Drug Trafficking, the Missing Piece in The Dallas Morning News's Texas Jobs Puzzle

Categories: Politics

drug-money.jpg
Piles of cash and nowhere to launder it? That's what Texas is for, hombre.
In Sunday's Dallas Morning News, reporter Brendan Case took a stab at explaining what, besides the state's generally business-friendly policies, has helped Texas produce such a relative bounty of jobs of late. The state has added a million jobs in the last decade, Case reports. The country lost a million in the same 10 years. In the last 18 months, while the country increased jobs 1.3 percent, Texas created work at twice that rate.

How? Low taxes and scant regulation help, of course, but the picture is more complicated than that, despite Perry and Co.'s attempts to leave it at that. A lot of those jobs are exceptionally shitty ones; more of Texas' workers make less than the minimum wage than any other state's but Mississippi (the two states are tied, in fact.) And a lot of the jobs are related to something politicians have little control over: the state's rich oil and gas reserves.

But experts believe there's another potential factor helping prop up Texas's economy, one that went unmentioned in the News article and will likely go unmentioned in Perry's inevitable presidential stump speeches: drug smuggling.

It's explored in the latest issue of New York magazine, and it goes like this: So much of America's illegal drug supply is trafficked through Texas -- more than half of all the drugs that come in, to the tune of tens of billions of dollars -- that the proceeds can't help but have positive impact on Texas's financial welfare. From NYMag.com:

Jack Schumacher, a recently retired Texas-based DEA agent, says that at least half the drug shipments coming from Mexico stop and offload in Texas. The product is repackaged in small units and resold at a considerable markup, with a share of the gross staying in the state. Even some of the money that gets expatriated to Mexico winds up back in Texas, laundered through Mexican currency exchanges. The state's relative security is the draw. "If you have a few million," says Schumacher, "would you invest in a war zone or a bank in San Antonio?" The DEA warns that traffickers are cleaning up their proceeds by buying businesses in South Texas. They also spend on guns, warehouses, security guards--and on luxury cars and houses. "In San Antonio, a high-dollar trafficker can buy a $2 million or $3 million place and exist for a long time," he adds.
Last week's drug bust demonstrated some of that on a smaller scale. Dealers in Fort Worth ran a body shop with the proceeds, owned several homes and dumped truckloads of cash into their local bank (in just-low-enough amounts not to attract suspicion). Dallas's kingpins kept multiple residences, rented a storage space and, presumably, shoveled down copious tacos after doing hand-to-hands in the Lupita's parking lot.

And while migrants are crossing the Texas border less and less these days, over the last decade middle- and upper-class drug lords have found their way into Texas to keep themselves and their profits safe.

"Some people, including me, suspect that some of these people come with funds from the drug trade," says Michael Lauderdale, a professor of criminal justice at the ­University of Texas. Whatever the explanation, the new arrivals are good for the real-estate trade."While housing prices are declining in the rest of the country, El Paso has held its own because Mexican nationals are able to come over and buy homes in the $100,000 to $300,000 level," says Tanny Berg, a commercial-real-­estate developer in the city. Restaurant owners in Ciudad Juárez have closed up and followed their old customers across the river. (It should be noted that over the past six months, the migration has slowed.) Meanwhile, in McAllen, the Chamber of Commerce says, about 95 percent of inquiries about starting a business now come from Mexicans, up from 30 percent in 2006.
So, Texas, that's the formula: low taxes, deregulation, no unions, tort reform, low wages and lots of immigrants, especially ones whose pockets are stuffed with cash rolled into tight, lightly dusted coke straws. Somehow I suspect those last few bullet points will get left off PerryforAmerica.com.


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18 comments
Corvettejunkie6
Corvettejunkie6

this is oh so very true and texas will remain wealthy due to this and if the cartels would keep the killings down an senseless acts of poor sportsmanship  by harming tourist an ect the us gov would really give this a blind eye as they have did for year and im no saint by far but they need to stop the killings and watch the money pile

Mike
Mike

The cartels are moving the money out of the country.  They are not putting it in TX banks and they sure are not reporting sales tax on it.  Yes, some low life, low level dealers are employed, but their contribution is insignificant.  You could make a case drug traffic is draining cash, not adding cash.

The DMN really does not understand what Perry is saying.  Yes, he has a few funds for investment, but they do very little.  He is not in charge.  No one is in charge.  His real message is see what's missing: big government infrastructure to over regulate and over tax your business, personal income taxes, high housing costs, and law firms having every incentive to litigate.

ozonedude
ozonedude

The other aspect of this "job boom" is the huge flow of Federal money into the State's border law enforcement agencies, to combat the drug trade, but mostly to take potshots at illegal immigration. Huge amounts of money, guns and armor are flowing into the State's Border law enforcers, courtesy of Rick Perry's hated Federal largess. Umm, you might say Rick Perry doesn't have much of an incentive to stop the drug trade or illegal immigration, in that it keeps both the weapon industry and his law enforcement constituency flush.

MattL1
MattL1

Wow.  Being a Mexican drug lord is good work if you can get it.  Does anyone know if you need to do any post-graduate work, or can you just jump right in?

Facebook User
Facebook User

You suggestion that the drug trade in Texas is a leading contributor to our economic success story is flawed. The economic output of Texas is greater than $1.4 trillion. According to the UN the drug trade is about 0.1% of global trade. While the actual numbers seem huge, as a percentage of Texas' economy the drug trade is tiny and can't be considered a factor in our economic story.

Phelps
Phelps

Funny how the DEA is quoted prominently in an article that pushes for full employment of the DEA.

Honeybee
Honeybee

Interesting article.

RE Texans making less than minimum wage:I'm not sure that's a bad thing, depending on the explanation behind it.If the people earning that pittance are mostly immigrants, the uneducated, and the unskilled, I think it's a good thing because:-they're getting job experience and skills which is the first step to the middle class -it models a work ethic to their children-there is dignity in any kind of work-I'd bet that any employed person is less likely to commit a crime than an unemployed recipient of welfare

I'd also want to know for how long they work below minimum wage before deciding it's worse than not working at all AND if they are making more now than they were in the past (with immigrants from Mexico that's very likely). 

I'm not a fan of Perry, but I wouldn't make the type of jobs Texas has the cornerstone of my opposition to him.  Too many Americans believe that any job is better for individuals and society than no job.  Also, it can be said that through these jobs, Texas is the gateway to the middle class.

MushMouth1
MushMouth1

Much like the economic boom that cocaine provided for Miami and south Florida in the 80's and 90's.  The problem with this huge influx of money is the corrosive effect it has on the rest of the society - justice system,political structure etc.

Watching
Watching

Really lame excuse for a report.  Right up there with the DMN claiming Mexico's economy is booming.

scottindallas
scottindallas

I think you can just jump right in, but there are heavy dues.

Joe Tone
Joe Tone

Yeah, F.U., no one's saying it's a leading contributor, or even a large contributor. They're just saying that it is a contributor, and one that no politician is going to brag up to his friends at the country club.

den
den

No where in this blog post or the related article is it stated that the drug trade is a leading contributor.  It only suggests that it has an unreported impact.

Observist
Observist

If that 0.1% of global trade is concentrated in a few places, it can be a significant contributor to those local economies.  The point is not that the Texas economy is based on drug trafficking, but that drug trafficking may partly explain the difference between (for example) -1% shrink and +1% growth.

rubbercow
rubbercow

 You could not be more wrong.  It is a well-documented and indisputable fact that any and all things done by persons of Latino origin are 100% beneficial to our country.  It is quite literally impossible for Latinos to cause any harm to the US. (sarcasm)

I completely agree with your last sentence.  I already feel like we are living in a society where anyone who plays by the rules is a sucker.  It is hard not to notice that the folks who blatantly break the rules are either richly rewarded or suffer no consequence.

Nailemup
Nailemup

"I completely agree with your last sentence.  I already feel like we are living in a society where anyone who plays by the rules is a sucker.  It is hard not to notice that the folks who blatantly break the rules are either richly rewarded or suffer no consequence"

You're right about that but what's coming next is what happens in Mexico where anyone who pays by the rules gets their head cut off.

Montemalone
Montemalone

Yeah, Schwarzman makes $400,000,000.00/yr and calls it carried interest and pays only 15% cap gains tax. He doesn't even have to use a gun.

DISD Teacher
DISD Teacher

10% of my students (teens!) have figured out how right you are and they take full advantage of it.

Teachers are hassled in DISD and made to jump through hoop after hoop if they dare to fail a student who sleeps in class or does nothing but disrupt.  The reason?  The school board wants to tout a "completion rate" that will fool most taxpayers.  They also want the state and federal money that we get each morning the student is counted "present".

Hard-working kids are expected to tolerate anything and everything so the district/school board gets that money, even at the expense of themselves, the suckers, sitting in the same class. 

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