Mexico’s single most important economic policy

A primer on Plan México, a potentially revolutionary new industrial policy.

This is part one of a two part series on Plan México. Here’s part 2.

In the 1980’s, the Mexican government decided to take a back seat when it came to its role in the economy. Perhaps it was time to take stock of what had gone so terribly wrong in the previous decade or so. Inflation, debt crises, and economic collapse—often because the government had got in too deep, meddling ineptly across too many industries.

The main conclusion to which Mexico’s statesmen came to at the time was that the government had, in fact, no role to play in deciding the direction of the economy. It should instead take a subsidiary, regulatory position, playing referee for the real, qualified players—the private sector.

In an incredible coincidence, this was also the prevalent global economic theory at the time, and “neoliberalism”—as this ideological approach would be called first by academics and then by its opponents—would continue to rule unquestioned until the Great Recession of 2008.

The Mexico Political Economist has discussed this particular historical era of debacle starting in the second half of the 20th century here.

Morena, the party that has ruled Mexico for over six years now, has made neoliberalism its main adversary for decades. It has also struggled to come up with a convincing alternative—until now.