Decentralization Plan Could Expel 2.7 Million From Mexico City

By Simon Schatzberg, Special to The Epoch Times
October 22, 2018 Updated: October 22, 2018

MEXICO CITY—A plan by Mexican president-elect Andrés Manuel López Obrador would move the offices of as many as 31 government agencies, and their employees, out of the capital to different cities around the country.

The plan, which seeks to promote even development in different regions, could lead to an exodus of as many as 2.7 million government workers and their families from Mexico City by some estimates, though other, more conservative estimates put the figure lower.

Although the policy is referred to as “decentralization,” Dolores Franco, president of the Urbanists’ College of Mexico, told The Epoch Times that she sees that title as misleading.

“They’re calling it decentralization, but it would be more accurate to call it deconcentration,” she said. “It’s about deconcentrating activities from Mexico City, but it doesn’t necessarily give more power to state and municipal governments.”

Kristobal Melendez, a researcher at the Center for Economic and Budgetary Research (CIEP) in Mexico City, told The Epoch Times that decentralization could help promote development in poorer regions of Mexico, a country that has long struggled with geographic inequality.

“There’s a lot of inequality in the distribution of resources in Mexico,” he said. “Almost the entire federal government is concentrated in Mexico City, and other states should have that opportunity as well.”

Melendez says plans to attract private investment to southern Mexico have struggled, and that the kind of government-directed stimulus offered by decentralization could be successful.

“Mexico City is on a level of development where it can compete with European countries, while some municipalities in poor states have similar poverty levels to places in Africa,” he said. “It’s important to break that pattern, and one of the ways we can do it is through decentralization, which would bring work opportunities to other places.”

Melendez more conservatively estimates that around 500,000 people, mostly federal employees and their families, will leave Mexico City as a direct result of the decentralization plan. Mexico City will likely suffer in some ways because of the implied decline in economic activity, but Melendez says that North America’s largest city could also see some benefits from reducing its population.

“Mexico City is overpopulated, and that causes problems like traffic congestion and strains on the water supply,” he said. “We could put the resources we spend on those problems to better use: There would be fewer people, and the people who stay will have a better quality of life.”

Mixed Reactions

Of course, many of the thousands of employees whose jobs will be moved out of Mexico City will not want to leave. Workers at the Culture Secretariat, which will be the first government agency to move, to the city of Tlaxcala, have reacted angrily to the proposal, staging protests outside of Lopez Obrador’s campaign headquarters.

Maria de los Angeles Medina, president of the Culture Secretariat’s workers’ union, railed against the plan at one protest.

Cars stuck in traffic on Mexico City's Paseo de la Reforma.
Cars stuck in traffic on Mexico City’s Paseo de la Reforma on Oct. 19, 2018. (Simon Schatzberg/Special to The Epoch Times)

“Workers aren’t accessories that you can just send to another state without even listening to our needs,” she said.

Lopez Obrador later clarified that the process of moving secretariats will be gradual, and that employees won’t be forced to move. But job losses in Mexico City will be hard to avoid.

Gene Towle, a managing partner with the Mexico City real estate research firm Softec, is skeptical that moving government employees will promote development in the cities that receive them.

“What generates development and wealth isn’t necessarily government jobs, it’s actually productive jobs,” he told The Epoch Times. “The question is whether this is a strategy that could attract people to move and invest in these communities in other types of jobs.”

Towle also thinks that, notwithstanding improvements in video-conference and other communication technologies, capital cities still serve an important purpose, and dispersing government offices around the country could make Mexican government much less efficient.

“If you look around the world, there’s not a single country that has done this effectively,” he said. “In 10,000 years of government, the way most national governments organize is to have the central government powers in one spot so that they can coordinate cheaply and easily.”

For the plan to work, Towle says that it would be necessary to roll back federal regulations and devolve powers to the states to avoid a high social cost in time and money of traveling between different cities to visit government agencies.

He noted that for an entrepreneur to open a hotel, he or she needs to visit nine different government agencies to get permits. This is a reasonable task if all those agencies are located in Mexico City, but considerably more difficult if they are distributed in nine different cities around the country.

“What would originally have been a two-day trip could become a one-month boondoggle,” he said. “But if this is accompanied with significant deregulation, significant decentralization of powers to localities, so you don’t have to go to the places, then it could work.”