Oliver stoned

 In a recent interview on “Piers Morgan Tonight,” Stone used a series of unfounded statistical assertions to justify his opposition to the war on drugs, the theme of his movie “Savages” which opened in the U.S. earlier this month. Among his comments, as compiled by the Los Angeles Times:

The Mexican economy would die without [drugs] because they need the money. It goes into their legitimate economy. It’s bigger than tourism. It’s bigger than oil. It’s bigger than remissions from their Mexican emigrants back to their country ... Fifty percent of our prison system is victimless crimes. People who’ve never hurt anybody, they’re in for marijuana and it has nothing to do with punishment. It’s a medical issue, and I think we have to move to decriminalization and legalization.

Stone is right to point out that the mass incarceration of drug offenders is demonstrably inefficient and in many senses immoral, but his facts are incorrect. Drug offenders do not constitute 50 percent of the US prison system’s inmates, but just over 20 percent. There are certainly more effective and humane ways to deal with the issue than tossing these people behind bars, but the opponents of the largely mindless approach to drug policy that has dominated in the last 40 years only hurt their case by casually tossing out falsehoods.

The problem continues with Stone’s statement that flows of drug money in Mexico are larger than those from tourism, oil, or remittances. Estimates for the value of the Mexican drug trade are all over the map, but the most rigorous analyses have concluded that export revenue from the drug trade is far lower than Stone suggests. Alejandro Hope, for instance, places the figure somewhere between $4.7 to $8.1 billion, while the RAND Corporation estimates that Mexican traffickers earn roughly $6.6 billion per year from sending drugs to the US.

In contrast, remittances sent by Mexicans living abroad in 2011 amounted to $22.7 billion. Mexico’s tourist trade, notwithstanding the nation’s unfortunate image in the international press, still managed to generate $11.9 billion in 2010. Stone’s claim is even further from the mark with regard to oil: the revenues for Pemex, the national oil company, amounted to $125 billion in 2011.

Consequently, Stone’s statement that the Mexican economy “would die” without drug money drifts into the terrain of the indefensible. Unfortunately, Stone is not alone in this exaggerated view of drug money’s role in the Mexican economy. One story, put forward by authors like Richard Grant and Charles Bowden, holds that a 2001 study by CISEN, Mexico’s intelligence agency, found that an end to the drug trade would result in a 63 percent contraction of the Mexican economy.

The study is not public — citing a story from El Diario de Juarez, Bowden wrote that it was leaked to the media in 2001, though InSight Crime’s online search for the original study turned up nothing. It is difficult to know, therefore, if its authors were perhaps making a more nuanced point that was lost in subsequent references to it. However, the scenario posited by Grant and Bowden, and the implicit idea that the Mexican economy would “die” without drug money, is simply absurd. [Note: Alejandro Hope and Jaime López-Aranda do not believe that the study exists.]

The most obvious flaw is the very idea that drug trafficking could disappear entirely. Though the size and composition of proceeds from the illicit trade may vary, longstanding industries, especially those that feed upon deep-seated human desires, don’t simply disappear from one year to the next.

Moreover, as demonstrated above, the total revenue generated by the drug trade is relatively small. Even using a methodologically suspect high-end estimate, such as the $39 billion cited by the US National Drug Intelligence Center, the figure amounts to less than 4 percent of total Mexican output. Using the more rigorous calculations of the industry’s size, drug trafficking probably accounts for roughly 0.5 percent of the nation’s economy. Eliminating the proceeds of drug smuggling would certainly have a significant impact on the GDP, but such an event, aside from being virtually impossible, would be nothing like the economic apocalypse posited by Stone.

Beyond simply being incorrect, Stone’s comments fuel a dystopian narrative of Mexico that has done the nation a great disservice over the past few years. They also help feed a belief that Mexico’s criminals are invincible supermen, against whom capitulation is the only solution. This is wrong, just like Stone’s facts.

Comments

[Randy McDonald]

"One story, put forward by authors like Richard Grant and Charles Bowden, holds that a 2001 study by CISEN, Mexico’s intelligence agency, found that an end to the drug trade would result in a 63 percent contraction of the Mexican economy."

That's a sharper economic contraction than anything I can think of outside the formerly Communist states, and even there, a depression of that scale would stand out.

[pc]

Funny that you mentioned it, I recently had to research Central Asia's modern economic performance, and Tajikistan, which I think came out worse than anywhere else in the Soviet realm, suffered a 62 percent real output decline from 1990 to 1995. Libya also declined by 60 percent last year, according to the Financial Times, but of course the point of the article is that they rebounded with more than 100 percent growth this year, ie it was a one-off thing, whereas the Bowden scenario was that it would essentially be a permanent disappearance of two thirds of Mexican output.

http://blogs.ft.com/beyond-brics/2012/07/11/guest-post-after-libyas-election-focus-on-investment/#axzz20XF3h1vD

[m.m.]

It is so difficult to give an estimate of the revenue of drug cartels. What strikes me as odd is the amount of money involved in the Wachovia-money laundering case. "For the time period of 1 May 2004 through 31 May 2007, Wachovia processed at least $373.6bn" from Mexican Casas de Cambio without "applying the proper anti-laundering strictures," according to the DEA. The number might well include transfers from legal activities--but is too high.
http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs