Making billions of $ in the drug business of Mexico

“Brazil is portrayed as the poster child for Latin American potential, while Mexico is the symbol for what’s gone wrong.” Rodrigo Lara Serrano from AMERICA ECONOMIA Worldcrunch

Mexico’s population currently living below poverty  exceeds 51 % CIA worldfactbook whereas its “big brothers” (Canada and USA as members of NAFTA) only note a level below 10 %.

Around half a million Mexicans enter the USA a year to find a better life there, many of them illegaly. (guardian)

What attracts people to be involved in the drug business?

Patrick Radden Keefe, a journalist of the New York Times wrote an interesing article about how a cartel makes its money. Did you know that a kilo of cocaine produced in Colombia and worth $2000 increases its value to around $10000 when it enters Mexico? Incredibly.

But did you also know that it will be worth more than $30.000 when it crosses the border of the United States and then even $100.000 if you sell it in gramms?! Not only one kilo is smuggled every year. Imagine there are tons of kilos. Cartels earn revenues estimated somewhere in the billions of $ dollar.

Mexico’s drug war

After becoming president in 2006 Felipe Calderon started the drug war against the cartels and many of their members were killed or arrested.

“Since December 2006, nearly 48,000 people have been killed in drug-related violence in Mexico” CNN

According to CNN Calderon and Bush had made an agreement to fight against drug business. The Merida Initiative (named after the Mexican city where the two met) had included a U.S. pledge of $1.5 billion between 2008 and 2010. Current President Obama had requested to expand this program in 2011 with investing more millions to enable the provision of aircrafts, inspection tools and other sophisticated drug-detecting technology to the Mexicans.

The normal worker’s life

An unskilled worker earns between $300 and $500 net income a month according to worldsalaries.org. Many families in Mexico are very big with many relatives. Imagine $300 for 5 people a month. Is that enough for a living?

If you had the choice between working around 12 hours a day and earning that little that it is hard to feed your family and on the other hand you can earn millions within the drug business and probably buy something special for your little daughter or your mother. What would you choose?

“it has never been the objective…of the public-security strategy to end something that it is impossible to end, namely the consumption of drugs or their trafficking…” former Mexican president Calderon 2012

The bloddy reality: Boom vs. poverty in Latinamerica

Who profits from the boom? Who does not?

Last week I already talked about a project to prevent the use of drugs in the northern countries of South America. This week I will focus more on social issues within these countries. There are always two sides of a boom, the ones who profit from it and the others who cannot jump on the train and therefore suffer. Although I already posted about the booming economy in my first post and how many people profit from this I will focus on the opposite of this boom in this blog: I will talk about poverty.

Poverty at its lowest level

“Poverty in Latin America is at its lowest level for 20 years” UN’s regional economic body, Eclac (Economic Commission for Latin America and the Caribbean)

According to an article of BBC household incomes had risen a lot over the last decades. The level of poverty had declined from 48.4% to 31.4%, between 1990 and 2010.

Check out this video to get to know more details about this topic:

The report about a declining poverty, published by the UN in November 2011, mentions other reasons for the positive changes: rising public spending levels due to an overall increase in incomes as well as an increase of government expenditure especially on social issues.

“Poverty and inequality continue to decline in the region, which is good news, particularly in the midst of an international economic crisis,” ECLAC’s Executive Secretary Alicia Bárcena.

Sounds perfect right? Everybody is happy so we can go home…But:

How is the reality?

The report continues that the progress of a declining poverty was threatened by the “yawning gaps in the productive structure in the region and by the labour markets which generate employment in low-productivity sectors.” You can read more about poverty in Eclac’s report Social Panorama of Latin America 2011

Colombia for example, although one of the countries with the highest decline in poverty, is still facing 37.2% (2010 est.) of its total population living below the poverty line (CIA world factbook) which I would consider as very high.  Although the number of people living in poverty has declined there are still many people who earn like 200 Euros a month. The question we have to ask: How much is enough for a living? How much is enough to feed your family? 200 Euros are definitely not enough because you cannot even pay your rent.

Following Jo Tuckman from the Guardian there still exists a very huge inequality in Latin America. There is another report which more emphasizes on the inequality than on the declining poverty rate. This report can be found here.

Isn’t it incredible what those experts found out?

“Latin America is the most inequitable region in the world, presenting lower results than regions with more dramatic poverty levels such as Africa and parts of Asia.” Poverty and Inequality Report Latin America 2011

That is really confusing. What can we actually believe? I think that we should not just believe in one report that we find because although there might be a positive change this does not necessarily mean that everything is perfect. This point brings me to the …

Future challenges

The future outlook of the UN report states that the poverty line will continue to drop into the next years. But still there are many challenges Latin America will have to face. It has to put more effort in social issues to make a permanent change and expand the social security system so that there is more equality for workers.

But compared to Germany I noticed that people e.g. in Colombia did not complain that much about their situation. People always came across me with a big smile and they were always helpful. I think that this depends on the attitude you have towards your expectations in your life. People there might be satisfied with less than people in Europe who are used to the consuming society and being spoiled many times.