March 15, 2002


Mexico's Cartel Crackdown - Bullish Sign for North America

By Andrew Reding

The arrest of Tijuana cartel drug lord Benjamín Arellano Félix is a signal achievement, but not as a victory in the "war on drugs." It will not reduce drug addiction or violence on either side of the border. It does, however, mark a major turning point in President Vicente Fox's war on corruption that bodes well for U.S. and Canadian economic partnerships with Mexico.

First, the bad news. Anyone who supposes that cracking down on drug traffickers will win the drug war is ignoring the most basic principles of economics.

To the extent that dismantling a major cartel causes a reduction in supply, the street prices of drugs shoot up. But the demand for addictive substances is, as economists say, relatively price-inelastic. That means demand does not drop appreciably as prices rise. Addicts will generally pay whatever they have to in order to get a fix.

That leads to an increase in crime, as addicts turn to theft to obtain the money they need to sustain their habit. At the same time, higher prices mean greater profits for the remaining suppliers. That attracts new entrants to the trafficking business. The newcomers get into turf battles with established suppliers, resulting in yet more deadly violence.

However politically correct, the war on drugs cannot be won on its present terms. This is because it pits the power of law and morality against two even more formidable forces of human nature: the biochemistry of the brain, and the profit motive.

Americans could learn from the history of the 18th Amendment, which banned alcohol. Prohibition did not curtail alcohol abuse, but did create a colossal crime problem. That problem disappeared only with the end of Prohibition.

The good news about the Arellano arrest is of far greater consequence. It is the first unequivocal sign of progress in confronting Mexico's all-pervasive corruption.

Until now, successive Mexican administrations have played a cynical game. To curry favor with Washington, particularly in the weeks preceding annual certifications that Mexico is cooperating in the U.S. war on drugs, they cracked down on kingpins from every cartel except the most powerful one.

That was because the Tijuana cartel managed to purchase significant influence in the long-ruling and notoriously corrupt Institutional Revolutionary Party (PRI). In effect, PRI administrations were acting as enforcers for the Tijuana cartel, then using their crackdowns to hoodwink Washington into believing they were cooperating. It was quite a racket, graphically and accurately portrayed in the motion picture "Traffic."

That changed with the July 2000 election to the Mexican presidency of Vicente Fox of the National Action Party, breaking the PRI's 71-year monopoly on power. Fox bravely traveled to Tijuana to declare war on the Tijuana cartel. Last month, police killed Ramón Arellano Félix in a shootout in the port city of Mazatlán. Then last weekend, heavily armed commandos stormed a home in the city of Puebla, capturing his brother Benjamín.

Benjamín was the Tijuana cartel's mastermind, Ramón its chief enforcer. Together, they were directly or indirectly responsible for hundreds of murders, including those of dozens of police officers, judges and prosecutors. They were wanted in Mexico for the brazen slaying of Roman Catholic Cardinal Juan Posadas at Guada-lajara airport in 1993. Ramón was at the top of the FBI Most-Wanted list, alongside Osama bin Laden.

With Benjamín behind bars and facing trial and lifelong imprisonment in both Mexico and the United States, President Fox has made it clear that no one in Mexico — no matter how powerful — is exempt from the law.

Ridding Mexico of the culture of corruption that developed under the PRI will take many years and many more courageous actions like this one. But this is a significant first step, which, if pursued, will also bode well for the economic future of North America.

The rule of law is perhaps the single most important element in assuring the viability of free markets. Without it, cronyism and corruption predominate, shouldering aside entrepreneurship and innovation. With it, competition is given free rein, rewarding the better ideas that are the engine of prosperity.

That is why the arrest of Benjamín Arellano is a very bullish sign for Mexico — and North America.

Andrew Reding (aareding@ directs the Americas Project of the World Policy Institute in New York.

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