On Mexico Opening Up Oil Sector To International Investors

“Mexico has mismanaged its oil to the detriment of us all, said José Luis Luege. Ever since the government proposed opening the oil sector to foreign partners, leftists have been marshaling “pseudo-nationalist arguments” that equate letting foreign oil companies develop Mexican oil fields with stiffing our own citizens. They have it exactly backward. Besides North Korea, Mexico is the only country in the world that doesn’t allow foreign commercial partners in the oil industry—even communist Cuba does. That’s because the industry poses investment risks that only private companies can take. Pure nationalization of our oil hasn’t worked: At the turn of the 20th century, Mexico was a top oil producer, behind only the U.S. and Russia. But since the state nationalized production under Pemex in the 1930s, our oil industry has been “bankrupt and inefficient,” as “terrible corruption” has siphoned off funds that should go to exploration and infrastructure. Pemex has been systematically “looted by a bloated union structure” and corrupt officials, who together have “defrauded the nation.” Only by amending the constitution to allow companies besides Pemex to invest in our oil fields will we be able to reap real profits “for all Mexicans.”” — Via The Week

43 Responses to “On Mexico Opening Up Oil Sector To International Investors”

  • “Looted by a bloated union structure.” Have companies ever been looted by bloated capitalist structures, wherein huge sums are paid to investors, that is people perhaps living in another country, maybe Wall St, where their productive contribution isn’t apparent?

    You hear stories about unions allowing workers that really don’t do anything. But you can exchange that for investors that don’t really do anything, and yet collect checks. Is that better? How would we know if we aren’t jumping out of the pan and into the fire? Privatization, that is taking on a group of investors that demand payments as they sit on the sidelines, is likewise the taking on of a burden.

    What I think would be very interesting is instead of stories about how public workers abuse the system and privatization is the solution, how about some actual examples in history where the privatization solution actually made life better. When it came to Russia the consequences were a lot like what you might see from a war. Life expectancy dropping like a rock. Look at Bolivia where Bechtel took over the water services. Was that a success? Impoverished people now paying half of their total salary just to get drinking water. Do you regard Chile as a success, where the rich became fantastically rich, the unemployment rate went from 3.8% to 25%, and ultimately a collapsed banking sector that required state bail out and a state sector that was larger than what existed in the prior socialist government? I think the reason you see so many protests at the prospect of privatization for things like Pemex is because the people look around them at the people who’s lives have been ruined. They focus on what privatization has actually done in the real world rather than stories conservatives tell about how it will usher in prosperity.

  • What I think would be very interesting is instead of stories about how public workers abuse the system and privatization is the solution, how about some actual examples in history where the privatization solution actually made life better.

    South Korea vs North Korea, West Germany vs East Germany, USA vs Russia, Chile vs Cuba etc…

    The debate you want Jon was settled generations ago.

  • So tell me about how S Korea privatized it’s public services and achieved prosperity as a result. I’m unfamiliar with the story. Same for Russia. Go to Gapminder and look at what happened when Russia privatized it’s public services. Make the case that this was good for Russians. I don’t think Cuba has done a major privatization yet and achieved prosperity as a result, so I don’t get how that applies.

    You notice that lots of people protest the efforts to privatize Pemex. My personal opinion is that since these are the people that truly suffer the consequences if privatization goes the way it’s gone over and over again, this tends to focus their mind more. They don’t accept the argument “You have to privatize because North Korea” for some reason. Maybe you think this means they are unsophisticated, uneducated, don’t understand the complexities. I think they’ve seen how over and over again the apologists for the rich get it wrong, and it’s always “Whoops, turns out we were wrong, but surprisingly the rich did well” as in Chile. As in the US following deregulated finance. As in Russian billionaires. Americans sitting comfortably behind their computers where they don’t suffer the consequences for being wrong tend to see the merit to your argument, but the people on the ground don’t. That’s I think the difference between people have the luxury of evaluating the question theoretically and those that actually face the prospect of the boot on their neck. They will feel the pain if you’re wrong, and this focuses their minds better. Just my opinion.

  • And by the way, you do know we’ve been at war with Cuba for like 60 years now, right? Not just the economic embargo, which would be crippling for just about any small country. Bombings, assassinations, chemical warfare, biological warfare. Even if Cuba was a terrible place to live, if you are going to be remotely honest, you have to admit that they really have not been allowed to try the socialist experiment. Why do you think that is? Why do you think if socialism is such a horrible system, why won’t the US just let countries try it without interference? Let them fail and then adopt the system that says it’s best to hand over the money you create to a group of investors that doesn’t actually lift a finger? If it turned out that system was better people would naturally want it.

    What internal records show is that US planners fear that without interference it would succeed. Then others would follow suit. Now the capitalists, who sit on the sidelines doing nothing and collecting the largest share of the money, are out in the cold, forced to work for a living like others. And so we cannot allow this to happen. We must sabotage their efforts.

    What’s really incredible is that despite the 60 years war Cuba is still a much better place to live than many of the capitalist states that are it’s neighbors, which have been unable to resist US efforts that demand capitalism, such as Haiti, Guatemala, and Colombia. Not as good as all nations that have had neoliberalism imposed through violence, but better than a lot of them.

  • Sorry, one last point. Notice your comparison of Russia to the US. Why would you think that’s a fair comparison? Post WWII the US had 6% of the world’s population and half the world’s wealth. Truly it was Russia that defeated the Nazi’s. They were utterly devastated by the war. They lost 60 people for every American that was lost, not to mention their infrastructure. If you want to compare different societies and how they fared you have to compare societies that started from similar places, not one that started with all the wealth to the other that started with nothing and say the latter must suck because they are not as rich as the former yet. That’s just common sense.

    This is one reason when I talk about S Korea I compare it with Haiti. They were at very similar places economically 60 years ago. One tried managed capitalism. Heavy restrictions on trade, government direction for industry, tariffs, etc. The other tried free markets. This is a reasonable comparison because you are comparing like with like. Should we say S Korea sucks because they still aren’t as rich as the US? No. They’ve made rapid progress. Now, I know you don’t buy this argument because you don’t agree that Haiti pursued neoliberal policy prescriptions, but setting that aside the point is only that you must compare societies that started at similar places.

  • You keep fighting the fight Jon….

  • I keep at it because I hold out hope for you. I find myself less and less willing to waste time with some on the other side. But I’m still here. I think your mind is more open.

  • Thanks man! We should start fresh…find a new way to discuss. Im open to it, as long as its productive in the end.

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