This editorial by José Romero originally appeared in the September 26, 2025 edition of La Jornada, Mexico’s premier left wing daily newspaper.
A modern left must reduce inequalities without renouncing growth. In Mexico and Latin America, social justice has been attempted through current spending and transfers, without building a productive base to sustain it. The result is immediate relief, but without a structural change that increases productivity, generates skilled employment, and expands value chains. Redistribution occurs, but without creating shared wealth.
It presents itself as “Keynesian,” but serious Keynesianism is countercyclical: it spends in recessions, saves in booms, and directs the stimulus to sectors capable of responding with greater domestic supply. When an economy lacks productive capacity and its financial system fails to channel industrial credit, the stimulus filters into imports, widens the deficit, and erodes revenues. This isn’t a doctrinal debate, but rather the experience of open economies without a productive apparatus.
The bottleneck is financial and productive. The Bank of Mexico is autonomous from the Executive Branch, but subservient to a banking system that concentrates 76 percent of its assets in five foreign institutions. It sets the interest rate, but has no control over the destination of savings. Thus, we have apparent exchange rate stability, but no productive investment. Financial sovereignty remains lacking.
The Mexican market does not strengthen when consumption of foreign goods grows, but rather when factories, local suppliers, and jobs that sustain demand increase.
It’s true that social programs have reduced poverty. This achievement is real, but without a productive engine, these gains are fragile: they depend on the political cycle and the fiscal situation. Domestic consumption is growing, yes, but not due to industrial wages or productivity, but rather due to welfare. More is spent, but the same amount of production is produced. The domestic market is inflating outward: sales of imported goods are increasing, not national chains.
Hence the fallacy of “expanding the domestic market” through transfers without industry. The market does not strengthen when consumption of foreign goods grows, but rather when factories, local suppliers, and jobs that sustain demand increase. For example: trains purchased for domestic projects were largely manufactured abroad, with little domestic content. A strategic, public investment resulted in learning and employment outside the country, not in Mexico.
The region offers lessons. Argentina spiraled spending and debt into chronic inflation; Venezuela initially squandered its income without diversification; Mexico has combined social programs with industrial stagnation. Nothing invalidates redistribution, but it reveals its condition: without productive capacity, equity depends on temporary booms or favorable exchange rates.
The Asian contrast teaches the method. Japan, Korea, Taiwan, and later China combined public and commercial banking, credit targets, macroeconomic discipline, and selective industrial policy. Foreign direct investment was useful as a complement to accessing technology and markets, but no successful country based its development on FDI. National enterprise, productive credit, and state planning were always the lending axis. In Korea, productive credit exceeded 40 percent of the total during industrialization, compared to the low percentage in Mexico, where consumer credit predominates. The motto was clear: first produce and save; then consume.
What should be done in Mexico? Change the growth regime. A viable path has five pillars.
First, pragmatic financial sovereignty that disciplines the banking system, with productive credit targets, and development banking that provides guarantees and joint ventures to industrial SMEs.
Second, selective industrial policy in sectors with linkages—steel, machinery, auto parts, power electronics, fine chemicals, advanced agribusiness—where the State uses public procurement and domestic content to leverage suppliers. Mexico must begin manufacturing its own consumer electronics, as an initial step toward integrated circuit design, and resume production of pharmaceuticals and agrochemicals that we currently import.
Third, orient science and innovation toward national missions—health, energy, electric mobility, food sovereignty—with effective technology transfer and university-business links.
Fourth, promote technical human capital with dual training and technological education that increases labor productivity.
Fifth, a wage agreement that makes decent employment the anchor of the domestic market, so that productivity does not translate into inequality but into popular consumption that strengthens national industry.
It’s not about choosing between equity and growth: the key is to sustain equity with productivity, link social justice with industrial modernization, and build a virtuous cycle.
It’s also necessary to update the macroeconomic toolbox. Maintaining fiscal balance isn’t austerity: it means prioritizing strategic public investment, coordinating it with development credit, and using exchange rates and energy tariffs to strengthen national linkages. Stability shouldn’t be an end in itself, but a platform for productive transformation.
Policy must regain direction. The dispersion of programs multiplies costs and dilutes impact. A productive policy coordinating center—capable of setting goals, measuring, and reporting—is worth more than 100 unrelated initiatives. Execution capacity is the new frontier of development.
The choice is clear. Either we continue managing shortages with current spending that quickly runs out, or we build the productive base that makes rights sustainable. A country that saves, invests, and learns, that links suppliers and raises wages, can redistribute without fragility. Social justice depends on industrial ambition.
And to achieve this, it is urgent to Mexicanize banking—not nationalize it, but ensure that it is owned by Mexicans and operates in support of national priorities. Only then will savings cease to fuel speculation or profits remitted abroad and become productive credit for industry and employment.
Mexico can and must redistribute because it produces, and produce because it invests in its people and its industry. This is the goal of national modernization.
José Romero is Director of the Centro de Investigación y Docencia Económicas (CIDE). CIDE is a publicly-financed social sciences research center aiming to impact the country’s social, economic and political development.
Redistribution Without Production is Condemning Mexico
September 28, 2025September 28, 2025
Mexico’s redistributive social programs have had tangible, laudable benefits, but continuing to redistribute revenues received from taxing the working class in an economy that lacks domestic productive capacity and a financial system that fails to channel industrial credit only filters money into imports and strengthens foreign multinationals.
To a Salsa Rhythm, Mexico City Celebrates Historic Link Between Cuba & Mexico
September 28, 2025
The theme: the union of the two cultures and the start of year-round activities to raise funds for the An Oil Ship for Cuba campaign and to celebrate the centennial of Comandante Fidel Castro’s birth.
Clicks September 28
September 28, 2025September 28, 2025
Our weekly roundup of Mexican political stories in the English and Spanish language press, including Canada-Mexico USMCA strategy, the unsolved Ayotzinapa disappearances, Gaza genocide, China-Mexico tariff spat, ICE murders, de-commodifying water, and corruption.
The post Redistribution Without Production is Condemning Mexico appeared first on Mexico Solidarity Media.
From Mexico Solidarity Media via this RSS feed
You must log in or # to comment.