chapter  5
27 Pages

The Structure of the State Sector: The Parastate Firms

WithJames M. Cypher

Critics of state intervention point to what they believe are the weaknesses of state intervention, particularly the state's fiscal deficit. The neoliberal and Austrian critique of the state centers, in part, on the fact that the parastate sector has not been able to cover its costs of production and expansion. The foregoing discussion of the public sector has concentrated on the neoliberal critique of state intervention because a fundamental reordering of the state has been launched through the application of ideas arising from the ideological perspective. Precisely situating the new policy of privatization in terms of its origin, purpose, and scope is no simple matter because the Mexican government has issued only the most general statements. Privatizion of state firms is a piecemeal method of undercutting any future turn toward populism in Mexico. Finally, privatization has important short-run consequences in terms of artificially raising the profit level of private sector firms.