1. Challenges and politics of social policy Contemporary Mexican Politics Harvard University Prof. Alejandro Poiré December 7, 2006

2. Political challenges in social policy Clientelism  Conditioning of public goods in exchange for political support  Authoritarian clientelism That which does not respect ‘organizational autonomy’  Modernized semi-clientelism Some degree of bargaining within a political incentives framework  Pluralism No political conditioning of provision Solidaridad as an example of mixed incentives  Targeted to hold off PRD growth (semi-clientelistic)  And to beef up the PRI’s base (authoritarian)  And a pluralistic provision in some cases

3. In 1995, gone was Salinas… And with him his favorite program  Mostly demand-based infrastructure improvements  Very strong internal PRI component; many governors were former Pronasol coordinators (R. Madrazo, Diódoro Carrasco, Manuel Cavazos, etc.) Zedillo implements PROGRESA, changed by Fox to Oportunidades No longer demand-based, but directly targeted  Direct cash transfers  Initial randomization  Conditionality on health and education  Specific effects  Measurement debate

4. Large growth of Progresa - Oportunidades

5. Impact on poverty reduction Very strong effect, in particular for  Nutritional (to 16%)  Asset (to 22%) Helped also by low inflation, high remittances, etc. Too little, too late?  Conditional on school, health infrastructure  Uncertain long-term effects  Requires large funding levels

6. Challenges in other areas Subsidization  Of energy for middle and higher class consumers  Of value added taxes to medicines and most foodstuffs Universal health system  Dubious long-term financial strength  Huge public benefit, especially in terms of inequality Education policy  Coverage is growing  But quality standards not  The SNTE as a major player

7. Hybrid social policymaking Combines elements of the old and new political regimes:  All programs plagued by a relative lack of long-term funding  Oportunidades, built on PRONASOL  Universal health system, partially funded with tobacco dealings, negotiated with business principals  Decentralization in education, but no real quality control  Subsidization of energy and medicines does not benefit poorest voter, but middle and upper classes  Immense power to public utility unions, including teachers, energy workers, etc. It is lack of reform what seems to be the problem  The SNTE has been the PAN’s most prominent union ally  But they denounced choice of education minister (Josefina Vázquez Mota)

8. Does democracy make clientelism more likely? Clientelism can produce bad social policy  You do not give to whoever needs it most, but those whose support you need most And bad for political accountability  Can make ‘uninformed’ voters reward ‘bad’ policy by incumbent However…  Should social policy be completely detached from electoral outcomes?

9. Who were voters rewarding?  Results from Magaloni, Estévez and Díaz Cayeros, WCFIA conference, Harvard, December 2006.

10. What about Seguro Popular?

11. Is social policy pluralism vindicated? Strong electoral effect of Oportunidades in favor of the PAN in 2006:  Mostly among urban voters, and in PAN and PRI states  Not in PRD states Seguro Popular is strongly rewarded across the board  Vote probability and candidate opinions  In rural and PRD states as well Some room for ‘virtuous’ accountability  Good social policy by incumbent is electorally rewarded  Additional evidence shows no effect of non-welfare enhancing handouts on the vote

12. Challenges and politics of social policy Contemporary Mexican Politics Harvard University Prof. Alejandro Poiré December 7, 2006