By 1982, Mexico had nationalized 85 percent of its economy. The eighties did not treat Mexico kindly and supposed attempts at neoliberalization took over Mexico in the late eighties and nineties. But as the stupidity of government ventures fades from our collective memory, old methods get reintroduced. Despite a history of failure, the Mexican government, led by President Andrés Manuel López Obrador, seems fixated on repeating such failures.
Case in point, as a part of his attempt to “organize” the energy sector, Mexico will create a new state-owned company to be in charge of the nation’s lithium. As El Financiero noted, “The head of the Ministry of Energy, Rocío Nahle, confirmed that the exploration and exploitation of the mineral will require the creation of a State company.” When asked about this move, Nahle harkened back to Mexico’s expropriation of the oil companies in 1938, a move Nahle praised, saying, “[F]or eight decades, [the oil expropriation] gave us wealth, schools, hospitals, roads…. Lithium will be the same, without a doubt, and I think it will be faster, such a strategic mineral that today is a raw material for the manufacture of batteries.”
This appeal to PEMEX, the state-owned oil company that was the result of the 1938 expropriation, is, quite frankly, hilarious. Indeed, on the same day that El Financiero ran the article, they also ran an article stating that the Mexican government is going to cover PEMEX’s debts (which total roughly $36 billion) that expire in 2024. A state-owned company run so well that the cronyist veil must be dropped so that the state can save its corporatist child is the proposed model for this new lithium company! How grand.
As previously explained, Ludwig von Mises and Murray N. Rothbard made it abundantly clear that there is nothing the Mexican government can do that will benefit the Mexican people. It is apodictically impossible for state action to be in pursuance of the common good. This power grab by the elites in Mexico City will only benefit them and those connected to them. It seems too obvious to even write, but monopolizing lithium production cannot make Mexicans richer. It did not work with oil, it did not work with banks, and it will not work with lithium. Even if this new company were able to bring the price of batteries and other lithium products below the current market price, it would be infantile to claim victory. If the Mexican government decided to spend the entire nation’s GDP on creating the most powerful computer known to man, I do not doubt a powerful computer would be created. But what would the cost be? Starvation for the entire country. The same applies here. Even if the state successfully reduces the price of lithium, this will not create wealth; it will only cause a redistribution of resources. This redistribution would lead resources away from the desires and needs of the people, impoverishing the society. What good are cheaper batteries if food prices go up? It cannot be reiterated enough—the state cannot create. The state only steals and redistributes. It only disrupts. It cannot benefit society in any way, even if it takes control of lithium. Only saving and investment, fueled by a respect for markets, will make Mexicans richer. State interference will only get in the way.
