Mexico's crime and the war on drugs

The day was July 2, 2006. Back then I was still living in Monterrey, not so far from the border. A relatively safe city which has the riches neighborhood in the country (San Pedro). Those who came from the DF (Mexico city) were usually shunned and Monterrey flaunted its safety. Back then the election was tight, I myself stood 8 hours in line to cast my vote and thus contribute to keep the populist Andres Manuel Lopez Obrador from office. With a tiny margin the more conservative minded Mexicans succeeded and Felipe Calderon won the election.

A year earlier the US had lifted a ban on selling assault rifles to the civilian population, and crime was rising in Mexico (according to Calderon as a direct consequence of lifting this ban). Mr Calderon launched a campaign against the drug cartels. Murder rates spiraled reaching a body count of 60 thousand. With drug trafficking being harder to achieve the drug organizations turned to kidnapping and extortion.

After 6 years of fighting this particular war, Calderon had still failed to make the necessary reforms to improve the police force. For those unfamiliar with the Mexican police force, there's the Federal police, then state, and then municipal, and there's transit, again federal, state and municipal. This is of course an administrative nightmare. Police are also badly paid, and mostly corrupt.

The population is also quite complacent with corruption at a small level, such that paying in cash instead of getting a ticket is not an uncommon practice. Though the required paradigm shift is unlikely to happen overnight, and with one of the drug lords still making it to the Forbes 500 billionaire list, the government has a daunting task before them.

Then in 2012 Mr. Pena Nieto won the election, bringing back the PRI to power (which ruled for 70 years until Vicente Fox won in 2000). He promised to make the necessary changes to curb violence, and instead of focusing on drugs, focus on other crimes and on improving living conditions. As the economist the economist says in this weeks edition, he's failing.

He's not failing spectacularly because for one, media attention on security has dwindled, and after years of fighting the crime rates have actually dropped. But this trend had started back when Calderon was still president, and I still have to see any major difference on how they address the problem.

Although in didn't support Mr. Pena Nieto while on campaign, and didn't want him as president, I'll agree some of his reforms have been good. Hopefully he'll get the much required energy reform through, and his education reform is already a great achievement (though the teacher's union will still try to oppose it and it will take years before the real benefits can be seen). Still his tax reform is misdirected and his attempt to tax soft drinks will hardly dent obesity.

In the end, with some states within the US making the use of recreational marijuana legal, Mexico must take action. If the government spends resources fighting its production and transport to the us, only for it to be legal across the border, Mexico has better and more important things to do with its money.

Those who oppose drug legalization will say that this won't really reduce the drug traffickers income, and they'd be mostly right since they might get other sources, so it won't threaten their existence. Worse they might, as under Calderon, turn to other crimes. The important thing is, the government can now concentrate on fighting the violent crimes. So we're not at the turning point on which all drugs should be legalized and face the controls of say the pharmaceutical industry, but for marijuana, the time is ripe.

Mr. Obama has already signalized that he won't oppose it within the US as Bush did. Ownership for consumption is already legal in Mexico, and Guatemala has already legalized. It is now the time to pass proper legislation in Mexico, both to improve the police force and pay them adequately, and to legalize marijuana.

Rethinking the debate

Looking at the disaster that has been the US government for the last few days, at how some even refuse to believe on evolution. In Europe extreme right parties exist in every country, despite the evidence that integration has improved things a lot for all of Europe. Leninist Marxist parties exist after the fall of the iron curtain. People still deny climate change, or that it is man made, fight genetically modified organisms even if there's no evidence that they cause any harm. Refuse to vaccinate even if it is clear that the argument for autism being caused by vaccines was false.

There's evidence enough that we don't change our mind when presented with opposing evidence to our opinions. This particular study was carried out using university students on facts presented by misinformation which they had just read, and were unlikely to have any emotional attachment to it. So of course when referring to peoples long held ideological or religious beliefs, to which they have strong emotional attachment, no one will change their mind and presenting evidence will most likely backfire.

Liberals and atheists should be the ones able to reshape the debate.

After 9/11 the response of religious people was to turn more into religion. I remember walking out of church (yes I do attend sometimes out of respect to my catholic family) at a family ceremony because the priest had the guts to blame Islamist terrorism on the "godlessness" of our modern world. So our reaction as atheists was in a way expected, and justified, I was also angry on the face of it all.

Liberals and atheists (with some exceptions) happen to be the only groups who recognize everyone else's right to believe whatever they well damn please (even if Dawkins sometimes would make you think otherwise, he's open to people being religious, as long as they don't impose it on anyone, like their children). If we are not going to be able to change anyone's mind by presenting evidence, well then let's rethink the discussion entirely.

It's not about whether you believe in god, Allah, Yahweh, or the flying spaghetti monster, its about getting a sense of community and being a better human being. So how about we get on with it?

It's also not about whether the historical imperative must move on, or whether previous socialist regimes made mistakes or not. It's about getting everyone a better living standard. We all just want everyone to have better quality of life, so how about we stop the shouting and get on with the job.

Politics won't be easy, but a start might be made if we all agree we want the same stuff. In the end, if I were left to survive on social benefits, maybe I would also support the idea of everyone having a basic salary to meet their basic needs (which I honestly consider a rather idiotic idea, but more on that on other posts, later). So I must in a certain Buddhist way, remove myself from the equation.

It's not whether I'd be better off at this particular moment under a different government. It is about how we empower everyone to pursue their dreams and improve living standards for all inhabitants.

I realize some of this discussions will still go terribly bad, and might backfire. But if we reshape the debate and start talking not about what's wrong with "their" ideas, but about our common goals and how we can get there, the evidence might be better accepted and allow us to get on with the job.

The possibility of a default is a black swan

It has been now 15 days since the US congress failed to agree on a budget. The political brinkmanship has gone on relentlessly though the ball has now gone to the senate and an agreement seems to loom in the horizon. Somewhat unexpectedly, markets remain rather optimistic about the whole thing and have shown a reaction which is way under the expected panic, with the DAX even reaching new records today.

A range of analysts have rightly said that it would probably an anti-climax since expected returns for US debt on the long run are expected to return to 100 cents per dollar, even if there’s a default for a short time. All of them agree that the chicken games being played by American politics are downright stupid bordering on suicidal. Though I am not an economic analysts and my understanding of financial markets is limited at best, I’d recommend caution when expressing the belief that it might not be as terrible as we’d expect.

Much as the Lehman Brothers default back at the beginning of the subprime crisis, I don’t think we can assess all variables at play here. Back then it all started with a real state bubble which had been made worse by bad probabilistic analysis (under the assumption that defaults on mortgages are independent events from each other, much as a throw of the die). What unleashed afterwards rather unexpected, especially when looking at Europe, where the fringe Economies of the monetary union spiraled one after another, requiring bail out money for several rather large economies.

Even after the full extent of the crisis had become more apparent, a few months into 2009 everybody expected the awful crisis to last a few years, not to spiral into a mess that might begin actual recovery by 2014, if the US politicians manage to sort the mess they’ve created. It is as true now as it was back then, we certainly don’t know what would happen if the US defaults even for a short time.

Probably the minute the announcement is made nothing will happen, but much like on technological development, it might be that we overestimate short term changes and underestimate long term ones.

Let us consider one particular scenario as a thought exercise. A US default would certainly make things harsher for the recovery in Europe. This in turn might result in European politicians taking a slightly bolder course and going for the measures which are and have been necessary for a while (like a real fiscal and banking union with an independent central bank, as opposed to the half-cooked monetary union we have). 

The drive to make Europe and European fringe economies more competitive would get a new push, and the lost drive for reform would again be urgent. Even now the EU is getting together with business in England and other countries for some serious red-tape reduction. Under the current situation mostly nothing much would happen. Under the lens of a financial debacle unleashed by the US default, political will might change and the red-tape cutting become a real efficient measure.

Let the huge European economy gather momentum, and its drive in world economics would be huge. Also the Euro would be more reliable as a currency than the dollar. Is the possibility of countries to go for the Euro as a reserve currency instead of the US Dollar really that remote? Even as I write it, it seems extremely unlikely, but how unlikely is it? If the political system in the US fails to improve after a default, and the extreme polarization driven by tea party supporters is not reversed, then the dollar might seem not as safe as previously thought.

Then one of the factors which have kept the imminent default of US debt from being the cataclysm we all expected would be off the table. Then again, a more competitive Europe would drive world demand, especially after the developing economies slow down. A shift from the US to the EU seems rather simple; both cherish the same western values and stand for democracy, the rule of law, and pluralism. Europe, is not, however, the US. Democratic values are different, and the perception of markets and companies is different. 

People in Europe mostly trust their governments, and distrust companies. They also believe in a far more extensive welfare state, and surrender a considerably larger amount of freedom to the government. Europe already has a hefty influence, demonstrated by Christine Lagarde as a head of the IMF even at a time when candidates from third world countries might have had a better insight into what a crisis entails and how it is solved, by having managed a country out of one.

The depth and duration of the ensuing recession notwithstanding the shift of powers would have effects that we cannot really foresee. I have painted a rather rosy picture not wanting any alarmism, and have thus disregarded China’s political influence, or Asia’s in general (depending on how China and India face their particular challenges). I have also not mentioned how Russia could use this to once again ascertain its own place in the world, as it did by cajoling western powers to agree to its own proposal to rid Syria of chemical weapons, without even the threat of military action looming at any time.

My point is not that the world would be extremely different immediately, my point is that we’re extremely bad at forecasting what the world would be like should a particular previously unthinkable disaster happen. Just as a tsunami in Japan has led to a 40% increase in energy costs in Germany, the possible consequences of a default, however short it might be, cannot really be assessed.

The world has changed...

„The world has changed…“ is the ominous phrase that opens the prelude to Peter Jackson’s film version of  Tolkien’s “The Lord of the Rings”. It is true of the fictional middle earth as it nears the end of the third age, but it is also true of our world. In a much faster and bigger way than middle earth our world has changed and will continue to do so. It is up to us to direct this change for the improvement of the human condition and the world.

I remember back when I left my home country to pursue a Master’s degree I was the second in my family to do so. Though graduates in the same field from my generation and university about 10% emigrated, the Germany I arrived into was a Bureaucratic when it came to getting a work permit. Change came swiftly once the “Vorrangsprüfung” (a test requiring a waiting period up to 6 weeks long to assess whether a German or European applicant could fill the position) was dropped for graduates from German universities. 2012 brought the European blue card making it easier for qualified ex-pats to get a work permit, provided they had a job offer. 

Now the European Union embraces 28 full members and the European monetary union has 17 members. Ex-pat get-togethers around the world can gather up to a thousand people with every nationality you can come up with (and several which probably wouldn’t cross your mind). Trade however, features a different story. 

The 2008 crisis has dampened the mood of globalization and of liberal capitalism. It was even thought by some that the rise of state capitalism would spell the end to the age of liberalization and globalization. It won’t, but Brazil, Russia, and China have certainly not pushed for more globalization or liberalization. Politics in Europe have shifted to the left; even if Merkel’s conservative party did get a huge victory last September.

Their slow does show that their growth is not as sustainable as at some point considered, but it might be too early to assess it, and the change slow enough to provoke a baseline shift rather than the stark evidence on which politics is mostly made.  The decision between liberalization and globalization or state capitalism with strong trade regulations should be made on the basis of decades of history and not the last couple of struggling years.

Looking back to the decades before the boom that preceded the sub-prime crisis, history shows that opening new markets and the creation of new and more widely open trade agreements boosted the world’s economy. The removal of capital controls allowed countries to boost exports and trade more freely. Our conclusions should be based on older facts though.

As Nietzsche realized that once you had apostatized from monotheistic religions, going back to the mythology found in Wagnerian operas wasn’t really an option; he broke his friendship with Wagner. So must we realize that socialism or versions or it, are not an option. Since the fall of the USSR and the economic disaster it was in it should be obvious that socialism or state controlled economies do not work.

Attempting to return to those beliefs in a different version is doomed to fail. It is only through understanding and facing our economic reality that we can improve our human condition. Concentrating power in the hands of a government with little accountability is not the way to go.

Liberalism and why it matters

Back in the day the struggle for civil rights was important and the generation of our parents struggled to attain many of the things we take for gratned (depending on which country we live in). The existing "liberal" parties have in a way forgotten the liberal dream. In a way both liberals and social democrats are to blame.

We have all come to understand business and social interests under the lense of a rather Marxist dialectic. As a struggle of opposites which we try to synthethise. This is a particularly dangerous falacy, specialy since more often than not individual rights go sacrificed for the "common good". Though Americans have proven that the final statement in the universal declaration of human rights is of the utmost importance, namely that no interpretation of the rights therein stated should lead to the violation of the rights of others.

A very important requirement for the existence of a liberal democracy is the rule of law. Another important predisposition of liberal thought is that we are all equal under the law. We should all have the possibility to pursue our dreams and aspirations and we are also each responsible for our mistakes, and should thus be held accountable.

Under no interpretation of the previous statement does one conclude that since I'm better off I should pay for you. Yes, you have the right not to starve to death, and be treated with dignity, but that does not translate to the right of having a TV and enough money to go on vacations at my expense. Nor should I be able to live at anyone's expense.

The definition of dignity might vary depending on where I stand, and speciall if I were the one who'd receive support. In such a case I refer to the statement that no interpretation of my righs should lead to the violation of your rights. So there's a caveat to the freedom to pursue your dreams, and that is that you alone are responsible for your failure.

That's where our perception of business is damaging. Specially since the same perception of a yuxtaposition of interests permeates the way business views social problems. So business sees social development as a goal for the state and undermining for business (not always but often enough), and the more "socially" oritented view business as a provider of resources for solving social problems. One that should preferably be squeezed dry.

Nothing further from the truth. It is the expansion of liberal economic princpiles and globalization which have given us the age of abundance in which we live. We now have the resources to fund a team of expensive physicists to find the Higg's boson and in the same decade cut world poverty by half.

Liberalism doesn't seek to reduce taxes, but rather sets the conditions in which taxation can be mantained at a lower rate by limiting the scope of what government does and reducing bureacracy. Any party which forgets this will fail, and as well it should. The Republicans have forgotten this to embrace more radical tea party conservatives, the German FDP squandered their popularity to promot tax reduction without ever doing anything for individual freedoms, or to curb bureacracy, increase government transparency, or rather without ever doing anything else much.

What liberalism needs is a new generation of leaders who are willing to state the dream the way Martin Luther King did. Who realize that the struggle for individual freedom is never over, and that it is important for the improvement of society, and understand what role government needs to play. The fact that guaranteeing individual freedoms under the rule of law on the basis of liberalism happens to be better for business should be colateral for liberal parties. Specially if the electorate is used to the entitlements of the wellfare state.

Constitutional Engineering (and the American Shutdown)

There's a lot going on about it on the internet, but a short background. The US government has, as of October 1st, reduced all operations to the necessary minimum because republicans in congress have held the budget approval hostage to reppeal Obamacare, or to make sure it dies. As if this were not rather irresponsible and spoke against all common sense, the debt ceiling has to be raised by October 17th of the American Government will default.

That this borders in lunacy and the disastrous consequences of such a default has been better exposed by others. My point here is that this is a result of the electoral system in the US, hence the title constitutional engineering. In his book "Comparative Constitutional Engineering" Giovanni Sartori made the perfect analysis of the American system. It's crap, but it works because people want it to and work for it to work.

As of this week I think it is safe to say, it does not work anymore. The absolute majority system, with some specifics of how districts lines are drawn has pushed the politicians to the extreme. This has allowed the rise of the Tea Party, and encourages the politicians to cater to extreme audiences. A suggestion to redraw district lines has been mentioned by the economist this week.

I think proportional representation would do far more in shorter time. It would entirely disrupt the two party system and allow other voices to come into government. This would of course require some reforms in the way campaigns are funded, and politicians in the US will also never pass a law that most certainly would see a huge part of them fired. Allowing smaller parties in government and the possibility of a hung parliament will also force the parties to creat coalitions which will make compromise necessary to form government.

I generally dislike proportional representation, specially if you see Germany's current politics. They're based entirely on opinion polls after which the parties build a half cooked program with snippets of ideas from every field, as long as the electorate will give them a couple of votes. Which is why I think Germay would profit from absolute majority.

Mexico on the other hand has a strange mixture of both, which most people are unable to understand and allows/encourages parties to create lists with people who're not even politicians. Mexico would probably, as Sartori states, profit from a second electoral round, but it is still quite governable as Mr. Peña has shown passing astound reforms which were long overdue. Still for the PAN it was nearly impossible to pass reforms because the PRI refused to cooperate. A second round would give the ruling party a higher number of seats which would thus allow parties other than the PRI to get reforms through when they have the government.

France has, however, demonstrated that the second round is no guarantee of good government. That gave them twice Sarkozy and now Hollande. So the caveat is, none of the possibilites are perfect, but if we want democracy to work more smoothly, electoral reforms need to become more likely, to reflect the dynamics which each system starts. So Germany should try absolute majority for a few decades, the US would profit from proportional representation, and Mexico could benefit from a second round, and changes to the systems should become common, to fine tune it to the specific needs of the country. General overhauls after a generation or two strongly recommended.

The vatican bank

As many things that I dislike about religion, the bank has been a closed institution without open information of what business it does, how profitable it is, how many assets it has so on and so forth. The problem is, as an institution much like the "holy" see, it has remained untouched by criticism. While going over the changes initiated by pope Francis, I think this is the most ominous of things to come, and here's why.

Though he did say the church "should focus less on homosexual marriage and contraception" he never said contraception or homosexual relationships were no longer sinful. He happens to be good at diplomacy. Since I myself struggled (and oftentimes still do) to abandon the prejudices instilled through my catholic upringing (more on that on a later post), I can imagine catholics rebelling against a more open statement, specially priests. Still, without an outright statement it has only moderate significance.

Yes, he has also called a group of archbishops to reform the church. Many of them not european. This is a sign of absolutely nothing though, priests will be priests, and there's a reason why change has been slow to come to any religious institution. The actual reforms might or might not bring about change, and though the calling of this particular council is a good sign, it is only a sign of a council being called, and not equivalent to reform.

Opening a church owned institution to public scrutiny, that is momentous. One of the biggest problems we atheists have with organized religion is not whether people should believe in god or not, but rather that belief in god and the institutions it supports should be as open to criticism as any other idea out ther. Specially institutions supported by believers should be accountable for their actions.

They have seldom been, as previous scandals about child abuse shows, decades can go by without anyone actually attacking the church despite the crimes being commited. Very important though, the same is also true of other religions so my addressing the catholics here is because change is happening there. Now we can all read the financial report of the bank, which has assets of  approx. 5 billion euros and an income of 81 million euros for 2012.

Pope Francis has made me optimistic that the overall influence of the catholic church on the world might improve, and being more transparent about their business is the best sign yet.