Small Wars Journal

Book Review of “Narconomics: How to Run a Drug Cartel”

Tue, 12/06/2016 - 7:05am

Book Review of Narconomics: How to Run a Drug Cartel 

Roger J. Chin

Tom Wainwright, Narconomics: How to Run a Drug Cartel. New York, NY: PublicAffairs, 2016, 278 Pages. $26.99.    

Are successful international companies and drug cartels so different after all? Apparently not, according to the insightful observations of Tom Wainwright in Narconomics: How to Run a Drug Cartel. While the intriguing book title may lure readers into assuming this is a clandestine guide on how to operate a drug cartel, Wainwright’s book is a proposal for how to better defeat drug cartels.  

There have been multitudes of books providing divergent explanations for the illicit activities of transnational criminal organizations, but none of the assessments are as unique and clear-cut as the one provided in this book.

Currently serving as the British editor for The Economist, Wainwright was previously the Mexico City bureau chief for the same publication. He is an intrepid reporter, and from the first page to the last, he invites readers to join him on his vivid, intense, and memorable adventures into secretive criminal operations throughout the world. Straight away in the introduction, Wainwright is sweating it out in an airport bathroom in the notorious Ciudad Juárez, Mexico, attempting to activate his safety tracking device provided by a security consultant as an aid in case he disappears during his perilous journey. Frighteningly, the device turns out to be defective, and Wainwright makes his way into the “world’s most murderous city” without the safety net of a location tracker (p. 1). Though he modestly describes himself as “a not very brave business journalist” (p. 2), I respectfully disagree. The process of conducting the investigations for this book took remarkable courage and tenacity.

The book consists of an introduction, ten chapters, a conclusion, acknowledgements, notes, index, and black-and-white photographs. Wainwright creates imaginative chapter titles to entice the readers:

Chapter 1: Cocaine’s Supply Chain: The Cockroach Effect and the 30,000 Percent Markup

Chapter 2: Competition vs. Collusion: Why Merger Is Sometimes Better Than Murder

Chapter 3: The People Problems of a Drug Cartel: When James Bond Meets Mr. Bean

Chapter 4: PR and the Mad Men of Sinaloa: Why Cartels Care About Corporate Social Responsibility

Chapter 5: Offshoring: The Perks of Doing Business on the Mosquito Coast

Chapter 6: The Promise and Perils of Franchising: How the Mob Has Borrowed from McDonald’s

Chapter 7: Innovating Ahead of the Law: Research and Development in the “Legal Highs” Industry

Chapter 8: Ordering a Line Online: How Internet Shopping Has Improved Drug Dealers’ Customer Service

Chapter 9: Diversifying into New Markets: From Drug Smuggling to People Smuggling

Chapter 10: Coming Full Circle: How Legalization Threatens the Drug Lords

In the book, Wainwright draws a comparison between prominent legitimate businesses and various drug cartels. His investigation for this comparison takes him beyond the borders of Central, North, and South America, and he cleverly guides readers from his meeting with an antidrug squad in the Dominican Republic, to exploring the “legal highs” industry in New Zealand, and finally to purchasing illegal products online through special web browsers in the “Dark Web.” Forming the foundation of his analysis, Wainwright exposes how although multinational companies like Burger King, Wal-Mart, Coca-Cola, McDonald's, and Pepsi do not typically engage in the brutal activities of those involved in illicit drug production—the murdering of government officials, torturing of business competitors, or the use of grotesque violence to honor contractual agreements, for example—criminal enterprises do, in many respects, operate like any large lawful corporation. This includes encountering those mundane and tedious complications that come to occupy all legally operated businesses. Drug cartels, like competitive corporations, are concerned with supply chain dynamics, recruiting and retaining new employees, competition and collusion, human resources, potential mergers and takeovers, public relations, offshoring, franchising, research and development, online sales, customer satisfaction, and diversification into new markets. These challenges require drug cartel leaders to develop business acumen, and to implement innovative solutions to placate and satisfy the needs of their consumers and employees.

Wainwright then delves into how drug cartels expand their enterprises to increase their profit, compete globally while gaining influence, and how they collude with other transnational criminal organizations to obtain optimal results. The interconnected operations of various transnational criminal organizations now require different nations to form partnerships in order to deter the proliferation of illegal activities. It is through these elucidations that Wainwright makes one of his major contributions, providing critical information for government officials and law enforcement officers to better understand the inner workings of drug cartels.

In his conclusion, Wainwright argues that “economists make the best police officers”—and his argument is the chapter’s namesake (p. 239). Here, the author takes readers another insightful step forward, discussing four main mistakes being made when trying to combat the illegal drug industry: (1) the obsession with supply, (2) saving money early on and paying for it later, (3) acting nationally against a global business, and (4) confusing prohibition with control. He provides a unique and powerful economic perspective on the issue, thought-provoking if not controversial. As such, there may be some who are grateful that most economists are not, in fact, police officers.

By the end, Wainwright not only convincingly depicts how drug cartels emulate successful businesses, but he also provides an assessment on the efficacy of current methods governments use to combat the sale and transportation of illegal drugs. Wainwright surpasses readers’ expectations by explaining a complicated topic filled with shadowy characters, while still bringing in humor, intrigue, and strikingly relevant examples to keep readers fully engaged in the material.

For most of the book, Wainwright withholds his critique of the law while sharing his precarious adventures in discovering the intricate and dark realms of drug cartels. However, in the last two chapters, Wainwright reveals his stance against current prohibition laws. He counts them as a costly and inadequate approach for dealing with the problems associated with illegal drugs. He believes that the legalization of marijuana, and potentially other illicit drugs, will deter the drug cartels from making a profit and render those organizations ineffective. While his opinion is based on unquestionable first-hand knowledge, many will disagree with his final proposal on methods for eradicating and thwarting the advancement of drug cartels. The solutions and in-depth discussions for this subject matter go beyond the analysis provided in this book, and beyond this review, but I will take a first look in those directions.

The topic of legalization will be debated by policymakers and constituents for the years to come, as California, Nevada, and Massachusetts are the latest states to join the ranks of those who have approved not only medicinal but also recreational marijuana use. The notion of legalizing marijuana in order to prevent drug cartels from making a profit is a noble, but flawed assertion. The cartels are innovative organizations and will adapt to new challenges and regulations, just as businesses do; and, just as businesses are opportunistic, so will the cartels quickly pursue new ventures to meet their financial objectives. As marijuana is becoming a less lucrative product, transnational criminal organizations are diversifying the types of drugs they smuggle. For example, cartels have already started to produce and distribute fentanyl, methamphetamine, and heroin in and into the United States. These crime groups have also thrived from non-drug activities like illegal mining, extortion, kidnapping, human smuggling, and sex trafficking.

Historically, illicit drugs are produced in greater quantities in Mexico and distributed more prolifically in the United States. A report by the United States Drug Enforcement Administration (DEA) recently noted that this trend has now reversed in some areas of the United States. In 2012 when the state of Colorado legalized recreational use of marijuana, this did not deter or reduce operations of the drug cartels there. The DEA indicates that Mexican cartel members, along with other international criminal organizations, are moving to Colorado in order to convert residential houses into marijuana growing operations. These criminal enterprises then send marijuana from Colorado to Mexico. In this way, cartels circumvent the regulated marijuana market in Colorado, adapt like a legitimate business, and find a way to take advantage of new regulations to continue making a profit.  

There are often perfunctory attempts at understanding legalization issues, and they often fail to approach the full complexity of illicit networks. While Wainwright adds an important dimension to these considerations, policymakers need to examine the drug epidemic from greater than a singly economic or business perspective, as doing so may eclipse other options that could be combined to better address this societal quandary. Simply put, pragmatic solutions require a thoroughly comprehensive understanding of the issue. There are myriad factors contributing to the drug epidemic, and given humans’ propensity for criminal behavior, the answer to these problems needs to go well beyond legalization. As James Madison so eloquently stated in The Federalist Papers, “If men were angels, no government would be necessary.”[1]

Despite the disagreement with part of the concluding assessment, this is a very enjoyable and informative book. Wainwright superbly informs, while also entertaining readers about a somber topic. His book makes a meaningful, noteworthy, and extensive contribution to burgeoning research about drug cartels and transnational criminal organizations. The author provides a thought-provoking book for scholars, government officials, law enforcement officers, researchers, practitioners, and interested stakeholders on how drug cartels operate and puts forth an insightful approach to defeating such criminal organizations.

End Note

Hamilton, A., Madison, J., & Jay, J. (1961 [1788]). The Federalist Papers. C. Rossiter (ed.). New York, NY: Signet Classics, p. 319.

Categories: El Centro

About the Author(s)

Roger J. Chin is a PhD student in Political Science and Information Systems at Claremont Graduate University. He currently works as a Staff Research Associate at the University of California, Irvine Center for Evidence-Based Corrections. Prior to pursuing his PhD, he worked for several years as a criminal justice practitioner focusing on public policy implementation. He utilizes a mixed method approach in quantitative, spatial, and qualitative policy analysis. His work in the public sector and research publications spans criminal justice policies; social policies; policy implementation, design, and evaluation; public-private partnerships; and teamwork and leadership. He received an MA in Public Policy from Claremont Graduate University, an MPA (Master of Public Administration) from California State University, San Bernardino, and a BA in Political Science from the University of California, San Diego. He is fluent in Mandarin Chinese.


J Harlan

Tue, 12/06/2016 - 9:45am

The War on Drugs is best captured in the WB cartoon in which the wolf and the sheep dog punch in and out of work together. The Cartels and the drug warriors need each other. Fighting drugs provides an interesting law enforcement career while creating the risk that hugely magnifies the value of drugs on the street.

You can have the health problems associated with recreational drugs or the health problems plus organized crime with all the violence, lawyers, courts, jails and SWAT teams that entails.

"Legalization" as currently done is a half measure. The pols desire to get windfall tax revenues will leave a price gap between legal and illicit products that organized crime will fill.