Collapse of Dignity

by Napoleon Gomez

  Since the Pasta de Conchos explosion, the government has presented Grupo México with more than six hundred new concessions for mining—about one hundred per year. Each mining concession represents thousands of acres of national territory to exploit, which Larrea and Grupo México have used to become one of the largest rights holders and speculators in the country, holding sway over enormous expanses of land. Today, more than 25 percent of the national territory has been given in concessions to private companies, domestic and foreign, according to different estimates. And Grupo México’s new possessions aren’t limited to mining projects; they have also collected railroads, seaport terminals, land and sea drilling projects, construction and engineering projects, beach resorts, golf courses, private residences, and farms. Despite the tragedy at Pasta de Conchos and the deaths of our comrades, Germán Larrea and Grupo México have gone on to create major new businesses—all under the protection of the government of Vicente Fox.

  The privatizations—or “disincorporations”—started in the 1980s under Salinas, and Mexicana de Cobre and Mexicana de Cananea were among the early losses to the people of Mexico, with most of the wealth—except for the 5 percent the Miners’ Union secured to fund its programs—transferred from national ownership to the Larrea family and their partners in Grupo México. Likewise, Altos Hornos de México (AHMSA) was subtracted from the national heritage and given to Alonso Ancira Elizondo and Xavier Autrey; the Las Truchas steel mill in Lázaro Cárdenas went to the Villarreal Guajardo brothers of Grupo Villacero; Aceros Planos de México (APM) was awarded to the PAN families Canales and Clariond; and many others could be named, besides.

  Family relations and friendships have played a fundamental role in all the shady processes of privatization. Government officials have sold assets and reserves that were once part of the national heritage at ridiculously low prices—practically gifts—to family and friends. A good illustration of this is the relationship between Pedro Aspe, treasury secretary under President Salinas, and Alberto Bailleres, owner of holding company Grupo Bal, which controls Grupo Peñoles, the second-largest mining company in Mexico, the department store chain El Palacio del Hierro, and insurance company GNP. (Bailleres is also a member of the board of directors of Televisa, along with Germán Larrea.) The two men became family when Aspe’s daughter married Bailleres’s son, and gifts and concessions flowed freely from the government to Bailleres, enabling him to amass the second-largest fortune in Mexico. Aspe also oversaw, under the Salinas presidency, the privatization of the Nacozari and Cananea mines, sold for a pittance to Grupo México. Once he left office, Aspe used his connections from the treasury to begin amassing great troves of wealth for himself.

  By throwing money at PAN officials, Germán Larrea and his ilk ensure that they continue to get top-dollar concessions—and they secure an unseen hand in the government’s actions through controlled officials and direct appointments to office. Conflicts of interest are of no concern to men like Fox and Calderón, for whom a prior business interest in a related area is not a problem when making such appointments. In fact, coming from a business background is an advantage in their eyes. Corporations might as well send letters of recommendation for these individuals, who are uniformly unsuited to public service after a lifetime of capitalist greed.

  Vicente Fox spent his entire term in the service of private companies that furthered his personal and ideological interests that financed his political campaign or that donated large sums of money to the Vamos Mexico Foundation run by his wife, Marta Sahagún. He forgot that he was just a manager of the country’s riches, not the owner. As with so many others, power caused him to lose his mind.

  The amount these individuals stand to make off Mexico’s resources just keeps rising. When the mining conflict began seven years ago, the price of copper was around 75 cents per pound; the price of gold was around $300 per ounce; and silver was around $4.50 an ounce. Seven years later, we have witnessed a surge in demand and the speculative market mainly in China, Korea, India, and Japan, and prices have shot up dramatically: copper is about $4.40 per pound—600 percent higher than five years ago. Gold is above $1,650 per ounce, more than five times higher than five years ago. The price of silver is around $34, eight or nine times higher than five years ago. While these prices fluctuate, they are always on an upward trajectory.

  Yet no one sees the benefit of these increases but the businessmen themselves. Their companies try to establish fixed costs of production and manual labor, ignoring or pretending not to know how much fatter their profit margin has become. The Miners’ Union has been struggling for a long time for better wages and benefits, and we continue to do this because we know that the companies can afford the increases and because we also know that wages do not have a large impact on the ongoing profitability of these transnational giants.

  In the comparison of wages between Mexican mine, metal, and steelworkers on one hand and those of the United States and Canada on the other, we find that wages in the two latter countries are fifteen times higher than in Mexico. A mineworker in Mexico can earn an average of $20 per day for eight hours’ work, while a worker in the United States or Canada can earn $35 dollars per hour. This difference in wages is overwhelming. This comparative analysis does not fit the concept of economic justice and equity, much less respect toward the interests of Mexican workers and their families.

  Mineworkers of Mexico, the United States, and Canada—and those of any other place in the world—perform the same type of activities, operating and producing the extraction of minerals and transforming them with the same equipment and technology in similar facilities. They produce the same materials and metals that are quoted in the international market, but the risks are much higher in a country like Mexico than in countries that have more advanced health and safety conditions, such as the United States and Canada.

  Mexican mining, metalworking, and steelworking companies, and those of any other industrial sector, do not have the economic justification to explain the enormous disparities between the wages paid in Mexico and those paid in Canada, the United States, and many other developed nations. Mexican owners generally use the excuse that the cost of living is high in developed countries, thus justifying the higher wages, but if we measure real comparative costs, we can confirm that there is a difference that is at most double or perhaps a little more than in Mexico. It is not enough of a difference, however, to explain or justify the enormous difference in wages, fifteen times higher in the more advanced countries.

  Exploitation and discrimination against Mexican manual labor is made even more unjustifiable by the fact that the finished products obtained from mining and steelworking are quoted in the international market at the same prices by the metals markets based in London, New York, Tokyo, or Hong Kong, established by buyers and importers from those countries. Thus, end prices are the same whether the minerals are extracted and mined in Mexico, Canada, or the United States, or produced or transformed in any of these countries. And no price differential or lack thereof, of course, can justify the gross levels of exploitation, abuse, and marginalization that exist and are tolerated, in complicity with the companies, by the Mexican government.

  How can we explain, then, such profound differences in wages between the United States and Canada as opposed to Mexico? The only possible explanation is the difference in the degree of exploitation of the workers. If we produce the same product, with the same equipment and technology, in the same working conditions—actually, much worse conditions in Mexico—the result indicates the degree of exploitation of manual labor that the respective governments are willing to accept. In Mexico the governments allow very high degrees of exploitation of human labor, far above the levels permitted in the United States and Canada.

  The case of Mexico illustrates the distortion brought about by an economic policy designed exclusively to benefit a single sector, as has become apparent in the past ten years. The first issue is misguided fiscal and tax policies that are designed t
o create incentives for large companies, such as granting voluminous exemptions in the payment of taxes. The majority of large companies, among them mining companies, owe the Mexican government many millions in taxes that they have not paid, or else the taxes are refunded or forgiven by the government. In the appendix, I have noted the relationships of some of these corporate “tax deadbeats”: information that is very illustrative.

  In January 2010, Carlos Fernández-Vega of La Jornada wrote a column that brought to light the enormous perversity of this situation. He revealed that since 2005 a group of forty-two companies has run up an unpaid tax bill of nearly 224 billion pesos (about 21 billion USD)—a number that is equal to a high percentage of federal public income for 2009.

  This is just one of the many gains that Mexican companies have experienced under the neoliberal economic model, with its appropriation by individuals of public resources. To this cumulative and ongoing organic deficit in public finances that involves debts owed to the government, it is necessary to add what private companies have not paid to the Mexican treasury during the past twelve years of the PAN government—at a time when there has been greater pressure on individual taxpayers in the middle of the tax scale.

  Although the figures are older, very recently the reality of these tax-avoidance schemes by large companies has been revealed. On February 26, 2011, La Jornada stated: “The Federation auditor general confirmed that the Tax Administration Service, SAT, failed in 2009 to collect 462 billion pesos [about 33.7 billion USD] in so-called ‘tax expenditures,’ in the majority extensions and subsidies.”

  This single amount represents a very large proportion of tax collections. And it is only the nonpayment from a single year, 2009. Imagine the unknown amounts from other years! And remember that this phenomenon has been occurring for many years, well before the PAN governments came to power. It has become worse during the two PAN presidential terms of Fox (2000–06) and the current Calderón administration (2006–12). The fact is that all companies in 2009 failed to pay a total of 462 billion pesos, and that the largest Mexican companies’ debts to the Department of the Treasury account for roughly half of that (223.7 billion pesos, or a little over 16 billion USD).

  The same La Jornada article reported that in 2010, capital flight from Mexico to foreign countries increased 79 percent, double the total amount of direct foreign investment, to a total 759.7 billion pesos (53.4 billion USD).

  Thus, if we add what the tax authorities failed to collect in 2009 from many companies to the enormous amount of money that fled Mexico the following year, we can conclude that Mexico was brutally undercapitalized in just these two years. Capital that does not flow to the government through tax revenue is capital that does not increase the treasury’s economic ability to invest in development. In addition, capital that leaves the country does not return to Mexico for reinvestment that could result in greater generation of stable jobs. What’s more, the capital that left was transferred to foreign banks, mainly U.S. and European banks, and to tax havens, with which these corporations will actually finance the development of other countries, mainly our powerful neighbor to the north.

  In summary, in addition to Mexico having a chronic capital deficit, and despite there not being sufficient resources from direct foreign investment, much Mexican capital is going abroad to finance programs and companies in other countries. It all indicates a scheme for dispossession of Mexican economic resources, a plan operated by private initiative that is not a bit nationalist, which does not invest capital in Mexico, and which seeks the protection of the United States and other nations to finance businesses there to the detriment of Mexican public and private finances. All this, of course, proceeds with the cover-up, if not the deliberate complicity, of the conservative PAN government.

  As if all this weren’t enough, current Mexican tax policy falls most heavily on the captive population, which already has a heavy burden. The government is always on the lookout for ways to increase value-added taxes (VATs) and direct or indirect taxes on public services, including electricity, natural gas, gasoline, and the prices of basic goods.

  This situation, instead of creating stimuli in the economy, creates serious inequality, because it is privileging a few to the detriment of the vast majority. It cannot generate short-, medium- or long-term growth. It also does not develop solid, stable, equitable, and just growth. It merely favors those who have the most ability to pay at the expense of those who have the least ability.

  The business sector’s obsession with profits leads to problems beyond tax-avoidance schemes and an insistence on low wages. As we have seen, it also prevents many companies from investing in the most basic safety measures. In just the past five years, two hundred workers have been killed in accidents in Grupo México mines and plants. That record will certainly not improve if Germán Feliciano Larrea and others of his type are left to their own devices.

  The situation that we miners have experienced in recent years has not just been another attack against a group of workers; it has been an all-out war against the free and democratic trade unionism of the people, an assault without precedent in our country. It certainly reflects the ambitions and appetites of unlimited power, the insensitivity of some groups who, by following globalization and international organization theories in addition to their own interests, seek to destroy the autonomy and freedom of workers and trade unionism itself.

  The brutality with which this attack against Mexican miners and steel workers was orchestrated reflects how unbridled capitalism works against the fundamental rights of workers and the most neglected social classes. Above all, it is clear that exploitative systems have no principles, no ethics of any kind, not even the vision to realize that when the situation reverses in favor of the neglected and the oppressed, the reaction is much more violent.

  Mexico does not need a new labor culture, but it urgently needs a new ownership culture—and governing culture—that would change the mentality of those insensitive and exploitative businessmen and authorities intent on maintaining the widest profit margins possible at the expense of basic safety and living standards for those whose labor generates the products they sell.

  What these businessmen and politicians do not understand or accept because of their sick or selfish greedy mentality and lack of respect for human and labor rights, for safety and health—in a word, their lack of respect for human life—is that assuming their social responsibility and harboring a positive relationship with workers and their unions leads to benefits for all parties involved. Individuals like Germán Larrea and the officials in the labor department assume that unions are by nature destructive but fail to see that these organizations can actually be powerful allies. When worker and company share responsibility and are able to negotiate productively, they can progress toward increased production, job creation, efficiency, and competitiveness. When any company displays goodwill and respect toward its workers and keeps its commitments to them, efficiency and productivity are increased, and any disputes are resolved quickly and with the least amount of conflict and lost time. And these benefits for the company reach beyond its own walls; high production and a peaceful, content working class strengthen the country as a whole.

  Yet under the difficult and violent conditions of contemporary Mexico, the importance and limits of union action have been reduced. These pro-business, right-wing Mexican governments applied a cynical and aggressive strategy to subjugate the unions to the imperious demands of the large companies and their voracious hunger for profits. Although they have not been completely successful, they have caused damage to the miners’ movement. Some of this is associated with the political persecution launched against me personally as national leader and against the National Miners’ Union, a struggle in which by no means will we let down our guard or fold our hands.

  Never in the history of the union has there been any precedent for the magnitude of this aggression and repression that is so strong, perverse, and aggressive against the minewor
kers, against our union and its leaders.

  In response to the political persecution unleashed, the struggle of the mineworkers in the past five years constitutes a historic struggle that is, as I stated earlier, without precedent in the defense of union autonomy, liberty, and the basic human rights of workers. To a degree this has been a conflict and a movement that has inspired all unions, not just in Mexico, but all over the world. The great resistance and dignity with which we have defended these rights, principles, and fundamental values have been of sufficient interest to the unions, international federations, and organizations, who are well aware of the significance and transcendence of our effort, work, courage, and dedication to achieving great victory for workers and democracy in this universal struggle.

  Since the invasion of neoliberal technocrats in the 1980s, most Mexican politicians have tried to ignore the reality of Mexico. They create an imaginary Mexico that reflects their desires and their demagoguery but that doesn’t reflect what the people see around them every day. Whether out of convenience, conviction, or inability, they disregard the poverty that affects so many citizens. Were they to address this reality, their economic policies would have to change radically. They ignore the fact that Mexico is a country of workers—whether city dwellers, farmers, middle class, campesino, indigenous, or immigrant. To the PAN, Mexico is Fox’s country that is, in the former president’s words, “of businessmen, by businessmen, and for businessmen.” This sentiment is a catastrophic mockery of the concept of a republic. They forget that labor laws were not created to cater to voracious private interests but to protect the interests of workers. People in the streets used to say that Fox’s version of the country was “Foxiland” or “DisneyFox.”