Conflict between cartels inevitable

We consider here the consequences of a decline in the demand for Mexican drug exports from the perspective of economic and organizational principles. There is nothing about the analysis that is specific to marijuana or to its legalization. This analysis simply assesses the effects of a loss of revenue from one of the existing streams of the DTOs resulting from some event over which they have no control, be it a change in law or in U.S. customer tastes. Our principal focus is on violence.8¶ The DTOs can be defined as consisting of the following: (1) a set of hierarchical relationships that allow higher-level members to command their subordinates to commit violent and risky actions, (2) a reputation for providing above-market earning opportunities to low-skilled workers willing to take particular kinds of risks, (3) a network of relationships with corrupt law enforcement officials, (4) a network of suppliers and customers for various drugs, and (5) ready access to capital for illegal ventures.¶ Presumably, the DTO demand for labor will decline, at least at the aggregate level. Given the lack of specialization, one would think almost all the individual DTOs will suffer some decline. One question is whether those “reductions in force” can be achieved through “natural attrition” or whether they will require “layoffs,” to use familiar industrial jargon.¶ Large-scale dismissals might carry a peculiar risk, both for the organization and for society in general. Those who are fired may try to create their own organizations, so DTO managers may have to think strategically about whom to dismiss. Also, those leaving have probably become accustomed to earning levels they cannot attain in legal trade. Since the whole industry would be affected by the downturn, other DTOs will not be hiring. Thus, the fired agents might attempt to compete with their former employers.¶ Hence, in the short run, there could be additional violence resulting from at least three sources:¶ • conflict between the current leaders and the dismissed labor¶ • within DTOs. Even after the firing of excess labor, the earnings of the leadership most likely will decline. One way the individual manager might compensate for this is to eliminate his or her superior, generating systemic internal violence from senior managers who become more suspicious in the face of the overall decline in earnings.¶ • between DTOs. The leadership of an individual DTO may try to maintain their earnings by eliminating close competitors.