ON THE UNWISE USE OF PUBLIC REVENUE, TO ELIMINATE CORRUPTION. B) A REDISTRIBUTION OF THE GOVERNMENT REVENUE TO CREATE PUBLIC FUNDS FOR THE NEEDED. C) TO AVOID BOTH, TAX INCREASE ON CITIZENS AND TO AVOID NEGATIVE GOVERNMENT SURPLUSES. D) TO CREATE A GOVERNMENT SYSTEM OF SAVINGS THROUGH BUDGET CUTS AND GOVERNMENT SPENDING CUTS IN ORDER TO FINANCE PUBLIC FUNDS TO THE POOR'S PROGRAMS.
A) THE UNWISE USE OF PUBLIC REVENUE TO THE ELIMINATION OF CORRUPTION: IT HAS BEEN KNOWN THAT THE MEXICAN GOVERNMENTS AT THE THREE LEVELS WERE A PLACE TO GET RICH FAST, WITH LITTLE WORK, WITH LITTLE CAPITAL, AND LITTLE EDUCATION. ALL OF THIS WAS POSSIBLE DUE TO THE CORRUPTION, AND THE NEPOTISM. HIS IDEA WAS TO CANCEL, TO KILL CORRUPTION AND NEPOTISM FROM THE ROOT. IT IS AN HONEST IDEAL, BUT HIGHLY IMPOSSIBLE TO OBTAIN IN SIX YEARS. IT TOOK THE PRI PARTY ALMOST SEVENTY YEARS TO IMPLEMENT, TO EDUCATE, THE MEXICAN SOCIETY THAT GOVERNMENT WAS A PLACE TO STEAL, TO MAKE MONEY FAST, AND WHERE NO ONE WILL BE PUNISHED FOR BEING A CORRUPTED ONE. TWELVE YEARS OF THE PAN GOVERNMENT DID NOT PRODUCE CHANGES IN THAT AREA. TO GENERATE A TRUE CHANGE, IT IS NECESSARY TO EDUCATE THROUGH DECADES, JUST LIKE THE PRI DID, TO EDUCATE GENERATIONS THAT CORRUPTION AND NEPOTISM IS A BAD ETHICAL AND CIVIC EXERCISE. THE PRACTICAL APPLICATION OF THIS IDEAL HAS A STRICT CONTROL BY THE SECRETARIES OF THE TREASURY OF THE THREE LEVELS OF GOVERNMENT. BECAUSE IT TAKES DECADES TO REALLY HAVE AN HONEST BUREAUCRATIC PYRAMID, THE IMMEDIATE CONSEQUENCE IS POWER CONTROL AMONG THE STRONGEST POLITICAL PARTIES. LATEST NEWS ALREADY SHOWED THAT HAPPENING. BECAUSE SHRINKAGES ARE HAPPENING IN THE BUDGETS, POLITICAL FIGHTS FOR FUNDS ARE AT THEIR BEST. (A CAR NEEDS GAS TO MOVE, AND WHEN GAS IS IN SHORT SUPPLY, DESPERATE MEASURES ARE TAKEN.) THE REAL EFFECT IS THE OPPOSSITE OF THE ONE THAT IS SEARCHED, AN INCREASE IN CORRUPTION. IT TOOK ASIAN NATIONS ALMOST FIFTY YEARS TO GET RID OF CORRUPTION WITH MEASUREMENTS LIKE THE DEATH PENALTY, BUT THOSE POLICIES ARE VERY DRASTIC!
B) A REDISTRIBUTION OF THE GOVERNMENT REVENUE TO CREATE PUBLIC SOCIAL PROGRAMS FOR THE NEEDED. THIS IS ONE OF THE STICKIEST POINTS IN HIS GOVERNMENT'S PLAN. THIS POINT GOES AGAINST ANY KNOWN PUBLIC POLICY KNOWN BECAUSE AMLO CLAIMS NO TAX INCREASE IS NEEDED. IN MY YEARS, I HAVE NEVER SEEN SUCH AN EVENT. IN ORDER TO INCREASE FUNDS FOR SOCIAL PROGRAMS,A TAX INCREASE IS NEEDED. PUBLIC PROGRAMS ARE SUPPORTED BY PUBLIC FUNDS, AND PUBLIC FUNDS COME FROM TAX REVENUE COLLECTED. IF THE TAX REVENUE IS CONSTANT, OR HAS A LIMITED GROWTH ANNUALY, THE COSTS OF THE NEW PROGRAMS WILL TAKE FUNDS FROM OTHER GOVERNMENT'S SECTORS SUCH AS HEALTH, BUREAUCRACY, ETC. THE UNWISE SOLUTIONS ARE PRINTING MONEY (INFLATION), USING THE NATION'S GOLD RESERVES (NATION BECOMES POORER), AND THE DRASTIC ONE, TAKING INDUSTRIES AWAY FROM THE PRIVATE INDUSTRY. CHANGING FUNDS FROM THE VARIABLE I TO THE VARIABLE G IS AN AUTOMATIC LOSS IN EFFICIENCY. THE PROFIT INCENTIVE IS LOST. IN MEXICO THE EXAMPLES ARE HUGE; PEMEX, CFE, PHONE COMPANY, MINING, ROAD CONSTRUCTION, ETCETERA.
C) TAX UNCREASE AVOIDANCE; THE DEFINITION OF A SOCIAL-DEMOCRATIC NATION IS A NATION THAT HAS A GOVERNMENT(G) THAT WORKS JOINTLY WITH THE PRIVATE INDUSTRY(I) AND THE UNIONS (SINDICATES THAT MAY REPRESENT (C)) IN ORDER TO REACH A COMMON NATIONAL GOAL (AN INCREASE IN GROSS NATIONAL PRODUCT (Y)). UNDER THIS GOVERNMENT MODEL THERE IS A COMMON AGREEMENT FROM ALL PARTIES THAT A TAX INCREASE IS NECESSARY ON THE PROFITS OF THE PRIVATE INDUSTRY(I) IN ORDER TO SUPPORT THE GOVERNMENT'S SOCIAL PROGRAMS FOR THE POOR. WHAT KIND OF TAX INCREASES DEPEND ON THE DIFFERENT SOCIAL PROGRAMS, STATES, AND COUNTRIES. THE TIMING OF THE TAX UNCREASES ALSO DEPENDS ON THE AVAILABILITY OF FUNDS, THE LENGTH OF THE SOCIAL PROGRAM, ETCETERA.
THE AVOIDANCE OF TAX INCREASE IS A FALLACY, A LIE, AN UNTRUE, A CRAZY DREAM OF A DREAMER. IT IS IMPOSSIBLE UNDER AN ECONOMIC WORLD. EVEN IN VENEZUELA, THE FALLACIOUS GOVERNMENT OF CHAVEZ AND MADURO SELLS OIL AND GOLD IN ORDER TO OBTAIN GOVERNMENT REVENUE. THE INTERNAL ECONOMY HAS BEEN DESTROYED (C+I), AND THE GNP ONLY DEPENDS ON G+X-M, WHERE M ARE EXTREMELY EXPENSIVE, THEREFORE, ALMOST IMPOSSIBLE FOR THE COMMON CITIZEN (C). THE GOVERNMENT MAY NOT CALL IT A TAX, BUT CHARGES WILL APPEAR IN SOME FASHION OR ANOTHER.
D) THE CREATION OF A GOVERNMENT SAVINGS PROGRAM FOR THE SOCIAL USE; THE LITTLE I KNOW ON PUBLIC ADMINISTRATION DOES NOT ALLOW ME TO CRITIZE THE CONCEPT.
THIS GOVERNMENT IS SAVING MONEY UNDER THE AUSTERITY IDEA, UNDER THE IDEA OF A BANKRUPTED NATION LIKE GREECE OR PORTUGAL OR SPAIN. THESE COUNTRIES APPLIED DRASTIC GOVERNMENT SPENDING CUTS IN ORDER TO SURVIVE, IN ORDER TO OBTAIN FUNDS FROM THE EUROPEAN UNION. BUT MEXICO WAS NOT BANKRUPTED LAST YEAR, NO DEVALUATION WAS EXECUTED, MEXICO HAS HIGH LEVELS OF GOLD RESERVES, SO NO WAY TO COMPARE IT TO SPAIN, PORTUGAL, OR GREECE. THE AUSTERITY PROGRAM CUTS GOVERNMENT SPENDING (G). LIKE IT WAS MENTIONED ABOVE, PUBLIC FINANCE RULES THAT THE GOVERNMENT MUST SPEND THE MONEY THAT COLLECTS FROM TAX REVENUE BECAUSE IT IS THE PEOPLE'S MONEY. UNUSED TAX REVENUE MUST BE RETURNED TO THE TAX-PAYERS. THERE IS NO SAVING PROGRAM. IF AUSTERITY MEASURES ARE TAKEN, GOVERNMENT GOES DOWN, THE PIE GETS SMALLER, LESS MONEY FOR GOVERNMENT USE. THE UNUSED MONEY MUST BE RETURNED TO THE TAX-PAYERS. OTHERWISE, THE SAVING FUND AMLO CLAIMS IS NOTHING ELSE THAN A TAX INCREASE ON THE PEOPLE THAT PAY TAXES (C+I). AMLO IS SELLING A BANANA AS AN APPLE. WILL MEXICANS BUY THE BANANA?