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Brian

Jun 3, 2010, 4:26 AM

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Can Mexico afford to win the war on drugs?

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According to this report, between 20 and 30 billion in cash dollars are being pumped annually into the Mexican economy from the narcotics trade. This compares with nearly equal amounts from oil revenues and money sent to their families by workers in the United States. President Calderon made a very strong point in saying that the United States is not doing its part in stemming the flow of arms into Mexico but he didn't say anything about the cash that is moving in the same direction. I think that the violence will end when the Mexican government enters into a negotiated disposition with whichever cartel (Sinaloa?) survives the current shakeout. The economy cannot realistically forgo 1/3 of its revenues especially when the reliability of the other two sources is so tenuous.

http://www.eluniversal.com.mx/primera/35033.html

(This post was edited by Rolly on Jun 3, 2010, 7:12 AM)

Manuel Dexterity

Jun 3, 2010, 5:53 AM

Post #2 of 16 (2542 views)

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Re: [Brian] Can Mexico afford to win the war on drugs?

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According to this report, between 20 and 30 billion in cash dollars are being pumped annually into the Mexican economy from the narcotics trade. This compares with nearly equal amounts from oil revenues and money sent to their families by workers in the United States. President Calderon made a very strong point in saying that the United States is not doing its part in stemming the flow of arms into Mexico but he didn't say anything about the cash that is moving in the same direction. I think that the violence will end when the Mexican government enters into a negotiated disposition with whichever cartel (Sinaloa?) survives the current shakeout. The economy cannot realistically forgo 1/3 of its revenues especially when the reliability of the other two sources is so tenuous.

http://www.eluniversal.com.mx/primera/35033.html[/reply]

It isn't 1/3 of its revenues. Not even close.

Brian

Jun 3, 2010, 6:33 AM

Post #3 of 16 (2519 views)

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Re: [Manuel Dexterity] Can Mexico afford to win the war on drugs?

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You are right. Would be it more exact to say that, after oil production and remittances, the cash from the drug trade represents the third highest source of revenue? Certainly, the proceeds from these sources are the main contributers to Mexico's overall revenue which, according to Wikipedia, was just over 200 billion last year.

Peter

Jun 3, 2010, 6:42 AM

Post #4 of 16 (2514 views)

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Re: [Brian] Can Mexico afford to win the war on drugs?

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I think the answer is the same for any entity involved: They cannot afford to win, cannot afford to lose, nor cannot afford not to play.

What would a "win" scenario look like?

There could never be an open and honest discussion of the "War on Drugs" by the governments involved, not for fear of giving away their strategies but for fear of giving away their motives.

Manuel Dexterity

Jun 3, 2010, 7:22 AM

Post #5 of 16 (2498 views)

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Re: [Brian] Can Mexico afford to win the war on drugs?

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Mexico's economy is much larger than 200 billion a year. You are talking foreign earnings perhaps. The GDP of Mexico is what you need to consider. Mexico has the 14th largest economy in the world with a per capita of approx 12,500usd measured in PPP: There are 110 million Mexicans. You do the math.

Eliminating the drug revenues would slow the economy but not nearly as much as the same drop in oil earnings.

chicois8

Jun 3, 2010, 9:05 AM

Post #6 of 16 (2455 views)

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Re: [Manuel Dexterity] Can Mexico afford to win the war on drugs?

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Don't forget the 1/3 revenue from Factories, 1/3 from produce and another 1/3 from tourists and expat dollars....6/thirds+

If the USA did not buy all the drugs then Mexico would not be receivng all this money ...........

esperanza

Jun 3, 2010, 9:23 AM

Post #7 of 16 (2449 views)

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Re: [Manuel Dexterity] Can Mexico afford to win the war on drugs?

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But...latest stats indicate that about 40% of those 110 million Mexicans live on far, far less than your per capita figure. Many live on less than minimum wage, and the maximum 2010 minimum wage in Mexico (Zone A, in and around the DF) is set at 57.46 pesos per day. The minimum minimum wage (Zone C, in predominately rural states) is set at 54.47 pesos per day. As you mentioned, you do the math...

http://www.mexicocooks.typepad.com

Peter

Jun 3, 2010, 9:57 AM

Post #8 of 16 (2430 views)

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Re: [esperanza] Can Mexico afford to win the war on drugs?

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Average in Carlos Slim with a small city of relatively poor folk and they all seem pretty well-off, taken as a whole.

esperanza

Jun 3, 2010, 10:13 AM

Post #9 of 16 (2425 views)

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Re: [Peter] Can Mexico afford to win the war on drugs?

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Precisely my point, although it doesn't have to be Sr. Slim and a small city--Sr. Slim and the entire country works!

http://www.mexicocooks.typepad.com

Manuel Dexterity

Jun 3, 2010, 11:59 AM

Post #10 of 16 (2398 views)

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Re: [esperanza] Can Mexico afford to win the war on drugs?

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Average earnings mean absolutely nothing in the case of the drug money. The argument was the impact of the loss of 20-30 billion usd would have on the economy.

The economy on the whole produces roughly a trillion a year. Remove 30 billion and there is plenty remainng. You do the math.

richmx2

Jun 3, 2010, 12:48 PM

Post #11 of 16 (2382 views)

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Re: [Brian] Can Mexico afford to win the war on drugs?

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Is that estimate (30 to 40 Billion) based on the retail value of the product, or its market price? You always are reading some "million dollars worth of cocaine seized" which means a potential "street value" (assuming the product was distributed to street-level retailers, who all found buyers) of a million dollars.

I don't see 30 to 40 billion dollars, or even a reasonable fraction thereof, pouring into rural Sinaloa, and suspect (as per the United Nations Drug Control agency) that most of it the big money ends up in U.S. and European banks... where it goes into the retail buyer country economies. And bribery costs are much more expensive in the U.S.

The farmers and ...er... "produce haulers" and processors certainly aren't swimming in cash.

http://mexfiles.net
http://voiceofmexico.com
http://editorialmazatlan.com

Manuel Dexterity

Jun 3, 2010, 1:08 PM

Post #12 of 16 (2371 views)

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Re: [richmx2] Can Mexico afford to win the war on drugs?

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Don't kid yourself that billions don't come south and are pumped into the economy. They buy up legitimate businesses to launder the money through. I personally know one mid level narco that built a several million dollar hotel at the beach amongst other cases I don't dare mention. These types of business don't need to turn a profit. They report income from phantom sales/occupancy, pay their ISR and zazzz! Clean money.

But these places generate little employment once the construction has finsihed and generally pay minimum wage level salaries.

esperanza

Jun 3, 2010, 3:48 PM

Post #13 of 16 (2331 views)

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Re: [Manuel Dexterity] Can Mexico afford to win the war on drugs?

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I was responding to your post about the average per capita income in Mexico, which has nothing to do with drug money.

http://www.mexicocooks.typepad.com

Manuel Dexterity

Jun 3, 2010, 4:39 PM

Post #14 of 16 (2310 views)

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Re: [esperanza] Can Mexico afford to win the war on drugs?

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This thread is about drug money and what it means to the economy. The OP tried to claim that drug money equals 30% or so of the economy which wasn't true. My post was meant to show the size of the economy in relation to the illegal drug earnings.

So if Mexico has a 12,500usd per capita GDP a simple way to show the size of the economy is to multiply the per capita income x the amount of inhabitants. You can use your calculator if you need.

BTW. What does anything you have said so far have to do with the thread's subject?

(This post was edited by Manuel Dexterity on Jun 3, 2010, 4:46 PM)

Hound Dog

Jun 3, 2010, 5:05 PM

Post #15 of 16 (2300 views)

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Re: [Manuel Dexterity] Can Mexico afford to win the war on drugs?

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I don´t understand how one measures per capita income anywhere in Mexico and especially in places like Chiapas and Oaxaca and the Yucatan Peninsula where I would suggest up to 60% of transactions, and I am being conservative, involving the exchange of goods and services take place as unreported cash transactions without tax implications and, therefore, are not accounted for in any statistical summary from which one could gauge a measure of national production and expenditure or, as redefined, national wealth.

Your arguments on both sides are spurious. Get off the high horse and return to earth.

Hound Dog

Jun 3, 2010, 5:50 PM

Post #16 of 16 (2256 views)

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Re: [Manuel Dexterity] Can Mexico afford to win the war on drugs?

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had posted a reply but the... mod decided to edit it....

Well, now, Manuelito; it is not I who edited you nor do I even know what you may have said so please inform me of what you mean by the "biggest transgression". Dawg is not without humor.

I still would like to know how you gauge wealth in a place where all participants are consummate liars. As a Chamula friend told me in San Cristóbal, "They (outsiders) think we are all poor but we could buy and sell them and have enough left over to purchase Equador at a premium."

[edited by TB for consistency with deleted post]

(This post was edited by tonyburton on Jun 3, 2010, 5:55 PM)