Economics: 50 shades of policy - Part I: The economy
Since the recent unveiling of his 50-point plan to combat corruption and achieve "republican austerity", López Obrador has put forward ideas that could have a considerable impact on the way the federal budget is allocated. The changes are designed to free up money with which to fund up to 500 billion pesos in new social programs, but there are doubts as to whether some of the proposed changes are even possible, much less more beneficial than harmful.
Slashing the pay of salaried personnel and reducing their number by 70% could generate considerable savings, but firing more than a quarter of a million of such non unionized personnel and handing the remaining staff longer hours and lower pay is likely to entail extensive litigation and costs, and may lead to an exodus of the finest and most experienced public servants, many of whom would be forced to move as part of the plan to transfer 12 ministries to the provinces. Such a massive transfer of federal offices will undoubtedly involve huge one-off costs and logistical nightmares.
Such problems would be further magnified by a decision to ban the purchase of any computer systems because massive layoffs can only lead to even greater inefficiencies without added technological support to compensate for such a loss of human capital.
The proposal to cut individual members of Congress out of the Ramo 23 process of direct disbursements to state and local governments, a system that has been rife with all manner of abuse, could curtail one avenue of corruption and produce substantial savings, although the roughly 200 billion peso figure some have raised is terribly exaggerated. There will still be a need for much of that funding, and so far, no clear mechanism for its disbursement is being proposed.
There are also less controversial proposals, such as halving the government’s advertising budget, handling public contracts through public bidding overseen by independent and UN observers, and centralizing procurement. All of these are widely viewed as good practices that could lead to significant savings and lower corruption.
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