U.S. Marijuana Legalization and the Future of Mexico

Alejandro Hope runs one of the precious few blogs that regularly provides data-based drug policy analysis, and his work is always worth reading. The latest example is his Bloomberg View essay Legal U.S. Pot Won’t Bring Peace to Mexico.

Alejandro estimates that national U.S. marijuana legalization would deprive the Mexican drug trafficking organizations of 1.5 to 2 billion dollars in revenue, but he is not confident that this would result in any reduction in violence or crime more generally. He sees the basic drivers of lawlessness in Mexico as more fundamental:

In the final analysis, Mexico doesn’t have a drug problem, much less a marijuana problem: It has a state capacity problem. That is, its institutions are too weak to protect the life, liberty and property of its citizens. Even if drug trafficking might very well decline in the future, in the absence of stronger institutions, something equally nefarious will replace it

I broadly agree with Alejandro’s analysis, and would add one other point: recent historical experience also does not support the idea that reduced drug trafficking revenues will pacify the Mexican cartels. U.S. cocaine consumption has fallen dramatically since 2006 and cocaine is a far more lucrative drug for the Mexican cartels than is marijuana. Yet the period in which the U.S. cocaine consumption decline was hitting the cartels in the pocketbook coincided with the great surge of cartel-related violence in Mexico.

These realities force honest analysts to return to the basic principle that there is no inherent connection between illegal markets and violence. Whether those who engage in transactional crimes are also violent and/or directly challenge the state varies based on the context, time and place. Irrespective of what happens regarding marijuana markets, the state capacity question that Alejandro raises will be central to the future security of the Mexican people.

Unravelling the Roots of the Upsurge of Criminal Violence in Mexico

Illegal drug trafficking is not inherently violent. The horrific surge of violence that began in Mexico in 2006 thus requires some specific explanation.

The most common account is that when President Calderon turned the force of the state on to organized crime groups, the old arrangements were overturned and a cycle of violence began. The drug kingpins used violence against government officials and citizens in an attempt to intimidate the state into giving up on enforcement. Further, as gangs were de-capitated, they broke into smaller groups warring for supremacy with each other.

But this account may be entirely wrong or only partly correct. Evidence presented this week in Bogota at the conference of the International Society for the Study of Drug Policy shows that there was another enormous shock to the criminal system concurrent with Calderon’s campaign.

Colombia shifted its cocaine suppression strategy from crop eradication to further down the production chain (e.g., laboratories and exporters), resulting in a more than doubling of cocaine seizures beginning in 2006. At this same time, the Mexican gangs became the dominant partner in their relationship with the Colombian gangs. Rather than simply receiving cocaine at the southern border of Mexico and carting it north, they moved into Central America and the edges of Colombia, giving them a larger role in transshipment and processing.

Cocaine is the biggest source of revenue of the Mexican gangs, meaning that these changes were highly disruptive to the old stasis. The cocaine flow shrank, but what was left became more valuable. This intensified competition among the Mexican gangs which may be the root of the burst of violence.

Whether this explanation is fully or partly correct is being investigated by Dr. Daniel Mejia Londoño and his colleagues at the Universidad de los Andes. He is one of a number of young Latin American scholars who are bringing new perspectives to drug policy research. Collectively, they will help policy analysts escape the trap of seeing drug policy only from the point of view of consumer countries (e.g., Europe and the USA). And in the long term, the “Calderon explanation” for Mexican violence may be only one of the received truths that this new generation of researchers overturns.

Why Only Some Criminal Organizations are Violent

Dr. Vanda Felbab-Brown’s interview in the current Journal of International Affairs makes the important point that transactional crimes (e.g., drug trafficking) have no inherent association with violence. The Mexican drug gangs are violent, their fellows in the Japanese Yakuza are not, for example. Even the same trafficking organization acts differently depending on the law enforcement and civil society surround:

You want to have the kind of traffickers that you have in the United States. Often these are the same groups that operate in Mexico, but when they are arrested, they do not react by shooting at the policemen; they react instead by extending their hands to allow for the handcuffs to be placed on them, because they understand the consequences of being a major challenge to the state of law enforcement, and that it is not tolerated.

Greater law enforcement capacity thus clearly reduces violence by criminals, as does reduced access to weapons. An intriguing third factor noted by Felbab-Brown concerns whether the criminal organisation is made up of younger, less experienced criminals or old hands:

In the late 1990s, Hong Kong and Macau were trying hard to hide the major escalation of violence between the Chinese tong and the triads. The reaction by the police chief in Macau was somewhat humorous and absurd, but at the same time not completely so. In an effort to assure people, especially tourists coming to Macau, that they did not need to be afraid of all the gang violence, he claimed that Macau had “professional killers who don’t miss their targets,” and who never kill innocent bystanders. In Mexico today, you have very much the opposite, such as a boy being hired to kill ten people in the hope of getting among them the intended victim. This is very different from when someone pays $400,000, for example, to hire a professional hit man to kill one person. It is a very different market that has a lot to do with internal management and the agent capacity of the criminal manager, as well as the capacity of the law enforcement.

This recalls an observation made by Debbie Reynolds regarding why she always felt safe doing shows in mob-controlled Las Vegas “No one got killed who wasn’t supposed to”.

Responding to Massacres by Mexican Gangs

Alejandro Hope, a frequent and much valued commenter on this site, is quoted in this week’s Economist saying that Mexican law enforcement responds inappropriately to massacres perpetrated by organized crime groups (e.g., the Sinaloa Cartel and Zetas). Alejandro argues that when, for example, a group of decapitated bodies is dumped in a gang’s territory, the police react by stepping up enforcement in that territory. This creates an incentive for gangs to commit atrocities and deposit the corpses in the territory of a rival.

Alejandro’s Kleiman-esque suggestion is for the police to change the incentives surrounding violence in Mexico. Instead of increasing enforcement wherever bodies are dumped, law enforcement should instead focus on the geographical area dominated by whichever organisation committed the murders. Instead of being indirectly rewarded by more law enforcement attention to a rival, the gang that engaged in mass murder would be punished by increased police attention.

He makes his argument in more detail here (In Spanish).

Proud to be American,

reason 9.b.ii:  We selflessly share our highest values with unfortunate people around the world and improve the cultures we engage with.

Today, let us reflect on two of those values, namely “more stuff cheap”  [Amen], and “business as a moral calling” “highest standards of honesty and transparency” , um, wait a minute, “if no-one’s not many people have been indicted convicted yet, nothing has actually happened; keep moving and go shopping”.

Yeah, that’s the one.

Mapping the Revenue of Mexico’s Organized Crime Organizations

Starting tomorrow, Stanford’s Center for International Security and Cooperation will host a two-day conference on violence, drugs and governance in Mexico. In preparing for the event (at which Mark Kleiman will also be in attendance), I decided to try to estimate the current revenue streams of the Mexican organized crime organizations (MOCOs). I leaned heavily on RAND research and on the analyses of colleagues in Mexico to generate my estimates, so credit for whatever is correct in these charts goes to them whereas any errors are solely on my own head.

The most difficult thing about getting current revenue streams correct is estimating how much the MOCOs are making from non-drug-related activities (e.g., smuggling immigrants across the border, pirating videos, kidnapping, extortion). Everyone I read or talked to agrees that this line of MOCO revenue is growing, but estimates of how large it is were divergent. The first chart here uses the low-end estimate among experts of 15% non-drug revenue. If this estimate is correct, the MOCOs are still largely one dimensional drug trafficking organizations, with principal profit coming for cocaine. Note that were we mapping drug markets more generally, cocaine would be a much larger share of the pie but because much of that money is made by Colombian gangs, the share for the MOCOs is smaller.

The drug-related pie slices are all based on the national U.S. market revenue, with one exception. Because California had a ballot proposition to legalize marijuana, I have broken out the California marijuana revenue stream separately. It’s about a seventh of the total. Continue Reading…