Introduction
On July 1, Mexico’s President Claudia Sheinbaum attended the AIFA ceremony to celebrate the delivery of an Embraer jet, which will be operated by the government-owned Mexicana de Aviación. This move has been criticized as an ideological act with low opportunity costs for the President’s time, showcasing a developing nation’s aspiration to maintain its underdeveloped status.
Background on Mexicana de Aviación
Mexicana de Aviación, once a prominent Mexican airline, ceased operations in 2010 due to financial difficulties. In 2021, President López Obrador revived the airline, claiming that government ownership would increase national sovereignty. The new Mexicana de Aviación aims to prioritize collective well-being, according to Sheinbaum.
President’s Speech at AIFA Ceremony
During her speech, Sheinbaum emphasized that recovering Mexicana de Aviación is a strategic decision, not an ideological one. She highlighted the importance of air transport for defense, emergency response, national logistics, and passenger travel. She also stated that the new Mexicana de Aviación would focus on collective well-being, transparency, inclusivity, efficiency, social responsibility, and national sense, backed by Defense Nacional.
President’s Ideological Stance on Government Involvement in the Economy
Sheinbaum’s vision of government involvement in the economy leans towards a mixed system, not fully embracing communism but believing that the government should produce and offer private goods defined by exclusivity and rivalry in consumption. Examples include airline services, electricity, gasoline, potable water, medicine, rail transport, postal and telegraph services, litio, salt, and hospitality services.
Critique of Populist Arguments
The President’s populist arguments claim that government-provided private goods maximize collective well-being, defined according to her preferences. However, individual and subjective preferences make this approach an act of authoritarianism that ultimately results in lower social welfare.
Economic Inefficiency of Government-Run Enterprises
Sheinbaum’s ideological stance overlooks the inefficiency of government-run enterprises, which stem from poorly defined property rights. Assigning social or collective well-being functions to these enterprises leads to inefficient economic operations, resulting in continuous losses for taxpayers, regardless of whether they consume these private goods.
Mexican Sector’s Inefficiency
The Mexican para-state sector, including Mexicana de Aviación, has historically been inefficient, causing fiscal deficits and lower social welfare. The airline’s revival exemplifies this ongoing issue.
Key Questions and Answers
- What is the main issue with the President’s approach to Mexicana de Aviación? The President’s ideological stance on government involvement in the economy, specifically through Mexicana de Aviación, overlooks the inefficiencies of government-run enterprises and poorly defined property rights.
- What are private goods according to the President’s view? Private goods, in the President’s perspective, are characterized by exclusivity (only those who pay can consume) and rivalry in consumption (one person’s use excludes others from using the same unit).
- Why are government-run enterprises inefficient? Government-run enterprises are inefficient due to poorly defined property rights, leading to economically and potentially physically inefficient operations that continuously result in losses for taxpayers.
- What is the historical context of Mexico’s para-state sector? The para-state sector in Mexico, including Mexicana de Aviación, has been historically inefficient, causing fiscal deficits and lower social welfare.
