
How a Mexican Drug Cartel Makes Its Billions - jlees
http://www.nytimes.com/2012/06/17/magazine/how-a-mexican-drug-cartel-makes-its-billions.html?pagewanted=all
======
guelo
The only way to stop these large criminal enterprises is to legalize the
stuff. Just like alcohol prohibition created some of the most notorious
American criminals, South American drug prohibitions produce powerful
criminals down there. There isn't any large crime related to South American
cocoa or coffee imports. Legalize it and then spend money and make laws
regulating consumption, it would greatly reduce the misery in our corner of
the world.

~~~
paulhauggis
At this point, I doubt it will help. Why? The cartels thrive in countries
where you can essentially buy off any official.

When you legalize drugs, they aren't going to suddenly stop selling it. They
will now have a legal business which will continue to fund their criminal
empires. We most likely will see an increase in other crimes, like extortion
and kidnapping.

Drugs are still illegal in the US and we don't really see the same kind of
crime in our country because the police actually (for the most part) do their
job.

If you really want to stop the violence, stop the corruption. I know the
recreational drug users of HN don't really want to hear this..

~~~
elorant
Legalizing drugs means that the street price will drop by 90% and that will
eventually make drug trafficking obsolete.

This of course doesn't solve the real problem which is consumption.

~~~
vlisivka
Meth is very cheap already. Any changes?

~~~
mrtron
From what I understand meth is produced really poorly by regional producers.

I think it would end up more expensive at your local pharmacy if legalized.
The benefit would be you know you won't lose your teeth from the odd chemicals
the producer is using.

(I could be horribly off on the details)

~~~
refurb
You are horribly off.

Methamphetamine is currently available at your local pharmacy. It's a generic
drugs and costs less than a $1 per dose.

You don't lose your teeth from meth because of chemicals used in it's
production, you lose them due to a combination of poor oral hygiene and
reduced saliva production. The same thing happens if you abuse the stuff you
can get at the pharmacy.

------
danso
> _Michael Braun, the former chief of operations for the D.E.A., told me a
> story about the construction of a high-tech fence along a stretch of border
> in Arizona._

> _“They erect this fence,” he said, “only to go out there a few days later
> and discover that these guys have a catapult, and they’re flinging hundred-
> pound bales of marijuana over to the other side.” He paused and looked at me
> for a second. “A catapult,” he repeated. “We’ve got the best fence money can
> buy, and they counter us with a 2,500-year-old technology.”_

~~~
tgrass
This is the border in Arizona, south of Sierra Vista. I often drive the
international road and rarely see anyone else...not even border patrol. One
does not need a catapult.

<http://postimage.org/image/wtie29yrb/>

~~~
startupfounder
Are drones patrolling the area from above?

~~~
tgrass
There's a conspicuous blimp that flies about sixty miles to the north. I'm not
sure of drones. I camp out there a lot and have never seen them.

[edit] it's an aerostat, not a blimp: Fort Huachuca is about fifteen miles to
the north and "is home to a radar-equipped aerostat, one of a series
maintained for the Drug Enforcement Administration by Lockheed Martin. The
aerostat is based northeast of Garden Canyon and, when extended, supports the
DEA drug interdiction mission by detecting low-flying aircraft attempting to
penetrate the United States."

<http://en.wikipedia.org/wiki/Fort_Huachuca>

~~~
blhack
Well...the drones aren't exactly huge, and they're flying really high up in
the air, so it's doubtful that you'd see them.

~~~
hexagonal
The MQ-1 has a wingspan of two dozen feet, and a service ceiling of 26,000
feet. (ten thousand feet lower than a 747) It's also got a pretty tinny piston
engine, with a fairly distinctive sound.

Think more "cessna with missiles" than "RC plane".

 __EDIT: __Just checked the wikipedia pages for both:

    
    
    			MQ-1 Predator	Cessna 172
    	Wingspan	8.22m		11m
    	Gross weight	1,020kg		1,111kg
    	Service ceil.	25,000ft	13,500ft
    	Cruise speed	90kn		122kn

------
startupfounder
Joaquín Archivaldo Guzmán Loera is a true hacker, he continually breaks into
the most secure country in the world by exploiting it's weaknesses.

"The cartel makes sandbag bridges to ford the Colorado River and sends buggies
loaded with weed bouncing over the Imperial Sand Dunes into California."

Because of this, even when he is caught and send to a maximum security prison
he is able to organize an escape by hacking the prison system.

"...[Joaquín Archivaldo Guzmán Loera] was transferred to the Puente Grande
maximum security prison in Jalisco...Guzmán carefully masterminded his escape
plan, wielding influence over almost everyone in the prison... The escape
allegedly cost Joaquín $2.5 million... According to officials, 78 people have
been implicated in his escape plan." - Wikipedia
(<http://en.wikipedia.org/wiki/Joaqu%C3%ADn_Guzm%C3%A1n_Loera>)

~~~
vecinu
It sometimes blows my mind how much power money can buy. This gentleman seems
to also have a powerful charm.

~~~
AncientPC
Not just a carrot, but a carrot and a stick. If you don't comply, your family
and friends can and will be harmed.

It's a large reason why Mexico military forces stays anonymous by wearing
balaclavas on duty and getting rid of the short hair requirement.

------
revelation
This is a 101 on capitalism. Raw capitalism, where killing someone is cheaper
than settling on a solution that works for everyone. One where power amasses.
But most importantly: where all actors are innovating. You can be amazed at
crudely built submarines and private cell relay stations but really its just
market pressure at work.

Which brings us back to the obvious conclusion: prohibition doesn't work; the
market will find its way. It doesn't need intricate portraits like this one to
make that clear.

~~~
mullingitover
Yes, exactly.

The war on drugs is a perfect example of capitalism v socialism. In the red
corner we have black market capitalists engaged in an enterprise with
extremely high risk premiums. In the blue corner we have socialized law
enforcement. If you truly believe that capitalism is the superior force, you
can't help but know that the war on drugs is absolute unwinnable folly.

~~~
WildUtah
Upvoted for quality.

But I disagree with your choice of colors. The communist/socialist side is
traditionally colored red.

------
abruzzi
Also impressed that the cartel smuggles cocaine on 747s that they own. That's
a large operation.

~~~
Eliezer
I'm a bit surprised by this; I'd expect spy satellites to be able to spot a
rogue 747.

~~~
ovi256
You're assuming the money that bought a 747 can't buy a fake company for
registration, plane manifests, flight plans and whatever else is needed to
make it look legal.

------
jboggan
I'd be really curious to know what their IT department looks like.

~~~
wmf
[http://web.archive.org/web/20021014183134/http://www.busines...](http://web.archive.org/web/20021014183134/http://www.business2.com/articles/mag/0,1640,41206,00.html)

~~~
vecinu
> They even use a fleet of submarines, mini-subs, and semisubmersibles to
> ferry drugs -- sometimes, ingeniously, to larger ships hauling cargoes of
> hazardous waste, in which the insulated bales of cocaine are stashed. "Those
> ships never get a close inspection, no matter what country you're in,"

That's interesting...I wonder if these ships are actually getting inspected
now (since the article is from 2002) since they are a known transportation
vessel.

> The mainframe was loaded with custom-written data-mining software.

> Most of the cartels' technology is American-made; many of the experts who
> run it are American-trained.

American-trained or Americans? I wonder if 'hackers' actually go to these
countries to earn some big bucks while developing some "cutting-edge"
technologies.

~~~
blhack
I've heard more than one hacker say with lots of humor and hushed speaking
something along the lines of:

"You know if I wanted to..."

------
fkn
I'd be interested in knowing how they were able to buy Boeing 747s. Those are
huge transactions, you can't simply buy planes with cash.

I would assume that it would be through shell companies, but wouldn't (or
shouldn't) Boeing be careful about who their customers are?

~~~
larrys
"but wouldn't (or shouldn't) Boeing be careful about who their customers are?"

Forgetting for a second whether we are talking about Boeing or the used market
that is what money laundering is all about. Taking ill gotten gains and
putting into a legitimate business. It wouldn't be a stretch to form a
legitimate air charter company and even get customers as a cover for buying an
airplane. If you've got the level of money they have there are many things you
can do. Obviously you are hiding the transactions even if some of the parties
might know there is something wrong going on.

~~~
ceejayoz
Hell, it'd be good for your cover if 99 out of 100 flights are genuine
charters with real passengers on board.

------
alexqgb
There's a direct correlation between misery and drug use, as well as a direct
correlation between misery and high levels of social inequality.

People who agonize between the dangers of prohibition vs. the dangers of
legalization (or even decriminalization) are doing so in the context of a
highly unjust society that offers virtually no social mobility, no access to
the courts for anyone who isn't fantastically rich, no prospect for wage
growth for anyone who isn't already in the top 10%, no job security for anyone
not worth putting under contract (i.e. nearly everyone), and the terrifying
prospect of loosing access to the health care system in the event of a job
loss - all of which imposes tremendous levels of anxiety and insecurity for
the vast majority of its members.

In spite of all this, we're still rich enough for most people to have some
disposable income. Add that to the conditions under which most people live,
and it's no wonder that the US is, per capita, a tremendously big consumer of
drugs.

Given this environment, either option will have predictably bad results. But a
society that was far less friendly to the winner-take-all ethos, and more
concerned with basic health and economic security for a large middle-class
population would find that drug coming down to much more manageable levels,
making the decriminalization route a much more attractive option.

------
Osiris
Laws could punish behavior that affects other people rather than behavior that
does not.

With alcohol, it is legal but certain actions that involve alcohol are not,
like driving. So, driving while high would be illegal and there would still
penalities for committing other crimes while using drugs, but casual use that
affects only oneself would not be illegal.

However, there may be other consequences to actions like higher medical
premiums or getting fired from a job for misuse, etc.

To me, laws should be designed to protect people from other members of
society, not to protect people from themselves. Breaking someone else's things
is illegal, but breaking your things is not.

------
GoliMaster
I've found this article to be 100 times as effective when listening to this as
I read it: <http://www.youtube.com/watch?v=4-wtJuqyKko>

------
joejohnson
I wonder is Ignacio "Nacho" Coronel is the basis for Gustavo on Breaking Bad.

~~~
acangiano
Reading this article made me think about how well researched Weeds and
Breaking Bad are.

------
nfriedly
I wonder if we could find a way of making these drugs less "popular", similar
to how we've done with smoking. That might require legalizing them, so I'm not
sure it would actually reduce consumption. But it would hurt the cartels
either way.

------
user49598
Here's a link to story on the Wisconsin hunter that stumbled upon a marijuana
farm operation on public land.

<http://fox6now.com/2012/05/17/cartels-invade-the-northwoods/>

------
praptak
I admit that I (in a way) root for those guys. If they can move around such
quantities of _physical_ illegal stuff then we can be sure we can move around
any strings of bits we choose to.

~~~
objclxt
It is a matter of priorities - drug enforcement isn't high up the agenda.

The DEA has a budget of $2.4 billion. The NSA's budget is classified, but most
analysts estimate it's at least $6 billion - over double that of the DEA. And
that's just _one_ intelligence agency. The total intelligence budget of the
USA is $80 billion.

Cartels could easily be dismantled if the will and money was there - it isn't,
because we would rather spend that money on other things, such as nation state
intelligence and counter-terrorism.

~~~
mullingitover
They might be dismantled, but all the incentives of illegal distribution would
remain. Demand would remain, prices would climb, and inevitably new cartels
would spring up in their place to fill the demand.

------
mcantelon
"The Sinaloa is occasionally called the Federation because senior figures and
their subsidiaries operate semiautonomously while still employing a common
smuggling apparatus. ... To reduce the likelihood of clashes [between
competing interests], the cartel has revived an unlikely custom: the ancient
art of dynastic marriage. ... An associate may be less likely to cheat you, or
to murder you, if there’ll be hell to pay with his wife."

------
antimora
“A catapult,” he repeated. “We’ve got the best fence money can buy, and they
counter us with a 2,500-year-old technology.”

~~~
GoodIntentions
seeing as stone walls have been around for minimum 20000 years, and wooden
fences likely much longer, I find his comment kind of funny.

Catapults are cutting-edge tech compared to a fence..

------
dreamdu5t
Preaching to the converted.

What's the point of these articles if they have no impact on legislation or
the national conversation?

------
patrickgzill
Opium Wars - there is at least 1 President who had connections in some way or
another to this earlier form of the drug trade.

FDR (via his maternal grandfather Warren Delano).

There are others who also became President, (starts with a B) who are alleged
to have been heavily involved while in a secretive government position.

------
AlexDanger
Can anyone recommend a good book/author detailing the history of these
cartels?

------
blhack
If you guys have interest in this topic, this is a good blog to watch:

<http://www.borderlandbeat.com/>

------
alan_cx
Why does government follow policies that make drugs so incredibly profitable?

~~~
Mz
The folks I know who work for the government are pretty rule driven. Folks
like that seem to think that rules have real power over people in a way that
isn't true -- as if the rule itself has intrinsic power to stop people from
doing X rather than the rewards and punishments which get tied to it.

------
user49598
Whats the easiest way to stop people from breaking the law? Change the law.

------
Futurebot
I believe that in order to fix drug policy, we need to think about the issue a
completely different way. The main issue is the basic one of sovereignty of
the self; the ability to do whatever you want with your own body without
imposing costs on others. It's the very same idea underpinning the
legalization of suicide. It's bigger than this, but that's for another post.
The short version is that all laws should be guided, first and foremost, by
the harm principle.

Keep in mind the one thing that is paramount with applying the harm principle:
/without imposing costs on others/.

So what we should do is make _smoking anything where others can inhale it
without consent illegal_ and legalize everything else-whether snorted,
injected, swallowed or absorbed of all drugs. The only places you should be
allowed to smoke are designated private smoking facilities with air filtration
systems or your own home if you install an air filtration system yourself. I
cannot refuse or consent to inhaling smoke (and where I live, it's a constant
assault on your respiratory system. If the people using it ate, snorted, or
injected it, there would be no problem). Otherwise, just legalize and
regulate; you should have to go through a process to determine whether you're
fit to use certain types of drugs, sign consent forms, and agree that any
costs incurred due to potential addiction are your own and will not be borne
by the state (including things like alcohol - nothing would be exempt from the
basic health indemnification. Addiction programs would be covered, though.) If
you agree, you're sold drugs by state-chartered companies that are tightly
regulated, including pricing, to eliminate the black market. If you use them
for medical purposes, you'd be able to bypass the process with a prescription
(subject to the same regulations about methods of use.)

We should also deign to move hardcore addicts into treatment programs, or, in
the case of those who are incorrigible, to long-term "use and protection"
facilities. Finally, we should have designated locations with medical
personnel, security, and addiction counselors where addicts could use drugs
without fear of personal harm and without being public nuisances.

With a harm reduction-based system, the entire apparatus surrounding the drug
war crumbles. The income of smugglers and dealers disappears. The need for
most costly state organizations to fight it goes away. The violence largely
disappears (what's the nominal level of violence surrounding nicotine and
alcohol?) Regarding DEA funding. Under the system I outlined, this agency
would actually get useful: to crack down on and prosecute black market (for
those who want to go around the screening process) drug smugglers,
importers/exporters, and sellers to the full extent of the law.

People are going to do drugs no matter what we do, so we should be talking
about methods of use and harm reduction, not just "substances." Don't
"legalize pot" or the like; protect sovereignty of the self, and reduce harm
to individuals and society.

Caveats:

Is a full drug legalization policy feasible everywhere? In every country? I
would have to give that an unqualified no. In order for a system like this to
be feasible, many things are needed.

\- A working system of justice that is generally trusted by the populace.

\- A largely transparent system of governance.

\- A government, justice system, and law enforcement personnel that are
perceived to be (and actually are) to be largely free of corruption.

\- A strong state that can actually enforce edicts against black market
suppliers.

\- A strong state, stable state that would be difficult to overthrow.

\- A culture that _truly_ accepts harm reduction, and does not simply regard
using it as "defeat" or "moral midgetry" Most developed countries fit, or
could fit this bill. There are places, however, that are so plagued by
corruption, are already so violent, are so unstable, or are already basically
run by drug organizations that legalizing drugs would be like legalizing
murder (Mexico fits this definition, unfortunately. It appears to already be
near to a full-fledged narco-state.) It's already the rule, and would
basically have no effect except to make these drug organizations laugh. In
those places, some of which are bordering on failed states (or successful
narco-states) cannot be fixed in this way. Those places need to re-establish
order, trust, and strong states. They should not be thought of as drug wars,
however. They should be thought of more like "reclamation missions." Criminal
organizations have gotten so powerful, that they are often their own nations
inside of existing states, and those states need to "reclaim" their territory
and power from said organizations. Those situations are far beyond the drugs.
They're fundamentally about power.

Moving beyond today's current drug-related battles, we need to ask another
question: why, in the face of so much effort to combat it, do so many people
still want to use recreational drugs? 1) To escape crushing poverty, despair,
depression. For these, only addressing the root causes are going to get us
anywhere. Economic opportunities, physical security, better social safety
nets, better mental health services, etc. 2) Pure enjoyment. For this,
developing largely non-addictive, side-effect-free, cheap, legal alternatives
to current recreational drugs. This could be anything from better drugs to
computer-neural interfaces that allow more pleasurable/realistic experiences.

------
adventureful
It's disheartening to see the intense division on this subject on Hacker News.
It leads me to believe the issue gridlock will continue, and the only
plausible solution (legalization) will continue to be a fantasy. And as a
consequence millions will continue to be jailed, tens of thousands will
continue to die and the cartels will continue to grow stronger.

Small prediction: the US Government won't legalize drug use and production
until the cartels are so powerful the Feds can no longer even partially
contain the drug trade. Within a decade the cartels will be powerful enough to
directly threaten the US President. I think that'll just about do the trick.

------
its_so_on
I don't like the way the author glibly compares his subject with startups like
Facebook and Netflix and seemingly seriously uses real notions of economics
such as 'cartel' and 'capital-intensive'. ("Sinaloa is both diversified and
vertically integrated, producing and exporting marijuana, heroin and
methamphetamine as well. ") It's frankly disgusting.

Of course economics is the study of how people behave with money and
resources. You can make these comparisons - just as you can study the
economics of lynchings and torture by slaveowners to assert ownership over
their property, the practices of the East Indian Company, or the (taking out
touchy subject - think of warmongering; not saying such a thing exists). But
please don't do it "straight" or without any irony. This isn't economics. This
is death and murder (or war etc).

The economics is important. But it's not the economics that keeps me - or the
Coca Cola company or your uncle Jack - from arming up with an uzi and
"diversifying" into this "sector". Have some decency.

