Narconomics audiobook cover - How to Run a Drug Cartel

Narconomics

How to Run a Drug Cartel

Tom Wainwright

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Narconomics
Supply-Side Failures+
Legalization as Competition+
Market Dynamics+
Human Resources+
Public Relations (PR)+
Offshoring+
Franchising Model+
R&D (Synthetic Drugs)+
Diversification+

Quiz — Test Your Understanding

Question 1 of 10
Why do US efforts to attack the drug supply, such as crop dusting in South America, ultimately fail to reduce the global drug market?
  • A. Cartels immediately switch to producing synthetic drugs instead.
  • B. The destruction of crops leads to the 'balloon effect,' where production simply moves to another region.
  • C. Farmers receive government subsidies that cover the cost of lost crops.
  • D. Crop dusting chemicals actually increase the yield of surviving coca plants.
Question 2 of 10
How does the economic concept of a 'monopsony' apply to drug cartels?
  • A. They are the sole sellers of drugs in a specific region, allowing them to set high prices for consumers.
  • B. They are the single buyers of crops like coca, giving them the power to dictate low prices to impoverished farmers.
  • C. They maintain a monopoly on the transportation routes across the US-Mexico border.
  • D. They exclusively use one type of chemical to manufacture synthetic narcotics.
Question 3 of 10
According to the book, what is a primary way that the legalization of marijuana threatens drug cartels?
  • A. It allows the government to become a legal rival that offers higher-quality, regulated products, forcing cartels to cut prices.
  • B. It immediately cuts off all revenue for cartels, causing them to go bankrupt within months.
  • C. It allows law enforcement to easily identify and arrest cartel members who try to purchase marijuana legally.
  • D. It forces cartels to move their operations to Europe and Asia where marijuana is still largely illegal.
Question 4 of 10
What surprising social benefit occurred in El Salvador when rival gangs began colluding instead of competing?
  • A. The overall consumption of drugs in the country dropped by half.
  • B. The gangs began paying taxes to the local government.
  • C. Rates of violence and murder decreased significantly as territories were peacefully divided.
  • D. The gangs stopped recruiting members from local prisons.
Question 5 of 10
How do organizations like the Nuestra Familia cartel solve the 'collective action problem' to ensure loyalty and prevent members from taking advantage of the group?
  • A. By installing hidden cameras in all their drug processing facilities.
  • B. By implementing a strict dictatorship where the top general makes all hiring and firing decisions.
  • C. By distributing power across a hierarchy where lower-ranking members can vote and hold superiors accountable.
  • D. By paying their members exclusively in drugs rather than cash.
Question 6 of 10
Why do drug cartels engage in 'social responsibility' activities, such as distributing money to the poor or building churches?
  • A. To launder their illicit drug money through charitable organizations.
  • B. To act as a strategic PR ploy to look better than rivals and fill the void left by failing public services.
  • C. To claim tax deductions from corrupt local governments.
  • D. To convince international organizations like Transparency International to improve their country's ranking.
Question 7 of 10
How can the international community effectively combat cartels that 'offshore' their operations to corrupt countries?
  • A. By sending international military forces to directly occupy the corrupt countries.
  • B. By publicly shaming the countries through corruption indexes, which deters legal transnational companies from investing there.
  • C. By paying the corrupt police forces higher salaries than the cartels can offer.
  • D. By offering the cartels legal franchise opportunities in exchange for peace.
Question 8 of 10
What is described as a major downside (a 'double-edged sword') of cartels using the franchise business model?
  • A. Franchisees often demand health benefits and retirement plans from the cartel.
  • B. It requires the cartel to send their own soldiers to new territories, risking their lives.
  • C. Decentralization of power makes it harder to control members, increasing the risk of rogue actions like killing a US agent.
  • D. Franchisees usually refuse to sell drugs and only want to participate in people smuggling.
Question 9 of 10
How did New Zealand change its laws to better regulate synthetic drugs and break the cycle of chemical alteration?
  • A. They made it the drug manufacturer's responsibility to prove a new drug is safe before it can be sold.
  • B. They permanently banned all forms of amphetamines, regardless of their chemical makeup.
  • C. They legalized all synthetic drugs and heavily taxed them to fund rehabilitation centers.
  • D. They required prosecutors to test the drugs on themselves to prove they were dangerous.
Question 10 of 10
Why have many drug cartels diversified into the business of people smuggling?
  • A. Because human trafficking requires less logistical planning than moving drugs.
  • B. Because increased border security after 9/11 made it a highly lucrative market where customers must pay up-front.
  • C. Because the US government offers amnesty to cartels that stop smuggling drugs.
  • D. Because people smuggling is considered a legal activity in many Central American countries.

Narconomics — Full Chapter Overview

Narconomics Summary & Overview

Narconomics (2016) gives us a tour of the business side of the $300-billion global narcotics industry. From human resources to PR to franchising and diversification, these blinks show how drug cartels run their operations not unlike highly successful businesses. By exploring the economic phenomena at work behind the world’s drug problem, the author presents new insights into how governments can defeat it.

Who Should Listen to Narconomics?

  • Students looking for fascinating applications of micro and macroeconomics
  • Readers interested in alternative perspectives on social issues
  • Anyone curious as to how the narcotics industry really works

About the Author: Tom Wainwright

Tom Wainwright is the UK editor for the Economist magazine. As a journalist and correspondent, he has also formerly covered Mexico and Central America for the Economist. His writing has been published in the Times, the Guardian, and the Literary Review.

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