Mexican Leaders in Denial

Mexico's Secretary of Treasury, Ernesto Cordero, said this week corruption in Mexico does not affect foreign investment. I was astonished to read this but it reinforces my perception that most of Mexico's top leaders are in willful denial.

Now, it's difficult to say how many dollars, euros, or yuan would flow to Mexico if corruption was not on the rise but it is clear that corruption raises the cost of doing business and, perhaps more importantly, creates uncertainty about costs. Any wise business owner is going to take this into account when deciding where to put their money. Between two similar opportunities, investors will take the one with the fewest unknowns.

Mr Cordero's announcement comes on the heels of a similarly obtuse statement he made three weeks ago. He said violence from organized crime hasn't had an affect on economic growth.

So the disastrous drop in tourism has no connection to the reports of violence that potential travelers are watching on the news, huh?

Mexico faces many challenges including organized crime, a stark divide between rich and poor, and system of government that structurally resists change. To effectively confront these problems, the first thing Mexican leaders need to be is forthright. Otherwise the high-levels of cynicism amongst the public will continue and nothing will improve.