Thursday, September 22, 2011

How Dodgy Numbers Distort the Drug Trade

Written by  Patrick Corcoran
How Dodgy Numbers Distort the Drug Trade
Public perceptions of Mexico's drug trade are largely based on unreliable estimates by government agencies, who have an incentive to make the threat seem as large as possible.
Take, for instance, the estimate that the amount of illicit cash flowing across the U.S. border to Mexican capos is between $18 billion and $39 billion annually. It is immediately apparent that this is a huge range; an economist who estimated that the U.S. economy was worth between $10 trillion and $20 trillion would be laughed at. (The real number is a bit less than $15 trillion.) For those familiar with such statistics, the lack of clarity over the government's methodology is equally worrying.
Peter Andreas, the co-editor of "Sex, Drugs, and Body Counts," a book released in 2010, makes the case that there is much reason for concern over the statistics that are used to measure the drug war. As he writes: “One DEA agent describes his desk job in the Latin America headquarters: ‘The other half of the job is makin’ up fact sheets and briefing papers -- you know, statistical bullshit, how we’re winnin’ the war -- so one of these clowns can go on TV or testify before Congress.’ When asked where he got the statistics, he laughed. ‘Outta yer head, where else?’”
This is vividly illustrated in a recent article in Nexos magazine, called "What were they smoking when they measured?" The piece unpicks the "absurd" implications of Mexican Public Security Ministry's estimates on the drug markets in the U.S. and in Mexico, such as that the street price of marijuana would be almost 50 percent higher in Mexico than in its northern neighbor.
In other cases, the statistics are valid enough, but given a dubious interpretation. For instance, U.S. officials often trumpet mass arrests, cash seizures, and narcotics busts as though they represented major successes in the decades-long war on drugs. Yet decades of experience have amply demonstrated that such law-enforcement successes have a limited capacity to affect either the supply of drugs or the structure of the industry that produces them.
Drug trafficking isn’t the only illicit industry where this lack of clarity and precision in estimates is a problem, though often the numbers are not just unreliable, but non-existent. There are no formal government estimates regarding the revenues of kidnapping and extortion, two of the crimes that most worry policy-makers and ordinary Mexicans. (Indeed, because both the victims and perpetrators have an incentive not to report the crimes, an informed estimate is probably impossible.) For other crimes, like pirate merchandise and smuggling undocumented migrants, current estimates fail to give a good sense of the nature of the industry.
Media and government reports suggest that these crimes have exploded in recent years, as has the involvement of the nation’s largest gangs. Yet beyond that general sense, little is known. Despite an ocean of statistics, a clear picture of the revenue structures for gangs like the Zetas and the Sinaloa Cartel does not exist, which makes it difficult to formulate a comprehensive plan to attack them.
This phenomenon becomes more pernicious as the statistics are picked up by media outlets, often blown out of proportion or provided without due context, feeding narratives that are divorced from reality. Media attention leads to greater pressure on the government. Government agencies, in turn, can use anything from the estimated revenues of drug traffickers to fluctuations in the addiction rate to lobby for a larger share of the budget. From there, it is a short distance to policy decisions that are ill-founded. While spinning statistics and building narratives out of a diffuse series of events is a basic requirement of democratic government, using faulty numbers vastly reduces the likelihood that the policy decisions will be sound.
In Mexico's case, the most prominent security statistic isn’t the size organized crime’s revenues, but the number of victims. Here too there are reasons to wonder about the reliability of the figure, though not as much because of difficulty in counting, but rather because of issues of interpretation. The key figure, much-quoted by the government and media, is the number of murders linked to organized crime -- but this label is open to interpretation.
As a result, the exact meaning of the spike in violence is an open question. Describing the violence as linked to organized crime suggests that a small number of capos like Joaquin Guzman, alias "El Chapo," are orchestrating a wave of violence whose scale is comparable to a small war. Yet the government tally of such killings also includes incidents related to local rivalries, with only the slightest of connections to the major gangs and their leaders. The narrative of 15,000 murders linked to organized crime glosses over this variation, promoting an over-simplified picture of Mexico’s violence.
Nevertheless, one can’t discount the numbers altogether. As a tool of both analysis and media narrative, “really, really large” simply doesn’t work, though it may be a more honest assessment than "$18 billion to $39 billion." But anyone analyzing the drug trade or the revenues of Mexican criminal groups would be wise to respect the limits on our capacity to measure the size of hidden industries, and to remember that the less reliable the figures, the more likely we are to derive the wrong conclusions from them.

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