White lines of credit

The city fathers of Culiacan aren’t that much different than city fathers anywhere.  When a new business pops up — whether its a WalMart or a prison or tourist hotels that will negatively impact the local mangrove swamp — defenders will always say “well, it’s job creation.”  It’s just that in Culiacan, the industry has been narcotics smuggling.  It isn’t the gangster slaughter that’s killing business so much, as the credit crunch caused by the “war on (some) drugs” that’s hurting here in Sinaloa.

Tracy Wilkerson’s amazing article for the Los Angeles Times is the first I’ve seen on the down-side of anti-narcotics efforts that doesn’t dwell on the violence unleased by the anti-narco wars, but on the effects that effort is having on every day life:

… Sales are down here and at scores of businesses across this western Mexico city. But this recession has nothing to do with stock-index dives on Wall Street, the weak peso or collapsing banks. This is a narco-recession.

When army troops rolled into Culiacan this year as part of a massive government campaign to fight drug traffickers, the big players went underground. From the looks of things, they took their free-flowing dollars with them.

“No one wants to be ostentatious right now,” said Raul Gustavo Piña Ibarra, manager of the Hummer and Cadillac dealership…

Losing a Cadillac or Hummer dealership isn’t a huge blow to the economy, but

… as much as 20% of Sinaloa’s gross domestic product is based on drug trafficking and the chain of production, transport and intelligence involved, according to Guillermo Ibarra, an economist and professor at the Autonomous University of Sinaloa.

Tomato sales were in the dumper this year, thanks to a phoney salmonella scare in the United States, tourism is off and what’s left?  The narcotics industry doesn’t just create jobs for hitmen, but for drivers, growers, accountants… and — like any local industry — the employees create other jobs, buying homes, groceries, goods and funeral services — the engines of small town growth and prosperity.  And, a “narco-recession” is no different than any other kind.

The usual arguements about the benefits of narcotics legalization come from user countries, not exporter ones.  The benefits to our community are different — right now we have a stake in increased consumption, and its continued non-regulation as an industry creates financial problems (as it does in other industries),  But, narcotics exporters are about the only leaders of an unregulated industry that are punished for their activieis by having their profits taken away.  What I might modestly suggest is that if we want to end the narcotics industry, we have to lessen the economic impact.  It’s a radical idea, but I could see the benefit of letting the narcos keep their “ill-got gains.”  Oh, I know that some money is recovered from cheating bankers and investment scammers like Enron in the United States, but most of it is just written off.

I wonder how much support there would be for legitimizing the gangsters — and letting them keep their assets — IF those assets were plowed into the legitimate economy?  A lot of those assets are already there, and why not just forget the source and concentrate on the future.  Sort of like Hong Kong did when it went out of the opium business.  Driving a load of marijuana isn’t any different than driving a load of tomatoes, or gravel to build a road.  Accounting for “dirty money” isn’t any different from accounting for “clean” money.  The driver and accountant for the Sinaloa Cartel — becoming the driver and accountant for Chapo Guzman S.L. de R.V.