Most American politicians appear to have flunked basic economics.
One look at the drug policies of the United States could lead to only one conclusion: most of the country's politicians learned their economics in gym class.
If I own a farm, in competition with my neighboring farmers, growing tomatoes, I can usually increase my profits by doing one of two things.
First, I can lower my price and increase my profits by enlarging my market share.
Or, second, I can improve the quality of my tomatoes. Perhaps, by switching to heirloom varieties.
Drug producers in Mexico are very much like my farm, example. They produce and distribute a product that has low production costs, but a very high market price. (In economic terms they garner about an 80% profit.)
But they forgo basic economics by taking over their rivals' production lines. War is simply a cost of doing business when the profits to be won are that large.
There is a huge demand from American noses and arms for Mexico's product. For over twenty years, the American government believed (and apparently still believes) it can stop drug transactions through police and military action.
The internecine drug wars currently under way in Mexico (cleverly induced by President Calderón) and drug interdictions on both sides of the border have affected supply -- a bit.
But look at that 80% profit figure. There is a lot of price elasticity there. And Americans continue to buy drugs even when the price increases. Just as they did illegal booze during Prohibition and just as they do with over-taxed cigarettes.
Last month, the political poobahs of Mexico and the United States met to conjure up a mutual drug strategy -- to stop the deaths in Mexico and to stop the drugs being exported across the border. But no such strategy exists. Nor can it.
This is pure Hans Morgenthau. If the competing national interests of the United States and Britain almost scuppered their cooperation during the Second World War, how can the two diametrically opposed national interests of Mexico and the United States possibly be resolved?
The Stratfor report we discussed yesterday suggested four potential strategies: 1) accept the status quo, 2) reduce drug demand in the United States while keeping drugs illegal, 3) legalize drugs, and 4) send American troops into Mexico to do what Mexico has not done with the drug lords.
The options are oversimplified, but they are a good place to start. And they each show the interest stress points of trying to cobble together a workable strategy.
Here is my take.
1. Maintaining the status quo, even with better-coordinated military aid and training from the United States, is not going to alter the economic equation. As long as Americans crave drugs and Mexico tries to interfere with the export business, there will be violence.
2. The second option has been tried and found wanting. The United States has tried to reduce the demand for drugs in the United States through education, scare tactics, lies, and putting a large portion of the American citizenry behind bars for the possession or sale of illegal drugs.
The states simply cannot afford to maintain that many people behind bars. Whatever drives people to drugs, education and prosecution are not going to stop the drug trade.
3. The most logical option (legalization) is also the most politically impossible -- even beyond improbable. A president who has already alienated a large portion of the middle class electorate over health care is not going to upset the same voters by raising the specter that their little Muffin is going to become a meth-hag.
Plenty of journals on the right and the left have reasonably argued in favor of legalization. But politicians will touch this one right after they privatize Social Security and nationalize the sex industry.
4. And the worst option (American troops in Mexico) is far too bizarre (and real) to imagine. Why not just call it Operation Polk-Pershing and print up posters of Los Niños Héroes? I cannot think of a course that would more quickly turn the drug cartels into popular folk heroes.
If the four options are bad, a waste of time, impossible, or terrifying, what is going to happen?
I suspect both governments will continue to muddle through with variants on the status quo. At least that is what the news outlets are reporting.
Mexico will do its best to put a fig leaf over its inability (or lack of desire) to stymie the drug exportation trade, and Americans will be satisfied that Mexico is being adequately faithful. In the interim, many innocent people will die in a phony war on the border.
"Phony" only because it has no real purpose. "Real" because blood is being spilled.
If this administration gets desperate enough for electoral affection and decides to put American boots in Mexico, the sorrow of possibilities lost will long be reviewed by military historians.
