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

Piles of cash and nowhere to launder it? That's what Texas is for, hombre.
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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