For two decades now, Mexico City, arguably the biggest metropolis in the world, has been overrun by populist governments.
To be sure, populism, as personified by the long-ruling Democratic Revolution Party (PRD), has its moments, like providing a monthly cash grant of US$90 to the elderly, a segment that is otherwise virtually unprotected. Costly subsidies to subway system fares, water and other basic staples could be defended is they were not so inefficient.
But the downside of populism in the capital far outweighs benefits. Every single action of Mayor Marcelo Ebrards government is designed to win votes. If street vendors dominate the urban landscape, it is because they potentially represent several hundred thousand votes.
According to private estimates, billions of dollars are lost in productivity each year from street demonstrations, of which there are a staggering average of three per workday. Ebrard allows all demonstrations, which wreak daily havoc and significantly increase environmental pollution from massive traffic jams, because protesters of something or another constitute his electoral foundation.
Ebrards grip on the government is firm because he enjoys full control of the local congress, known as the Legislative Assembly, which in practice is little more than a rubber-stamp appendix of the executive branch.
Frequently, populism can go overboard, especially now that Ebrard is a presidential hopeful for the 2012 contest. Recently, the mayor may have outdone himself with a decree forbidding supermarkets and other established retail outlets like convenience stores, from setting up shop anywhere near a traditional farmers market.
Needless to say, the measure, duly approved as ordered by the so-called legislators, has irked organized commerce, since it is thus being punished for offering lower prices to the consumer.
In a reaction that may be too little, too late, the National Association of Self-Service and Department Stores (ANTAD), which basically represents the biggest players in the retail sector, has threatened to retaliate by shifting all new store openings to the neighboring State of Mexico, while putting expansion plans on hold in the capital. ANTAD claims the decision will mean US$500 million fewer investments and 10,000 jobs lost for the nations capital.
Ebrards effort to protect traditional markets and family-run stores from corporate competition for at least three years is likely to cost Mexico City plenty, but we know that to a populist, investments and job losses actually mean little. What matters are votes.
In typical populist fashion, Ebrard says, We want the (traditional) markets to survive, to continue to be the neighborhood centers. He claims that current competition is asymmetric, which to him presumably means unfair.
It should go without saying, but chain stores normally offer lower prices thanks to bulk purchasing power, capital markets financing and, in some cases, international stakeholders.
However, it should be acknowledged that chain retailers are superior in dry goods and other departments like fresh meat, while the traditional markets offer fresher fruits, vegetables and other basic commodities.
ANTAD says it regards the regulation, called Norma 29, as a ploy for votes from the estimated 70,000 people who work in Mexico City's more than 300 conventional marketplaces. Some of the markets are housed in fixed buildings, while others move around under tents on city sidewalks, parks and streets. ANTAD members had 27,313 stores and restaurants nationwide as of the end of April.
Ebrards measure is not going to drive customers to the marketplaces, says ANTAD president Vicente Yáñez. Some of these markets dont need protection they compete very well based on variety and freshness. Others are just public eateries that sell some produce and lack hygiene, security and modern payment methods. At the end of the day, clients vote with their purchases.
Mexicos legal system being what it is, its safe to say that ANTADs struggle to overturn the regulation in the courts will take months, if not years.
That will be enough time for Ebrard to gear up his presidential campaign.