Mexico collapsing?

**Donald Aquilano** · 03-22-2009, 10:04 AM

The Mexican government is pretty much controlled by the Mexican drug cartels. I see no peaceful solution to problem. I fear a war will be necessary to secure the southern border-not like the failed drug war but a real all out conflict involving all military branches.

I don't like it but what other solution is there other than legalizing the drug trade?

**jberryhill** · 03-23-2009, 08:54 PM

I don't like it but what other solution is there other than legalizing the drug trade?

There are a couple of things going on, and it's my silly belief that we are seeing a transient condition.

Typically, violence in black markets is a consequence of a change in market conditions.

Take the notion above - "As long as people keep using drugs, there will be violence in Mexico" or words to that effect.

The drug gangs are pretty much in business to move drugs and make money. They don't profit directly in shooting people. I mean, really, if more people in the US took up drugs, you'd have an expanding market that would accomodate more drug gangs. Violence, in this market, takes the place of legal disputes in legitimate markets. As long as everyone is making money, then there are fewer problems.

And, no, I'm not advocating that more people should take up drugs.

But a change in market conditions causes a shakeout. In legitimate markets, you'll see more legal disputes - breach of contract, intellectual property right enforcement - in a shrinking market than in an expanding one. It's the same story - turf protection. Whether it is from decreased demand, tougher transport conditions due to better border enforcement, or more effective interdiction and penetration in Mexico, clearly the market conditions indicate that taking a chunk out of the competition has a better marginal payoff at the moment than concentrating on other ways of expanding one's own market share.

I'm fascinated by the volume of weaponry that's getting into Mexico from the US. You can sell an AK-47 clone at something like a 5X markup over retail in the US. Now I can understand the sensitivity of the "gun show" folks to being regulated like normal dealers are - there has to be a lot of double accounting going on for that much inventory.

I think what we're really seeing is primarily fallout from bathtub meth and oxycodone taking over market share from heroin and cocaine/crack. I can't really imagine that marijuana is that significant a part of the Mexican/South American traffic anymore, given its role as probably the biggest cash crop in California, several southern states and British Columbia, but then again I haven't seen a bag of weed since Gerald Ford was president (who remembers paraquat? raise your hand).

It could also simply be that economic conditions have caused US consumers to cut back enough that there's not enough market to support the supply of narcotraficantes, so they have to fight among themselves for their share of a market that is shrinking overall.

And, since I mentioned "better" border enforcement, I might as well mention that there are unintended consequences of really tight border enforcement. When it is harvest time in Arizona, for example, there is a short term need for a lot of low-paid labor to gather it. That labor has been coming into Arizona for more than a hundred years from Mexico. Until recently "transient" labor was pretty much that - transient. The sticker lately has been that with a higher cost and failure rate of getting in illegally, it has made more economic sense for illegals to winter over for one or more additional harvests instead of going back to Mexico after the harvest is over - which is what most of them normally used to do. And... predictably, they find other things to do with their time before the next harvest.

But our likelihood of rationally approaching the harvest problem in Arizona and California is about as high as rationally approaching the several drug problems - and marijuana is a significantly different issue than, say, meth - a likelihood of about nil, primarily because we tend to take a breathless emotional approach to these kinds of things.

**HarveyJ** · 03-23-2009, 09:48 PM

jberry, there's no point bringing well though out logic and proven market paradigms into an argument when we all know Mexicans and drugs are bad, mmmkay?

P.S. I'm calling you Jberry from now on whenever we talk about illegal things... it's way more gangsta!

**jberryhill** · 03-23-2009, 10:15 PM

Mexicans and drugs are bad, mmmkay?

Well, you know I spent a week in Mexico City two weeks ago for the ICANN meeting.

They really did a poor job of keeping Mexicans out of that country.

True story - I was talking to the manager of a restaurant a couple of blocks from the hotel. He was born and raised in Tampa, Florida, but he moved to Mexico because he got tired "of all of the Cubans and Puerto Ricans" in Florida.

I nearly blew tequila out of both nostrils.

And, according to the Gansta Name Generator (http://gangstaname.com/), I'm "Mofo Skull Cruncher".