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The (relatively) poor will always be with . . . Morena

25 January 2022

Reworked (more than translated) from Viri Rios, “La apuesta de AMLO es la clase media baja, no los más pobres“, Expansíon, 25 January 2022.

López Obrador’s signature slogan has always been “For the good of all, but first the poor .” In a country where 53% of the population is poor, the real question is not whether they are put first, but who, among the poor, are at the head of the line.

How poverty has been addressed is largely a matter of electoral calculations, with differening social policies by the recent ruling parties, PRI, PAN and Morena.

Business-oriented PAN sought to hold down social spending to a minimum. Under the Calderón administration, Mexico became the country with the lowest social spending in the OECD and — with a few exceptions — in all of Latin America. The pittance of social spending that existed (7.3% of GDP) was focused on the poorest of the poor, but because there was so little money, leaving many poor people frankly destitute.

PAN’s tight-fistedness is based on the assumption that the poor needed to “earn” support — that they needed to prove they were the “deserving poor”. Assistance was only available to those that could prove they were enrolled in school and using medical clinics… something impossible for the ultra-poor (who didn’t have the resources to attend school, and might not be able to travel to the clinic regularly). Calderón’s signal social expenditures were Seguro Popular (91 billion pesos), and 55 billion for higher education and post-graduate studies (something very, very unlikely to benefit the vast majority of the poor).

Under PRI’s Peña, things changed. The party wanted to increase social spending, but ,,, true to its paternalist traditions… did not trust the people. Social spending, while substantially increased, went to state institutions, and not into the pockets of the poor.

Thus, during the Peña administration, while social spending grew by 29% (from 660 billion to 854 billion), cash transfers were reduced even more than under the PAN. Social spending went mainly to the IMSS (236 billion) and Seguro Popular (76 billion). And, as it turns out, much of the IMSS spending was for never finished buiding projects, and other white elephants that made no one better off than some political connected builders and real estate “developers”.

But if — maybe in spite of itself — the PRI did something right, it was to focus its social spending. For this reason, despite having fewer direct transfers, assistance in general managed to reach more of the poorest of the poor, becoming available to 63% of households in the two lowest income categories, compared to only 53% during Calderón’s six-year term.

With López Obrador, there has been a paradigm shift. The current policy is not, like with the PRI, to focus on only the poorest of the poor, or like PAN, to spend as little as possible. Rather, it is to put money into the hands of everyone.

Social spending has increased by 24%, and cash transfers by 47%. The number of households receiving direct benefits has gone up from 28% under the Peña administration to 30% under AMLO.

The numbers don’t reflect it, but López Obrador’s spending policy has triggered an extremely momentous change. For the first time in recent history, the “not so poor” — the lower middle class — are also receiving cash transfers. Only 17% of what in the US would be called the lower middle class or working poor, received transfers under the previous two adminstations, whereas now 26% of the households in this category do. More importantly, they are receiving 54% more than they did before.

For these people, social assistance makes a huge difference. 54% of the lower middle class — while not destitute (the focus of previous administration’s social policies) — they lack the income needed for basic necessities.

(My interjection); John F. Kennedy supposedly said, regarding “trickle down” economics, that a rising tide lifts all yachts. In other words, the beloved theory of neoliberalism is only true in that money might trickle down, but only to the next level. That is, when the rich get richer, the ony beneficiaries are the slightly less rich catering to their whims. But when the poor get a little extra money, they’ll spend it on basic necessities, like food: the products of the very poor.

As to political calculus, this has meant increased political support for MORENA. The best kept secret of López Obrador’s cash transfer policy is that his bet is not on the poorest, but on the lower middle class. Morena is betting on winning the hearts of precarious urban areas such as Iztapalapa, Gustavo A. Madero and Ecatepec, areas mostly abandoned by past governments because they were not ultra-poor.

One Comment leave one →
  1. norm permalink
    28 January 2022 3:17 pm

    Nice essay.

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