Sunday, April 11, 2010

economics 101 -- drugs

Poor Mexico.

If a medical patient, she would be assigned to intensive care.  Or, perhaps, hospice care. 

That is, if you believe her detractors.  The old "Mexico is a failed state" crowd.

We talked about their ilk in chicken little meets wolf boy in January 2009.

You may recall the Joint Forces Command report that was supposed to have concluded that Mexico was on the very brink of becoming a failed state.  Of course, the news outlets failed to properly report the story.  According to most of them, the United States was about to have a Somalia on its border -- I guess in addition to California.

As much as Mexico should pray for deliverance from its detractors, its hard-nosed friends can be just as dangerous.

The boys over at Stratfor have disinterred the failed state corpse.  But this time they have distanced themselves from the "Mexico is melting" crowd.  Their report would give you the impression Sauron had been reinstated in the dark corridors of
Chapultepec Castle.

Stratfor's new tack exchanges sack cloth and ashes for Machiavellian finery.

As all good reports, it starts with definitions.  And "failed state" certainly requires one.  But Stratfor's definition is one that would warm the heart of Louis XIV.  It is all about central government power.

A failed state is one in which the central government has lost control over significant areas of the country and the state is unable to function.

Anyone who has lived in Mexico for any period of time knows that Mexico has never been able to meet the literal terms of that definition.  Certainly not since its independence in 1810 -- and probably long before.  The push and pull between local officials and the central authority has been the warp and woof of Mexico's struggle with its own history.

The writ of the central government simply does not run far in Mexico.  And that makes some of us very happy residents of a nascent libertarian experiment in progress.

I am surprised the report does not say the same thing about the application of its definition to Mexico's history.  Because the report is every bit as cynical.

Under the guise of straight talk, the report takes swipes at each level of the Mexican Establishment -- from politicians to banks to the army.  The report concludes that Mexico is not a failed state.  The central government may have lost control of its northern tier states, but only in the realm of drug enforcement.

That seems like a rather level-headed analysis.  But here comes the cynicism -- as thick as peanut butter on a third grader's sandwich.

The analysis boys conclude Mexico is not a failed state in general because drug trafficking helps to stabilize Mexico's central government.

The report claims the export of drugs provides gainful employment for young men.  And it brings in at least $32 billion (US) each year in profit from drug trafficking.  $32 billion that is invested in the Mexican economy, such as selling pirated DVDs to naive expatriates and tourists.

Looked at in those terms, how could it be in the national interest of Mexico to shut down an export business that provides that much hard currency to a faltering Mexican economy?

The report is even too cynical for me.  But it does point out one of the flaws of the current attempts to coordinate startegies between the United States and Mexico.  Until a common national interest can be found, there can be no common strategy.

Of course, Americans have a different national interest.  The past five American administrations were convinced that they could get drugs off of American streets by increasing their retail price -- through strong interdiction programs and effective local prosecution of central criminal drug figures.

So far, after over two decades of that policy, the American national interest has been thwarted.

Tomorrow, let's look at why that is true.


Calypso said...

Mexico a failed state - this coming out of the United States! If that isn't the kettle calling the pot black...

Anonymous said...

Stratfor is incredibly cynical about everything. They provide one of the most well-argued covers for maintaining the various status quo (enormous U.S. military spending, multiple wars everywhere, U.S. role as world policeman, war on drugs, etc) that exist today.

Still, they are interesting and you can't dismiss the Machiavellian point of view entirely.

But the larger point (which I commented on in Felipe's blog) that Mexico is damned whether the drug war continues (human carnage)or ends (likely deep recession), is probably true.

A lot of those drug profits probably go toward things that will be deeply missed by everyone.


Kim G
Boston, MA
Where, thankfully, there is remarkably little carnage

Steve Cotton said...

Calypso -- Like you, I far prefer this "failed state" to the hall monitor mentality of the governments north of Mexico's border.

Kim -- I agree that the cynical spin did give a new perspective to the argument. But, as you say, for all that new perspective, it is merely another think-tank that provides cover for whatever the administration wants to do.

Babs said...

As long as everyone in the USA continues to diminish the reputation of Mexico and finger point - they don't have to look at their own backyard!

Anonymous said...

It's curious to note that in the current Nation magazine, Cockburn has an article which includes some interesting facts about how Humboldt county has benefited from the trade in marijuana, providing a boost to truck dealerships and providing $200 a day jobs for trimmer laborers, in an underground economy that sells the devil's weed which can go, in different markets, for as much as $2400 a pound from the grower/producer.

The world is as it is, whatever we might wish to believe.

I don't know how this affects your take on the analysis. But I thought it was interesting all the same.


Steve Cotton said...

Babs -- True.

ANM -- Sometimes a cigar is just a cigar. And trade is trade.