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Mexico Runs on Sidewalk Economy

May 09, 2005|Marla Dickerson | Times Staff Writer

TLALNEPANTLA, Mexico — When authorities decided to clean up this town, they didn't take any chances. Police swooped in just before midnight, armed with riot gear and backhoes. The invaders were repelled, the streets reduced to rubble.

A sneak attack to eradicate drug dealers? Gang members? Armed insurgents?

No, municipal leaders were uprooting sidewalk vendors, mostly women and senior citizens, whose makeshift taco stands and clothing stalls were clogging the city center. Ordered to relocate to make way for an urban renewal project, most wouldn't budge, leading authorities to eject nearly 1,900 of them by force.

"The mayor wants to create a tidy First World city in this place where people have nothing," said Jose Luis Vargas, the leader of a group of vendors protesting their ouster in late March. "Better to die fighting than to die of hunger."

The dust-up in this gritty municipality northeast of the capital underscores a turf battle being waged throughout Mexico.

More than a decade after the landmark North American Free Trade Agreement transformed Mexico into an exporting powerhouse, the nation's formal economy of on-the-books businesses and workers who pay taxes is dramatically losing ground to the underground sector.

From 2000 to 2004, the underground economy was Mexico's sole source of employment growth, and it's getting bigger all the time. Some economists estimate that as many as half the nation's workers eke out a living in subsistence jobs such as street hawkers and day laborers because there is nothing for them in the legitimate economy and no safety net for the jobless.

For Mexico, this swelling legion of shadow entrepreneurs is both a blessing and a curse.

The underground sector provides cheap goods and services for millions of low-income people, while giving Mexico an official jobless rate lower than that of the United States. Andres Manuel Lopez Obrador, mayor of Mexico City and a 2006 presidential hopeful, credits that entrepreneurial grit for easing tensions in a nation whose formal sector is creating far fewer than the 1 million jobs a year needed just to keep pace with population growth.

"Why hasn't there been a social explosion in Mexico?" he wrote in his recent book outlining his vision for fixing Mexico's employment and development woes. "The escape valve has been the informal economy, migration and drug trafficking. It's painful to admit it, but that's the reality."

But business leaders complain that entire industries are being lost to pirates and off-the-books entrepreneurs. It's costing Mexico big-time in terms of lost tax revenue and formal-sector jobs. Mexico's urban areas are also feeling the heat from the explosion of ambulant vendors, pitting residents' quality of life against peddlers' need to scratch out a living.

The friction is most evident in Mexico City, where an estimated 500,000 itinerant vendors ply their trade, hawking phone cards at traffic lights, bootleg CDs in the subway and snacks from kitchens set up on the sidewalks.

The area surrounding the sprawling central square, the Zocalo, the symbolic heart of Mexico, resembles a giant swap meet. Parts of stately Chapultepec Park looked like a county fair until last fall, when management closed a popular section for maintenance. Officials in swanky Polanco, Mexico City's Beverly Hills, are trying to relocate nearly 500 itinerant merchants who sell food and trinkets not far from high-end shops like Louis Vuitton.

"It's out of control," said Fernando Aboitiz, a Mexico City legislator whose district includes Polanco. He said the government had been forced to negotiate with ambulant vendors rather than simply evict them.

That's because Mexico's underground economy is so mammoth that informal-sector workers such as street vendors and gypsy cab drivers have formed unions to protect their territory. Although Mexican cities have zoning ordinances, the reality is that possession is nine-tenths of law. Once established, open-air merchants are extremely difficult to dislodge, alternately paying off authorities or taking them on with marches, sit-ins and blockades.

What looks chaotic to the casual observer is actually a highly organized industry. Most vendors in the capital pay dues of a few dollars a day to their leaders, who divvy up territories and keep the peace with government officials and competitors. They don't always succeed. Alejandra Barrios, leader of one of Mexico City's biggest peddlers' groups, is in prison awaiting trial after a rumble with another union over turf. The 64-year-old is accused of masterminding the 2003 shooting death of the husband of a rival leader with whom she had been feuding.

Business groups say ambulant vendors amount to foot soldiers in a network of organized crime that is toppling legitimate sectors of the economy.

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