Jacopo: Do you think the legalization of marijuana was the reason for the United States’ final descent?
Esteban: Hardly. But it did lead to the Mexican Civil War. And I think most historians would agree that the Mexican Civil War was a point of no return. It was the moment when America definitively crossed the boundary from a flawed democracy into an authoritarian police state. That moment was coming, regardless of how it happened. But in that way, I suppose marijuana legalization was a trigger.
Jacopo: Ironically, that threshold was crossed when United States appeared to be in the midst of the strongest recovery since World War II.
Esteban: It’s not as ironic as all that. Americans was in the midst of a recovery so unlikely that they’d have acceded to far worse to keep their country from the chaos that loomed.
Jacopo: How did marijuana legalization go so quickly from the bottom of legislative priorities to the top?
Esteban: We began to hear rumors of this around Labor Day 2012. President Obama and the congressional Democrats, realizing that there was no chance of either incurring anything but a colossal loss after the austerity package described in our interruption, began to talk in secret about a hastily arranged bill to legalize marijuana.
Jacopo: How was it a secret to the world if it was passed by October?
Esteban: How is it ever? It was a secret until it was leaked.
Jacopo: Why was it leaked?
Esteban: Because a measure like this can be so politically damaging that if it weren’t presented hastily, cautious people would never agree to it.
Jacopo: Who leaked it?
Esteban: Once again, it doesn’t really matter. It could have been a Republican who wanted to sink the Democrats even further. Or it could have been the President himself since he knew that he had only until Election Day to get it passed before Republicans would block it completely. But by October 1st, it was clearly on the table.
Jacopo: How could the President get it passed with a Republican congress?
Esteban: Because the Republicans knew that if enough moderates voted for it, it could pass they could still blame the Democrats for another policy for whose success they could steal credit. Until Election Day, the argument could still be made that President Obama was not a lame duck.
Jacopo: But weren’t the Republicans of this era notorious for unanimous voting?
Esteban: That’s precisely why Republicans could coordinate an effort to help Obama pass it. Some moderate Republicans were instructed by their operatives to vote for the bill. Other Republican moderates were defeated in primaries by the Tea Party, so they simply voted their consciences.
Jacopo: Obviously Obama and the Democrats were expecting to be trounced.
Esteban: Indeed they were. But this also presented an opportunity for Democrats. Obama realized that for Congress’s sake, he needed to energize the Left and the youth vote. The Left was still as furious at him for his austerity measures as the Right was. If I might use an antiquated term from what was once called American Football, marijuana legalization was the Democrats’ “Hail Mary”: a final ploy for votes concocted in desperation. The move worked at least a bit. It only saved three senate seats, which gave the Republicans 63 Senators rather than 66. But in the house, the number of Republican congressmen was only 350, in a year when the Republicans were expected to carry more than 400 seats.
Jacopo: How was legalization sold to the larger public?
Esteban: As a way to pay off the remaining debt. Marijuana could be taxed at virtually the price it cost to buy, and those who wanted Marijuana would still buy it. It was much safer than buying illegally. And it came in varying strengths; so people could get more potent varieties than what they usually bought under the high school bleachers.
Jacopo: But it still must have been illegal for high schoolers.
Esteban: Indeed it was. And that was at least a sliver of what contributed to its backfiring.
Jacopo: Why did marijuana legalization backfire?
Esteban: Many reasons. But they boil down to this: It was thought that part of why the plan would be effective was because of a provision to gradually release prisoners who went to jail for marijuana possession. One out of every eight drug prisoners were there for nothing larger than marijuana. But releasing the prisoners saved no more than $1 billion a year and prison had hardened most of these released prisoners. When they were released, they still were former felons who had no skills. Out of desperation, many of them turned to violent crime and dealing harder drugs. And since acquiring harder drugs was easier than ever, there were far more people who became addicted to harder drugs.
Jacopo: So not only did marajuana make more money for the government and pharmaceutical companies, but it also strengthened the drug trade and forced the government to put most of the money saved from legalization into police protection.
Esteban: Yes it did. Something like 150% of the projected savings were used for more policemen, border patrol, intelligence gathering, intelligence analysis, mass surveilence, pre-emptive neutralization operations, non-military preventive action - which we used to called ‘Nation Building’ - rehabilitation centers, prison expansions and target hardening. The illegal drug trade became more dangerous than ever because it was no longer grounded in a harmless substance. And as much as we did not want to believe in marijuana as a gateway drug, it proved to be so in enough cases that we have to wonder if legalization was worth the effort.
Jacopo: I take it that since the projected savings from marijuana legalization was quite high, the amount of people affected by the drug trade was much higher after legalization.
Esteban: Oh yes. It was expected that over time the projected earnings from marijuana legalization would be in the hundreds of billions. But all of these complications cost America nearly a trillion dollars.
Jacopo: How did it affect the Mexican Drug Trade?
Esteban: It’s almost impossible to describe in detail, simply because there’s so much of it. The Mexican Drug War was already a byzantine network of double-crosses, shifting alliances and indiscriminate killing. But when the drug war grew into the Mexican Civil War, it could often seem like a war of everyone against everyone. But I’ll do what I can to give this some nuance.
Jacopo: Is it worth explaining?
Esteban: Absolutely, but in order to talk about it, you have to go back to at least to 1929. From 1929 until 1982, Mexico was a one-party system which gave the appearance of a democracy. Every election would end with the Institutional Revolutionary Party (or in your language - Partido Revolucionario Institucional) accumulating 70% of the vote - a tally which they would achieve through massive electoral fraud. The fraud allowed them to maintain every senate seat, every regional governorship, and nearly every seat in the Chamber of Deputies. After six years, the President would handpick his successor; a process known as the ‘Tap of the Finger’ (or El Dedazo). The famous Peruvian writer, Mario Vargas Llosa called Mexico the ‘The Perfect Dictatorship.’ It preserved all the forms of democracy meanwhile gutting all of democracy’s mechanics.
Jacopo: A process which prefigured some of the developments of the early 21st century.
Esteban: Authoritarian Democracy. All you have to do is to look at the Russia of Vladimir Putin or the Fujimoris in Peru to see a similar process.
Jacopo: How did the one-party system collapse?
Esteban: The PRI was not only a one-party system but also a Socialist party. Being a neighbor to the United States, it could never ally itself with the Soviet Union. So the PRI installed a full welfare system in Mexico by borrowing from the United States Government. By the 70’s the Mexican government had so over-borrowed from the US that the peso went into hyper-inflation. In order to combat inflation, Mexico became the fourth-largest producer of oil in the world. Over the next ten years, so much oil was produced that the price of oil dipped and investors almost entirely pulled out of Mexico. The PRI was powerless against the change in price and in 1986 the left-wing bolted the party because the PRI cut social spending to pay their debts.
Jacopo: So after that Mexico was a two-socialist-party system?
Esteban: No, there was always the National Action Party - a token conservative party deliberately kept in opposition. It was not until 2000 when the National Action Party became the first party to defeat the PRI for high office.
Jacopo: That must have been considered a huge step forward for democracy.
Esteban: In many ways, it was. The election was fundamentally clean, and the PRI accepted the results with no complaint.
Jacopo: It must have seemed ironic that true trouble began after Mexico became a democracy.
Esteban: Democracy is just as easy to exploit as a dictatorship. It depends on its citizens acting in good faith and solid institutions which can fight corruption effectively. A successful democracy is the exception, not the rule, and its success is usually fleeting. In the case of Mexico, it’s success lasted six years.
Jacopo: That’s more than five years longer than the American Restoration lasted.
Esteban: Indeed. Y’know, I’m not sure I can finish this today. As you know, today was a terrible day on the markets and our portfolio took an enormous hit before we got out altogether. Why don’t we continue this later and I’ll start with the presidential election and end with how Mitt Romney turned the United States authoritarian.