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Plata o Plomo? The Lessons We Can Learn From Escobar’s Drug Empire

Philanthropist, the 7th richest man in the world from 1979-1983, politician, community leader and drug lord. Pablo Escobar can be described using so many different adjectives, most of which is worthy of a Tony Stark description. It’s true that Escobar built an empire doing illicit business, but it’s undeniable that he was a great businessman and entrepreneur; to the point where some of his practices are actually described in business books: focus on reducing distribution costs, franchising and, most importantly, the courage to follow his gut.

When the well known TV series Narcos premiered, a lot of curiosity about Pablo’s life and the relationship with his community came up. It’s understandable for Europeans and Americans not to understand the type of relationship Pablo had with his community, but for South Americans it is something embedded in our society. Since the state is not able to supply the basic needs for most of the population, drug lords normally serve as a replacement: from cable TV to water, they supply the people in need with everything the state cannot provide them. Of course, that this doesn’t come without a price. Just like in Narcos, the communities suffer from violence and an uncertain routine, that goes from weekend parties sponsored by drug trafficking money to helping the drug dealers hide from the police in their houses. So, if it doesn’t come as a straightforward conclusion for you why most Medellin supported Pablo in the beginning of his “career”, and why until today there’s a neighborhood with his name in Medellin, don’t worry, it means you live in a welfare state.

Businesswise, it’s pretty clear why Escobar became rich in such a small period of time. He identified a demand that was not being met by its supply: the cocaine market in developed countries.With the disco era frenzy for the drug, Escobar realized that with his privileged location, corrupt Colombian police and supply of the prime matter for his production (coke plant) he could meet this demand, and make a lot of profit from it. At a certain point in his business history, 4 out of 5 lines of cocaine that were used in the U.S. were originated from the Medellin Cartel. Differently from what is shown on the Tv series, Pablo never had to battle for his market with other cartels; he had a more ingenious way of solving the competition problem: he bought and built multiple airports in central and south america, which gave him control of all the cocaine being transported to the U.S. So even if the drug was produced by other Cartels, it was transported by him, which, of course, had a cost.

Not only in distribution Pablo excelled, but also in regard with strategical moves in the market. Realizing that the competition for the cocaine market was growing, he decided to negotiate his surrender with the Colombian government in a prison designed by him, where he could run his business safely, and if not ironically, with the protection of the Colombian government. Of course, his relationship with Colombia would end in not such a pretty way, after all. After the “Hunt for Pablo” started, Pablo responded with a lot of violence and no care for civilians. Thousands were killed, millions were spent, and, after a few years, Pablo ended up being killed by a DEA agent Javier Pena (even though some conspiracy theories say he committed suicide).

Besides being the source of a good business class, Pablo’s history should also be the example of a much more relevant discussion: the legalization of drugs. At some point, Escobar was making 2,1 billion dollars per year and spending 5000 dollars a week for rubber bands to stack up his cash. This humongous amount of money was neglected by government taxes because what he was selling was illegal. But what if it was? We actually don’t have to imagine that – after Colorado legalized marijuana, the state tax revenue originated from marijuana sales have reached almost 1 billion dollars for the year of 2015.

In the next few weeks more than 7 states in the U.S. will vote in favor or against the legalization of both recreational and medicinal use of marijuana. I would tell them to consider all the last great examples of countries and states that legalized not only marijuana, but also different drugs, but maybe all they need is a Netflix and chill session watching Narcos.


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