InSight: Mexico’s ‘Wall Street’ Decries Violence, But Ignores Own Responsibility

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When crime hits the pocketbooks of the wealthy, it usually sparks the first real measures against it. But in Mexico, that response is taking a long time to crystallize. What’s more, those calls for action overlook the wealthy class’ own role in creating the situation in which organized crime emerges.

For the third year in a row, a major financial institution, this time the BBVA, Mexico’s largest financial institution, said that one percent of the GDP is lost due to crime and violence. BBVA joins a chorus of powerful voices singing the same song to government officials: It’s time to do something about the large organized criminal syndicates.

But even after the increase in the size of the federal police, multiple purges of security officials and the disbursement of over 30,000 troops to various parts of the country, Mexico is struggling. Over 15,000 were killed in events related to organized crime last year, bringing the total number of deaths to over 34,000 since Felipe Calderon took office in December 2006.

Ironically, part of the reason the violence continues may be economic. Criminal activities are not bad for everyone. Indeed, many areas experience short-term and even long-term benefits from criminal activities. And those who do experience these increases in economic gains often control the levers of power – politicians, large landowners, importers whose buying power rises – giving them little incentive to really stop the criminal activities.

Take Colombia, a place that has been enmeshed in a civil, sectarian and illegal drug-fueled conflict for nearly half a century. According to the World Bank, the Colombian economy has had a steady growth of four percent a year from 1960 to 2009, comparable to the other top-performing country in the region, Chile.

Obviously, this cannot be explained by simply looking at the drug economy in Colombia, although some of the growth undoubtedly relates to that economy. How much is subject to an endless debate, but Rensselaer Lee, co-author of The Andean Cocaine Industry, once put that number at eight percent.

Still the drugs are only part of the equation. In Colombia, other criminal activities may have paved the way for the creation of the “modern state,” thus facilitating long-term growth. Specifically, I am referring to the sectarian paramilitary groups who unleashed terror in the coffee regions of Colombia in the 1940s, 1950s and into the 1960s, displacing mostly smaller coffee growers and setting the stage for more industrial coffee farms to be developed that could compete on a world coffee market.

This violence was partially sanctioned by the State, but because it fostered growth, it faced less public scrutiny. Its long-term consequences, however, were no less than tragic and may have cost the country more than what it gained in GDP. One of those displaced coffee farmers was named Antonio Marin. After joining a small political-military outfit that would become the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC), he took on the name Manuel Marualanda, or alias ‘Tirofijo.’ Marin died in 2008 of natural causes after creating the largest rebel army in the hemisphere.

It remains to be seen if Mexico has created its own Marin, but the government’s attempts to “modernize” its own economy, by entering the North American Free Trade Agreement with the United States in 1994, may have spawned a few candidates. The resulting flood of U.S. agriculture products have left a generation of rural Mexicans “displaced” from the countryside, searching for work, and have sowed the seeds for the emergence of groups that are beginning to use FARC-like rhetoric. It’s not a coincidence that the most ideological of the large drug cartels, the Familia Michoacana, is centered in one of the areas hardest hit by these shifts in the local economy.

And while the one percent lost in GDP refers to increased security costs, lost investment, lost jobs and displacement, it does not take into account the large informal sector that is picking up the slack, part of which includes the criminal syndicates who employ the first post-NAFTA generation in places like Michoacan.

That Mexico’s financial sector is worried about its own pocketbooks is a good sign. The outcry is sure to result in the same political push for answers about why violence is rising and what can be done about it. But those answers should take into account the vast changes in the economy, some of which this same economic elite pushed for, as organized crime is sweeping the country. 

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