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.Further, adds Rosenberg:
Mexicans in Texas are hardly new, but in recent years it’s middle- and upper-class families in Mexico’s north who have also made the exodus, bringing their savings and businesses with them. While most seem to be fleeing the kidnapping and extortion back home, one observer has a different take: “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.After all, picking up your money on the Texas side means avoiding the border checkpoints and customs officials altogether. The US-side infrastructure of drug cartels is a subject that seems almost willfully ignored by policymakers and the media. The Texas Department of Public Safety has maintained for years that "command and control" of much so-called Mexican cartel activity is actually on the US side of the border, and so is much of their money. Not just cartels but also mid-level distributors set up front companies that lose money as a practical matter but serve as vehicles through which they can launder drug cash, making it a lot easier to distribute either back to Mexico or to other stakeholders in the US. This is happening today on a fairly widespread basis and it means a lot more marginal businesses stay afloat - how many, no one can tell - to perform what amount to retail-level money laundering functions.
Then there's just the fact that rich people spend more money, including Mexican cartel thugs and others getting rich from drug money. Tone adds that "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."
It requires almost nothing to create a legal business structure in Texas - pay $15 for a DBA at the county courthouse and you can open a bank account and start to make cash deposits. Apply for a federal tax ID number and you can put employees on the payroll. Setting up a corporation requires only slightly more paperwork. Multiply that process by hundreds or even thousands of businesses backed by billions in liquid cartel capital, and it's no wonder the state's economy looks so much better than the rest of the country's.
There's an ironic sense in which it's a good thing for Texas' economy that "winning" the drug war is a senselessly impossible task - at least banking solely on a prohibitionist law-enforcement strategy. If it were ever actually possible to eliminate the flow of illegal drugs, our state economy would be like the dog who caught the car - lucky if not dead, much-disfigured, and walking forward into the future with a permanent limp.