Smuggler Nation (56 page)

There are some common themes in these scary accounts of the illicit side of globalization. Globetrotting criminals, ranging from drug traffickers to migrant smugglers to money-launderers, are increasingly agile, sophisticated, organized, and technologically savvy. Governments, on the other hand, are increasingly overwhelmed, outsmarted, and outmaneuvered. And though the problem is portrayed as a global one, the United States is often depicted as the favorite target market of this new, unprecedented, and rapidly growing threat.

At first glance, this picture of the shadowy underside of globalization seems terrifyingly accurate. Traffickers
are
routinely defying borders, mocking laws, and corrupting and sometimes violently challenging government authorities. These concerns are confirmed in daily media stories and policy statements and reports, and resonate with the popular imagination. It is commonsensical, after all, that the same global transformations in communication, transportation, and finance that aid licit business also aid illicit business. Globalization reduces transaction costs for both licit and illicit market actors. As President Barack Obama put it in July 2011, “During the past fifteen years, technological innovation and globalization have proven to be an overwhelming force for good. However, transnational criminal organizations have taken advantage of our increasingly interconnected world to expand their illicit enterprises.”
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True enough. But even though this gloomy portrait of illicit globalization contains many truths, it ultimately obscures more than it reveals. Most importantly, its neglect of the past grossly distorts our view of the present. Contrary to conventional wisdom, illicit globalization is not entirely new. Indeed, rather than a new threat to America, it is the continuation of an old American tradition. As we have seen, its starting point goes back not just years or decades but centuries, beginning with the growth of transoceanic commerce and the violation of rigid mercantilist trade restrictions.

So despite the anxious voices inside the beltway who warn us that “smugglers, traffickers, and copycats are hijacking the global economy,”
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the reality is that these illicit actors have long been integral to
the global economy and indeed helped to create it. Smugglers have frustrated government controls from the very start: the modern state emerged with the expansion of long-distance trade, and it is therefore little surprise that efforts to impose controls on such commerce would prove to be imperfect, at best. Evasion, diversion, and subversion were inevitable by-products of restrictive laws and their enforcement. The policing reach of the state has always been greater than the strength of its grip.

This final chapter in our long story evaluates today’s conventional wisdom about illicit globalization through the prism of the American experience, past and present, highlighting patterns of continuity and change in America’s centuries-old relationship with the world of clandestine commerce and speculating what this may mean for the future. Now, as in the past, this relationship is far more complex and double-edged than standard accounts would lead us to believe.

Continuity and Change

“Transnational organized crime” is the favored term to describe the illicit dimensions of globalization.
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But it is also a frustratingly broad, vague, and fuzzy term. Many of those who use it tend to focus on large criminal organizations (often misleadingly labeled as “cartels”) and mafialike leaders (often given colorful medieval-sounding names such as “crime lords” and “drug barons”) rather than particular market sectors or activities. At base, much of what makes the business of organized crime transnational involves some form of profit-driven economic exchange across borders. How transnational, organized, and criminal the exchange is tends to depend on the legal and financial risks. For the most part, transnational organized crime is therefore merely a fancy new term for an old and familiar practice: smuggling. The speed, content, methods, and organization of smuggling have varied greatly across time and place; the basic activity itself has not fundamentally changed. Neither has the necessity for smugglers to go either through law enforcement via camouflage or corruption or around it via circuitous routes.

As in the past, smugglers today sneak in or take out whatever they can, in whatever way they can. This includes prohibited commodities,
legal commodities that circumvent sanctions and embargoes or evade taxes and tariffs, stolen or counterfeit commodities, unauthorized migrants, and endangered species. Some of these smuggling activities are little more than a law enforcement nuisance (cross-border vehicle theft); some are obscure (the black market trade in bear bile), and others receive intense policy attention and media scrutiny (illicit drugs and human trafficking); but still others have serious environmental consequences (the outlawed trade in toxic waste) and security implications (sanctions busting and arms trafficking).

The extraordinary diversity of smuggling is illustrated by simply considering the thousands of seized items at New York’s JFK Airport during the span of just a few days. They range from the predictable (Cuban cigars, fruits, meats, and vegetables) and fraudulent (counterfeit Tiffany jewelry, fake Viagra, pirated CDs, knockoff Louis Vuitton handbags) to the exotic (undeclared antique pistols, handbags made from endangered species skin) and bizarre (cow dung toothpaste, cow urine, deer blood, animal corpses for witchcraft rituals).
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And this does not include the human trade, ranging from illicitly importing low-wage nannies, grape pickers, and sex workers to high-priced Cuban baseball players.
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At the same time, America is a favorite place for illicit traders from around the world to stash their ill-gotten gains. For all the U.S. finger-pointing at offshore tax havens and money-laundering centers such as the Cayman Islands, the state of Delaware is one of the easiest places in the world to hide money via shell companies, with the diverse clientele ranging from Serbian cigarette smugglers to Russian arms dealers to Fortune 500 corporations.
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Today’s smugglers are as diverse as what is being smuggled, from disorganized to highly organized. In the case of drug smugglers, for instance, they include not only the everyday “mules” smuggling dope in their vehicle, luggage, or body (swallowing condoms filled with heroin or cocaine and tied shut with dental floss) but also grandmas smuggling in their meds as well as jocks smuggling in their steroids from Mexico and Canada. Smugglers range from self-smugglers (migrants sneaking across borders) to individuals smuggling goods for their own personal consumption, to independent and small-scale entrepreneurs, loose networks of transnational gangs, and highly developed and sophisticated criminal organizations.

Even though the global reach of some smuggling groups has accelerated with the integration of the global economy, the image of an octopuslike network of crime syndicates that runs the underworld through its expansive tentacles is a fiction invented by sensationalistic journalists, opportunistic politicians, and Hollywood scriptwriters. If this picture matched reality, the challenge to law enforcement would actually be far less difficult: one would need only to cut off the head of the octopus and the tentacles would die with it. Even the most developed and sophisticated smuggling schemes tend to be defined more by fragmentation and loose informal networks than by concentration and hierarchical organization.

The conventional account of illicit globalization repeatedly tells us that there has been a dramatic upsurge in the volume of illicit trade in the last few decades. This may well be true; after all, such trade would simply have to keep pace with the licit economy to grow at an impressive rate. But that does not mean this trade has necessarily increased as an overall percentage of global commerce. And indeed, the liberalization of trade in recent decades has sharply reduced incentives to engage in smuggling practices designed to evade taxes and tariffs, which were historically a driving force of illicit commerce. With the lowering of trade barriers as part of the process of globalization, smuggling is increasingly about evading prohibitions and bans rather than import duties. Behind this bifurcated trend, the United States has been the world’s leading advocate of both market liberalization and selective market criminalization. So rather than an extreme example of “globalization out of control,” the prevalence of illicit global commerce today partly reflects how limited and incomplete globalization actually is. In other words, smuggling would be defined away in a truly “borderless world” in which free trade and labor mobility reigned in all sectors of the economy.

Standard accounts of illicit globalization also tell us that borders and border defenses are increasingly overrun and overwhelmed—with the U.S.-Mexico line, the most important crossing point for illicit drugs and labor in the world, pointed to as a particularly glaring illustration. Calling for tougher border enforcement is therefore an easy political sell in Washington, and every administration is vulnerable to the charge that it is not doing enough to “secure the border.” But we too
often forget that America has always had leaky borders. As we saw in the previous chapter, smuggling across the southwestern border was a defining feature of the U.S.-Mexico relationship from the very start. The same is true of the U.S.-Canada border—though today this history is often forgotten, given all the attention to the southern border. And as was the case with smuggled Chinese in the late nineteenth century and smuggled booze in the 1920s, the northern border continues to be an important clandestine crossing point for people and drugs, including Chinese migrants, “Ecstasy” (MDMA) tablets, prescription pills, and high-potency British Columbian marijuana (“BC Bud”).
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Moreover, we should remind ourselves that much of today’s U.S.-Mexico border smuggling problem is self-created, an unintended consequence of past government actions. The “successful” U.S. crackdown on Colombian cocaine trafficking through the Caribbean and South Florida in the 1980s pushed the cocaine trade to the southwest and vastly increased the power and wealth of Mexican traffickers—with devastating consequences for Mexican society. Similarly, the increased sophistication, organization, and profitability of migrant smuggling across the border is largely a self-made problem: migrants used to have the option of smuggling themselves into the country, but with the dramatic tightening of border controls they now have little choice but to place their lives in the hands of professional smugglers. The border remains porous, but it is far more difficult and dangerous to cross than ever before. The fact that migrants keep crossing is made possible by the hiring of smugglers but ultimately reflects Washington’s unwillingness to seriously target domestic employers. Not surprisingly, unauthorized entries have slowed substantially in recent years with the slowdown in the economy and reduced employer demand.

The ability to weed out illicit from licit border crossings has long depended on the nature of the smuggled commodity; the ease of production, concealment, and transport; the availability of legal substitutes; and the nature and level of consumer demand. It is little surprise, therefore, that law enforcement has been least effective in suppressing the illicit drug trade. Drugs have all the traits of the ideal smuggled commodity: high-value and low-weight; compact; easy to produce, transport, and hide; and having intense consumer demand requiring constant replenishment. These characteristics also apply to the most
lethal and addictive legal drug—tobacco—which is smuggled in large quantities to evade high taxes rather than bans. It is striking to note that global cigarette exports are about one-third higher than imports, with the mysteriously missing third explained by diversion via smuggling channels. America’s favorite brand, Marlboro, is also one of the world’s most smuggled brands—with Philip Morris at one point paying the European Union $1.25 billion to settle charges of complicity.
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Policing campaigns often fail to eliminate the targeted illicit trade but nevertheless function as an alternative form of regulation: as we have seen again and again throughout the nation’s history, the method, intensity, and focus of law enforcement significantly shape the location and form of smuggling, the size and structure of the smuggling operation, and its cost and profitability. For instance, U.S. efforts to restrict Chinese immigration in the late nineteenth century prompted both a sharp increase in Chinese smuggling and a geographic shift in clandestine entry to land borders, and this dynamic was repeated again a century later. A similar pattern has long been evident in the geographic displacement effects of U.S.-promoted drug eradication and interdiction campaigns—for example, pushing the heroin trade from Turkey to Mexico in the 1970s, and pushing cocaine trafficking from the Caribbean to Mexico in later years (much to the delight of Mexican smugglers).

We should therefore not lose sight of the fact that, even if not always terribly effective, it is the very existence of government controls and efforts to tighten them that makes it necessary for illicit traders to adapt and devise such creative and elaborate evasive maneuvers. Some smuggling activities are so profitable—and sometimes violent—precisely because governments impose and enforce prohibitions. Prohibitions can therefore function as price supports, which can attract new market entrants willing to accept the occupational hazards so long as consumer demand remains high. Even corruption can be considered a peculiar form of regulation, the equivalent of an informal tax on illicit trade that smugglers pay for non-enforcement of the law. But instead of filling government coffers, the corruption tax lines private pockets.

As has always been the case, the sheer volume of border crossings means that governments prioritize some smuggling concerns more than others. In this regard, the United States has shaped the global anti-smuggling agenda more than any other nation. No country has
been more aggressive and more successful in exporting its favored prohibitions and policing practices.
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When one digs beneath the surface of many United Nations and other multilateral anti-smuggling initiatives, one inevitably finds U.S. funds, personnel, model legislation, and diplomatic endeavors. But U.S. attention and concern is highly selective and uneven. Washington has persistently blocked UN attempts to impose more stringent controls on small-arms trafficking—and the political muscle of the NRA has made sure there is no tampering with notoriously loose domestic gun laws. The United States spends billions of dollars trying to stop the smuggling of drugs into the country while doing relatively little to impede the smuggling of guns out.
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