Schumpeter

Narconomics

From HR to CSR: management lessons from Mexico’s drug lords

Jul 28th 2012

MEXICO has 11 billionaires, according to Forbes magazine. Ten are often pictured smiling at charity dinners and other posh bunfights. One, Joaquín Guzmán Loera, has a rather different mugshot. Wearing a cheap anorak, he is pictured shivering in the rain inside the concrete walls of a high-security prison. Mr Guzmán, who is better known by his nickname El Chapo, or “Shorty”, is one of Latin America’s most successful exporters, having made perhaps $1 billion as chief executive of the Sinaloa drug “cartel”. There haven’t been many photos of El Chapo since he escaped from jail in 2001, hidden in a laundry trolley.

Other billionaires look down on Mr Guzmán. But unlike some of the entrepreneurs on Mexico’s rich-list, he seems to have weathered the American recession rather well. Conditions in his hideout in the Sierra Madre may not be luxurious, but his fortune is believed to have remained intact despite the efforts of the imbéciles on Wall Street that brought the Mexican economy to its knees in 2009. Armed with no more than a phrasebook and some Pepto-Bismol, Schumpeter went to the desert to see what lessons Mexico’s narcotraffickers might offer to other businesses.

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Indigenous rights in South America

Cowboys and Indians

A ruling on an oil project reasserts the indigenous’ right to consultation

Jul 28th 2012

DEEP in the rainforest, the village of Sarayaku is two days by river from the nearest town. But its 1,200 Kichwa Indians are now in the spotlight. On July 25th the Inter-American Court of Human Rights ruled that Ecuador’s government had ignored the rights of Sarayaku’s residents when granting permission for an energy project—putting governments in the Americas on notice that big physical investments are not legal until the indigenous people they affect have had their say.

The dispute began in 1996 when Petroecuador, the state oil firm, signed a prospecting deal with a consortium led by Argentina’s Compañía General de Combustibles (CGC). Much of the area it covered was the ancestral land of Sarayaku’s residents, who were not consulted. CGC later offered locals medical aid for their consent. Some villages signed up, but Sarayaku held out.

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Jamaica at 50

On your marks, get set…oh

Half a century after Jamaica’s independence from Britain, its economy is struggling to get out of the starting blocks

Jul 21st 2012 | KINGSTON

THE world is used to trailing behind Jamaican sprinters. The small island has won a string of world records, and may claim more at the 2012 Olympics. Its economy, however, is not so speedy: on current forecasts it will finish the year with the slowest average growth rate since 2000 in the Americas—behind even earthquake-stricken Haiti. On August 6th Jamaica will celebrate the 50th anniversary of its independence. But the festivities will be muted by frustration with its performance.

The Jamaican economy should by rights be booming. The island is just a 90-minute flight away from the United States, the world’s biggest market, with which it shares a language. It is on the shipping route to the Panama Canal, and has a spacious natural harbour in Kingston. It is politically stable, without the ethnic tensions that have riven other Caribbean nations.

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Cuban health care

Under observation

An outbreak of cholera tests a much-praised health system

Jul 14th 2012 | MEXICO CITY

CHOLERA was eradicated in Cuba more than half a century ago. But on July 3rd the government announced that the disease had returned, infecting 53 people and killing three in the south-eastern province of Granma. Since then unconfirmed reports have said that up to 15 may have died, and that the outbreak has spread to Havana, at the opposite end of the island.

The most likely source is Haiti, which since 2010 has suffered an epidemic that has killed more than 7,000 people, plus 363 in the Dominican Republic, its neighbour. Only 50 miles (80km) of sea separate Haiti from Cuba, which has sent hundreds of doctors to help the Haitians control the outbreak (and who may inadvertently have brought the illness back). Tests are expected to establish within days whether the Cuban cases match the Haitian strain.

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After Mexico's election

Counted out

López Obrador, sore loser

Jul 14th 2012 | MEXICO CITY

AFTER recounting more than half the ballots at the request of Andrés Manuel López Obrador, Mexico’s electoral authority confirmed the original result of the July 1st presidential election. Mr López Obrador (31.6%) lost to Enrique Peña Nieto (38.2%) of the Institutional Revolutionary Party (PRI).

Despite the clear margin, Mr López Obrador wants the election annulled by the Electoral Tribunal. (He finds no fault with the congressional and gubernatorial races held on the same day, presumably because his left-wing coalition did well in them.) He claims that the PRI bought votes in return for supermarket gift-cards; the PRI says these were given out under a public programme, not for votes. The National Action Party, which came third, has made some belated complaints but accepts the result.

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Mexico's election

The PRI’s qualified comeback

The former ruling party triumphs, but without the majority it had hoped for

Jul 7th 2012 | MEXICO CITY

THE band that struck up jolly music to greet Enrique Peña Nieto as president-elect probably had not bothered to practise any of its downbeat numbers. Mr Peña, the candidate of the Institutional Revolutionary Party (PRI), had long been the favourite and went into the election on July 1st leading by double figures in most polls. Sure enough he won, restoring to office the party that ran Mexico for seven decades until 2000. But his victory was slimmer than expected, and the PRI was denied a majority in Congress. Indeed, it appeared that the party had lost seats in the lower house. Voters are clearly not ready to hand the former ruling party free rein.

It was a good night for the left-wing Party of the Democratic Revolution (PRD) and its allies, whose presidential candidate, Andrés Manuel López Obrador, came within 6.6 percentage points of Mr Peña, less than half the predicted gap. His coalition will form the biggest opposition block in Congress's lower house. Of the five state governorships up for grabs the PRD lost one but took control of two, including Tabasco, which the PRI had run for more than 80 years. The PRI still controls most of Mexico's 31 states (see map). The result was dismal for Josefina Vázquez Mota of the ruling National Action Party (PAN), which was pushed into third place for the first time since 1988.

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Television in Mexico

Channelling public anger

The president-elect must show that he is not a stooge of Televisa

Jul 7th 2012 | MEXICO CITY

MORE Mexican homes have television than running water. The influence of the box is greatest at election time: surveys show that, when deciding how to vote, people trust newscasters more than their friends. After the Institutional Revolutionary Party (PRI) won the presidential election on July 1st, protesters gathered outside the offices of Televisa, the dominant broadcaster, which they claimed had “imposed” Enrique Peña Nieto, the PRI's candidate, on a hypnotised public.

Before the election, newspapers claimed that the PRI had bribed Televisa to give rosier coverage (which both party and broadcaster deny). Televisa no longer styles itself a “soldier of the PRI” as it did during one-party rule. But whereas politics has become more plural since the 1990s, control of the airwaves has not. National free-to-air television is split between Televisa, with 70% of viewers, and TV Azteca. Televisa also has 45% of cable and 60% of satellite customers. The result is pricey as well as monotonous: regulators reckon that a third more households could afford pay-TV if there were more competition.

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