>> correct man. i'm a policy analyst in latin america at cato center for liberty and prosperity.

try to leak his vision led by a a few libertarians as the editors of the economist. recently they published this article which tom just let me know he authored a couple of weeks ago. the recent -- and a warrant drug's and central america have increased people's awareness of the failure of prohibition and the need to tackle the so-called drug rovlin using a different approach. tom argues that an economic perspective can help us to understand how the illicit drug industry and what's wrong with the current policies. he was after all leading free-market cons from university chicago using simple ruse of supply and demand who forcefully pointed out the fragility of

prohibition. this approach was echoed by none other than the one of latin america's most renowned drug warriors mexican president felipe aycock around. it's to acknowledge that there are of its own drug holidays. by the end of his term in 2012 he told "the wall street journal" if the price of drugs goes up thanks largely to interdiction efforts and that demands the same you increase profits so you are creating more incentives for participants in the market. he went on to say that it's clearly a case for an economic system which the more successful you are the more -- you are creating. this is precisely what the warren truck has been doing for over 40 years radius, wainright writes prohibition has german up the price of cultural parties to produce violence.

and what a formidable industry drug trafficking has become. drug cartels have shown -- entrepreneurship to satisfy over quarter and nine customers worldwide. in this regard economics -- "narconomics" is a good read for understanding why this is likely to fail pretty fun a particular interesting to read how cartels are an integrated business model for heroin for example controlling the job of the way from mexico to its distribution in the streets of the united states. however when it comes to good cocaine trafficking organizations preferred to specialize in one part of the business but in choosing their business model cartels are applying the finance of another chicago boy who summoned the work of the nature of the firm explains the conditions under which companies choose to --

instead of handling it internally. i will let him explain the findings of his research with took him from bolivia to the gang invested regions of el salvador to colorado. we will also hear from one of washington's leading thinkers whose 2005 book it was set on how commerce is changing and changing politics and capturing -- let me introduce wainwright. he is the editor of the economist and until 2003 he was the mexico peer achieve for the magazine covering mexico central america and the caribbean as well as part of south american united states united states border region. he is a venture but are to the times guardian and later he revealed. he has also been a commentator on "cnn" and the bbc npr among

others. wainwright has a first-class -- politics and economics from oxford university. please help me welcome tom wainwright. [applause] >> thanks a lot juan-carlos and thank you for being here. it's a great privilege to be here and especially great to be sharing a platform with one of the great authorities on the subject and indeed many other subjects. i hear we have got practically a full house today and it's good to so -- see so many people here but i'm a bit concerned there aren't enough people in washington. i should probably start by explaining myself and explaining how i came to write this rather unusual book. it began when i got can send to mexico at the economist in 2010 and i thought i was going to be writing about just ordinary

subjects, radar business whether the oil industry or two key lower tourism in this kind of stuff. but this was 2010 and is the drug were riots. this was a time when the mexico the murder rate was higher link to playing in radio for just two years. i found this was the subject of people wanting to talk about. interviews at parties or business roundtables or whatever and quickly found a subject very often returned to the subject of the drug business so i started writing more about it than i'd expected. i got into this habit of doing business stories one weekend drug stories for next week and the more i did that to the more i came to see that actually they weren't as different as you might think and i began to wonder if the drug story was in fact a big business and economic story that we had been missing. i started to try and think about it. i'll give an example.

this was after i got there in 2010, there is this extraordinary case with the mexican government had a cache of marijuana near tijuana the biggest seizure in mexico city. more than 100 times that they found in a warehouse on the edge of the city. they got all the merra one of them packet and they made it gigantic on fire. it was an incredible sight to the police were there to make sure no one was standing downwind of this big fire because it's like a 100-ton joint. he was smoldering away and i was marveling at this and wondering what this meant for organized crime. it was widely opposed at the time that this represented a blow against organized crime since half a billion dollars, how much this particular seizure was valued at. i gave it some thought and seem to me plausibly hide. there aren't many companies in the world that can withstand the shock of the half a billion

dollars. the cartel is big but not that big. i started digging into barnes tried to look at how this estimate that come about. it was fairly straightforward and it sounds sensible. i figured out the rough retail price of marijuana in states because that's where the drugs were heading and i conservatively estimate it was worth $5 a-gram in united states. it sounds plausible at first but if you give it a moments thought and applied to any other business you can see how insane this is. imagine if he tried to do this with another product like coffee for instance and you said okay the retail price of a cup of coffee in the united states at starbucks is three or $4 or something like that in that cup you get 2 grams of coffee so maybe coffee costs a couple of dollars per gram. that means the kilo was seized in mexico for $2000 is not the

case pretty mentioned in to calculate the price of a cow accusing the price at the stake in washington d.c.. you would get a weird figure. i did a rough calculation of what i thought the maurice what what -- marijuana seizure should be worth using wholesale prices in mexico which needless to say is lower. those 100 tons are probably worth a bit less than $10 million rather than the 500 million we were told. this kind of shocked me and it made me think if in fact what we are doing on the supply-side of the business is 98% less effective than we believe then what else are we getting wrong and this is when i started to think seriously about looking at the business as a business rather than a war. in so doing i identified it more closely resembled as this has been a may think in various ways

and i spell out in the book for instance taking part in things like franchising. that's the way it spread quickly in mexico. things like public relations and i was told while i was in war as someone told me to avoid going outside after quarter to six because that they said was a time when the cartel times their assassinations to lead the 6:00 bulletins. we are seeing now with sites like silk road the cartel and dealers in the rich world are experienced -- experimenting with e-commerce. a lady sat in the book and i will kind of highlight a couple. i know -- i realize we are short on time but the one of the ones that i thought that was the most interesting important was the question of how it seems to me we very often focus very much on supply-side of this business rather than the demand side. to give an example of this look at the cane business. i went to bolivia to look at the

cane business they are paid all of the world's cocaine originates in bolivia colombia and peru that i went down there to have a look at what's going on and the cocaine business represents a particular puzzle for economist because the idea is fairly straightforward. the idea is to cut the supply because if you restrict supply and demand remains constant you would expect price to increase. the price goes up you expect people to consume less of it and yet that doesn't seem to be what has happened. we look back over the past couple of decades efforts to cut in supply have been successful. governments of those three countries of bolivia colombia and peru have managed to eradicate an area the same size, 14 times the size of manhattan. this is an impressive thing.

they have to do this while watching out for landmines while being shot at. it's an incredible feat that they do and yet for all this you look at the price of cocaine in the real tale -- retail price is hardly budged. you go back a couple of decades all that time it's remained around $150 per gram. it hasn't changed much so this is something of a puzzle. how has this happened? had went there and have a look and there are couple of things to bear in mind. one thing that seems to me is happening in south america is you see eight -- effective you would like to it's important to make that walmart is not accused of any wrongdoing but you do see something similar to what people sometimes accuse walmart of doing which is acting as a monopoly buyer of some these products. the idea is if you picture regular market is something like apple the idea is in some of those markets walmart is a dominant higher that even if

they -- are supplied and you expect farmers to raise their price walmart has such a dominant position is able to say sorry guys where the main buyer around here. where going to set the price and we are not going to go any higher producing something similar similar is happening in some parts of south america in the cocaine business. you find some areas where you have one cartel it could be a mexican cartel or colombia which has effectively a monopoly buying of the cook will leave. even if supply is interrupted that's the price they continue to pay so it's not that they have no effect at all. they're affecting the wrong people rather than affecting the cartels are the consumers in the united states or europe. there are affecting the farmers to grow the stuff and really the people who are probably least interested in harming the regular farmers who exist

sometimes on a dollar a day and those are the people who seem to be bearing the brunt of all these exercises. the second on the supply business the economics suggests that even if you were able to increase the price of a cocoa leaf which is extremely difficult even if you were able to increase that there's a reason to believe without much of an impact on the retail price in the rich world. to explain how this happened i will give you a few numbers. ..

>> there are two big gangs in central america based in el salvador 18th street gang, and i went to see the head of the a street gang carr close on the sunset of al salvador and his problem is a serious one. if you picture these group, let's give you an idea of the size of them. these two groups together throughout central america to have 70,000 members so just a comparison sake that's the number of people employed by general motorses in the united states so a fairly big organization. and managing is difficult but not at least because he's in prison. but organized crime groups in particular have two unique problems that effect them. one is that, of course, they have a very, very rapid turnover of their members of staff, and

possibly due to high rate of violence in the world and those murdered are often arrested and there's an example that i read from the business of trafficking -- from the caribbean to the u.k. about one and four of the mules on that route get arrested. and i was thinking imagine trying to run a business. imagine trying to run a newspaper or think tank or any other business in which a course of your staff had to be replaced with every interaction you made it was a real problem. offing this problem is compounded bit fact that organized criminal groups can't just appetize for new people. place an ad in the people and linkedin. getting new people is a real problem for them. but fortunately for them, we've come up with a pest solution to this, and we call it prison. thises place where we helpfully get together unemployed young men lock there many or for years. in this jail i visited if you

weren't a member of the carlos gang when you went in then you were by the time you left, and again and again we see examples of prisons used as these universities of crime and thoughts of you watching narco on netflix introduced cocaine to the united states, and his cocaine trafficking career began when by chance he was put in a jail cell in connecticut with a guy named george yen, and it was a perfect match. he was in there for trafficking marijuana by plane. carlos had contacts in columbia and rest is history they traffic cocaine in by plane and america got its addiction. this is how prisons help with the resource problem. so i thought this was interesting because it helps cartel to recruit through jails, but also because i think it risks having quite a big impact they can use violence.

if you think about it, a gang like carlos gang is far more likely to send its employees out to kill and be killed. if it's easy for them to replace them. and this test this idea i decided to look at another part of the world where decision vatter different about and i look to a study done in europe for the european commission few years ago. really interesting study of what happens when had cocaine deals go wrong. and it's this great study where they look at really big cocaine deals worth each one 20 kilo some several tons they were talking about multimillion dollar deals. and they looked at the way in which they go wrong sometimes hilarious one went wrong because they were facts to the young number. another went wrong because a consignment of cocaine meant to be picked up from a hole of the ship but diver meant to pick it up got seasick and had to call it off. you would expect, you know, watching, you know, if you watch narc or breaking bad you want

expect to be punished harshly and revenge to be taken. yet what that paper was found in two-thirds of those cases, the problem which also was worth millions of dollars with resolved without the use of violence. and what this paper concluded in europe, netherlands cost of replacing member of staff and finding new contact if you burn or particular contact, was so high that more often than not for the organized crime group in general it would make sense to resolve without revolving violence. markets in el salvador easy to recruit people from prison has a organized group don't need to worry too much about how they treat their employees. if you have fewer people to prison in the first place and running them better then cartels face a higher risk of hiring people and less likely to use violence. anyway, i think i'm just about coming to the end of my

allocated slot so i'll leave it there. but lots more to be discussed and i look forward to all of your questions. thank you. [applause] >> thank you, tom. >> our next speaker, he'ses distinguished fellow of carnegie endowment for peace. colony and contradict or tore editor to the atlantic. he's also the host of producer of effect, a weekly television program on international affairs that airs throughout americas. niem editor in chief for 40 years, and he's author eve many psychological and more than ten books on international economics and politics. more recent bookened of power, a "new york times" good seller was selected by washington post and financial times as well as best books of the year. he is also the author of elicit.

niem in the previous -- i might add. director of venezuela central bank and ticketed director of the war bank. also a corps. member of philanthropic organization with masters and ph.d. from the the massachusetts of technologies. help me welcome jose niem. [applause] >> thank you very much. and i read almost everything, i think that is published on subject of trafficking and elicit trafficking drugs all kinds. i have to tell you this is one of the best books i have read in years, and i strongly recommend it. it is first because it breaks one of the patterns, one and these thing, that is those that know don't write books, and those that write are very often don't know what they're talking about. [laughter]

tom is a reporter and he's a thinker and that is a rare combination of thinkers, they tend to stay at home and meditate and reporters just go and report and that's it. he does more than that. he reports, he observes, he collects data, and then he's able to put it in a context that has a framework that is larger than just reporting. so -- other thing that makes this book unique is that the debate about drug, drug trafficking has been dominated by law enforcement, by doctors, physicians, lawyers, and the like. more simply, we have -- we welcome arrival of the economy to the conversation. people that try to say well, afterall these are markets. why don't we then use some of the tools that we rely on to understand market and framework

try to -- do our better job on dealing with these. which had is a scourge and it is a threat. and we haven't had something like this book that essentially takes all of the common -- if you look at the table of contents it looks -- it reads alike the sea level of a course at a harvard business school or any of the business schools, it's an nba kind of thing and he talks about human reare source management many and outsourcing, and corporate social responsibility and you know. he goes down the item, the subject that are normally talked into business schools and he said let's look how cartels use these things and use that to come o up with a good idea about what to do with these. i think his presentation was very revealing on some of the distortions, self-inflicted wounds created by the were on drugs.

this lodge preface is my way of setting the stage to criticize the book. it is a very good book but more fun for you and more intellectual hadly interesting and entbaijinging i tell you some of the things about the book. that i think are worth debating. interesting, if you look at the index there are three words that you will not find. one is money, the second is finance. and the third is laundering like as of money laundering. he, of course, talks about that. but i would have loved to have a chapter finance. you know, how do these people manage their money? and by that, i mean not just financially but lodgisticly we're talking about containers full of dollar bills. what do you do with that? you are somewhere in mexico, you

receive a container and container is full of, you know, files and piles of cash. what do you do with that? well you try to launder it. you try to inject it into the form of physical system and make it more usable and you pay a fee for that. and that is side industry connected to the vertical integration of the drug industry that is very lucrative, important, and it is very sophisticated. in recent years, that industry has had two major disruptions. one is osama bin laden and the second is from wall street. osama bin laden distortion of financial markets gain after 9/11 and it became clear that one of the main tools to do the war on terror was to change the money. so go after the money, became an important strategy for those -- for people fighting.

you know, if you understand with sources of funding of the terrorist networks, you can get to them. so they created a very significant -- laundering regime in the world that created all sorts of conditions, restrictions and requirements for bank and financial institutions and how to deal with money and money transfers and moving money around the world. and that, of course, had as a collateral damage the not for traffic launders and wanted last thing, because if you're running a broker sale last thing you want to do is have also the problem of dealing with antiterrorist forces in the world. you have a drug enforcement administration and local politician. you don't want to bring them in. so there are very important material incentives to keep a distance from traffickers and terrorists.

but that created then a very important new challenge for people in the cartels or that were servicing cartels with money laundering operation os but they have another disruption that came in the form of financial drivety. there's instruments available that started to emerge in the 90s and became quite significant later years. that is very sophisticated financial instrument that were suddenly available for the cartels that, you know, is not that they solve the problem, but they created new options if you wanted to launder money. so that's -- one of the points that i wanted to raise. the other that is not in the book is -- what has to do with lobbying. tom has a @onderful, wonderful, very engaging chapter on

corporate social responsibility. and how if you run a cartel, you better spend some money buying the goodwill of the communities in which you operate, in which you become seen as a terrible killer, but also someone that can, you know, build -- you know soccer finance soccer theme and build a sports stadium and fund churches and gives money away to friends and families. you know, we have seen, for example, their reactions when pablo was killed. many came out and lamenting because or cartel were important donors to the company. so it makes sense that or for social responsibility which is essentially making a financial and all kinds of effort to gain the trust and sympathy, and

support of the community, it's something that corporations do. and cartels do. but what else do highly regulated corporations around the world absolutely do? they lobby government. they influence their systems. so these are one of the most regulated industries in the world, in fact, it's so regulated it that it's prohibited. but at the same time, it is one of the most lucrative cash rates operation in the world. so why not assume that like electricity companies and banks and telephone companies and all kinds of, you know, oil companies, they all spend a chunk of their revenues in they invest it in influencing government, in influencing

regulators, regulator os and trying to steer their system in their favor. so why not assume that drug cartels will do exactly the same? they do. and that is why question see their presence in elections. that's why we see you know, drug in big time, politics, everywhere. that is why we see regulators that are either err or bride or that is another important area that has larger consequences that done the damage, that drugs do to the users. in fact, you could argue that the drug -- drug use effects of course effect the users. and it's harmful to their health.

but you could also argue that it's hard for the democracy, society that those of us who do drugs are not engaging in these things are suffering consequences in the way that it is taught. because this is starting democracies were interfering in politics, corrupting governments, and it's creating all kinds of conditions that affect all of us. so understanding that from these perspective is very important and that is one of also the useful contributions of tom and his book. thank you very much. [applause] >> want to say something? >> yeah, i can respond to that or take questions. very quick -- >> just very quickly i'd like to hear other people's questions. but i think first of all he says is right money land ergs is something that could be or more on and second edition of the

book then that could be some more in that. in the meantime i can advertise the great book available called elicit by moises, that covers this stuff very, very well. on the lobbying, i thinking that is a very, very important part it have. and i cover some of that in the chapter in which the way cartel is assuring like ordinary companieses move to companies like -- countries in central america where lower wages in mexico, and so cartels look the sinaloa cartel and guatemala and honduras, and i think lobbying is part of that really. i think, you know, whether the expression republican and expression comes from fact that the mernl fruit company were so

easily able to lobby the government there that people said actually these companies are the ones that really run the place. it is literally banana republic. and now you're seeing something similar. drug cartels are finding that they in the same way are able to lobby some of these governments or very easily because the institutional capacity in these countries is really or very low in somes cases. some of them make mexico look like a strong state by comparison. so you do see a lot of this lobbying and i think really the, you know, name that cartels use for lobbying is corruption. that's really what they're doing when they corrupt people. but sorry -- over to you. do go ahead had. >> that's okay. >> don reviewed in "the wall street journal" you want to check that too. we're going to open the floor for questions. please raise your hands. wait to be called on. and identify yourself, and keep it short.

other than that we're going to start over here. >> wait for the mic. >> good afternoon thank you for your time and your insight, big fan of all of your work and nrp interview you did. i'm david medina finishing up my masters at gw from imaging columbia so i've seen a lot of this firsthand growing up and i've seen it on streets of the united states are. my question to you, to the both of you actually is what type of business are are you seeing at the corporate levels of these contemporary cartel and organize od criminal groups? are are you seeing nba, master or o ph.d., high level of education in order to create these sophisticated networks of trafficking and laundering?

>> i'll go first. question do you find cartel people with mba? i remember one trafficker i can't remember who he was but one mexican trafficker as you know they have nicknames one was known at eli because he was really with a high level of education. but generally not. the way that they work is pretty sophisticated, though. the kind of tricks of the trade that they've learned mimic those of ordinary had successful businesses. i although i make thesage gist in the book with ordinary film like wal-mart. amazon.com and so on. i don't get that they're looking at firms like that and saying let's do what they do. but i think that same kind of business logic has krifn them to the same strategy so that's how the mechanism works.

sorry i lost my train of thought. another part to your question i think -- i suppose it's the logic of the market. what makes company successful is what makes a cartel successful so i suppose that's why you find successful cartels are ones that mimic tactic of successful firms. [inaudible] >> quickly there are two generations i think one needs to understand. we're the visionary and pablo was one. he was the one -- lia that tom mentioned. these are people that were early on. these weren't people that understood sooner than anybody else, opportunities created by globalization and technology and open markets. and they created very sophisticated business operation os without a lot of straining. it is essential entrepreneurs,

buzz they were visionary. then what happened, especially mexico in recent years when tom was there it was that the war against cartels essentially hit all of the leaders and the power was transferred, was fragmented to a second, thursday generation to second and third layers of the u hierarchy there, and new guys are far more crazy, far more operational, and so there's deterioration because there's a fragmentation of the big cartels usually break up in many mini cartels run many leaders far more limited in their vision and skills and far or more violent in that strategic. so in terms of skill and higher

education requirements that you mentioned, they may not have it, but they hire them. they have pretty good lawyers. they usually have pretty good people on technology and communications. they are able when i did elicit i interviewed some of the people in the -- trying to get them and they complain that they had more sophisticated encryption technologies and a i.t. technologies and that the use of internet was far advanced, more advanced, more modern, sophisticated than what the law enforcement or organizations had. they also very good money people. but again these are -- you may say they're not members of the cartel. they have just service providers. >> here. >> hi i'm guzman columbian, also a masters student.

so there seems to be a moment of catharsis when a latin america president becomes ex-president where a secretary general of the oes so they see the light and there we need to work on this, and this becomes my life resolve now. what's your comment on that? why is acting on public servants more active on this issue? >> you're talking about issue of that. so we're starting to see a for more sitting presidents speaking out more about this. i mean, recently you've had the example of guatemala no longer such a great example perhaps in what happened to him. but he was a -- president in office who very clearly said that legalization is what we need to do. and people or where are stunned by that. you know, he run on this campaign of or daughter, got into office. he said look i spent my career

in the armed it forces destroying these fields of opiums to see them grow back next season. changing, we need to change this. you see those in columbia or much more about important example i think. and handful of others. otherotherwise, why? ting that reason really is that the penalties of people in office you talk about this on the whole -- whole to invite this important allies such as the united states and you're probably not going to get very far. what is i think chaiing now i think, actually and this seems to be changes things a lot in which the way united states is so itself experimenting with legalization in those four states of legalized marijuana. i think that has gfn a sort of license if you like to other o countrieses to go ahead and be more explicit about this. i think if it hadn't been for the great experiment with marijuana here, it would both

medical marijuana and now recreational sort it would harder for a country like uruguay so guy at the state department with the responsibility for this stuff, what had he says about jam ka says want it is to legalize, he says you know, it's their issue, convention has to be interpreted and very, very different message than ten, five years ago. so i think that's opened up a big, big space and we may, you're right that does seem to be this incredible moment where you leave this and suddenly you understand. but i think actually we may see a change had on that front and see more sitting presidents and prime ministers speaking outs and being, you know, pushing issue a bit harder. >> i think tom is exactly right. essentially the answer, short answer to your question edwin is that the prohibition to smoke

led to the prohibition to think. for, you know, prohibition regime created a -- culture and narrative that essentially said, if you're not for prohibition you must be in favor of total illegalization that means in the pocket of the traffickers or o soft in crime, or you are not to be trusted as a leader i'm talking about politicians. i was a member of a -- commission called the commission for drunk and dmax in latin america that included presidents from brazil to mexico, from columbia, from chile and people like me, there were 1e8 18 of us and we spent years talking to everybody. law enforcement types, and doctors and all kinds of people and we came out with a strong is report legalizing legalization of marin so we felt that it was

a need to create a space between prohibition and partly illegalization. i don't think anybody seriously can argue that everything, every drug for everyone at every time should be legalized. that would be, you know, an extreme position that i don't think is viable nor sense. but i do think that there are spaces between prohibition and total legalization the need to be explored and then see what happens, and use the result of that social experiment to adjust policy which i think it is also what is -- tom suggests in his piece, cover story and one needs to create and the purpose also was to create a safe space for politicians. to talk openly about the possibility of not being for prohibition. and you know, because if you are a politician, somewhere, and you know i interviewed a lot of people in congress here, and

they all agreed that the war on drugs you have these very strange situation in which everybody agreed that war on drugs was failing. but it could not be change haded. which was a very unamerican kind of thing because you be this is the can to country pragmatic and you know, yes, yes -- senators will tell you yes this thing is not working but we cannot change it because politics are not there. well some said that politics have moved. and now it is safer for politicians to express doubt about prohibition. >> yep. we're going to have one question over there. >> thank you. my name is lina graduate student at the security studies program in georgetown also columbian. [laughter] >> i quite the eye for columbia. >> i was wondering an hear your

thoughts on how do you see similarities between illegal enterprise and drug or cartels under the lens of other nonstate actors particularly insurgentties, thank you. >> sorry i just want to make sure i understand the exactly. how i see -- the similarities between cartel and companies but under the leeps lens of i didn't get at what you're getting at. you trace similarities between legal enterprises and drug cartels. how do you -- see this same relation or yeah -- between legal enterprise and cartel. >> i think it is a good example

partly because they're heavily involved in drug business themselves. i mean, you can see to give another example that has been in the news a lot recently so-called islamic state has taken on some of the functions of ordinary companies. it supposedly is involved in a big way in the oil industry they've been trading in equities stolen from places like iraq. so they're using ordinary business tactics in that way. trying to think of other examples. people often talk about the way in which islamist groups have used social media in which way it is that mimic companieses in professional looking ways to try to gather support online through source like twitter and facebook and so on. and there's something almost company-like about the way that some of them organize themselves and do their recruiting so i suppose a subject for, you know, follow-up book. but the idea of using business

analysis to look at nonconventional types of organization might be a way to apply that too. i don't feel i know enough about the islamism to push it much further but i imagine you can extend in a similar way, yeah. >> i wanted to pick on what you originally said. do you believe that old drugs should be legalizeized or concern about that that shouldn't be legalized? >> that's a really good question and tried to get to the bottom of in the recent story that you mentioned. >> position of the economist and that probably all mainstream drugses which they're better if they were regulated by doctors rather than bit mafia. there's a -- [laughter] [applause] >> i one place in america where it's safe to say that is the cato institute. probably preaching to converted here but important to make the

case when you talk about legalization you're not talking about about free for all and legalized it marijuana in switzerland it is a restricted form of legalization run by doctors. i think, though, it is worth sort of making clear that when you really get down to the detail of legalizing and regulating a drug even like marijuana which is relatively safe one, you do have to make quite difficult decisions about what you're going to prohibit, just to give a noncontroversial example which i except libertarians would agree with. most people i think would agree with continuing prohibition of marijuana for children. right? whether it's under 18, 21 or whatever you like. there's also a -- now that marijuana is being legalized it there are questions asked about whether for instance, edible should be legal or concentrate should be legal. and this -- does raise an interesting question for me because as far

as i'm concerned, one of the big reasons for legalizing drugs, marijuana or cocaine or anything else is that you take the market away from organized crime, and in the case of the edibles market, you're not really doing that. you are creating new market that didn't really exist before the sinaloa cartel don't sell brownies and they have done what market does, they have a whole range of very good appealing products, drink, sweets, you name it. and i think this is a worry actually. and within the the legalization is movement snow, i think there's a political argument brewing because argument for legalization is made of this quite strange alliance of, you know, real libertarian and real conservatives a lot of the people want to legalize drugs like police officers, president see it as a effect way of

regulating them but not everybody's right to do whatever they like with their body. but a way of getting drugs under control and a question of arguing that legalization is better than prohibition these two sides can get along quite happily. but when you come down to a situation like in colorado and discussing should you tax it quite high to diswade kumtion and concentrate, two sides allied are going to find themselves on on site sides of the argument and don't know what will happen and seems as, though, in colorado it's relatively libertarian. uruguay it is and in places like canada i think are probably going to set rules one day we're going to follow ourself os in u.k. and elsewhere. so that's -- the interesting question for me. how many have you been in the shop in colorado, cameras are

not on you. all right. you want to follow-up on that. which substances do you think should be legal? >> again, i think that question -- that is exact question that we shouldn't be asking. i think that when we say legal or not legal we need to think about details that they're releasing details here but has to do with how, and who and systems is what tom said. you know, there are many, many questions that need to be answered before answering one. could easily say marijuana is relatively easy. but what happens with crack? and u how do you do that? are you really ready to legalize crack and how do you do that and district that and who is in charge -- which doctors are going to be in charge of prescribing crack-cocaine? so you know the question that is

something that we fell hard in the commission. question should never be legalize or or not legalize that moldses the conversation that inhibits ability of the society to experiment and learn to find middle ground to understand what can be tested and tried, perhaps adjusted. and so you know, i'll stay away from generic sweeping, everything what is to be legalized all of the time. won't work. >> all right. we're going to continue gentleman here. >> and then you -- yeah. >> all right bruce center for regulate effectiveness. discussion so far today has focused on illegal agricultural substanceses. but the federal government may now be embarking on a very is different sort of experiment making a popular legal agricultural substance illegal.

which would be menthol flavored cigarettes a ban of those has been enacted in some places around the world and currently under consideration in the u.s. could you both please speculate on how you think the markets, elicit market and so forth would respond in event of such a ban? >> good question. i suppose -- you would expect when you buy something, when you ban something, you will immediately create an illegal market for it of some sort. menthol cigarettes are banned where i come from in europe they've been banned for a while along with any other flavor of cigarettes, and as far as i know, there actually hasn't been explosion in, you know, e leels menthol cigarettes it seems to be something that is phased out straightforwardly. the idea behind the ban is that flavored diswrets more likely to appeal to children.

and a similar debate in os trail >> australia a ban on vodka jelly thing it is that you can buy . nice, appeal to children but not for children. and i feel you know herety realize i put company from those at cato but i'm in favor of legalizing drugs, but i think once legalized part of the benefits of legalization it gives you ability to sort of shape exactly what had kind of market you have, and flavored cigarettes, sweets with alcohol in them, those are things that i -- you know, i don't particularly have a civil liberty problem with those being banned. and i'll tell you what does seem old to me at the moment is that the fact in the the united states in many ways, the cigarette industry is facing stronger restrictions than marijuana industry.

at least in business of appetizing. if you go to colorado you see more ads for marijuana than you do for tobacco because this agreement that the tobacco companies reached a decade or so ago that they would stop their appetizing. marijuana companies on the other hand have their -- constitutional right to free speech and they use it. so it is an odd sort of -- contrast there in which this, you know, new drug that is banned in many states, marijuana, more likely regulated it in colorado than tobacco even and you get cannabis gummy bears in colorado and may not have menthol cigarettes so there's a weird inconsistency there. but i haven't been there recently myself, i'm kind of -- edging towards the more conservative side eve legalizing spectrum if you like. that's why where i find myself so on flavored cigarettes don't bother me. so i can see there's a strong

argument on the other side and i respect it. but i think marijuana regulators are probably going to start looking at things like cigarette and alcohol and say you know, if we do have cigarettes why not do that to marijuana? [inaudible] >> thank you, i'm joe with the state department and i spent about 20 years in latin america great time in ecuador, columbia and i wanted to make one observation that is that the current -- prohibition paradigm created two industry and, of course, is the elicit one. but the other is the -- the police prison enforcement side of that industry that depends on

the other if you move towards more of a legalization that would be pushed back i believe from every -- everybody who depends on massive amounts of u.s. and other assistance to support their police agencies. you have a fore profit prison industry in the united states that depends on the supply of -- of people being arrested for drugs for consuming drugs. what is your comment on that, the fact that these parallel industries that depend on each other benefit from the stat is us quo and would both of them push back against any legalization? >> that's a good point and one of the air peeling things to people about legalization is that it could have the potential to reduce the prison population

in this country is extraordinarily high. it's one of the things wherever we write about in economist when we do a chart we need a broken to accommodate the united states. it's really unique in this respect. but you're right, for the people who run prisons perhaps that might be not so appealing. one thing that interested me when i was in colorado just the other month i asked authorities in denver what legalization had done to their policing need and i was expecting them to say well, you know, great now we don't need to ins force marijuana laws. you know we don't need many police they have more time and more important stuff. and i think that's you know to some extent true by they surprise me saying actually since legalization they need to hire more police. so why is this? they said reason is that actually now we've got this quite complex regulate la story framework before there was a strailgt forward ban if they saw

marijuana they knew that was bad. you know, they knew that person was breaking the law. where as now what happens in colorado, they'll get a complaint from a neighbor saying hey, my neighbor is growing too much can bigs in their house. sorts it out. police gurned and neighbor will say well, you know these of mine, they're allowed half a dozen each. these are mine. these are my brother-in-law who lives here but he's out of o town. you can imagine it is really quite a big regulatory challenge so for police there i was surprised by this. but so far they've had hire more to reenforce nuance regulations than they have before to enforce and fail to enforce but to try to enforce the all out ban. so is interest you might find for pro prison lobbying you have a powerful lobby on the other hand and i'm seeing on the cannabis lobby, following legalization mother and more

money is getting behind the prolegallization initiatives. and when you see ballot measures now, if you look at the money going to each side of the campaign and outlined this in the book these days that yes side of the campaign tends to have more funding than nose hide because businesses are getting behind it. they see an opportunity. and we know from the fast that tobacco companyies look into this as a possible line of business. so i suspect that although you will have very strong lobbying again, you may find that actually lobbying in favor is soon stronger still. we'll see but that would be my guess for what it's worth. >> you want to -- something. right here. >> from mexico, when you use wires and yyu see this use when

describing trafficking, about which are the most that you hate like for example when the capture of guzman in mexico people keep saying you know, he's single about man runs this sinaloa cartel, right, we know that's not true entirely. but try to figure and public discourse that you mostly hate to this industry? >> good question. i think one of the things that's most frustrating is one that had i mentioned at the beginning about the price. very often you see it reported. but you know there was a big bust of opium in afghanistan with a street value in london of million pounds and, of course, it's not worth that at that stage in the supply campaign so the kind of calculating value at different stages is an important one. i think one of the things that really bugs me most if you're talking about the stereotypes it's the way that -- drug traffickers have managed to

cultivate a reputation as being almost kind of lovable rogue, and there's a chapter in the book where i talk about their publicity effort and public relations and you can see how effective they've been in the way that -- the british form of drug traffic you may have heard of howard marx who has written a biography called mr. nice. one of his aliuses he describes trafficking drugs as a great enjoyable escapade yet funneling money as you know used to murder people in their thousands. and i think this -- this sort of willingness to ascribe drug traffickers in their lovable jokey term is a real problem actually. it's something that people in the rich world just don't get. and i've come across people in britain i'm sure people -- or those in the states with members of agency international

or human rights watch and go buy cocaine and you want to say any idea how your money is being spent. the least fair trade business on earth, and i think all of this is just evidence of what an effective job traffickers have done in helping to sort of launder their image sthoos one thing that bugs me any reporting on el chapo needs to be clear about how he spends his money and that have a deficiency in the sean penn piece. he was far too quick to swallow the the line that the kind of honest man from the mountain trying to make a living. he's nothing of the sort as you all know. so that would be one thing that i would highlight. >> i would just add that if you want the best collection of stereotype and read sean penn's interview about elle el chapo au have there everything you need to know about this stupid way of understanding that drug wars.

[laughter] >> when you were doing research door -- did you find references to how much consumption of this drug is problematic it doesn't all lead to addiction when had it comes to marijuana a fraction that were problematic but cocaine a larger share i guess when it comes to methamphetamine things go u up. do you have how much of consumption of this drug is problematic? >> some. i'm just trying to think what's in the book. but the -- if the book is mostly focused more on the supply side than demand side but about karl tell its and you can do interesting comparison there. one interesting study that i read which i believe i site in the book at some point where the authors compared this sort of effective dose of drug with the leets dose and how much does it take to get you high and how much does it take to kill you,

and they measured these guest each other and i forget exact figure but for alcohol to give an example all very familiar with. i think that example they gave it was a ratio of ten to one or dozen to one. so if it takeses you, you know, kind of piebts to get a bit drunk if you drink 24 pints you might be risk of death. for heroin it was 5-1 given that elicit type of heroin is varying purity and people can overdose if they take something purer than they ewe to. marijuana as far as everybody knows it is impossible to overdecember and many people have tested that theory too -- >> questions right over there. in the back -- you have it ten more minutes. wait for the mic.

>> thank you. my name is chris from the national sexual on sexual exemployeation sex trafficking, prostitution, pornography, et cetera. my question is i would really like to know what osks you made during your research regarding the sex trafficking and sex industry and how i guess the intersection or parallels that you see and that also the second part to my question will you believe is route demand of both industries? okays it's a good question and i find overlap and i cover that. in a chapter on this sort of different industry in to which cartels are are diversifying like any other business looking for ways to use skills they have to make money, and with trafficking business with the sex trafficking business,

they're getting into that through their expertise in smuggling they specialize in getting over o the board without detecting and that's a skill that can be applying to people like it can be to drugs and they're getting what we've seen is mexican cartels are getting more and more evolved in business of traffic aring migrant not just for sex but many pay a fee to be -- brought across border but they are trafficked for sexual exploitation and numbers are interesting. proportion of migrants moving illegally to united states over mexican border over the past few decades proportion of them using a so-called coyote people trafficker, is increased very dramatically in the 1970s, the great majority of people went on their own, it was really relatively easy and professional help if you like has been rising

stead lis and latest survey found i think more than 90% of illegal migrants helped paid treasker and this is as a result of the crackdown at the border which is increased the price as well of the fee of using a coyote. you can actually do a chance. i've got one in the book plotting the number of hours spent policing the border against afnlg price of the coyote service and perfectly correlated more we spend money on enforcing border, or more we drive up the price of the service off you have people traffickers. across border is more difficult business than it used to be cartels which have a more professional smuggling operation than others are getting more heavily voafed in it. so for them it's quite a nice earner so more involved in getting people across the border. majority are people who want to go to work you know tootdz e-to do straightforward work but a proportion are people trafficked against their will. it's a worrying development that

cartels which are so good at getting people and drugs across border are now turning their attention to this crime which is a particularly horrible one. >> i'm master and i want to thank you all for coming today and your books required reading in one of my classes elicit so a lot of talk about columbia. and the farc and discuss more in depth the peace process how that can affect the cocaine market and doctoring trade in general. so for a perspective you have a huge share with a cocaine business market in columbia right now. and so if they agreed to see criminal activities after the accord you essentially have a huge player in the majority exiting abruptly so i'm wondering how you think that will affect drug trade in columbia, cocaine and in the world in general.

and then maybe -- you know, possibly speculating on security side of things once the farc exit market will you have a power vacuum and people battling the market in columbia going on in mexico right now? or could there be a transition we haven't seen yet? thank you. >> a very good question and nobody quite knows the answer. but -- if the farc was with cocaine i would wonder who would fill gap in klum kra. other question is which countries might the business move to? because one of the big stories of the cultivation business of thes past decades is that every time countries manage to drive it out of one country, very often corrupt in another one and people talk about the balloon peskt and called cook roasm effect in latin america drive them out of one ream and they take it somewhere else. that's what we saw used to be the peru was main cultivator and it wents to klum why and drove

out of columbia and it went back to peru. that's where we are right now. peru is the main -- provider in the world. so i would suspect that if the farc do get out of cocaine and far from a done dole that they will. but if they did, i would keep an eye on peru and bolivia and have a look at that but i'm less up with latest news on talks to be honest. i expect more it be this than i do. >> i'm supporter of the peace in klum why. i hope it goes well and hope they sign it and hope it works. but those are all hopes. in essence you can use some approach of using business metaphor and methodology to apply to fields and use it for the peace process and say that essentially what is beginning on is that the government of columbia is --

launching franchise of the farc so that doesn't mean farc appears more or less as an armed group, and that brand reappears but they have another brand that replaces that in columbia, and they call it bakim. that is screaming of gangs on band. it is hard to imagine that just because the government of columbia sign an agreement with the farc that the whole industry of cocaine and drug and drugs in columbia is going to disagree. that vacuum will be filled both in columbia and elsewhere. and the good thing is that the farc was essentially providing security for the drug cartel that was, you know, a masking

hit under ideology of social redemption and fighting for equality and justice. but they were essentially mercenaries that were providing security to the drug cartels and to the drug trafficking option.

>> and to another form of organizations. >> just to let you know that on march 30th, we're hosting an event on the peace process in colombia. 4 p.m., we have have human rights watch debating on the merits of the peace accord. we have time for one last question. the gentleman with the green tie over there. >> hello. >> the guy with the green tie. >> yeah. >> gave the mic to me, passed it to me. thank you, sir. [laughter] this question is for porks ises -- moises, and could you comment on the recent initiative

in guatemala and honduras where they basically are outsourcing their justice system? do you see this as something as necessary or reapplicable in countries with drug cartels like mexico or as our own venezuela? >> what a great question, and what a difficult answer. i don't know, but it's a very good question. as you all know, what we're talking about is that at some point there was -- guatemala outsourced its judicial system and, essentially, a u.n.-sanctioned body came to the side of corruption, essentially. they became quite a force in the country. they, for example, had influence on the decisions concerning magistrates and all that. and tom covered that in detail,

so i would can is him also to -- so it is a horrible thing when you say, you know, as a country i have to recognize that i'm not capable of providing justice. you know? that i have to outsource that because i cannot do it. because there are not enough honest lawyers and imagine statements -- magistrates or people that are going to be immune to the temptations of the drug cartels and others. so it is a very sad story. but at the same time, it's a very practical answer. and so the answer is i don't know. i think it's a great question, and i don't know the future of that. i can't imagine that this is going to be mostly with small and weak countries. i cannot imagine mexico or brazil deciding that they cannot handle their justice system and are going to call the oas to run it, you know? i don't see that. so it's going to be small countries mostly. but tom may know much more about this than i. >> no, no, i don't think i do, but i'll just very quickly add i

think it's a real dilemma for them. it reminds me of the extradition question, actually. in countries like mexico there's this question about should they sort of outsource the holding of someone like "el chapo," or should they do it at home. i'm not sure i know the answer either, but i suspect possibly the best answer is a compromise whereby in the short term these kinds of interventions can help. but the priority has to be getting the domestic system functioning properly. i'd say things like guatemala and the equivalent in honduras, you know, i would support them. i think they've done good work, earn hi in guatemala. -- certainly in guatemala. they should probably have a time limit, and the emphasis should be on building institutional capacity at home. same with the prisons, uni? you can extra -- you know,? you can extradite a few people, but you've got to fix the system. >> since you wanted to have the final word on -- >> no, it's not a final word. i just wanted to make sure at

some point in the conversation we raise the issue that we may be fighting the old war in which you are fighting the war on drugs that are harvested and imported. and the next war or the current war ought to be drugs that are not harvested, but cooked. and not imported, but made at home and made here. and you know that i'm talking about crystal meth and all kinds of drugs that are synthetic, that are chemical, you know, from ecstasy to all of that. that kind of drugs are growing quite quickly and are quite significant. and tom has a great chapter in the book about the cartels diversifying. and so they first diversify, as already mentioned, they diversify towards people trafficking, but they are also, the book also shows some very interesting examples about how they're diversifying into meth methamphetamines and other stuff. so it may be, the conversation

we just had, imagine the conversation we just had does not include importation. so there's nothing to interdict. there's noerinterdiction. there's no e eradication of pla. many of the things we discuss here do not apply as the main drugs we're talking about are cooked in the lab and not harvested and instead of being imported from a third world country are made somewhere in the united states. these are a whole "breaking bad" scenario that i think creates all kinds of analytical challenges that are even less clear than the ones we have with the drugs that are agricultural staples. >> you point out something very interesting in the book, and i'm goings to quote. out -- going to quote. four out of ten americans admit to taking drugs. society has decided to tolerate a certain amount of dealing so long as it comes without violence. what about when producing the drug here in the united states?

>> well, you're right. i think there's a big, big change going on here. historically, there's been this division between so-called producer countries like, a, colombia, and the states are producing more drugs and producer countries like colombia are consuming more drugs. as they get richer, they're adopting all kinds of middle class habits including drug-taking. it's a middle class vice, basically. and i think that in some ways this could help the politics of the process, because until now you've had an imbalance where countries like the united states and the countries of western europe have been quite content to wage this war against drugs which has terrible costs on the ply side. -- supply side. because those costs are not incurred in their own countries, and they say, well, as far as we're concerned, we want to stop the stuff getting here. and i think things are going to change on both fronts. if consumer countries start becoming producer countries,

they're going to think twice about raiding meth labs in the same way they might suggest they be raided were they in another country. and i think equally you might find the producer countries, whether it's colombia, mexico or anywhere else, might start thinking about the issue differently if they start getting a sort of epidemic of drug taking of the sort that we've seen in the rich world. so i think that could change the politics of it quite interestingly. >> well, thank you very much. we've run out of time. [applause] i want to thank the speakers. [applause] such a wonderful panel. i think that we still have some copies of the book out this if you want to purchase -- out there if you want to purchase some. we have lunch available for you upstairs on the second floor, also in the winter garden, so please follow the staff in case you want to stay with us for lunch. thank you very much. [inaudible conversations]

>> author nick adams, if you read your books, i think it's probably safe to say that you love america more than anybody else in the whole world. >> i love america. it's the greatest country in the history of the world. the constitution is the best political document ever written. the united states military the finest fighting force the world has ever seen and the greatest vehicle against evil. when i come to america, i am taken by the initiative, the boldness, the excitement, the individualism, and that's something that i want to see preserved. there is no place like america. >> people listening are going to wonder why somebody from australia loves america so much. >> well, it's a good question, peter, but it's also a very

simple question to answer. what's good for america is good for the world. when america is strong, the world is strong. when america is weak, the world is dangerous. and that's not a nick adams hypothesis, that's the reality that we're living right now x. that's why every single person, no matter what you do, who you are, what color you are, what your sexual orientation is, everyone has an investment in keeping america as robust and as powerful as possible. >> when did you come to this viewpoint? >> guest: i, all my life, was drawn to the united states. i was one of those people, you know, arnold schwarzenegger, elon musk, stuart varney, there's a whole tradition of people right around the world that have this inexplicable desire to just get to the united states. and it's something i think about the energy in america, the optimism, the feeling that anything is possible, that this is the land where magic can

truly happen. and that's really what i kind of subscribe to. and i've got to tell you that i've never, ever been disappointed. this is the country where anything is possible. i think that this is still the land where anybody can rise above the circumstances of their birth and go on to achieve whatever it is that they want to achieve, and that is an elegant and beautiful principle and one that we've got to preserve for as much and as long as possible. >> host: well, the title of your most recent book is "retaking america," which seems to indicate we're doing something wrong. what is that? >> guest: i think, peter, that political correctness is behind every single problem in america today. whether we're talking about open borders, a diminished america on the world stage, the police having to wear their own handcuffs, declining educational standards, an inability to defeat the islamism that is rampaging throughout the world right now. all of those things are rooted

in political correctness. and the solutions to those problems can't be implemented also because of political correctness. so i think that there is no greater moral imper tuf than crushing -- imperative than crushing this totalitarian ideology that is producing a choking conformity, an intellectual tyranny that, quite simply, is un-american, anti-american, antithetical to the foundational principles of the united states. and i think that right now people are just sick and tired of being accused of micro-adepressing and macro-adepressing and trigger warning and white privileging and not knowing the 77 different genders and being accused of being a racist should they dare to use chicago star sarcasticaln a sentence. i think that people just have had enough of these moral and intellectual pixies that want to bully us into silence, that want

to force us into conformity. america has always been about confidence, identity and individualism. and they're three things that political correctness firmly has in the crosshairs. >> host: what's one of the real-life examples you use in your book? >> guest: there are lots of real-life examples. i've lived it. i am an australian, and i've seen what political correctness has done to my country. i've seen what it's done to england. in england now it's really not an exaggeration to say that you can't even look at somebody the wrong way. and unfortunately, that is the trend throughout western civilization. and my book is really a cautionary message to americans to be aware that i've lived your future, and i'm here to tell you that you ain't gonna like it. and you need to arrest the problem, you need to really punch this cultural totalitarian thug in the nose. you've got to hit first, you've got to hit hard, and you can't

stop because if you don't, then we're going to end up in a situation where america will simply become belgium, it'll become another european country, and that's not what we want. we want america to remain the indispensable nation of the world. we want america to be the rainbow in the world's clouds. we want america to be the refuge for people all around the world that want to blaze a trail, that want to take a risk. other countries are wonderful. if you want a life characterized by small steps. but if you really want to do something different, if you want to take a risk, there is no country on earth like america. initiative, confidence and risk go further here in the united states than anywhere else, and that's why america is a beautiful idea that transcends geographical entities. >> host: so when you take that message home to australia, what do your fellow aussies say?

>> guest: well, i think that a lot of australians are very grateful for america's role in the world. i know that we're very proud that we are the only country to have fought alongside the united states in every single major military conflict since the beginning of last century and we, of course, hold that distinction because the brits didn't go to vietnam. and that's something that we're proud of. and i think that there's a lot of connection between america and australia. and i think that there's a lot that we can really take from the australian example and give to america. and i want america to be a very special place, to remain the special place it's always been and not let an ideology dilute that strength and that power that america has always had. >> host: nick adams, "retaking america: crushing political correctness," is the name of his latest book. >> guest: ing if you love america and you hate political

correctness, this is the book for you. >> next on booktv, douglas rushkoff talks about building a new economy. >> i just want to say before i hand the mic off to our guest that it's a personal privilege for me and for my co-founder, andrew, who's floating around here somewhere to be celebrating the publication of yet another book from the brilliant and prolific douglas rushkoff who seems to produce yet more works of brilliance every year. i don't know how you do it, but fantastic that you keep doing it. as an author myself, i have to say that the publication of a book is always a really special event. there is something about taking your words and putting them on paper between slightly thicker pieces of paper that make people look at you differently. u'