They found paradise, and put up a WalMart…

“When the small-business owner goes out of business, the middle class gets smaller,” says Sebastian Alvarez, a 34-year-old liquor-store owner who is part of a group in the tourist mecca of Los Cabos, at the southern tip of the Baja California peninsula, seeking to block a Wal-Mart. Though opposition is small today, he said he expects criticism of Wal-Mart to grow in coming years – just as it did over time in the U.S.

Wal-Mex is already the biggest private employer in the Republic, and growth shows no sign of tapering off any time soon, writes John Lyons in the Wall Street Journal (reprinted here). While I have the usual lefty objections to WalMart (environmentally unfriendly, ugly big boxes in pedestrian-unfriendly neighborhoods), I have to admit Wal-Mex has done some things right.

I always thought Banco Azteca (the consumer savings bank owned by Grupo Electra Department Stores) was one of the best things to happen to the Mexican working class. They could get credit for very small purchases, and it gave SOME of the estimated 75% of Mexicans who don’t use conventional banks access to more credit than was available through the family network and traditional methods (I had a student with a “real” credit card, who was the investor or financer of six or seven family businesses — a bicycle for a delivery driving uncle here, a brothers’ computer there…). Sometimes alls you need is a blender or two, or a steam iron to become an entrepreneur, and without small credit, that’s not possible.

Banco Azteca was — and is — proving that micro-lending isn’t a charitable enterprise. Working people pay their loans (I once sat through a real estate buying seminar… not that I’ve ever had money… and right now I don’t have any — hey, it’s PLEDGE MONTH HERE AT MEX FILES) … where looking for pickup trucks in driveways was one of the signs of a neighborhood worth buying into. The theory back then was that pickup drivers were working guys, and working guys paid their bills). And, if granny is making a few pesos ironing clothes for their neighbors, she’s as much a member of the business community as Carlos Slim. Certainly, she won’t be as influential as Slim… but, she will have a stake in the prosperity of the community.

And… middle-class values. A Mexican small business owner is someone of importance in their community. Even if you’re only talking about your block in Mexico City. I had my apartment wiring fixed by the nephew of the lady who sold quesadillas and breakfasts to construction workers out of the local in the front of my building because… well, because la Señora was the business owner I knew and trusted. And I wasn’t acting like a lost gringo. That’s how you get things done… through local shop owners.

The middle-class values extended to things like sweeping the sidewalk every morning, the informal “neighborhood watch” committee, feeding my dog on occasion (she was a notorious mooch) and taking in the mail if I wasn’t home. The kind of things that make neighborhoods livable. And, being middle class, you can be sure her the kids were going to school, and doing their homework every day.

Not that she — or I — or anyone else in the neighborhood, had any money to speak of. Income does not make you middle-class. And that is my real problem with Wal-Mex.

Yes, they pay better, and its a good thing to get people into the “formal economy” where they can get housing credits and pay into IMSS (Social Security). But, as employees of some big box, they don’t have neighborhood ties, and aren’t going to sweep the sidewalk just because it’s your home. And they aren’t usually living in the neighborhood (though there are some moves to encourage employers to find employees nearby residences).

I think the people who say “well, Mexicans prefer to shop at the locals because …” are whistling in the dark. Mexicans are no different than any other shopper. They’ll like the local, and the local shopkeeper, but that won’t stop them from shopping where their peso goes the furthest. They’ll complain about the crappy fruit (WalMex fruit is aweful… my favorite fruit, zapote, has to be very fresh or it turns to wood. WalMex distribution systems have no way of dealing with things like that). They’ll complain about having to take the bus to the store and wrestle their packages back on. But they won’t notice until the local is gone. Just like the U.S.

The bigger problem is the ownership. Mexico built a middle class by “going it alone”. One of the ironies of the Revolution was that by concentrating on education and development, Mexico went from almost no middle class to a relatively middle-class country, or one with middle class values. And, they were the voters who threw out the Revolutionary party in favor of the counter-revolutionary PAN in 2000.

After World War II, when the new PRI (founded in 1948) sought to consolidate the revolution, creating a national consumer base, and the national industries to support the middle-class, were priorities. Volkswagen was more a Mexican company… and “el Vocho” a Mexican car, even with its Germanic lineange, than otherwise.  The others who were given special consideration and government loans or contracts to get they started — Herdez, Goya, Cemex, Commercial Mexicana and so on — were fostered to meet internal needs. Mexican consumers had access to the same stuff other advanced countries had… just not all the brands. You could buy canned soup — but there weren’t five or six brands selling the same tomato soup. You might get crappy goods for some things (old Mexican plumbing is a nightmare!), but the money you spent stayed in the country… as did the jobs.

Wal Mex is 62% owned by Wal Mart… which means the Walton family of Arkansas. Their interests are not Mexico’s interests.  If I have to eat crappy fruit… and give up zapotes except for rare trips to the campo… I don’t want the money going to some bubbas who are too damn rich to begin with. Or the price of tortillas going through the roof.  Or my neigbhors working for ‘da man… and not themselves.