Inside Mexico's Anemic Economy

Searching for Modern Mexico: Dispatches from the Front Lines of the New Global Economy by Nathaniel Parish Flannery, Floricanto Press, 2019

They say ignorance is bliss and it certainly used to feel that way whenever I ate a tortilla chip laden with guacamole. But now, because journalist Nathaniel Parish Flannery chose avocados, along with coffee and mezcal, as the principal entry points for his boots-on-the-ground exploration of the Mexican economy, Searching for Modern Mexico, I know a little too much about the main ingredient of guacamole to enjoy it’s creamy, green goodness as much as I once did.

Most of the avocados Americans consume come from Michoacán, a state located west of Mexico City that stretches to the Pacific Ocean. In 1995, the year after the North American Free Trade Agreement (NAFTA) was signed, Michoacán exported 45,600 tons of avocados. In 2015, it exported nearly 775,000 tons valued at $1.5 billion. But if this sounds like a free-trade success story, it’s not so much.

The wealth generated by avocados not only enriched Michoacán’s farmers, explains Flannery, but it also attracted criminals, many of them former members of drug cartels. These gangs of gunmen demanded 30-40 percent of the earnings of avocado producers as “protection money.” The gangs tortured and killed anyone who refused to pay, dumping the mutilated bodies in public squares as a warning.

The police and armed forces of Mexico’s local, state, and federal governments were unable to stop the killing, so the avocado growers of Michoacán formed and funded their own gangs, vigilantes called the autodefensa. A running battle ensued that continues today. Caravans of gunmen armed with automatic weapons speed through avocado country fighting for control. Gangs have splintered and reformed until it is impossible to tell the good guys from the bad guys. Cities and towns have been transformed into armed camps, with private armies manning turrets and barricades.

“The government doesn’t rule here, but it’s under control,” a grower in the city of Tancítaro tells Flannery. “You can relax.” Meanwhile, in the U.S., we are mashing avocados into guacamole as little as 30 hours after they were picked in Michoacán.

Oaxaca, located two states south of Michoacán, also on the Pacific, has its own economic story to tell. A rural region in which 80 percent of the population of 3.8 million people works in the informal economy, Oaxaca has one connection to Mexico’s modern economy: mezcal, tequila’s smokier, more rustic cousin, which has gained favor among aficionados of artisan liquors. With the best mezcals bringing $80 per bottle, their distillers are able to earn a living. But they are struggling to grow their businesses.

One big problem in Oaxaca is the lack of education. On average, Oaxacans have less than nine years of formal schooling, and in recent years, students have been missing 2-3 months of each school year because of the militancy of Section 22, the Oaxacan branch of the national teacher’s union.

“Mexico’s Ministry of Education calculates that there are over forty-four thousand ‘ghost teachers’ illegally collecting salaries as educators even though they don’t teach in classrooms,” writes Flannery. But the federal government can’t even get an accurate headcount of Oaxaca’s teachers, and whenever it tries to impose accountability in the form of work rules and student testing, the teachers respond with protests that often take a violent turn. Meanwhile, the artisan mezcal makers struggle to understand how to grow their businesses and wonder how their children will find prosperity.

Flannery starts his search for modern Mexico in Chiapas, its southernmost state, hard on the Guatemalan border. Chiapas is Mexico’s poorest state and the one that is least connected to the global economy. Yet, its small farms produce Mexico’s best coffee beans, 80 percent of which is shipped in volume to the U.S. as a commodity.

The big problem in Chiapas is the inability of farmers to directly connect to national and international coffee markets. On January 1, 1994, the day NAFTA took effect, the Zapatista Army of National Liberation declared war on the federal government and it still controls portions of Chiapas a quarter of a century later. As a result, bringing coffee beans to local buyers can be a life-endangering task for small farmers. The local buyers sell to aggregators, who, in turn, sell to multinational companies. “The price jumps most noticeably between the wholesale level and the final sale to the consumer,” writes Flannery. The opportunity to brand Chiapas coffee and sell it into the higher-priced specialty markets is largely lost on the government, which has chosen to address the state’s poverty with welfare payments and free TVs.              

Flannery deftly employs the three states—Michoacán, Oaxaca, and Chiapas—and their products—avocados, mezcal, and coffee—to illustrate the major obstacles to the development of Mexico’s economy. He shows how the government’s inability or unwillingness to connect, educate, and protect its people is holding back growth.

That doesn’t seem likely to change anytime soon. The Mexican government’s attention remains focused to the north on the U.S. border and the new trade pact that the Trump administration claims is a "better deal" than NAFTA. And southern Mexico continues to languish, as it has since the colonial era.

Meanwhile, Mexico’s economy remains fundamentally bifurcated and inequitable, with five billionaires and 53 million people living below the poverty line. As a Tijuana food truck operator tells Flannery, “Mexico could be one of the strongest economies in the world. But we’re selfish. One guy gets fat while a thousand starve. That’s how it works. That’s how it is.”