AMLO ain’t nuts (and maybe the phone rates will drop)
I wrote a while back that I thought AMLO’s parallel cabinet was going to be a “think tank” and wasn’t going to be a joke. Looks like I can pat myself on the back.
The new administration is considering an opposition proposal on an anti-trust law… the source being AMLO’s parallel cabinet’s economics team.
The Competitive Pricing Law, introduced by Andrés Manuel López Obrador and two of his top economic advisors, seeks to reduce the “exaggerated costs” of key basic commodities and services, such as cement, electricity, cellular phone service and Internet connections.
The bill should find support within the incoming administration. In interviews on Tuesday, Luis Téllez – President-elect Felipe Calderón´s choice to be the next communications and transportation secretary – said his mandate was to take on monopolies.
“We will strive to improve the quality of services, make prices affordable and control monopolies …
López Obrador, accompanied by parallel Cabinet members José Agustín Ortiz Pinchetti and Mario Di Constanzo, trotted out price comparisons indicating that Mexicans are paying considerably more for basic goods and services than those in the United States.
Mexicans, he said, pay twice as much for electricity and cable service, three times more for long-distance calls and cement, four times more in cellular phone rates, and 35 times more for some bank charges.
“This is in spite of the fact that the average salary in that country (the United States) is almost 10 times higher than in Mexico,” he said, putting the minimum daily wage in the United States at 445 pesos compared to just more than 47 in Mexico. “What we´ve found is that the prices (in Mexico) in these sectors are much higher than in almost any other country in the world.”
… “Monopolies are prohibited by the Constitution, but in practice many companies behave like monopolies because of the great economic power they enjoy,” López Obrador said.
The Competitive Pricing Law will be introduced in the Senate by legislators from to the United Progressive Front (FAP), a political coalition allied with López Obrador´s parallel government. The second largest force in Congress, the FAP consists of the same three parties under which López Obrador ran for president – the Democratic Revolution Party (PRD), the Labor Party, and Convergence.
The proposed legislation would create a Competitive Pricing Commission to operate independently of the existing Federal Competition Commission.
Kelly Arthur Garrett, Mexico City Herald (23 November 2006)
mexfiles.net 
Interesting, but fundamentally misguided. Prices are lower in the US because of the nature of our economy, not because of price controls and regulation. Everybody agrees that the price of basic goods in Mexico needs to fall, but how do you make that happen? Clearly, state control of industry is not the answer…the Mexican government completely controls the price of electricity and gas, and both cost more in Mexico than in the US.
Mexico needs more industrial competition, but the major barrier to that is corruption in Mexico – from corrupt local officials demanding payments for licenses to corrupt judges who won’t force their cronies to honor contracts and debts. Until the broader business environment improves, the Mexican economy will continue to suffer.
PS – And I don’t mean that Mexico must do this to attract foreign investors (although that would help). Mexico needs to do this so mexicanos quit investing in US businesses and real estate ventures and start investing in their own country!