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tv   Book Discussion on Narconomics  CSPAN  April 2, 2016 9:00am-10:25am EDT

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>> good afternoon. my name is juan carlos diago from cato's center for global liberty and prosperity. . ..
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it was after all leaving for more because the university of chicago such as noble laureates milton friedman using simple rules of supply and demand who most forcefully pointed out the fragility of prohibition. this approach was ago by none other than one of latin america's most renowned and into his recent drug warriors, former mexican president lupe calderón took he acknowledged the failure of his own drug policies. the end of the term in 2012 he told "the wall street journal" the following, if the price of drugs goes up thanks largely to interdiction efforts and that demand is the same you will increased profits for your putting more incentives for participants in the market. he went on to say that it is clearly a textbook case for
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economic system which is the more successful you are, the more criminals you are creating. this is precisely what the world drugs have been doing for over 40 years. tom wainwright writes prohibition has driven up the price of a few cheap and cultural commodities trade of $300 billion global industry. and what a formidable industry drug trafficking has become. drug cartels such a tremendous ingenuity, adaptability and entrepreneurship to satisfy over a quarter billion customers worldwide. in this regard, "narconomics" is a fascinating read for anyone interested understand why government offers to thwart this business are likely to fail. i found it particularly interesting to read how cartels -- integrated business model for her when i'm for example, controlling the production of the drug all the way from mexico to its douche douche and industries of the united states.
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however when it comes to cocaine trafficking, criminal organizations preferred to specialize in just one part of the business. in choosing their business model, cartels are applauding the finance of another chicago board and noble laureate whose seminal work the nature of the firm explains the conditions under which companies choose -- some step-by-step handling internally. but i will let the author of the book proper explained the findings is research which took them from the plot those of bolivia to the gang infested regions of el salvador to colorado. we will hear from moises naim, whose 2005 book shed light on how the commerce is changing the world by transforming economy, reshaping also takes, politics and capturing politics. let me introduce tom wainwright.
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in 2000 was the moscow bureau chief for that magazine coming mexico central america and the caribbean as well as parts of south america and the united states border region. he's a contributor to the times, guardian and literary review. has also been a comity or on cnn, the bbc, npr, among others. he has a first class degree in philosophy and politics and economics from oxford university. please help me welcome tom wainwright. [applause] >> thanks a lot, thank you all for being here. it's a great privilege to be here especially great to be sharing a platform with moises naim was one of the great authorities on the subject and, indeed, many other subjects. i hear we got practically a full house to a full house today at a city see so many people although i'm almost a bit concerned are so many people in washington who
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want to know more about how to run a drug cartels. [laughter] i assume your interested purely academic. i thought i should start by explaining myself and explain how i came to write this rather unusual book. it began when i said to mexico with the economist in 2010, and i thought i was going to be writing about ordinary subjects, regular basis whether oil industry or the car business are tourism, discussed the. it's 2010 inches as i write the drug war arrived. this was a time when the next of the murder rate was spiraling. it almost doubled in the space of two years. quite quickly i found this was the subject that people wanted to talk about. go to any views or parties or business roundtables or whatever, and quickly found the subject often returned to the subject of the drugs business. i started writing a lot more about than i expected. i got into this habit of doing
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business stories one week and drugstores the next week. the more i did this, the more i came to see action with the two were not quite as different as you might think. i begin to wonder if the drugstore was, in fact, a big business and economic story we have been missing. i started to try to think about in those terms. our tv an example. soon after got there in 2010, there was this extraordinary case where the mexican government discovered a gigantic cash of marijuana near tijuana, the biggest seizure in extras history. more than 100 times that they found in a warehouse on the edge of the city. so they got all the stuff come out of a marijuana, unpacked it and made a gigantic bonfire. doused with gasoline and set this thing a life. it was an incredible sight of the pleased with having to make sure no one was dancing downwind of this big fire. [laughter] it's like a 100 joint. [laughter] it was faltering and i was marveling at this and wondering
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quite what has been organized by. it was reported at the time this represented a blow against organized crime since about half a billion dollars, that was how much this particular seizure was valued at. i gave this some thought into seemed to me implausibly high. there are not many companies in the world that can withstand the shock of half a billion dollars. the cartel are big but not that big. i start looking into it a bit more attractive account this estimate had come about. it was fairly straightforward. it sounds sensible. all they had done, figured out the rough retail price of their one and this because that's where the structure heading and a conservatively estimate it's worth maybe $5 a gram in the united states. and then multiply that out over 100 times an and right at the cy of half a billion. it sounds plausible at first but if you give it a moments thought applied to any other ordinary business you can see how insane this is the imagine if you try to do this with another product
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like coffee and you said the retail price of a cup of coffee in the united states at starbucks is, three, $4, something like that and you get perhaps two grams of coffee so maybe call because a couple dollars program that means a kilo of coffee seats in mexico must be worth $2000. not the case. imagine undertaken at the price of a cow using the price of a stake in washington, d.c. you would get a very weird that you. this is what we're doing. i did a rough regulation of what i thought this marijuana seizure should really be worth using wholesale prices in mexico, which needless to say are much, much lower. the wholesale price in mexico is about 8 cents per gram. those hundred times are probably worth somewhere that less than $10 million rather than the 500 million we were told. this shock to me and maybe think if, in fact, what we're doing on the supply side of the business
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is sometimes about 98% less effective than we believe, then what else are we kidding wrong? this is when i started to think seriously about looking at this business as a business rather than a war. and in so doing i identified the cartels more closely resembled businesses and you might think in various ways. i spell these out in the book. for instance, the cartel takes parts in things like franchising their brand. they are concerned with things like public relations, and i was told while i was in juárez, so adobe to avoid if i could go outside a quarter to six because that they said was a time when many of the cartels time to their assassinations in order to lead the 6:00 news bulletins. they get into things like on the line -- online return. sites like silk road, the cartels and dealers in the rich world our experiment in with e-commerce. i looked at these enemies about in the book and i will highlight
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a couple because realize we are short of time, one of the ones i thought was most interesting and important was his question is how it seems we very often focus on the supply side of this business rather than a demand-side. to give an example look at the cocaine business. i went down to bolivia in researching this book to look at the cocaine business. all of the world cocaine originates in three countries, bolivia, colombia and peru. i went down there to look it was going on. the cocaine business represents a particular puzzle for economist because the idea is very straightforward the idea is to try to cut into supply. if you restrict supply and demand remains constant than you would expect the price to increase. it's straightforward because the price goes up you would expect people to consume less of it. that doesn't seem to be what is happening even look back over the past couple of decades efforts to cut into supply have
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been quite successful. the governments of those three countries have managed to eradicate very large quantities of locally purchased the need to make cocaine. these days every year that iraq and around the same size of, it's about 14 times the size of manhattan. is as impressive thing. they have to watch out for landmines while being shot at. is an incredible feat they do. for all those you look at the price of cocaine, retail price in the united states, hardly budged. easy go back a couple of decades, although time is running around $150 per. ram. hasn't really changed much. how has this happened? i went there and had to look and there's a couple things to bear in mind. one thing that seems to me that's happening in south america is you see a world more effectively like. it's important to make clear
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world mark is not that wal-mart is like using of wrongdoing. at gdc something similar to what people sometimes accuse wal-mart of that which is acting as a monopoly player. a monopoly by of some of these products. the idea if you picture a regular market like apple, the idea of some of those markets, wal-mart is a dominant but even if there are interruptions to supply, you normally expect farmers to raise the price, wal-mart has a dominant as he is able to say sorry, we are the main buyer, we will set the price. it's not going to go in hi. it seems this is something similar happening in some parts of south america in the cocaine business. you find in some areas where coca leaf is grown coming up on cartel, maybe mexican cartel or the farc in colombia which has effectively a monopoly by position of the coca leaves in the area. so they say sorry this is the price that even if supply is interrupted that's a price they continue to pay. so there's efforts to into
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supply. it's not that they have no effect at all. they are affecting the wrong people it seems rather than affecting the cartels or affecting the consumers in the united states or in your. they are affecting the farmers who grow the stuff. those are the people who are probably least interested in harming, the regular farmers who exist sometimes on about a dollar a day and those who are very the root of all these exercises. the second point on the supply business, the economics suggest even if you were able to increase the price of coca leaf which seems a bit extreme difficult, even if you're able to increase it there's little reason to think it would have much of an impact on the retail price in the rich world. to explain how this happens i will keep you if you numbers. to make a kilo of cocaine you need about a cut of fresh coca leaf. it weighs less once you drag it out. in colombia that freshly is
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worth about four or $500. now kilo of pure cocaine by the time it is sold in tiny quantities is about worth $150,000 to imagine what happens even if you're very, very effective in raising the price of coca leaf. let's say you double it. now that so you managed to push alall of the extra costs onto te consumer in the united states. all you would do is raise the price of fuel from 150,000 to 150,400. at the look on the other programs obligor raise the price by 40 cents. that's what you get if you're incredibly effective in dublin the price of coca leaf. sometimes in the book i use the example of the arts business and it's rather like saying we want to try to raise the price of works of art. the main ingredient in the painting is painted and so will try to raise the price of a box of paint. you can see this isn't going to be an effective. a box of paint costs $50.
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we raise it to $100. what's it going to do? nothing. that's what we're doing in the cocoa business. that was one thing that caught my attention to another one to highlight is the business of human resources. that might not sound like the thing that cartel people would be particularly concerned about but it actually does. i saw this one went to interview the head of what of the big games in el salvador. that are too big gangs in central america base in el salvador, the 18th street gang and i went to see the head of the 18th street gang, carlos, who is korean jail and prison on the outskirts of san salvador. we sat down and started talking to business. his human resources problem is a serious one. if you picture these groups can give you an idea of the size, these two groups together throughout central america are reckoned up about 70,000
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members. just the comparison sake that's about the number of people employed by general motors in the united states. candidate organizations. managing is difficult not least because he is in prison but organized crime groups in particular have to unique problems that affect them. one is to have a very, very rapid turnover of their members of staff. part is due to the high rates of violence in those parts of the world. those who are not murdered are very often arrested. an example i read from the business of trafficking cocaine from the caribbean to the uk. about one in four of the cocaine mules on the road get arrested. i was thinking imagine try to run a business, imagine trying to run a newspaper or think tank in which a quarter of this data to be replaced with every transaction. it's a real problem. this problem is compounded by the fact organized criminal groups can't just advertise for new people. they can place an ad in the
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paper. getting new people is a real problem for them. fortunately, for them we've come up with the perfect solution to this end we called it prison. this place where we hopefully get to give all of the unemployed young men with criminal records, put them in one place, lock them in there for a few years and in this job i visited in el salvador if you were not a member of his gang when you went in, then you were by the time you left. again and again we see examples of prisons used as these universities of crime. for those of you watching netflix you'll come across this guy who has a claim to be the person who introduced cocaine to the united states. is cocaine trafficking career began when by chance he was put in a jail cell in connecticut with a guy named george younger it was a perfect match. georgia never trafficking marijuana by playing. carlos had contacts in colombia and the rest is history. they began trafficking cocaine by playing and america got its
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addiction. so this is how prisons help cartels with his human resources problem. i thought this was interesting because it helps the cartels to expand quickly by recruiting through jail, but also because i think of us can be quite a bit impact on the extent to which it would infuse violence. if you think about it, a gang is far more likely to resort to violence and sense of place out to kill and be killed the fcc for them to replace them. to testify do i decide to look at another part of the drove what the situation is different. i looke look at a study that wae in europe for the european commission a few years ago. interesting study of what happens when cocaine deals go wrong. this great study with a look at a 30 with big cocaine deals worth, each with 20 kilos, several times, multimillion dollar deals. they looked at these and the
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ways in which these deals go wrong are sometimes a list. one would want because details on the operations were faxed to the wrong number another one because a consignment was the to be picked up from the whole of the ship that died was meant to pick it up got sea sick during operation and had to call it off. you'd expect if you watch marco's for breaking bad you would expect mistakes like that to be punished fairly harshly. you'd expect pretty violent revenge to be taken. what this paper found was actually two-thirds of those cases the problem which was worth millions was resolve without these five people this paper conclude was that in europe and the netherlands the cost of replacing member staff and funding new context if your particular contacts were so high that more often than not it make more sense to resolve a battle without resorting to violence. in other words, the labor market if you like with tighter in el salvador where it's easy to recruit people from prison,
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slack labor market. organized crime groups don't need to worry about how they treat their employees. if you have a tighter labor market by sending fewer to prison than that cartel say so much our costs in replacing people. the evidence seems to be the other for less likely to use violence. >> i think i'm just coming to the end of my slot so i will leave it at that. there's lots more to be discussed and i look forward to all your questions. thank you. [applause] >> thank you, thank you for our next speaker is moises naim, distinguished fellow of the carnegie endowment for international peace, international syndicated columnist and contributor editor to the atlanta. is also the host of producer of -- a weekly television program on international affairs that airs throughout the americas. he was the editor-in-chief of "foreign policy" magazine for 40 years and years of the author of
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many scholarly articles and more than 10 books of international economics and politics. his more recent book the end of park of a "new york times" bestseller was selected by the "washington post" and the financial times as one of the best books of the year. is also the author of illicit. he has served as an as well as minister of trade -- not in the current government i might add. director of venezuela central bank and executive director of the world bank. is also a board member of some other largest corporation in the philanthropic foundations. he holds a masters and ph.d degrees from massachusetts institute of technology. [applause] >> thank you very much. i read almost everything, i think, that is published on the subject of trafficking and illicit trafficking of all kinds
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and trucks. i have to tell you that this is one of the best books i have read in years. i strongly recommend it. it is first because it breaks one of the patterns that one discovered in this thing, and that is those that know don't write books, and those that ride a very often don't know what they're talking about. [laughter] tom is a reporter and as a thinker, and that is a very rare combination of thinkers. [laughter] thinkers tend to stay at home and meditate and think great thoughts, reporters just go and report and that's it. he does more than that. he reports, i observed, collects data and then he is able to put it in a context that has a framework that is larger than just reporting. the other thing that makes this book unique is the debate about drugs, drugs trafficking has been dominated by law enforcement, by doctors,
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physicians, lawyers and the like. more recently we welcome the arrival of the economies to the conversation. people that tried to set after all these are markets, and why do we then use some other tools that we rely on to understand markets and regulatory framework and all that you tried to do a better job on dealing with this discourage? which it is a scourge and it is a threat. but we haven't had something like this book that essentially takes all of the common can't even look at the table of contents, it reads like to see levels of a course at the harvard business school or any other business schools. it's an nba kind of thing and he talks about human resource management and outsourcing and corporate social responsibility, and you know, he goes down the item, the subjects that are
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normally taught in business schools and say let's look at how cartels use of these things and lets venues that to come up with th the good ideas about wht to do with this. i think his presentation was very revealing on some of the distortions, pitfalls, self-inflicted wounds created by the war on drugs. this long preface is just my way of setting the stage to criticize the book. it is a very good book but i think it's going to be more fun for you and more intellectually interesting and engaging if i tell you some of the things about the book. that i think are worth debating. the first one and a very interesting omission i think is if you look at the table, index, there are three words that you will not find. one is my the second is finance and the third is laundering, like as a money-laundering.
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he of course talks about that, but i would have loved to have a chapter about finance. you know, how do these people manage their money? and by that i mean not just financially but logistically. we are talking about containers full of dollar bills. what do you do with that? you are somewhere in mexico and receive a container and the content is full of, files -- piles and piles of cash but what do you do with that? you try to longer it. you try to inject it into the form of financial system and make it more usable, and you pay a fee for that. that is a side industry connected to the vertical integration of the drug industry that is very lucrative. it's huge, important and is very sophisticated. in recent years that industry has had two major disruptions. one is osama bin laden, and the second is from wall street.
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osama bin laden distortion of financial markets gained after 9/11, and it became clear that one of the main tools to do the war on terror was to chase the money. so go after the money became an important strategy for people fighting, you to come if you understand what are the sources of funding of these terrorist networks, you can get to them. so they created a very significant anti-money laundering regime in the world that created all sorts of conditions, restrictions and requirements for banks and financial institutions on how to deal with the money and money transfers and moving money around the world. that, of course, had collateral damage that narcotraffickers and the money launderers that had nothing to do and wanted nothing to do with terrorists, because the last thing if you're running
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a drug cartel, the last thing you want is to have also the problem of the with antiterrorist forces in the world. you have drug enforcement administration and narco police but you do want to bring in the others. there are very important material incentives to keep a distance from traffickers and terrorists. but that created them a very important to challenge for people in the cartels who were servicing the cartels with a money-laundering operations. but they had another distraction they came in the form of financial derivatives. there's a whole slew of new instruments available that started to emerge in the '90s and became quite significant in later years. that is a very sophisticated financial instruments that were suddenly available for the cartels that you know, not that
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they solve the problem but they created new options if you wanted to launder money. so that's one of the points i wanted to raise. the other that is not in the book has to do with lobbying. tom has a wonderful, wonderful very engaging chapter on corporate social responsibility. and how come if you run a cartels, you better spend some money buying the goodwill of the communities in which you operate, in which he becomes seen not as a terrible killer but also someone that can build, you know, soccer, finance and soccer teams and build sports stadiums and fund churches and gives money away to friends and families. you know, and we have seen, for example, their reactions when pablo escobar was killed. people in nadine came out
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lamenting because pablo escobar and his cartel were important donors to the community. so it makes sense that social responsibility is essentially making a financial end of the kinds of efforts to gain that drugs and sympathy and support of your community, is something that corporations do and drug cartels do. but what else do highly regulated corporations around the world absolutely do? they lobby government. they influence the regulatory systems. so this is one of the most regulated industries in the world. in fact, it is so regulated that it is prohibited, but at the same time it is one of the most lucrative cash rich operation in the world. so why not assume that like
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electricity companies and banks and telephone companies and all kinds of, you know, oil companies, they all stand a chunk of their revenues in, they invested in influencing government come in influencing regulators come in by regulators, and trying to steer their regular system in their favor. so why not assume that drug cartels will get exactly the same? and they do. and that is why we see the president in elections. that's why we see drug in politics that time, everywhere. that's why we see regulators that are either bribed or incentivized to look elsewhere in the attempts to curb and contain the cartels.
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that is another very important area that has even larger consequences than the damage that drugs due to the users. in fact, you could argue that the drug use of thanks, of course affects the users, and it's harmful to their health. but you could also argue that it's harmful for democracy and for society. it even those of us who don't do drugs are not actively engage in this are suffering the consequences in the wiki which the war on drugs is being fought there because it is distorting democracies, corrupting governments and is creating all kinds of conditions that affect all of us. so understanding that from this perspective is very important, and that is one of come also the very useful contributions of tom and his book. thank you very much. [applause]
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>> and do you want to say something speak with you. i mean, i can respond to that or i can do questions. just very quickly i'd like to hear other people's questions, but i think first of all what he said is right, money laundering a summit that could be more honored. to get a chance to do a second edition then they could be more in debt. in the meantime i can advertise a great book available called illicit by moises naim which -- [laughter] covers the stuff very, very well. on the lobbying, i think it's a very, very important part of it. i cover some of that, there's a chapter on the way which the cartels, just accord their companies are moving to countries in central america where wages are lower on the whole even in mexico. you are seeing similar things going on in the cartel business.
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they're setting up operations in countries like guatemala and honduras. i think lobbying is part of that. the expression banana republic, honduras was the original another republican expression comes from the fact that the american food companies were so easily able to lobby the government there that people said these companies are the ones that really run the place. it's literally a banana republic. now you are saying something similar. the drug cartels a funny that day in the same what are able to lobby some of these governments very easy because these additional capacity in these countries is very low in some cases. some of them make mexico look like a strong state by comparison. so you do see a lot of this lobbying. i think the name the cartels just lobbing his corruption. that's what they are doing when they corrupt people. sorry, over to you. to go ahead.
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>> by the way, tom's book was reviewed today in "the wall street journal." you want to check that. we will open the floor for questions. please raise your hand, wait to be called on, identify yourself and keep it short. other than that, we're going to start over here. >> good afternoon. thank you for your time and your insight. big fan of all of your work, big fan of the npr interview he did a couple weeks ago as well. my name is david and i'm finishing up my masters at international secure gw, i've seen a lot of this firsthand we have and i've also seen on the streets here of the united states. my question to the both of you is what type of business acumen are using adequate levels of the
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contemporary cartels and organized criminal groups? are using individuals who have mbas, masters or ph.d, i level of education in order to create a sophisticated networks, trafficking and laundering? >> i'll go first. in my experience, not so much. the question deified cartel people with mbas, on the whole not. i remember when trevor cook and i can member who he was but one mexican trafficker, they all have the makings and is what i think was known as -- he was relatively compact high level of education. but generally not. the way they work is pretty sophisticated though. the kind of tricks of the trade that they learned minute those of ordinary, successful businesses. although i make these analogies in the book with ordinary firms
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like wal-mart and amazon.com and so on, i don't get the impression cartel people are conscious of looking at firms like that and saying let's do what they do. i think the same business logic has driven them to the same strategy so that's how the mechanism works. sorry, i've lost my train of thought. there was another part to question i think. [inaudible] >> i suppose it shows the logic of the market. what makes a, successful is the same of what makes a cartel successful. i suppose that's what you find a successful cartels ones that minute the tactics of successful firms. >> very quickly, there are two generations i think that one needs to understand the they were the visionaries, pablo escobar was one biggie was the one, and later that tom mentioned. these are people that were early
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on. these were people that understood sooner than anybody else come opportunities created by globalization and technology and open market. they created very sophisticated business operations without a lot of training. it was entrepreneurs but they were visionaries. then what happened, especially mexico in recent years when time was there was that the war against the cartels essentially hit all of the leaders. that power then was transferred, was fragmented to a second, third generation, second and third layers of the hierarchy. and the new guys are far more crazy, far more operational, and so there is a deterioration in the quality of the top management because there's a
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fragmentation of the cartels usually break up in many many cartels run by many lives that are far more limited in their vision and skills and far more violent than their predecessors. and insurance the skills and higher education, they may not have a but they do either they usually a pretty good lawyers. they usually have pretty good people on technology and communications. i interviewed some of the people in trying to get them, and they complained that they have more sophisticated encryption technologies that i.t. technologies that the use of the internet was far advanced, more advanced and more modern and sophisticated than what the law enforcement organizations have. they also have very good money people. but again, you may say they are
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not members of the cartel. they are just service providers. >> there seems to be a moment of catharsis when a latin america president becomes a latin america ex-president osha co-general of the oh, yes, becomes the next secretary of, that they suddenly see the light the they are willing to work on this and this becomes my life resolve know. what is your comment? why i do not more active on this issue? >> you're talking about the issue of legalization presumably, yes. one thing that' that change i ts we're starting to see a few more sitting presidents speaking out more about this. recently you bad example of --
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not such a great example in guatemala but he was president in office who very close to legalization is what we need to do. people were stunned by the. he had one on this campaign of, got into office and said look, i spent mike are in the armed forces destroyed these fields of opium poppy for this event go back to next season. it's networking company to change this. you see people again, people like santos in colombia, module import example i think and handful of others. but otherwise, i mean, i think the reason is that the penalties for people on the degree. on the whole you going to invite the disapproval of important ally such as the united states, and you're probably not going to get very far. what's changing a thing actually, changed quite a lot is
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way which the united states is itself experimenting with legalization. that has given a license in july 2 other countries to go ahead and be more explicit about this. if it hadn't been for the great experiment with marijuana here, it would both medical marijuana and not the recreational sort it would've been much harder for a country like uruguay or jamaica to go ahead and do the same thing. if you look at what some like william brownfield says, that guide the state department was responsiblresponsible for this e with this is about a country like jamaican singer wants to go again legalize it. he says it's their issue, the conventions have to be flexible interpreted and very, very different message from what we would have heard 10 years ago, maybe even five years ago. that's opened up a big, big space your you right there does seem be this incredible moment you leave all of us to should
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you leave office. i think we may see a change on that front and we may see more sitting presidents and prime ministers speaking out and being, pushing the issue a bit harder. >> i think tom is exactly right. essentially the answer, the short answer to your question is about the prohibition to smoke led to the prohibition to think. the prohibition regime creators of culture, a narrative that essentially said if you are not for prohibition you must be in favor of total legalization. that manger in the pocket of the narcotraffickers or you're soft on crime or if you're not to be trusted as the leader the unpopular politicians. i was a member of a commission called the commission for drugs and democracy in latin america that included president from brazil and mexico, colombia, chile, and people like me.
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the 18th of us and we spent a couple of years talking to everybody, law enforcement types and doctors, all kinds of people. we came out with a strong report recommending the legalization of marijuana. but mostly what we felt was there was a need to create a space between total prohibition and total legalization. i don't think anybody seriously can argue that everything from every drug for everyone at every time should be legalized. that would be an extreme position that i don't think is a viable nor sensitive. but i do think that there are spaces between total prohibition and total legalization that need to be explored and then see what happens, use the results of that social experiment to a just politic certificate is also what tom suggests in his piece come
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in his cover story in the columns. at the story here is one that one needs to trade and the principles was too great a safe space for politicians to talk openly about the possibility of not being for prohibition. because if you are a politician somewhere, and any a lot of people in congress here, they all agreed that the war on drugs, you have these very strange situation in which everybody agreed that the war on drugs was failing, but it could not be changed. which was a very un-american kind of thing because this is the can-do country, pragmatic and yes. yes, senators will tell you does this thing is that working but we cannot change it because the politics are not there. sums of the politics have moved, and now it is safer for politicians to express doubts about prohibitions.
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>> we are going to have one question over there. >> thank you. i'm a graduate student at the security studies program in georgetown, also colombian. >> i have quite of the eiffel columbians. [laughter] >> i was wondering, i want to hear your thoughts on how you see the similarities between illegal enterprises and drug cartels under the lens of other violent nonstate actors, particularly insurgencies, thank you. >> sorry, i just want to make sure i understand the question exactly. how i see the similarities between the cartel's and companies, but through the lens of -- sorry, i didn't quite what you're getting at, sorry. >> you traced some familiarities between illegal enterprises and drug cartels.
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how do you see this simulation between illegal enterprises and insurgencies? >> like the farc you, okay. i see what you mean. let's see, i'm in the farc is a good example partly because not least because there haven' haven involved in the drugs business themselves. to give another example has been in the news a lot recently, the so-called islamic state has taken on some of the functions of ordinary companies. it's supposed is about individual in the oil industry. have been trading in antiquities stolen from places like iraq. today using ordinary business tactics in that way. i'm trying to think of other examples. people often talk about the way in which islamist groups have used social media in ways which mimic companies and very
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professional looking ways to try to gather support online through sources like twitter and facebook and so on. there's something almost company like the way some of them organize themselves and do their recruiting. so i suppose it the way it's maybe a subject or a follow-up book, but the idea of using business analysis to look at nonconventional types of organization might be one you could apply. i don't feel i know enough about either the farc or islamism to push it much further but i imagine you could probably extend an example in a similar way. >> i wanted to pick on one when you originally said, do you believe that all drugs should be legalized or do have some concerns about our ticket stubs and that shouldn't be legalized speak with a question but i do get to the bottom of in in the recent economist story that you mention. the position of economist at a think on balance by position is probably all mainstream drugs,
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which they are bad if they were regulated by doctors rather than by the mafia, there's -- [applause] >> it's one place in the were safe to say that isn't the cato institute. [laughter] i am probably preaching to the converted. i think it's important to make the case when you talk about legalization you're not necessarily talking about total free for all but if you look at the way they've legalized heroin in switzerland, it's a very sort of restricted form of legalization run by doctors. i think though it's worth sort of making clear that when you really get down to the detail of legalizing and regulating a drug come even like marijuana, which is a relatively safe one, you do have to make some difficult decisions about which are going to prohibit. just to get a uncontroversial example which i expect even the most of the hard-core libertarians would agree with, most people i think would agree
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with the continued prohibition of for children, right? whether it's 21, 18, whatever you like. now that marijuana is being legalized their questions being asked about whether edibles should be legal or concentration be legal. this does raise an interesting question because as far as i'm concerned one of the big reasons for utilizing drugs, whether marijuana or cocaine or anything else, is you take the market away from organized crime. indicates that the edibles market you are not really doing that. you are creating a new market that didn't exist before. the cartel does not sell hash brownies. [laughter] you go to colorado to go to the shops, the legal entrepreneurs have done just what the market does but they have come up with a whole range of very good, very appealing products, drinks, sweets, you name it. i think this is a bit of a worry
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actually, and within the legalization movement now i think there's a political argument brewing because the argument for legalization is made up of this quite strange alliance of real libertarians and neoconservatives to a lot of the people who want to legalize drugs are former police officers, people like -- gses as a more effective way of regulating them. they don't think it's ever tried to do with the like with her body, blah, blah, blah. they see this as we're getting drugs out of control. if it's question of are going legalization is that the prohibition, these two sizing get along quite happily. when you come down to a situation like in colorado and discussing should you tax it quite high to dissuade consumption, tax load to kill the black market, edibles, concentrates? these two sides will find themselves on opposite sides of the argument. we don't know what's going to happen if it seems in colorado is relatively libertarian. uruguay it seems relative
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conservative. i should switch would happen in places like canada what you think will probably set the rules that one day we will follow ourselves in the uk and elsewhere. that's the interesting question to me. >> how many of you have been in a marijuana shop in colorado? don't worry, the cameras are not on your. [laughter] do you want to follow up on that? with subsidies you think should not be legal? >> again, i think the question, that exact question we should be asking to i think when we see legal or not legal we need to think about what are the details. the devil is in the details but it has to do with how and who and what my guitar systems, is what tom said. there are many answers that need, questions that need to be answered before answering. one could easily say marijuana is relatively easy, but what
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about crack? and how do you do that? are you really ready to legalize crack, and how you do that? how do you just did it and who's in charge tax which doctors are going to be in charge of prescribing crack cocaine? the question, and that is something that we fought very hard in the commission to the question should never be legalized or not legalized, provision or legalization that models the conversation, that inhibited the build of the society to experiment and learn come to find middle ground to understand what can be tested and tried and perhaps suggested. i'll stay away from generic, sweeping, everything has to be legalized all the time. it won't work. >> we are going to continue. >> bruce levinson, the center
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for regulatory effectiveness. the discussion so far today has also done illegal agriculture substances. but the federal government may now be embarking on a very different sort of experiment, making a popular legal agricultural substance illegal. which would be menthol flavored cigarettes, a ban on those has been active in some places around the world and is currently under consideration in the u.s. could you, both of you, please speculate on i think the market, the illicit markets and so forth would respond in event of such a ban speak with good question. i suppose when you expect something, when you ban something you will initially create an illegal market for it of some sort. menthol cigarettes are bad where i come from in europe.
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they've been banned for a while on any of the flavored cigarettes. as far as i know, there actually has been an explosion in illegal menthol cigarettes they seems to be something that is being phased out relatively straightforwardly. the idea is flavored cigarettes are more likely to appeal to children. a similar debate underway, i read recently australia, there's been a ban on those kind of vodka jelly things that you can buy. for the same reason. they look nice, they appeal to children but they are not for children. icl come here i realized i probably the part comprehensive duplicate of but i don't feel too bad about those bands actually. i'm in favor of legalizing drugs but i think once legalized, part of the benefits of legalization is it gives you the ability to sort of shape exactly what kind of market you have. flavored cigarettes, sweets with
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uncle condemned, those are things that i don't have a civil liberty problem with those being banned. i'll tell you what does seem odd to me at the moment, which is the back into united states in many ways the cigarette industry is facing stronger restrictions than the marijuana industry. not least in the business of advertising. if he could to colorado to see more ads for marijuana than you do for tobacco and it's because this agreement that the tobacco companies reached a decade or so ago that they would stop most other advertising. marijuana companies on the event had their constitutional right to free speech and so the user. it's an odd sort of contrast in which this new drug which is due back in many states, marijuana, is more likely regulate in colorado and tobacco even. you get canada's gummy bears and colorado and yet you say might not have mental cigarettes.
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there's a weird consistency -- menthol cigarettes. i having been the result myself, i'm kind of edging towards gomorrah conservative side of legalizing spectrum if you like. that's kind of where i find myself. so plant down on things like flavored cigarettes don't bother me but i can see there is a strong argument on the other side and i respected. i think marijuana regulations will look at things like cigarettes and alcohol and sang if we do that to cigarettes why don't we do that to marijuana? >> the gentleman over there. >> thank you very much. and i spent about 20 years in latin america, great deal of that time in colombia, venezuela and ecuador. i just wanted to make one observation, and that is that
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the current prohibition paradigm really created to industries. one of course is that the illicit one, the other is the police prison enforcement side, and that industry depends on the other. if you move towards more of a legalization, they would be pushback i believe from everybody who depends on massive amounts of u.s. and other assistance to support their police agencies. you have a for profit prison industry into united states that depends on the supply of people being arrested for drugs, for consuming drugs. what is your comment on that, on the fact that these parallel industries that depend on each
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other benefit from the status quo? and both of them would pushback against any legalization. >> that's a good point and i think one of the appealing things about legalization is that it could have the potential to reduce the prison pulation which certainly in this country is extraordinarily high. it's one of the things whenever we write about an economist would to a chart we need a broken axis to accommodate the united states. it's really unique in this respect. but you're right, for the people who run the prisons perhaps that might not be so appealing. one thing that interested me when i was in colorado just the of the month, asked the authorities in denver what legalization had done to their policing needs. i was expecting him to say, great, now we don't need to enforce these marijuana laws. we don't need so many police. tthe police more time to do othr
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more important stuff. to some extent that's true but they surprised him by saying actually since legalization they have had to hire more police. i said why? they said the reason is action that we've got this quite complex regulatory framework. before there was just a straightforward than. if the police saw marijuana they knew that was bad, right? they knew that this was breaking the law. were asked about what happens in colorado, they will get a complaint from a neighbor saying my neighbor is growing too much cannabis in the house. can you sort it out with the police will go about and enable say these plans are mine. i think you're allowed to have a dozen each. these are mine. these belong to my brother-in-law. he lives your buddies out of hundred you can imagine it's quite a big regulatory challenge. so for the police there, i was surprised by this but so far they've had to hire more people to enforce these relatively complex nuanced regulations than they have before to enforce are
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really failed to enforce but to try to enforce the all out ban. it's interesting. i suspect also you may find to all the pro-prison lobbying you will very soon have a very powerful lobby on the other side and we are very same on the cannabis lobby, following legalization, more and more money is getting kind of pro-legalization initiative. when you see ballot measures now come easily to the money going to each side of the campaign, and i outlined this in the book, these days the yes side of the campaign instead more funding than the no side because this is his are getting behind it. they see an opportunity. ..
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>> we will have some questions right over there in the back. we still have 10 more minutes. wait for the mic. >> thank you. item from the national center on sexual exploitation that links all forms of sexual explication and whether sex trafficking, prostitution, pornography, et cetera. my question is, i would really like to know observations you made during the research regarding the sex trafficking and sex industry and how i guess the intersection or parallels that you see, and also the second part of my question, will you believe the root demand of both industries -- what do you
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believe? >> it's a good question. you defined overlap in this and i covered to some extent in the book in a chapter i've done on the different industries and which of the cartels are diversifying. like any other basis they are looking for different ways to use the skills they have to make money. with traffic business come with the sex trafficking business dedicated in to that to his expertise in smuggling. what they specialize in is getting things over the border without being detected. that's a skill that can be applied to people just in the same it can be applied to drugs. they are getting what we've seen is basic and cartels are getting more and more involved in the business of trafficking migrants. not always for sex but most migrants, people pay a fee to be brought across the border of their own accord might in some instances they are being trafficked for sexual exploitation. the numbers are quite interesting.
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the proportion of migrants visiting come moving illegally to the united states over the mexican border over the past few decades, the proportion of using a so-called coyote, has increased dramatically. in the 1970s the great majority of people with other own. it was relatively easy to cross the border than. the proportion using professional help has been rising steadily. the latest survey found more than 90% of illegal migrants used to help of a paid trafficker. ..
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>> >> but a proportion in our people that it is a worrying development with the drugs across the border and trade their attention to this crime which is particularly horrible. >> afternoon. thanks for coming today. your book is actually required reading in my class. so i just wanted to discuss more in depth of the peace
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process from the cookie market than the drug trade in general. so this group that had a huge share in the cookie business market in columbia right now. so if that is after the accord heidi's seek that will affect that drug trade in the world did general? to possibly speculate on the security side of things. did you going to ask for a power vacuum? or could there be a different tradition? >> no bakelite use the answer. and then to fill the gap in colombia. but one of the big stories
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of the coca leaves business over the past decade is everytime countries managed to drive out with one country then you can talk about the ballooning effect because you got of one-room they take up residence somewhere else. and then they drove that of columbia and it went back to peru. that is what are the main providers of coca leaves in the world so if the farc does i would keep the eye on peru and bolivia. i am not up on the latest news to be honest. >> i am a supporter of the peace process said columbia. i hope it works but those
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are hopes. innocence you can use the approach of that metaphor and and methodology for the peace process to say that i essentially what is going on is the government of colombia is launching a friendly takeover of the farc franchise in their bonnet that franchise. so that means it disappears more or less a end of the brent disappears but it is hard to a legend because i signed an agreement with
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though whole industry that that vacuum will be filled. both in colombia and elsewhere. essentially it was a security force of that ideology of social redemption and for equality but they were essentially mercenaries providing security to the drug cartel. now that is gone and it will be replaced as providers and as far as what else will happen as it is rapidly
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becoming a failed state a lot of those drug operations are operating in the border into did venezuela. the in source comes from the andes and kevin to venezuela and elsewhere. so essentially we will see a transfer of operations. >> on march 30th we are hosting a the peace process said columbia. and then to debate on the merits of the peace accord. we have time for one last question and.
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this. >> could you comment on the recent issue from the un where they are outsourcing there justice system? for those countries that are dominated by cartels from venezuela? >> what a great question and end what a difficult answer
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so what the outsourced was the judicial system decide on the side of corruption and for example, they had influence concerning the magistrates. so that is a horrible thing to recognize that i had to outsource that's with the lawyers and the magistrates to be immune to those temptations such the same time it is a very practical the answer.
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it is a great question and i don't know the future of that. >> i cannot imagine with small and weak countries i cannot imagine mexico or brazil that they cannot handle that justice system. so it is small countries mostly. >> this reminds me of that extradition question should they outsource of holding a somebody like el tableau? -- el chapo? but these outside intervention and can help but the priority has to get the metric system to know
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the equivalent but they cannot go on forever and should have a time limit to build the capacity but you have to fix the domestic system. >> is said to a final word but i just want to make sure at some point we have the issue may be we are fighting the war on drugs that are harvested and the current war are not important in you know, that i am talking about crystal meth and other drugs that our synthetic so that kind of drug is growing
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quite quickly and significant. there is a great chapter in the book so for the first diversify but the book also shows some very interesting examples. so imagine the conversation we just had from importation it is like ted interdiction. many of the things that we discuss here that they are cooked jindal lab. and everything in the third world country is made somewhere in the united states. >> it is a "breaking bad"
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scenario with those challenges and even less clear. >> key point dash something very interesting but the figure that suggests a society has decided to tolerate without violence but what about producing the drug here in the united states? >> there is a big change. historically there is the division to countries like colombia and consumer countries like united states now we see those that are producing more drugs are consuming more drugs adopting all sorts of middle-class habits so in some ways this could help
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the politics because until now you have an imbalance of the united states and western europe have been quite content to wage this war that has terrible cost of the supply-side as it is not incurred in its home country and things will change the. if consumer countries start becoming producer countries they will think twice about rating method labs. and producer countries whether mexico or columbia might start thinking about the issue differently if they get the epidemic of drug taking they have seen. that could change the politics quite interestingly. >> we have run out of time. [applause]
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takes to our wonderful panel we have lunch available for you upstairs. please follow the staff. [inaudible conversations] ut here
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story of the reporter's journey. ms. miller joins us here in miami. judith miller, this is a complicated story. in your book you lay out in a sense an outline in the first couple of pages to let everybody knows, here is where it begins and here is where it ends and you explain the in between. how long have you been covering the middle east?

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