Source: The Wall Street Journal

March 22, 2010

By MARY ANASTASIA O’GRADY

Strong demand and the high profits that are the result of prohibition
make illegal trafficking unstoppable.

They say that the first step in dealing with a problem is acknowledging
that you have one. It is therefore good news that Secretary of State
Hillary Clinton will lead a delegation to Mexico tomorrow to talk with
officials there about efforts to fight the mob violence that is being
generated in Mexico by the war on drugs. U.S. recognition of this shared
problem is healthy.

But that’s where the good news is likely to end.

Violence along the border has skyrocketed ever since Mexican President
Felipe Calderón decided to confront the illegal drug cartels that
operate there. Some 7,000 troops now patrol Juárez, a city of roughly
one million. Yet even militarization has not delivered the peace. The
reason is simple enough: The source of the problem is not Mexican
supply. It is American demand coupled with prohibition.

It is doubtful that this will be acknowledged at tomorrow’s meeting. The
drug-warrior industry, which includes both the private-sector and a
massive government bureaucracy devoted to “enforcement,” has an enormous
economic incentive to keep the war raging. In Washington politics both
groups have substantial influence. So it is likely that we are going to
get further plans to turn Juárez into a police state with the promise
that more guns, tanks, helicopters and informants can stop Mexican
gangsters from shoving drugs up American noses.

Last week’s gangland-style slaying of an unborn baby and three adults
who had ties to the U.S. Consulate in Juárez has drawn attention to Mrs.
Clinton’s trip. The incident stunned Americans. Yet tragic as they were,
statistically those four deaths don’t create even a blip on the
body-count chart. The running tally of drug-trafficking linked deaths in
Juárez since December 2006 is more than 5,350. There has also been a
high cost to the city’s economy as investors and tourists have turned away.

Even with low odds of a productive outcome, though, Mexico can’t afford
to write off tomorrow’s meeting. It is an opportunity that, handled
correctly, could provide for a teachable moment. I suggest that one or
two of Mexico’s very fine economists trained at the University of
Chicago by Milton Friedman sit down with President Obama’s team to
explain a few things about how markets work. They could begin by
outlining the path that a worthless weed travels to become the funding
for the cartel’s firepower. In this Econ 101 lesson, students will learn
how the lion’s share of the profit is in getting the stuff over the U.S.
border to the American consumer. In football terms, Juárez is first and
goal.

Mexico hasn’t always been an important playing field for drug cartels.
For many years cocaine traffickers used the Caribbean to get their
product to their customers in the largest and richest market in the
hemisphere. But when the U.S. redoubled its efforts to block shipments
traveling by sea, the entrepreneurs shifted to land routes through
Central America and Mexico.

Mexican traffickers now handle cocaine but traditional marijuana
smuggling is their cash cow, despite competition from stateside growers.
In a February 2009 interview, then-Mexican Attorney General Eduardo
Medina Mora told me that half of the cartel’s annual income was derived
from marijuana.

This is especially troubling for Mexican law enforcement because
marijuana use, through medical marijuana outlets and general social
acceptance, has become de facto legal in the U.S., and demand is robust.
The upshot is that consumption is cool while production, trafficking and
distribution are organized-crime activities. This is what I called in a
previous column, “a stimulus plan for Mexican gangsters.”

In much of the world, where institutions are weak and folks are poor,
the high value that prohibition puts into drugs means that the thugs
rule. Mr. Medina Mora told me in the same 2009 interview that Mexico
estimated the annual cash flow from U.S. drug consumers to Mexico at
around $10 billion, which of course explains why the cartels are so well
armed and also able to grease the system. It also explains why Juárez is
today a killing field.

Supply warriors might have a better argument if the billions of dollars
spent defoliating the Colombian jungle, chasing fast boats and shooting
down airplanes for the past four decades had reduced drug use. Yet
despite passing victories like taking out 1980s kingpin Pablo Escobar
and countless other drug lords since then, narcotics are still widely
available in the U.S. and some segment of American society remains
enthusiastic about using them. In some places terrorist organizations
like Colombia’s FARC rebels and al Qaeda have replaced traditional cartels.

There is one ray of hope for innocent victims of the war on drugs. Last
week the Journal reported that Drug Enforcement Administration agents
were questioning members of an El Paso gang about their possible
involvement in the recent killings in Juárez. If the escalation is now
spilling over into the U.S., Americans may finally have to face their
role in the mess. Mrs. Clinton’s mission will only add value if it
reflects awareness of that reality.

Write to O’Grady@wsj.com

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