There has been a great deal of talk about the recent problems in Mexico. A recent blog post by Chris Nelder on Get Real List summarizes the scope of the problem pretty vividly:
"An estimated 10,000 people have died in the violence since Mexico's president Felipe Calderón took office in 2006 and began a campaign against organized crime. Over 6,000 died last year alone, of which about four-fifths were criminals killing criminals, plus about 800 police, soldiers, prosecutors and other officials who dared to fight organized crime. Another 1000 have already died in 2009.
The atrocities committed are brazen and horrific, including torture, beheadings, and public displays of mutilated corpses. Gangs hang banners in the streets announcing their views, make public threats against officials, and make YouTube videos of their executions. Extortion and protection rackets are proliferating as the federal crackdown has splintered the cartels into warring factions. The nation's framework of 32 independent states, a decrepit judicial process, and an ineffective and disorganized federal police force have left the nation with a corrupt law enforcement system that is ill-equipped to control the cartels."
It is clear that Mexico is in dire need of a solution; however, I fear that the solution comes in the form of social entrepreneurship and given the lack of safety and protection within Mexico, entrepreneurship is arguably at an all time low. The current focus in Mexico, be it the private, public, or illegal sector, is on profit. The government continues to seek foreign investment to ramp up oil exports (the country's #1 export) while private companies, such as Telemex, continue to focus on bolstering profits across the nation and, of course, the cartels are increasing exports of illegal drugs and increasing the amount of foreign guerilla operations in the US, Canada, and Central America to increase their profits as well.
Consequently, increasing the profits amongst the drug cartels limits the ability for the public and private sector to increase their profitability. The reason for this inverse relationship is that the drug cartels are expanding their enterprise through violence, vandalism, and murder, making Mexico less appealing to foreign investors. Because the government limits oil export and a number of other industries to domestic ownership, foreign investment in those companies is crucial. However, with human mutilation and beheading becoming everything but commonplace, domestic operations will surely lose their ability to raise fresh capital.
In my opinion, the problem spurs from a lack of opportunity. In 2006, the poverty rate in Mexico, based on assets, was more than 40%, now in 2008 that rate has been cut by more than half. Where is the money coming from? Drug exports. Drugs are bringing money to Mexican citizens in ways that no other enterprises are. As more and more citizens seek opportunity and financial success they turn to the cartels and illegal trade as the answer. Mexico's corporate governance leaves little room for new enterprise and provides little financial promise for domestic entrepreneurs. The decrease in the poverty rate is not a reflection of better times and healthier living; it is a reflection of the increase in drug exports.
How do you solve the problem? The answer has many facets but I believe one key is decreasing the focus on profitability and increasing the emphasis on social responsibility. There is no black and white division between profit-based entrepreneurship and social entrepreneurship. If the government allowed foreign companies to operate within Mexico on a large scale those companies could dump money back into the Mexican market, increasing opportunity, and making legitimate changes to the poverty rate. I believe that the majority of the population does not desire to work with or associate with the local cartels and given abundant opportunities, cartels would see a massive reduction in support and membership.
The Mexican government needs to accept that their domestic system is deteriorating as a result of increasing cartel influence and a need for foreign investment interest (which I believe they have already done). In order to combat these trends the government needs work with foreign enterprise to bolster domestic markets, increase legitimate jobs, and more than anything, provide attractive alternatives to drug trade. The government could then work with these companies to build socially based programs with focus on bettering the Mexican population.
I think military action is required to limit the cartel's current actions which are horrific; however, I think a long term solution to the problem must attack the root, which is lack of opportunity, and I don't think that solution is one of guns and metal.
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