Sunday, December 04, 2005

Grits for Breakfast: Mexican border wars: "The only leaders who can contain the violence are the ones who are in jail"

I once had a research paper regarding the drug trade. The way things are now, we can only expect one result: increased violence. You have to know some people in the business to understand that it's business. Take away the profit and you've got no incentive.

I don't know when the drug war started. I'm sure it was back in the 60s or 70s sometime. In the Reagan years, our country began to crack down on drugs (pun intended). Then George Bush, the father, had his turn to defeat drugs. Bill Clinton did his best. I haven't seen any evidence that the current Bush puts fighting drugs as a priority. On the other hand, by adding more people to the Border Patrol and Customs, it's likely that more drugs are interdicted.

It seems like the more our country fights drugs, the richer and more powerful the cartels become. It's simple supply and demand economics. The more we restrict the flow of drugs into the country, the more valuable the drugs that get through become. The increased profit is then sufficient incentive and capital to bring more drugs into the country. If you lose some drugs, that's a cost of doing business. You expect some loss. Of course, you reduce your losses by holding the caught smugglers responsible for repaying the loss.

Here is another thing to consider. The cost of entry for new Cartels is too high. In order for a new cartel to enter the market, they would have to buy drugs wholesale, obviously. Can a new market entrant get the same price breaks that the current cartels do? In addition, the larger cartels can afford their own highly trained security and enforcement personnel. New cartels would have to pay a premium to attract talent. You also need to consider that when you buy a corrupt official, you need to ensure that he does not help the competition.

How do you ensure loyalty from a corrupt official? Well, it's simple. You pay him well, and you protect him and his family from rival drug cartels while making it clear that you would not hesitate to kill his family should he step out of line. Obviously, he has no choice in the matter. The decision to be corrupt is not his. He either is corrupt, or he will be honest and dead. So, for a new cartel, the pool of available officials to corrupt is small. All the good ones are taken.

So, on the Mexican side, we have no influence. The whole network is bought and paid. The federal government, despite heroic efforts to contain the situation, are inadequate against a well-financed enemy.

On the U.S. side, we have raised the price of the goods so that substitute products are an attractive alternative. This is similar to when gas was really expensive. Suddenly, bike riding became a viable alternative for transport. So, by raising the price of traditional drugs, we have created a market for meth. Now we have to fight the drugs coming in from abroad AND the ones being manufactured here at home.

Every time we escalate the war on drugs, we are subsidizing the existing cartels by making it more difficult for new market entrants and by decreasing the supply, resulting in higher profit. Not only that, we have created enough incentive for our own people to manufacture drugs.

My solution? None. It can't be fixed. The only way to win the game is not to play it. We should just stop fighting. Let the drugs hit a price floor and end the market. At the very least, legalize marijuana so that it can be grown by every stoner in the country. Why pay for it when you can grow it? Heck, license, regulate, and tax pot so that we can use that money to pay for the drug war (ironic, isn't it). That will effectively put an end to that market. Then, we can focus on the other drugs that aren't made here and keep them from entering the country. But it won't happen. Every respectable politician is going to be against drugs. It's as inevitable as being for clean air, clean water, and wanting to help children. It just sounds good and polls well with voters. So, don't expect our government to solve the problem. After all, Government is subsidizing the kingpins. If I were a kingpin, I would contribute to rabidly anti-drug politicians. Sure, it would hurt my exports, but it also hurts the competition. We are the only ones who can solve the problem. We simply have to stop using drugs. But that won't happen.
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