Encouraging informality

The Economist had a good piece on how the Mexican government is inadvertently promoting the informal sector.  One of the cornerstones of EPN’s platform was a universal social security system, which would no longer rely on payroll contributions and incentivize workers to join the formal economy.

The backlash over the new taxes implemented in the last year caused this campaign promise to be scrapped. Luis Videgaray, the finance minister, promises no new taxes until 2017.

What surprised me though was how much the government is currently subsidizing informality.  The article explains:

“The heart of the problem is the way social-security provision and labour laws have evolved in Mexico. Formal-sector workers contribute to their pensions, health care, child care and the like through payroll taxes that add an extra 30% or so to wage costs. Yet as democracy has come to Mexico, governments have added a parallel system of non-contributory pensions, health and child care for informal workers, paid out of general government revenues.

The gap in quality between the two systems is narrowing. After employee and employer contributions totalling 6.5% of salary for 24 years, a low-paid formal worker might get a pension of 1,700 pesos ($132) a month at 65. Under a law close to approval by Congress, an informal worker under 50 can expect a pension at 65 of at least 1,050 pesos a month, gratis. Meanwhile, firms are discouraged from hiring formal workers by rigid and expensive rules for severance pay.”

It’s not that surprising that informality is such a huge portion of the Mexican economy with perverse incentives like that!

From central banker to emir?

The Economist recently had an article about Nigeria’s former central banker governor, Sanusi Lamido Sanusi.  Sanusi, if you recall, was fired by President Goodluck Jonathan in February after being too outspoken about “government corruption and presidential ineptitude.”  I’m guessing President Jonathan really didn’t like the ineptitude comments from his appointee.

So where do you go after you’ve been fired from the Central Bank?  If you’re Sanusi, you become elected as emir of the northern state of Kano, making “him the country’s second-highest authority in the Muslim north after the Sultan of Sokoto.” 

The Economist helpfully gives a brief job description of an emir:

For centuries before the British imperialists arrived in what is now northern Nigeria, the emirs ruled as kings. Today they hold little constitutional power, but their influence is still huge. They act as peacemakers, rally public opinion, preserve religious tradition, and endorse political candidates. On paper, they are neutral. 

I’m not sure how many of the job skills as CB governor would transfer to being an emir.  They seem like a totally different set of skills, especially since Sanusi wasn’t known for being a “peacemaker” or “neutral.”  Based on recent photographs, he does seem to have fully embraced his new job though.

Here’s Sanusi as CB governor:

sanusi_banker

and here he is as emir:

sanusi_emir

 

Whack a mole?

Reuters posted an article called “Frustrated U.S. lawmakers urge tough action on child migration” which caused me several WTF moments.  By the end of it, I had a different adjective in mind besides “frustrated.”  Here are some low-lights:

1. Michigan Republican Representative Candice Miller suggested cutting off aid and repealing free trade agreements with Mexico and the Central American countries involved. “We need to whack them, our neighbors, to understand that they are just not going to keep taking our money and we are just going to be sitting here like this – we’re not the ATM machine,” she said.

Whack?  really?  is that the word you wanted to use Candice?

2. Alabama Republican Mike Rogers scoffed after Johnson said he had discussed the issue with Guatemalan authorities. “I think what you need to do is ask the Guatemalan government where they want these kids dropped off when the buses bring them back down there,” Rogers said.

It’s sad when the Homeland Security Secretary is the big softie in the room.  Jeh Johnson (not a typo!) argued:

“We are talking about large numbers of children, without their parents, who have arrived at our border – hungry, thirsty, exhausted, scared and vulnerable. How we treat the children, in particular, is a reflection of our laws and our values.”

Indeed.

Soccer and Politics in Mexico

A New York Times op-ed yesterday showed that the old wiliness of the PRI is alive and well.  One of the most politically sensitive topics in Mexico is PEMEX reform.  So what does the PRI do?  They use the World Cup as cover:

“To debate and pass laws that could open Pemex, the nationalized oil company, to foreign investment, the Mexican Congress scheduled legislative sessions from June 10 to 23, dates precisely coinciding with you know what. Final passage might be pushed back, but it originally looked like it was supposed to happen on Monday, when Mexico plays Croatia to decide which country advances to the elimination rounds.”

That is smart politics!

Apparently it’s a tactic the PRI has used successfully in 1998 and again under EPN: “In 1998, under a previous PRI government, Congress passed a $67 billion rescue of Mexican banks, to be paid by taxpayers, on Dec. 12, the Day of the Virgin of Guadalupe and the start of the Christmas holiday.  This past Dec. 12, PRI legislators, joined by allies on the right, “fast track” approved, with almost no debate, the constitutional reform opening the way for the Pemex privatization.”

One of the things we marveled at when living in Mexico was just how much politics was filled with rumors, shadows, and insinuations. Often we scoffed at what we considered to be preposterous rumors and then were later proven to be proven wrong.  A lot of that had to do with the fact that Mexico had been a one party system for so long and politics was so murky that people guessed at what was going on behind the scenes (a form of Kremlinology, perhaps LosPinosology?)

This op-ed reminds me of those days.  After laying out the political machinations of the PRI under EPN, the author, Francisco Goldman, goes on to argue that “Mr. Peña Nieto is a politically insignificant figure, ruling at the service of established powers within the PRI and elsewhere. In fact, he seems so absent and unforceful a leader that in recent days some have speculated that he is gravely ill.”

This is one of those times that I would roll my eyes and say really? gravely ill?  but then we have incidents like this:

Cuauhtémoc Gutiérrez de la Torre, the former president of the PRI in Mexico City, who “was accused of running a prostitution ring with party funds. At conventions, he allegedly showed up with his army of women, making them available to other politicians.”  

So who knows? Is EPN a gravely ill puppet of the nefarious, manipulative PRI, or is the man Time Magazine held up as the “savior of Mexico”?

Footnote:  Not all Latin American Presidents decided to use the World Cup to pass sensitive legislation.  Juan Orlando Hernández, President of Honduras, decided that he needed an 8 day “working visit” to Brazil that just happened to coincide with the World Cup!

Disappearing Donkey, or the confusing issue of race in Brazil

Africa is a Country recently posted a great discussion about race in Brazil.  They begin by examining the case of soccer superstar Neymar, who once said that he never faced any racism in Brazil because he’s not black.  As you can see from the photos in the post, Neymar has become increasingly white over the years.  Africa is a Country makes some good points though when they write:

“It’s too easy to condemn Neymar for pretending to be white: judging by the images, he is partly white. Technically speaking, however, his logic was faultless – and even kind of interestingly honest: the Neymar who made that statement was an unworldly eighteen-year-old who had never lived outside Brazil. And in Brazil, Neymar is not black.”

In 1976, the Brazilian government decided not to ask people to check a particular race box on the census but to instead describe in their own words what their race was.  The incredible range (and amazing creativity) of the answers is amazing.  Here are some of my favorites:

Agalegada:  Somewhat like a Galician

Alva escura:   Dark snowy white  (seems like a contradiction)

Branca-morena:  White but dark-skinned (ditto)

Burro-quando-foge:  Disappearing donkey (i.e. a nondescript color) humorous

Cabocla:  Copper-coloured (refers to civilized Indians)

Cor-firme:  Steady-coloured  (steady??)

Marinheira:  Sailor-woman  (this is a race?)

Pálida: Pale (hey I found my category!)

Russo: Russian  (again, this is a race?)

Sapecada:  Singed  (head scratcher)

Turva: Murky (another head scratcher)

Verde:  Green (a joke on the census workers?)

Definitely check out the full post though, because it includes some interesting thoughts on the intricacies of race in Brazil.

Indigenous Diversity in Mexico

One under appreciated fact about Mexico is the incredible indigenous diversity in the country.  When Kevin and I lived there, we loved having the opportunity to be able to visit pre-Columbian archeological sites from a range of different cultures.  What I didn’t realize was just how diverse the country really is.

For starters, Mexico has 65 different indigenous ethnic groups.  Scientists are starting to map the different genomes of 20 of these groups and have found remarkable differences across them, probably due to “centuries of living so far apart—and often in isolation because of mountain ranges, vast deserts, or other geographic barriers.”

Initial results, just published in Science, show that “the most divergent indigenous groups in Mexico are as different from each other as Europeans are from East Asians.”  And even though much of the population is now mestizo, “the mestizo genomes “track so well with the indigenous groups that we could use the genetic diversity in mestizos to make inferences about [their native] ancestors.”

Besides tracking what the historical movements of indigenous groups, the researchers hope to find clinical applications from their findings:

“Many of these variants are what he calls “globally rare but locally common.” That is, a genetic variant that’s widespread in one ethnic group, like the Maya, may hardly ever show up in people of different ancestry, like people of European descent. If you study the genomes of only the Europeans, you’d never catch the Maya variant. And that’s a big problem for people with Maya ancestry if that variant increases their risk of disease or changes the way they react to different kinds of medication.”