- File Size: 12077 KB
- Print Length: 288 pages
- Publisher: PublicAffairs (February 23, 2016)
- Publication Date: February 23, 2016
- Sold by: Hachette Book Group
- Language: English
- ASIN: B017QL8XKE
- Text-to-Speech: Enabled
- Word Wise: Enabled
- Lending: Not Enabled
- Amazon Best Sellers Rank: #176,985 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Narconomics: How to Run a Drug Cartel Kindle Edition
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A lively and engaging book, informed by both dogged reporting and gleanings from academic research...”Wall Street Journal
"A cracking read."Reuters
"One of the most exciting business books of the last few years."Management Today
"Tom Wainwright has powerfully argued in favor of legalizing drugs. He says that the policies aimed at stifling the drug trade seem to be misdirected and have failed... a controversial but well-argued book... a must-read for everyone interested in solving the drug issue. Wainwright makes a lot of sense at a time when the world seems helpless against drug traffickers."The Washington Book Review
Narconomics is the book that Sean Penn wanted to write. Tom Wainwright may not have interviewed Joaquin El Chapo” Guzman, but he did talk to drug kingpins every bit as ruthless and intimidating in writing this book [and] he makes a convincing case [Narconomics] presents an incisive look into a worldwide problem. Few Americans have escaped the corrosive influence of the drug trade on a family member or friend; this book explains the magnitude of the problem.”The Washington Times
Tom Wainwright of the Economist brings a fine and balanced analytical mind to some very good research ”Minneapolis Star Tribune
Narconomics: How to Run a Drug Cartel could not have come at a more pertinent time The Economist's former Mexico City correspondent offers some needed context to the region wide debate over drug policy.”Americas Quarterly
[Wainwright's] book is courageous on several levels [he] challenges everyone at oncethe dealers, the drug czars, and the bystanders in between. A daring work of investigative journalism and a well-reasoned argument for smarter drug policies.”Kirkus Reviews --This text refers to the hardcover edition.
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Along the way a secondary story emerges that is just as interesting and even more important. It’s the story of how the drug war makes no sense from the standpoint of economic logic. Destroying fields in South America only makes for poorer farmers because their monopsonistic (i.e. single buyer) market pushes the cost of lost crops back onto them. And because raw product is such a tiny portion of retail price, their destruction has almost no effect on prices at the user end. Furthermore, as more US and European states legalize marijuana, it seems that this will have more of an effect at putting cartels out of business and ending their reign of violence than all the arms shipments and foreign aid for drug enforcement ever had.
The book consists of ten chapters, each of which addresses an area of business practices that have been taken up by the drug cartels. Chapter one is about supply chains, and in the case of cocaine there is a rather long one. The raw product is grown in South America and must be infiltrated into the US—usually through Mexico. (For a while there was a prominent Caribbean route, but it was shut down—at least for a while.) This is where we learn about how the cartels adapt to eradicated crops, as well as how the product is marked up at various stages of the operation.
Chapter 2 is about the decision to compete versus collude. We mostly read about the competition, because in a lawless market competition equals violence. However, over time cartels have been increasingly willing to agree on distribution of territory. Although, there are also clever means to compete unique to criminal enterprises, such as engaging in violence in someone else’s territory to cause the police to crack down there—thus making it harder for said opposition.
Chapter 3 is about human resources, and the different approaches used to handle problems in this domain. In the movies, an drug cartel employee who fouled up always gets a bullet to the brain, but it seems that this isn’t always the case—though it certainly happens. Different countries and regions have differing labor mobility. In some cases, there is no labor mobility. (i.e. if one has a gang’s symbols tattooed all over one’s body, one can’t interview with a rival gang and Aetna sure as hell isn’t going to hire you.)
Chapter 4 is about public relations and giving to the public. One doesn’t think about drug lords engaging in CSR, but in some cases they may be more consistent with it than mainstream businesses. The cartels face an ongoing risk of people informing on them, and at least some of those people can do so without their identities becoming known. Violence is often used to solve problems in this domain, but it can’t do it all. That’s why drug lords build churches and schools, and often become beloved in the process.
Chapter 5 explores “offshoring” in the drug world. This may seem strange, but drug cartels, too, chase low-cost labor. But it’s not just about lowering costs, it’s also about finding a suitable regulatory environment—which in the cartel’s case means a slack one. An interesting point is made that all the statistics on doing business are still relevant to the drug business, but often in reverse. That is, if Toyota is putting in a plant, it wants a place with low corruption, but if the Sinaloa want to put in a facility--the easier the bribery the better.
Chapter 6 describes how franchising has come to be applied to drug cartels—famously the Zetas. The franchisor provides such goods as better weaponry in exchange for a cut of profits. Of course, there’s always a difference in incentives between franchisors and franchisees when it comes to delimiting territory, and this doesn’t always work out as well for drug dealers as it does for McDonald’s franchisees.
While the bulk of the book focuses on cocaine and marijuana, Chapter 7 is different in that most of it deals with the wave of synthetic drugs that has popped up. The topic is innovating around regulation, and so it’s certainly apropos to look at these drugs. If you’re not familiar, there are many synthetic drugs that are usually sold as potpourri or the like. Once they’re outlawed, the formula is tweaked a little. In a way, these “legal highs” may be the most dangerous because no one knows what effect they’ll have when they put the out on the street.
In chapter 8 we learn that the drug world hasn’t missed the online retail phenomena. Using special web browsers, individuals are able to make transactions that are not so difficult to trace. In an intriguing twist, the online market may foster more trust and higher quality product than the conventional street corner seller ever did.
Chapter 9 examines how drug traffickers diversify—most notably into human trafficking. Exploiting their knowledge of how to get things across the border, they become “coyotes.”
The last chapter investigates the effect of legalization, and it focuses heavily upon the effects that Denver’s legalizing marijuana has had in Denver, in the rest of the country, and on the cartels. Wainwright paints a balanced picture that shows that not everything is perfect with legalization. E.g. he presents a couple cases of people who ingested pot-laced food products intended for several servings, and did crazy stuff. However, the bottom line is that legalization (and the regulation and taxation that comes with it) seems to be the way to go if you want to really hurt the cartels and stem the tide of violence, as well as to reduce the number of people showing up at the ER having ingested some substance of unknown chemical composition.
There is an extensive conclusion, about the length of one of the chapters that delves into the many ways our approach to eliminating drug use is ill-advised and dangerous. This connects together a number of the key points made throughout the chapter.
I found this book fascinating. Wainwright does some excellent investigative reporting—at no minor risk to life and limb. If you’re interested in issues of business and economics, you’ll love this book. If you’re not into business and economics, you’ll find this book to be an intriguing and palatable way to take on those subjects.
Top international reviews
Human resourcing can be a nightmare (loyalty is short-supply, mules are regualarly caught, men and women do stupid selfies of their crimes and are not always subtle) while settling scores within an organisation can be a frustrating bureaucratic process. Public relations, collusion and fostering good relations with governments and communities to create Pax Mafiosa can be undone by competition in the market. The advent of the Internet means cartels have to reach out to their communities through effective digital marketing and diversify into new markets (migrants) or invest in off-shore sites to run their business without inferences and regulations. Social media and media has become as much a tool of brand cultivation as its has terror.
The conclusion is simple; the drug wars (surprise, surprise) were neither lost nor won. It is a costly economic cycle for some and benefits those who profit from narco-trafficking, securitisation and militarisation state securities across the United States and governments across Latin America. Violence and displacement often means foreign governments and criminal corporations can access the resource-rich regions of Latin America without being stopped by either national governments or local activists, journalists and human rights defenders (who are typically “disappeared”, forced to flee or murdered). These powers play off one another and have mutual benefits in continuing the drug wars.
Those fighting it (heroic and/or cruel), the military, security and police forces expending lives, blood and money to eradicate and contain transnational organised crime are Sisyphus. Their methods — essentially endlessly rolling a huge boulder up a steep hill to have it roll back down to the bottom every time — are largely in vain. Lopping off the head of an organisation does not work and leads to splintered, perpetual conflict. Prisons are recruitment grounds for gangs and mobsters and offer a safe haven in which criminals can do business and deal with rivals. The ruthless nature of prisons, particularly in Latin America, encourages criminality and a system of violence. People thrown into prison, much like would-be jihadists in the Middle East, come out radicalised and more deadly than before, nurtured in an atmosphere of criminal craftsmanship.
As Wainwright argues, the strategy and tactics of government do not make economic sense. Cocoa crops are burned but it is the livelihoods of the farmers which are destroyed not those of the cartel. The criminals demand greater efficiency and tax farmers more heavily, while the government offers no incentives to those using lands to cultivate marijuana and cocaine to switch to legal crops. Moreover, not only are the wrong lives destroyed, targeting the source of supply for drugs is the equivalent of attempting to increase the price of paint to stop a painter from drawing. Cocaine remains cheap at its source despite it values rising by 30,000% when it crosses into European and U.S territories. The wrong part of a drugs journey to the addict is targeted.
Authors will have covered this before, and there are certainly economic arguments which suggest that the ‘War on Drugs’ go beyond narco-trafficking and extend into resources in a Capitalist Age (avocado, oil, iron ore, timber, and coffee), local and regional politics and the stark failures of neo-liberalism. Wainwright simplifies the economic arguments which make for a magnificent introduction to the drug trade and by cross-comparing the bloody business with Wallmart, McDonalds and other corporate enterprises and entrepreneurial. Los Zetas is the McDonalds of the criminal world, a franchise which has rooted into tentacles into every city in Mexico and Latin America. The Cali Cartel in Colombia founded Rodríguez Orejuela brothers acted as an executive board and was dubbed ‘Cocaine Inc.’ by Time Magazine, not dissimilar to ‘Los Zetas Inc.’
To understand drug trafficking is to understand modern economics. The only way the cartels can function is, contrary to popular culture, not by being an outcast in the economic system, but by being a fundamental part of it. Narconomics is pure capitalism in its most exploitative, brutal form. The sooner the public is educated about this, the sooner reforms can be made which will solve the global health crisis caused by drugs and in-turn the horrifying human rights violations and atrocities it generates.
I did get a shock listening to the book at one stage as it unexpectedly mentioned the website me and my friends made use of to assist with our studies in this particular field, the wonderful officialbenzofury.com - had he reached out to the operators of this site I believe he could have had a better viewpoint which would have allowed him to write parts of the book with more understanding, particularly regaridng the feelings and motivations concerning the many libertarians in the space.
Drugs should undoubtedly be legalised, whichever side of the fence you may find yourself it’s clear legalisation is the only route that works for society!
If you believe drugs are dangerous and harmful to society a legalisation framework would both make them safer and society considerably better.
If you believe people should have that right to do what they wish with their own bodies, whether for pleasure, bio hacking or medicinal purposes then of course legalisation is the preferred route.
Let’s make drugs, users and society as a whole safer by introducing a legal framework that would ensure quality control standards, remove criminals lacking care and compassion from the supply chain, increase awareness and correct information concerning the affects of each drug, allow addicts (addition is about the individual, not drugs! The majority of peope who use drugs are NOT addicts, same as the majority of people who eat food are not addicts but we also have many addicted to food amongst us!!) the help they need and deserve without fear of criminal prosecution, allow our polices forces to focus on true crimes & criminals that hurt individuals terribly such as paedophile, rapists, traffickers etc, stop wasting extreme sums of money ie billions and trillions on the failed ‘war on drugs’ and put these funds along with the immense tax revenues that would be generated to use to make society better, let’s allow people to escape depression and find a cure for many other ailments where dr’s have failed their desperate patients, let’s allow research scientists and bio hackers the ability to make new discoveries for the field of medicine and general human wellbeing without harsh, restrictive licencing requirements let’s allow people to use a substances to reduce pain, anxiety etc to make themsleves feel happy, relaxed etc when they desire without fear of harsh judgment or repercussions, particularly considering alcohol is often the legal alternative despite being considerably more dangerous than 99% of drugs and often having a profoundly negative impact on the user and their surroundings.
When this day comes and it will come, the tax revenues will ensure that is the case!, only then will we find ourselves in a better society....
In the meantime please consider where your beliefs, particularly prejudices, regarding drugs have been obtained, is it via a government’s sinister self serving false and flawed narrative? That was certainly the case with myself along with teachings from family with good, albeit flawed intentions but a little research goes a long way and can open the eyes of anyone lacking in the true facts of the matter, making for more tolerant, compassionate thinking and actions - isn’t that what the world truly needs?
Best Wishes to one and all :)
For anyone wanting to understand the business side of the drug industry, a must read