An Interview with Narconomics Author Tom Wainwright

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Tom Wainwright's recent book Narconomics seeks to serve as an arsenal of new ideas, even a register of best practices, for security officials looking to improve their nation's approach to security policy.

Over the course of the book's nearly 300 pages, Wainwright, a former The Economist correspondent in Mexico, applies a textbook's worth of economic theories to different elements of public security around Latin America, whether diagnosing the cause of different gangland tactics or examining official responses to them. The book bounces around the hemisphere and beyond, tackling the prison system in El Salvador, regulation of synthetic drugs in New Zealand, police debauchery in Dominican Republic, and a litany of issues in his former adopted home of Mexico.

The book represents a catalog of failures, both explicitly, by pointing the finger at specific governmental missteps, and implicitly, by demonstrating the sort of thinking that has been woefully absent among policy-makers locked into a warrior mindset.

In an interview with InSight Crime, Wainwright discussed Narconomics, his impression of Mexican President Enrique Peña Nieto, the current wave of drug legalization, and absence of economic thought among security officials in Latin America.

(The interview has been edited for space and content.)

InSight Crime: I believe you arrived in Mexico in the latter half of President Felipe Calderón's administration (2006-2012). How did the country change over the course of your tenure there? I am referring to attitudes among government officials, the overall popular sense of public security, the behavior of the gangsters themselves -- really anything that jumped out at you.

Tom Wainwright: Yes, I got there in March 2010, in the second half of Calderón's term. The big change during my time, of course, was the change from Calderón to Peña Nieto.

I think Calderón's term was characterized by the slow realization on the part of the government and voters that things were going horribly wrong. I missed the beginning of his presidency, but if you read accounts of it it seems that for the first year, at least, most people thought that his crackdown on organized crime was actually going quite well. There is some good stuff in Ioan Grillo's book, El Narco, about this -- reports from the US embassy saying what great things are going on in Michoacán and so on. And indeed, the nationwide murder rate did drop a little in 2007. Then of course everything deteriorated.


"By pushing the message that security was almost unattainable as long as prohibition stood, Calderón was effectively making the case that the failure to register violence was not all his fault. Either way, I think he's at least partly right."


When I was there I saw two main changes in the behavior of the government. The first one was the development of a slightly more practical, realistic approach to managing the violence. When Alejandro Poiré became the Interior Secretary, he began to talk more openly, if tentatively, about a strategy which focused on minimizing violence, rather than one that focused on dismantling the cartels. I think this sort of approach was partly why rumors had earlier begun to circulate that the Calderón administration was protecting the Sinaloa cartel. I know of no evidence that that was the case, incidentally, but one thing that I think they were doing, openly, or at least semi-openly, was paying closer attention to the cartels that caused the most violence. Sinaloa seemed to have a somewhat more professional, less extortion-based approach than the Zetas, for instance, who as I discuss in the book seem to have a model which is more about grabbing territory and then controlling all the illegal stuff that goes on there, including kidnappings and so on. So it would make sense that the Calderón administration paid Sinaloa a little less attention than it did the Zetas.

SEE ALSO: Sinaloa Cartel News and Profile

The other thing I noticed, looking at the president himself, was a growing radicalization in the language he used to speak about the failures of the war on drugs, and the possibility of legalization. I interviewed him just before the end of his time in office, in 2012, and he was really quite outspoken about the failures of prohibition. If you google "Calderón says impossible to end war on drugs" you'll find my interview with him on The Economist's website. I think behind this was partly a genuine realization of the futility of fighting the drugs market. But I suspect it was also partly designed to shift blame away from him for Mexico's terrible security situation, onto the United States and others. By pushing the message that security was almost unattainable as long as prohibition stood, Calderón was effectively making the case that the failure to register violence was not all his fault. Either way, I think he's at least partly right.

With the benefit of hindsight, was the designation of the Zetas as public enemy number one handled properly? Should Calderón's government have done more to proactively advocate and establish support for this policy of picking out the worst actors? Should they have done it at all, or would it have been better to just pursue all groups equally without any preference?

"Pursuing all groups equally without any preference" sounds sensible, and the opposite sounds corrupt, but actually that's not the case. It's totally legitimate to prioritize cartels whose business model is more violent and socially harmful. In many countries the penalty for burgling a home at night is tougher than that for burgling it during the day, on the basis that it's far more likely that people will be at home at night, and that harm will result. The aim is to deter burglars from carrying out their robberies at night, thus minimizing the risk of harm coming to homeowners. Governments aren't saying that it's ok to break into a home during the day, or encouraging anyone to do that. They're just signaling that some crime -- namely violent, risky ones -- are worse than others. I think it's totally legit to do the same thing with cartels: if one is in the business of kidnapping and dismembering people, and the other is exporting drugs, it would be wrong to treat the two even handedly -- the right thing to do would be to crush the former, and turn your attention to the latter when there's nothing more pressing to do.

Did the government do enough to make this clear? Maybe not, which may be partly why the rumor got about that the government was "protecting" some cartels over others.

How do you think the arrival of the Peña Nieto government affected the operation of the largest criminal organizations? Is it easier to be a gangster today than it was six years ago? Relatedly, given how many of the obstacles to improved security in Mexico are very deep-seated, how much do you think one presidential administration can aspire to fundamentally change the circumstances on the ground?

I left in March 2013 so I only saw the beginning of the EPN [Peña Nieto's common nickname] administration. From the mood music ahead of the election, it sounded as if they were going to continue the Alejandro Poiré approach of focusing most intently on the most violent, in order to provide incentives to cartels to get on with their business in the least violent way possible. Has it worked? Hard to say: the murder rate is lower than it was during the height of the violence, but it hasn't fallen much beyond where it stood at the end of Calderón's term, and I think I saw recently it was edging back up. Drugs, of course, continue to be traded.

SEE ALSO: Coverage of Security Policy 

Is it easier to be a gangster? Honestly I don't think the change in president is likely to make a huge difference either way. Cartels rely most on the co-operation (or coercion) of local politicians and police, far more so than the national ones. I think you're more likely to see changes in the narco-political landscape following changes in mayors or governors than of presidents.

The bigger things affecting the cartels are the fundamentals of supply and demand. And actually on that front, Mexican cartels probably have it harder than they did six years ago. America's appetite for cocaine has plummeted in the past decade. And the growth of legal marijuana -- both recreational and loosely defined medical -- means they face a big competitor on that front. Demand for heroin has risen, which has helped them out, and as I discuss in the book they're diversifying into all kinds of things, including people-smuggling, though even demand for migration has fallen. But overall these are probably somewhat leaner times than the cartels are used to.


"But I think somewhere along the line this reasonable policy of trying not to talk about it so much mutated into the totally unreasonable one of not doing much about it. Ayotzinapa seemed to symbolize that."


Is this the new normal then? Is another country likely to replace or at least rival Mexico as the hemisphere's foremost generator of international criminal groups? Put another way, Colombian groups once relied on their unique control over the production of cocaine, and Mexican groups have exploited their unique control over access to United States territory -- could some other nation exploit another unforeseen advantage, say Central American nations taking advantage of unique impunity?

Yes, and we're already seeing a bit of this. The heightening of Central America's violence in recent years coincided with Mexico's crackdown. Lately, following a big push to get things under control in Central America, there are some signs that the business is moving back to the Caribbean. Where next? What you want is weak, corrupt government, cheap labor, high rates of crime, and easy links to the cocaine producing countries of the Andes and the big markets of the US and Europe. With that in mind, I would bet on Venezuela as being the next place to watch. It already serves as a springboard for a lot of the cocaine going to Europe. And as Eastern Europe gets richer, and American appetites for cocaine seem to be waning, the European market is going to become the more important of the two.

How do you think the many security scandals have complicated Peña Nieto's approach to security policy? Would it have been markedly different if Chapo had remained in prison and he had handled the fallout from the disappearance of 43 Ayotzinapa students differently? 

I was really astonished by the incompetence with which the government handled Ayotzinapa. This is supposedly the professional party that knows how to govern, and they just got everything wrong. The president didn't even go down there for months. Even now they are making a hash of the investigation. I think EPN had the perfectly legitimate aim of changing the international conversation about Mexico from one about violence into a more positive one about its economic potential and so on. But I think somewhere along the line this reasonable policy of trying not to talk about it so much mutated into the totally unreasonable one of not doing much about it. Ayotzinapa seemed to symbolize that.

One of the bits from Narconomics that I found particularly engrossing discussed the circumstances in which criminal groups absorbed state legitimacy. To what do you attribute the lack of confidence in public institutions across Latin America? Do you think there is sufficient appreciation from government officials, at every level, about threats to their legitimacy? 

Democracy came later to Mexico than almost anywhere else in the region, so it's something that's particularly an issue there. I think the general lack of confidence in public institutions is because those institutions are so often inadequate. For comparison: I once went to a municipio in the middle of nowhere in Chiapas, where the Jehovah's Witnesses were doing particularly well. The secret of their success was that they provided many of the very basic services that the state had not bothered to provide in such a remote area -- business help, community space, drying-out clinics for alcoholics, etc. You see the same thing with the evangelicals in Central America, where they're doing incredibly well, partly using the same approach. When the state is absent, someone may come and fill it. If you're lucky, you get the Jehovah's Witnesses; if you're unlucky you might get someone more unsavory.

SEE ALSO: Mexico News and Profiles 

One silver lining re the PRI's poor performance, by the way. Imagine if, following 12 years of fairly unimpressive PAN presidencies, the PRI had returned and done a brilliant job. They kept saying ahead of the election that government would work better because at last the presidency and the states, most of which are PRI-run, would again be in concert. If EPN had then done a great job, Mexicans may well have concluded that the one-party state had something to be said for it after all. As it is, the PRI in Los Pinos has done a pretty poor job -- which is a shame for Mexico in the short term, but perhaps healthy for its democracy in the long term. At least, this is my attempt to look on the bright side of a not very bright situation!

You talk in your book about how economists make the best security officials. How prevalent was a sense of basic economic concepts among security officials at different levels? I don't necessarily mean the fairly sophisticated bits about when, say, mergers make sense, but even just an active appreciation for how incentive structures guide criminal decisions, and how government can influence criminal incentives. Did you see much of that when talking to officials in different countries? Did that change with time or vary from one country to another?

Not a huge amount. Poiré, whom I've mentioned, certainly has his head screwed on -- he was the one who was talking about how by focusing on the most violent you effectively send a message to criminals that the more violent they are, the higher up the list of targets they will be. Calderón has made the economic point that the trouble with prohibition is that if you do manage to restrict supply, all you do is raise the price, which raises the incentives for criminals to enter the business. And here in the UK I've spoken to drugs officers who realize that restricting imports may lead to drugs being "cut" with more dangerous chemicals still -- and that it is therefore odd to hold up falling purity as a sign of success, as some governments do. But in general people tend to just follow the script. I don't think they have time to think about what they're doing from first principles.


"I think if you have the opportunity to take away from criminals a huge, lucrative business -- cars, marijuana, or anything else -- you ought to take it."


You write a little about legalization in your book, though with a fair amount of nuance. Do you believe that legalization is a solution to Latin American insecurity, or is the problem more complicated? Do you think the piecemeal approach to marijuana legalization in the US is a harbinger of a broader liberalization and enlightenment on drug policy, or is it going to be pockets of legalized weed and that's it in the US and around the globe?

I didn't want to make the book just a big argument for legalization, as I think a) people have heard that before and b) many drugs, like cocaine, are nowhere near being legalized just yet. But yes, I'm on board -- it wouldn't solve Latin America's security problems. Look at how violence has stuck around in the Caribbean even after the Caribbean-Miami cocaine route was shut down. But it would improve them. For my views on marijuana legalization check out The Economist's leader a few months ago called "the right way to do drugs," and the accompanying briefing. I think we'll see pockets of legalized weed, not a worldwide conversion. But even if it's legal in only half the US, it means that the black market in the rest of the country becomes a home-grown "gray" market, not an imported Mexican one, and that's a good thing for security in Mexico.

SEE ALSO: Coverage of Drug Policy

How do you think Mexico should manage that transition with regard to its own criminal groups? A scenario in which well-armed, state-protected criminal groups relatively suddenly lose out on a major portion of their revenues could have unforeseen consequences. A loss of marijuana revenue could, for instance, push gangs into more meth or heroin production, or into relying more heavily on crimes like kidnapping and extortion. How do you see such a scenario -- is my version overblown, temporary, a price worth paying for cutting off the income and ultimately weakening the gangs?

Yes, this is a risk. The Caribbean is often held up as an example of how even if you manage to drastically reduce the drug trafficking business, you don't necessarily eliminate criminality. Cocaine trafficking through the Caribbean fell pretty sharply in the 1990s as it moved to Mexico, not coincidentally. This is the old "balloon effect" in action. Yet murder rates there are still among the highest in the world. In the case of marijuana, in Mexico we're already seeing cartels move into more heroin and meth production as their marijuana market disappears.

It's a fair point, but I'm not sure what people imply when they make it: should we allow criminal gangs to carry on with one multibillion dollar business in order to deter them from others? I don't think any government can honestly take that option. Let me give you another example: in the 1990s, car theft fell dramatically in Britain as cars became much harder to steal. You used to just be able to hotwire them; now that simply doesn't work. So car theft plummeted. In Britain this coincided with an increase in street robberies. One theory is that criminals who used to steal cars moved into mugging instead. Now, mugging is arguably a more socially harmful crime than car theft. So should the government try to slow down advances in vehicle security, in order to make sure that criminals can continue to exploit the relatively non-violent business of car theft, rather than robbing people at knifepoint? It's a point of view, I suppose, but I don't think any government would seriously consider doing this. I think if you have the opportunity to take away from criminals a huge, lucrative business -- cars, marijuana, or anything else -- you ought to take it. And if the argument is that you shouldn't, that's not just an argument against marijuana legalization; it's presumably an argument about all kinds of marijuana interdiction and enforcement.