Obrador's Chance to Reduce Mexico's Corruption and Violence

Only July 1st, Andrés Manuel López Obrador won the Mexican presidential election promising to eradicate corruption and quell endemic violence.

Prohibitions and resulting black markets in drugs and illegal migration are responsible for approximately 60% of the violence and corruption in Mexico.  These black markets result principally from US immigration and drug policy and Mexico's war on drugs.

Black markets are not crimes of convenience.  They are businesses, sometimes legal and sometimes not, as we have seen in the US for alcohol, marijuana and gambling, for example.  When illegal, they generate outsize profits available for bribery and recruitment of foot soldiers to intimidate and assassinate politicians, policemen, judges and journalists.  

For example, US Prohibition era gangster Al Capone once claimed that half the Chicago police force was on his payroll and reportedly spent half his $60 million in annual earnings in the 1920s on bribes for police and politicians.  The head of the DEA in Colombia during the Pablo Escobar era described the country as a 'narco-democracy' after drug traffickers contributed $6 million to the successful presidential election campaign of Ernesto Samper in 1994.  The Escobar organization turned about $20 bn in revenues in a good year, twice Colombian government tax receipts, providing ample funding to take on the national government there.  More than 500 Colombian policemen were shot pursuant to Escobar's bounty on their lives.  

With the death of Escobar in 1993 and the ratification of NAFTA in 1994, the drug business moved north to Mexico.  But the dynamics are the same.  In the just concluded election cycle, 138 politicians and campaign workers were assassinated.  Just last week in Mexico, 28 police officers in the state of Michoacan were detained over their alleged involvement in the murder of mayoral candidate Fernando Angeles Juarez. 

In the US, the homicide rate nearly doubled during Prohibition, and fell by half when Prohibition was repealed.  In Mexico, the situation is even worse, with homicides rising by 150% with the inception of the war on drugs; 2018 is on track to post a record 32,000 homicides for the year.

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When President Obrador calls to reduce violence and corruption, these are essentially two manifestations of a single problem: black markets.  Our purpose is not to advocate for legalizing hard drugs (although we do think Mexico should legalize marijuana along the lines of Canada and a number of US states).  Rather, our purpose is to call for legalizing and taxing migrant labor -- a proven approach to address this black market.  This would not cure all ills, but it should reduce corruption and violence by 20% or so, even in the absence of drug legalization.