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Brooks Wilson's Economics Blog: Mexico: Violence, Limited Access Order and the War on Drugs

Tuesday, August 18, 2009

Mexico: Violence, Limited Access Order and the War on Drugs

(HT Drudge)  Douglas North, John Wallis, and Barry Weingast would describe Mexico as a limited access order in which government solves the problem of violence by trading economic favors to specialists in violence for foregoing violence. The size of the payoff is directly related to the ability of commit violence.  When payoffs are disrupted, violence ensues.  Our demand for drugs and subsequent War on Drugs has made Mexico a more violent country.  Perhaps because of comparative advantage in the production of drugs, or relatively effective enforcement of laws prohibiting the production of drugs in the United States, Mexico has become an important producer of illegal drugs. 

Early on drug cartels develop methods of using violence to enforcing contracts for the production, distribution and sale of drugs that are outside the law.  Being both profitable and violent in a limited access order earns them a role in government.  They must be bought off to preserve peace or violence will ensue. 

Non-drug producing elites in Mexico have chosen civil war over peace to remove drug suppliers from the ruling coalition and it is proving to be a difficult task. reports on August 16, 2009 in "Mexican Army takes over customs on US border," that
Mexico's Army took control of customs Sunday on the busy US border, as federal authorities pulled agents off the job in a massive anti-corruption shakeup, officials told AFP.

An Interior Ministry official said the dismissals were being carried out at all Mexican border facilities, and that the customs agents were being replaced.

Customs agents were sacked after some were found to be linked to contraband operations, according to sources at the ministry.

Agents in Nuevo Laredo, on the border with the southern US state of Texas, were called in Saturday to be told they were fired, and to hand in their badges and weapons. A total of 1,100 agents were sacked, Mexican media said...

During a visit to Mexico last week, US President Barack Obama praised President Felipe Calderon for his controversial military crackdown on the country's drug gangs, which involves more than 36,000 troops.

The United States has pledged around 1.6 billion dollars to tackle drug trafficking in Mexico and Central America under the Merida Initiative, which also includes funds for training and equipment to boost security on the Mexican side of the border.

The Obama administration has acknowledged the US role in the violence, pledging to stem the flow of weapons into Mexico and curb demand for drugs in the United States, one of the world's top cocaine consumers.


  1. Robert Jackson-

    In a country as corrupt and nefarious as Mexico it comes as no shock to find out that border officials were linked to the crime that is catalyzing the violence in both Mexican and American border towns. Drug trafficking is such a serious and prevalent issue and has been for such a long time that I feel it's about time that the US is beginning to step in and crack down on this issue. I can only hope that with time and an increased crack down this issue will diminish.

  2. As the demand of drugs become more and more, I do not think there will be any changes in the situation of Mexico any time soon.

    The country is not efficient enough to allocate its resources to provide for its people and there is no equality either. Rich people get richer and poor people get poorer.

    Drugs are an easy way to make money for many people. Cartels have a daily advertising campaign to try to recruit people; they offer a lot of money if you work for them, and so that attracts a lot of people. Now, some people join the cartels because they have no choice and because the government does not provide enough jobs for them, and they are left with three options, either they join the drug cartels, cross the border or their families starve of hunger.

    Calderon it is doing what he can and that makes some people happy, but what he is doing is not enough to make things better. I think it is time for U.S to do something about this situation before gets out of control even more.