Jun 19, 2011

Legalization won't kill the cartels but it will let justice systems to focus on other areas

Drug cartels diversify their portfolio as well, from the NYT:
For one thing, if marijuana makes up 60 percent of the cartels’ profits, that still leaves another 40 percent, which includes the sale of methamphetamine, cocaine, and brown-powder and black-tar heroin. If marijuana were legalized, the cartels would still make huge profits from the sale of these other drugs.
Still, legalization would deliver a significant short-term hit to the cartels — if drug trafficking were the only activity they were engaged in. But cartels derive a growing slice of their income from other illegal activities. Some experts on organized crime in Latin America, like Edgardo Buscaglia, say that cartels earn just half their income from drugs.
The author concludes:
What it [legalization] won’t do, though, is stop the violence in Mexico.
The article is interesting because it criticizes what is starting to become a mainstream idea on drug policies (or at least, more mainstream than it used to be, and probably more mainstream among civil society than among government officials). 

What the author does not say, and probably does not know, is the relative profitability of each illegal activity. A cartel might be willing to kill because the opportunity cost of loosing a drug route is very high, but they might not do it for CD production in the black market, for example. The relative profitability of drug trafficking seems to be higher than CD production, there are not many reports of killings from CD production and trading (for example). With CD production, and even kidnapping, the difference is that the illegal markets is in the developing countries themselves. Drugs on the other hand are demanded mainly outside the borders, that makes a difference.  

What drug legalization (and not just marijuana) will do is to reduce the portfolio of activities of cartels and allow the justice system to focus on the activities that can not be legalized. Justice systems in Mexico and Central America are too weak to handle drugs, kidnapping, etc., lets legalization take care of a portion on that, and lets strengthen the justice system to focus on the rest. 

We know that when the economy does not generate job opportunities illegal entrepreneurship emerges, legalizing drugs (or some of them) will make illegal entrepreneurs to be innovative and create new business ventures, that it why economic growth is important, and not just drug legalization. The problem is that drug related crimes is killing very valuable social capital in developing countries. 

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