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Chapter 1: What is the main topic discussed in this episode?
This episode of the podcast is brought to you by Cantor Fitzgerald Ireland, proud sponsors of my own festival, the Doki Book Festival, which is on the 18th and 21st of June. Now, in Doki, you're going to expect four days of ideas, of literature, of politics, of economics, comedy, and culture.
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Canterford's Gerald Ireland Limited is regulated by the Central Bank of Ireland. Three, two, one. Coming up on the podcast in a couple of minutes, we are going down Mexico way.
We're looking at, against the background of the World Cup, we're looking at Mexico, the football team, the country, the politics, the narco state, and the complications of running this enormous economy wedged between Latin America or South America and North America. That's all coming up. Mexico in a couple of minutes. To understand the economy, you have to understand human nature.
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The Brazilian team wants to reach the semifinal of their World Cup. Here comes Serrado in the center.
How you doing there? It's time for the podcast today. It's all things Mexican, John. You can see you with your sombrero. Uh-huh. Okay, so that was John's impression of a Mexican person. I would apologize to our burgeoning Mexican audience. John, it's a sort of a cross between... It's like if you're trying to be Ernest Shackleton or something.
Yeah, I just had some tequila, so it's just kicking in now.
So we're going to get tequila. We're going to talk about narco drugs.
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Chapter 2: What economic factors define Mexico as a narco state?
To the boozer.
And we stayed. Oh, really? Yes. Did you have tickets for the match? Yeah. Oh, shut up.
It was just one of the... It was a very hazy trip. But basically what happened on that trip was I was in London, working in London, had no real intention of going to the World Cup. I wanted to, but I was working and whatever. And then Ray Houghton chipped the Italian keeper. Called you. Ray Houghton called me, I'm going to come over there.
But he said, Ray Houghton chipped the Italian keeper in the Giants stadium and we beat the Italians. And I said, that's it, got to go.
Yeah.
So flew over. and then watched a series of brutal games. I think it was Norway, Holland, Mexico, which we didn't even bother going to. Right. But it was a hazy trip. So anybody who has got long football memories... Must have cost you a fortune. It probably did, yeah. But it was worth it.
Yeah, yeah, yeah.
There's no better crack than going to watch the boys in green away. Yeah. That's the key. There's a certain creature that follows the boys in green. There's a certain male rather... Hopeful male.
Yeah. Oh, you've got to be hopeful.
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Chapter 3: How does the narco economy influence Mexican politics?
Chichen Itza. Oh, yeah, nice. It's a wonder of the world. Yeah. You know, it's the old Mayan ruins. You know when they found those in the jungle? Yeah. And it is extraordinary. I mean, you stand back, you look at the size of these pyramids and the majesty of the buildings and the madness of the sculptors. Look at that. Just crazy. Built by aliens. You know that. Of course, built by aliens.
Of course, built by aliens. Who are coming back. They're already here, Mike. I know, I know. Already here. Anyway, enough of that. So think about it. GDP, $1.8 trillion. Right, okay. Right? 13th largest now economy in the world, bus, John. Drug cartels are the fourth largest employer in Mexico. Wow. Think about that. That is extraordinary, right? And that's what we're going to talk about.
We're going to talk about the narco economy, how it emerged, where it emerged from, why it emerged, where it did, when it did, what they are selling, what the Americans are buying, and how it has totally and utterly corrupted the Mexican body politic. Yeah, okay. Have you watched... Narcos. You know, I haven't. It's really good. Okay.
So basically, what happened was Colombia was the first narco state. People will know the name Pablo Escobar. Basically, the Medellin cartel, all that sort of stuff, right? And then when the Americans came down really heavily against the Colombians, the Colombian cartels were destroyed completely. De facto.
Yeah.
But those cartels shifted their production and their operation to Mexico and they ceded power to the Mexican cartels who have now become this enormous parallel force within Mexico and, of course, Because of the geography, the Mexican cartels control the route of all drugs from Latin America up through Mexico and into the United States. And they have exploded. I'll give you a few figures, John.
Total annual revenue from the drug trade is estimated at $12 billion. billion annually. Now, I think that's probably an understatement.
Probably, yeah.
But that's the official, right? Fentanyl production. So it used to be weed. Yeah. Then it was coke. It's still weed and coke, but now it is fentanyl. And just look at the mathematics of this, right? Fentanyl costs them 10 cent a pill to make in Mexico. This is estimated, right?
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Chapter 4: What role do drug cartels play in Mexico's economy?
Right. So they basically hijack the Wi-Fi, repackage it, and extort money from your average person.
But, you know, politically, how do you deal with this? Because, obviously, the politicians, the Mexican politicians, if they're not already in the pocket of the cartels, they're under pressure.
They're under death threats. So basically what you have is you've got an enormous, enormous illegal industry. And then that money needs to be washed and needs to be cleaned. So you've got enormous money laundering industry across huge sectors. They're buying hotels. This is basically the mafia, right?
And then, of course, the whole point of the cartel is they embed themselves into public life at every single level so that anything material has to go through them. So you can imagine the amount of backhanders that I've gone through on the building of the World Cup stadiums alone. Yeah.
And the whole World Cup infrastructure because the World Cup, again, is ideal for money laundering because it's a service industry and people need cash. So you can see it's all going on. But even if you look at like an extraordinary figure, Mexican produces no weapons. Right, okay. None. They have no arms industry. Right. 80% of all their weapons come from the United States. Yeah.
So the United States are selling... Guns, and not guns, heavy artillery. I mean, I saw the Mexican cops in Yucatan. They are sitting in Jeeps with massive machine guns. Like machine guns. But yeah, crazy stuff, right? Yeah. Who's selling that to them? The Americans. The Americans are selling both to the cartels and to the Mexican government, the Mexican cops.
So the Americans, this is a huge business for the United States because they sell to both sides. Mm-hmm.
So to come back to your question... But that's the irony of the whole thing.
So, yeah. So, I mean, again, a lot of Latin Americans would say, look, yeah, we produce all this coke and this stuff, but you guys consume it. You're buying it, yeah. You're the problem. You're the people we're feeding. We're not, you know, we're not the drug addicts. You guys are the drug addicts.
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Chapter 5: How has the U.S. influenced drug trafficking in Mexico?
And they're very public as well. That's the other thing about those murders. Exactly, because it's to say that I'm the big guy.
Yeah.
Because, of course, there isn't one cartel. There are many cartels, and those cartels are fighting with each other. They're fighting with the cops. They're fighting with the state. They're fighting with the Americans, the whole thing. But they're running states within states.
This is the whole thing, and this is why they're a bit like the mafia, is that their idea is to basically set up a state within the state and buy everybody, terrorize everybody, money launder their money so that they're the richest guys on the block, And as you say, use extreme violence.
Yeah, yeah.
And not only use extreme violence, but publicly make people aware of the extreme violence so that the whole state is living in a permanent state of anxiety. And you can't get away from these people. I mean, I don't know if you saw Narcos. There's a moment where Pablo Escobar, now I know he wasn't Mexican, he was Colombian, is in effect positioning himself as a Robin Hood sort of character. Yeah.
That he's robbing from the rich and giving to the poor. And he has so much money that he has to give it out. He has to give it away. Mm-hmm. And again, the cartels in Mexico are doing the same thing. What they're doing is they're giving welfare to people. They're giving rations to people. They're saying, they're basically, you know, doing what all mafiosos do.
They're buying off the electorate because what they're trying to do is undermine profoundly the credibility and the effectiveness of the state itself. So this is happening all the time, right? And again, where they are most prevalent, ironically, you know, you kind of think... that it's sort of big stuff and it's big drug deals or whatever.
No, actually, what's most prevalent is in this informal economy. You know, street vendors, fellas selling tacos, you know, all this sort of thing, you know, tortilla sellers, these sort of things. It's estimated that the informal sector, which is about over half the population in general Mexico... is being preyed on by cartels, right?
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Chapter 6: What impact does the informal economy have on Mexican society?
Well, let me give you some figures, right? Between 2008 and 2021, the United States... spent $3.5 billion on cooperation with Mexico in security and counter-narcos forces, right? It's estimated the cartel activity is probably costing collectively the Mexicans about $254 billion, roughly 18% of GDP every year. So that's what they're losing. So the incentive...
for the Mexican government to get in control of this is enormous. And they're trying as much as possible to deploy troops. So even this year alone, they deployed an extra 130,000 Mexican troops on the border with Mexico. These are big, big figures. This is a 40% increase in the military budget, fighting the narcos and fighting the cartels, right?
Now, interestingly, homicide rates have fallen dramatically in the last year. And people are saying that Scheinbaum, this new president, should get the credit. Lots of other people are saying, let's just wait and see. Let's just wait and see. But homicides have fallen. But the problem is to dismantle a narco state is incredibly difficult. Of course, yeah.
Because the incentive structure to maintain the narco state are there. So the basic idea is Americans and Europeans consume drugs in monumental quantities. The Latin Americans say, well, hold on a second. What else are we supposed to do? You know, this is what we make. And we are only servicing a need. And of course, the entire war against drugs...
is rarely figured on trying to stop people taking drugs. And it's all trying to stop people importing drugs.
I mean, the war on drugs began with Nixon, didn't it? It did, yeah. In the mid-70s. And then Nancy Reagan took over. Just say no. Just say no. So they had ads like that, you know, as if that's going to stop people taking drugs.
Well, also the problem is, you know, people like a buzz. That's the weird thing. That's what... That's drugs, alcohol, all that sort of stuff. But the dilemma for the Mexicans is the following, right? Mexicans living in poverty, right? The percentage of Mexicans living in poverty is 26% of the total population, right?
So that means there's always an incentive for young lads in particular and young girls to get involved with the cartels.
Yeah.
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Chapter 7: How do cartels maintain control over local communities?
Because, number one, it's cheaper. But number two, over the last 25, 30 years, the Mexicans have built up a huge industrial economy, feeding the United States. Yeah. And that... is operational. Whereas what Trump is trying to do is kickstart an American economy that has been moribund for 30 years. They've lost the skills. They've lost the technology. They've lost the networks.
The Mexicans have all this.
Yeah.
So the Mexicans are doing quite well.
So given that this is a series about the World Cup or based on the World Cup, what is... The relationship then, like between Claudio Scheinbaum. Claudio Scheinbaum. Yeah.
It means shiny tree, John. Actually, it means shiny branch. Does it? In Spanish? In Yiddish. In Yiddish? She's Jewish. Oh, I didn't know that. Yeah. Okay. Yeah, yeah. She's the first Jewish leader in Mexico ever.
And that's really interesting, actually. But what's her relationship with Trump like? It must be the fact that she's Jewish might help. It could help, but she's a lefty, right?
So Trump doesn't like this. Right. So basically... Oh, he's conflicted. In the, yeah, yeah, yeah. And he did the usual, she's a beautiful woman. He did the usual stuff, right? But briefly, for most of Mexico's history, it has been run by a political organization called the PRI. Yeah. Okay? Which, for Irish audiences, is a bit like Fianna FƔil.
Right.
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Chapter 8: What are the consequences of cartel violence in Mexico?
In the middle is Mexico.
Yeah.
It's a huge country.
Yeah.
As I said, one of the largest economies in the world, 130 million people, which is about half the size of the United States.
Yeah.
In terms of population, well, maybe a little smaller, maybe one third, but it's a huge place. So what you'll see is that constantly she will be negotiating with him. But if the United States goes down this road, of the Monroe Doctrine. What the United States will then be on will be on a collision course with these big Spanish-speaking Latin countries.
Now the irony, and we'll kind of leave it here, is the Monroe Doctrine was conceived as the United States siding with the little guy against the Spanish colonists. So it basically said, Spain is the colonial power interfering with the rights and expectations of Latin American countries. We will kick them out and we will support you in an anti-colonial drive.
But the irony is, that's what the Monroe Doctrine 1823 looked like. The Monroe Doctrine a la... Donald looks like neocolonialism all over again. And that's where the friction point is. But we will leave it, John, on the basis of I hope Mexico do extremely well. Could you imagine the crack in Guadalajara or Mexico City, you know, or down the Chiapas region? Yeah. The Mexicans are football mad.
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