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Mexico's Advanced Auction on Stolen Goods

Mises Daily: Monday, July 10, 2006 by

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Ludwig von Mises argued that ballots are to be preferred to bullets because while they bring about similar outcomes, the former has less bloodshed than the latter.

Murray Rothbard (Mises's student) criticized this conclusion (which Mises shared, after all, with David Hume), because, he argued, democratic rule promotes political arrangements — not social optimality — as the ultimate end. This hardly seems like an improvement, and it guarantees no less amount of bloodshed.

Still, both men would have been intrigued by the election crisis brewing down in Mexico, and it is unlikely that bullets or ballots would have produced something as enjoyable (or possibly even as socially optimal).

The crisis is reminiscent of the 2000 presidential elections in the United States. Andrés Manuel López Obrador is Mexico's Alberto Gore, the candidate on the short end of the election, down by an incredible one-half of one percent of the popular vote, forced into playing the legal cards necessary to avoid having the election certified for his opponent.

The left-wing candidate (and former Mexico City mayor) who didn't distance himself enough from Venezuela's Hugo Chavez, López Obrador has staged seemingly impromptu rallies in the capital calling for a recount, an impressive feat the unlovable Gore would never have been able to accomplish in the days following November 7, 2000.

López Obrador calls the vote-count rigged and demands both a vote-by-vote recount and for the election to be declared illegal by the Mexican Supreme Court, bypassing the country's special election court.

His opponent, the former Secretary of Energy Felipe Calderón, playing the part of Mexico's Jorge Bush, collected more legal votes (which is different from the total votes cast) and is now accepting congratulatory calls from foreign leaders and setting forth goals for a six-year term. (The Mexican press is calling him the "virtual President-elect" of the Republic.)

Correctly assuming that many people simply want the dreaded election to end and are indifferent to the results — is there a peso's worth of difference between these two lifelong pols? — Calderón is hoping that by acting presidential, he can turn public opinion against López Obrador, making him seem like a sore loser and a pest.

But the situation is not all that simple.

First, presidential elections are as corrupt in Mexico as they are anywhere, and memories linger from 1988, when another Mexico City mayor, Cuauhtémoc Cárdenas, lost an election many thought stolen by Carlos Salinas (a character so reviled in Mexico today that he spends most of his time outside the country). Although many outside observers called this year's election quite clean, many bad feelings from that time remain.

On the other hand, elections have become little more than advanced auctions of stolen goods, so that supporters of the losing candidates have more reason to rally and complain about the election results. This is much less of a problem in countries where power is less centralized and where redistributive urges are restrained. When the losing candidates' supporters wail in the streets about democracy denied, their indignation might well be fueled by lost income transfers they would have received had their candidate won.

(But since whoever wins needs to appease his opponents' supporters, the policies turn out to be similar no matter who wins. Remember that joke that is updated repeatedly in the United States: "They told me that if I voted for Gore (or Kerry) I'd get a growing welfare state. And they were right. I voted for Gore (or Kerry), and I got a growing welfare state.")

Second, a vote-by-vote recount might be great for López Obrador's case because the few recounts allowed so far have reduced Calderón's lead from 400,000 votes to 230,000. But the problem with this solution is twofold. There are some pesky Mexican laws, with which both candidates agreed to comply prior to the election, that forbid recounts of vote packets except in cases in which tampering is discovered.

You can't change the rules of a game (or an election) after it has started. Also, who is to say that vote stealing in favor of Calderón in (say) northern Mexico would not be balanced by vote stealing in favor of López Obrador in southern Mexico?

Again, consider the case in the United States. Any possible smarmy electioneering in South Florida in 2000 in favor of the Republicans was surely countered by equally smarmy electioneering in places like Philadelphia, Milwaukee, New Mexico, and Oregon in favor of the Democrats.

Squeaky clean elections, if they ever take place, are unlikely to change the eventual results of corrupt ones. Perhaps this has always been the case, although it surely didn't matter in previous decades — certainly throughout US history prior to FDR — when executive powers were more restrained, making the president irrelevant to the average person.

Third, even if the current Calderón margin is correct, the closeness of this election reflects the growing resentment toward US intervention in the affairs of other countries throughout Latin America. While this resentment against "neoliberalism" has contributed to the electoral success of leftists in Venezuela, Bolivia, Argentina, Chile, and Peru, it had not yet fully surfaced in Mexico which is, after all, the most dependent of any Latin American country on trade with the United States.

Mises speaks on Latin America: $8

With free trade, such resentment would not exist today. But the fact is that for many countries, trade with the United States requires IMF and World Bank loans and comes with strings that reward politically well-connected industries. Indeed, if trade were truly free, it wouldn't require trade treaties (such as NAFTA and CAFTA) with tens of thousands of pages of confusing (read: easy-to-violate) rules or a court that makes criminals of those who engage in voluntary exchanges unapproved by treaty signatories. It's no surprise that Calderón's strongest support comes from those regions that benefit the most from regulated trade with the United States, while López Obrador's support comes from areas that are excluded and therefore suffer from such treaties.

The result is a mess in Mexico, and neither Mises nor Rothbard would be surprised by it.

Rothbard, in fact, would surely have welcomed it, because any event that has the effect of reducing the legitimacy of the state increases the realm of social cooperation — as was happening in the United States throughout the 1990s.

Mises was close friends with Otto von Habsburg, whose family once ruled Mexico under a model that, whatever its faults, endeavored to decentralize power and respect the rights of the individual. Many countries — not the least of which being Mexico — would benefit from finding models that accomplished the same.

Under decentralized government, close elections might still make for enjoyable standoffs, but the stakes would not be nearly so high.


Christopher Westley teaches economics at Jacksonville State University. See his articles. Send him mail. Comment on the blog.