When Tom Wainwright became the Mexico correspondent for The Economist in 2010, he found himself covering the country’s biggest businesses, including the tequila trade, the oil industry and the commerce of illegal drugs.

“I found that one week I’d be writing about the car business and the next week I’d be writing about the drugs business,” Wainwright tells Fresh Air’s Terry Gross. “I gradually came to see that the two actually were perhaps more similar than people normally recognize.”

During the three years he spent in Mexico and Central and South America, Wainwright discovered that the cartels that control the region’s drug trade use business models that are surprisingly similar to those of big-box stores and franchises. For instance, they have exclusive relationships with their “suppliers” (the farmers who grow the coca plants) that allow the cartels to keep the price of cocaine stable even when crop production is disrupted.

“The theory is that the cartels in the area have what economists call a ‘monopsony,’ [which is] like a monopoly on buying in the area,” Wainwright says. “This rang a bell with me because it’s something that people very often say about Wal-Mart.”

Tom Wainwright is now the Britain editor for The Economist. The Economist hide caption

toggle caption The Economist

Wainwright describes his new book, Narconomics, as a business manual for drug lords — and also a blueprint for how to defeat them. When it comes to battling the cartels, Wainwright says governments might do better to focus on controlled legalization rather than the complete eradication of the product.

“The choice that I think we face isn’t really a choice between a world without drugs and a world with drugs,” he says. “I think the choice we face really is between a world where drugs are controlled by governments and prescribed by pharmacists and doctors, and a world where they’re dealt by the mafia, and given that choice, I think the former sounds more appealing.”

Interview Highlights

On how the narcotics supply chain is similar to the Wal-Mart supply chain

They say that in certain industries Wal-Mart is effectively the only buyer in the industry. So if there’s some disruption to supply, let’s say the harvest fails for apples or something like that, apple growers aren’t able to increase their prices, because Wal-Mart is the only buyer and they say, “Well, sorry but this is our price and if you don’t want to sell to us, well, tough.” So the sellers have to carry on selling it at the same price as before. It seemed that something similar might be going on in the cocaine industry. …

I was looking at the supply chain of cocaine. I went down to Bolivia, and I went to visit some of the terraces down there in the Andes where the coca leaf is grown. The coca leaf is the raw ingredient for cocaine, and all of the world’s cocaine is grown down there in the Andes in either Bolivia, Colombia or Peru. So I went down there, and I read about all the incredible work that’s being done down there to try to disrupt the cocaine supply line, and you’ll have seen footage probably of airplanes and helicopters dumping tons of weed-killer on these Andean terraces in Colombia, for instance. They’ve done lots of work on this and they’ve done a fairly effective job at making it harder to grow coca leaf. They destroyed hundreds of thousands of hectares over the years, and it has made the lives of cartels more difficult on the surface, at least. And yet, I looked at the price of cocaine in the United States, and it has hardly budged. You can go back decades and the prices remain roughly $100 per pure gram.

On why an increase in the price of coca leaf doesn’t change the cost of cocaine

When you look at the economics of the supply chain you begin to see why actually even if you could increase the price of that coca leaf, it’s doubtful that it would have very much impact on the final price of cocaine in the U.S. or in Europe. … To make, for instance, a kilo of cocaine you need about a ton of coca leaf, and that ton, once it’s all dried out, in a country like Colombia will fetch perhaps $400. Now, the kilo of the United States will fetch about $100,000. So let’s say you’re incredibly successful in managing to raise the price of coca leaf, and you manage to double it, to $800, if you then manage to transfer all of that extra cost onto the consumer. That final kilo of cocaine is only going to cost now $100,400. In other words, you can double the price of coca leaf and you increase the price of the final product, cocaine, by less than 1 percent. … We’re putting all this effort into raising the price of coca leaf, when in fact that’s only a small part of the cost of the final product.

On how the Mexican gang ‘The Zetas’ franchise

The Zetas are one of Mexico’s biggest drug cartels and they’ve got a reputation for being one of the nastiest ones, so when you see pictures of people who’ve been beheaded or hung up from bridges, these are often the guys who are responsible. And while I was in Mexico the Zetas expanded more quickly than any other cartel. It was extraordinary. Originally they came from the northeast of Mexico, but within a very short space of time they spread across all of Mexico and in fact down into Central America as well. So I got to thinking about how they’d done this and when you look at the way that they spread, it seems that what they do is that they go to local areas and they find out who the local criminals are, people who do the drug dealing and extortion and all the other kinds of crime, and they offer them a crime, they say, “OK, you can use our brand, you can call yourself the Zetas, just like us,” and they give them, believe it or not, baseball caps with embroidered logos and they give them T-shirts with their logo on and they train them in how to use weapons sometimes, and in return the local criminals give the Zetas a share of all of the money that they get from their criminal activity. In other words: It’s exactly like the kind of franchising model that many other well-known companies use.

And it comes with all the same advantages and disadvantages [of franchising]. One of the big advantages is that it has allowed the Zetas to grow much more quickly. One of the disadvantages though, and this is something you often see in the legitimate franchising business, is that the franchisees often start to quarrel among each other and the trouble is that the interest of these franchisees, the local criminals, aren’t very well aligned with the interests of the main company. Because as far as the main company is concerned — and this applies whether it’s the Zetas or McDonald’s — if you’ve got more branches, more franchises in a local area, that means more income for the main company, because they take their money as a slice of the income of the local franchisees. But the local franchisees have totally different motives. They want to be, if possible, the only ones in the area. They want as few branches as possible. And so you’ve had very often cases of franchisees suing the main brand over what they call “encroachment,” in other words, when the main brand has too many branches in the same area.

On personnel issues in cartels

This was a guy … who I went to see in El Salvador and he’s a called Carlos Mojica Lechuga, who is the leader of one of the two big street gangs in El Salvador. There are two of them: One [that he’s the head of] called Barrio Dieciocho, or 18th Street Gang as most people call it in English, and the other called the Mara Salvatrucha [MS-13] and both of these are effectively transnational corporations, really. They make their livings dealing drugs and with extortion, principally, those are the two main business lines that they have. So I thought it would be interesting to go and speak to this guy and find out how he ran his company. So I went to see him and he’s in jail at the moment, which doesn’t seem to be stopping him from running his business in any way. … We sat down and we started talking business and it really turned out that a lot of his complaints were just like the kind of complaints that I’d heard many times before from the business people. He complained about managing his staff, he complained about competition with his rivals, he complained about his image in the international media. It was really strangely reminiscent of speaking to a kind of frustrated mid-level manager.

On how government legalization and/or regulation of drugs affect cartels

There’s an interesting example underway in Switzerland where they’ve legalized heroin, which sounds crazy. But it’s worth making clear that when they legalized it, they haven’t put it on sale in the way that marijuana is on sale in Denver; they’ve just legalized it by allowing doctors to prescribe it to people who are already addicted, and it’s had quite an interesting effect there because many of the people who are addicted to heroin in Switzerland and indeed in other countries are people who deal the drug, because you’re addicted to this drug it’s a very expensive habit and for many people the only way they can afford it is to deal it on the side. So in Switzerland what they found is that by taking those very heavy using addicts into treatment they’ve stopped them from dealing the drug, because now they get their own drug free of charge from their doctors, and because they’re no longer out there on the streets dealing the drug, the number of new users has dropped dramatically. So in Switzerland, funnily enough, since they “legalized” heroin in this very, very limited, restricted, controlled way, the number of new users has actually fallen quite a lot and, of course, the illegal supply has dried up almost entirely, because the supply is now run by the government.

What does the lifting of economic sanctions against Iran, as part of a nuclear deal, mean for one Iranian?

We met a carpet weaver in the ancient city of Shiraz. She spends her days on the floor of a little room. Working swiftly by hand, she ties knots with little bits of wool — orange, green, white and two shades of red. Wool threads stretch across a steel frame like strings on a harp.

Her clothes — loose, and flowing, and colorful — identify her as part of a traditional nomadic family. She might be in her 40s, though she said she didn’t know her age. She was born back when her family was still living in tents.

It wasn’t bad in tents, she said. They used to move south toward the Persian Gulf in the winter.

The name her family gave her, Zarafshan, means “spreader of gold.” And they made carpets: Her mother did, and her grandmother, and her grandmother before that. It’s a family tradition that Zarafshan has also passed down, saying her oldest daughter makes better carpets than she does.

Even today, Zarafshan’s loom is of a kind that’s simple and easy to carry — though the family long ago settled outside Shiraz.

We’d found her by following one street to a narrower street to a still narrower dead end, and finally to a little house, where her daughter-in-law was reading a book beside the gas stove.

Zarafshan is divorced with five kids, not all of them grown. She said what she earns from making carpets isn’t enough to support her family.

Zarafshan comes from a family of carpet weavers, dating back to her great-grandmother. Steve Inskeep/NPR hide caption

toggle caption Steve Inskeep/NPR

Still, “What do I need a husband for?” she says with a laugh. But now that he’s gone, she is forced to supplement her income with help from her son-in law.

This is true even though she employs her local craft as part of the global economy. Zarafshan works for a local businessman, who says he employs a total of 40 women to make carpets in their homes.

He told us the carpets are sold in Germany. They were sold overseas even during economic sanctions, passing through third-party sellers. Iran is said to sell about two-thirds of its carpets abroad, exports worth about $330 million in 2014 alone.

They can be sold more easily now, though it’s not clear what difference that will make to Zarafshan. I asked if she’d ever seen one of her carpets in someone else’s home.

This is such an outlandish idea that she doesn’t understand the question at first.

She finally says no. She hasn’t. She’s never even kept one of her carpets for her own home. She can’t afford her own handiwork. So she keeps a machine-made, red-and-yellow carpet, the kind you might see in any modest home in Iran.

“Rich people can buy the carpets,” she says.

And she goes on making them, working in this room whose only window opens to another room.

She’s part of a very big world, though her world remains very, very small.

A string of attacks on cities, schools and workplaces has prompted many employers to turn to a new area of security for their employees: active-shooter training.

Until about a decade ago, workplace security focused mostly on preventing theft. Now, businesses are trying to give their employees guidelines on how to escape or handle armed intruders.

“Active shooter’s been kind of my life since 1999,” says James McGinty, vice president of training and development for Covenant Security Services, whose clients include companies looking for guidance on how to deal with active shooters. He is also a former police officer and consultant to the Department of Homeland Security.

“Seventy-five to 80 percent of your businesses are looking to now do some type of armed intruder/active shooter policy procedure and training,” McGinty says.

He says the Columbine High School shootings in 1999 changed the way law enforcement, schools and workplaces thought about dealing with an active shooter.

Definitions of what constitutes an active shooter can vary, which makes data hard to collect. Some crowdsourced estimates put the number of shooting events last year at 330, but some definitions only include events with four or more casualties. The FBI defines it as someone actively engaged in killing or attempting to kill people in a confined and populated area. There were 160 such incidents between 2000 and 2013.

Insurance companies may encourage employers to do active-shooter training to limit liability. Some in the chemical or nuclear power industry might be required to do so by law. It is also a sensitive matter — no company was willing to discuss its program on the record for this story.

Some employers partner with local law enforcement for their training.

Videos produced by local police forces and the Department of Homeland Security promote the slogan “Run, Hide, Fight.” They say running away increases the chances of survival. They also advise coming out of the building with your hands up, or turning off the lights and your cellphone ringer if you’re hiding. Or — as a last resort — trying to gang up as a group on the assailant.

This kind of training at work is hard, says Laurence Barton, a threat consultant and trainer who works with the FBI.

“How do you create awareness, without creating paranoia?” he says.

He says employers are handling more threats — increasingly made through social media or through underground Internet services that allow people to send anonymous, encrypted messages.

“About a dozen threats per week for the Fortune 100 [companies] is average,” Barton says, but the vast majority of those are handled quietly, without incident or publicity.

It often falls to human resources departments to identify unstable or problematic employees — and sometimes fire them. They have to weigh a worker’s medical privacy and rights against the safety of other workers. Barton worries that some training courses create false expectations that those workers can handle active shooters themselves.

“This cottage industry is out offering one- and two-day seminars on how to deal with the active shooter, and this is crazy. This is absolutely, in my opinion, totally inappropriate,” he says. Only police, he says, should manage shooters.

Don Alwes, a law enforcement officer and instructor for the National Tactical Officers Association, says workplace training does not have to be expensive or time consuming, especially when done in concert with local police.

“The training costs on that are relatively low, compared to some types of physical security systems or armed guards,” Alwes says.

But none of it is effective if people don’t heed the lessons from past shootings.

“Sometimes we learn the lessons, but they tend to fall out of our minds as we get back to normal activities,” he says. “Someone paid for those lessons, usually in blood.”

The San Bernardino facility attacked in December conducted monthly active-shooter trainings. One might be tempted to say it didn’t work, but Alwes says it’s hard to know. More might have died that day without it.

Federal Reserve Chair Janet Yellen made clear in congressional testimony Wednesday she sees an economy that faces increased risk. Her assessment was sufficiently downbeat to practically remove the possibility of another interest rate hike at the Fed’s next monetary policy meeting in March.

Transcript

ARI SHAPIRO, HOST:

A reality check today from Federal Reserve Chair Janet Yellen. She acknowledged that the U.S. economy is facing a higher level of risk than just a few months ago. NPR’s John Ydstie reports.

JOHN YDSTIE, BYLINE: Yellen was on Capitol Hill giving her semi-annual report to Congress on the health of the U.S. economy, and here’s what she had to say in her opening statement.

(SOUNDBITE OF ARCHIVED RECORDING)

JANET YELLEN: Financial conditions in the United States have recently become less supportive of growth.

YDSTIE: Yellen blamed the sharp decline in stock prices, less available credit, weak global growth and a further strengthening of the dollar, which hurts U.S. exports.

(SOUNDBITE OF ARCHIVED RECORDING)

YELLEN: These developments, if they prove persistent, could weigh on the outlook for economic activity in the labor market.

YDSTIE: Not a very sunny outlook. But, ironically, that’s what investors were looking for – an expression from Yellen that she sees the same headwinds for the economy that they do. As investors see it, Yellen’s acknowledgment of these economic headwinds makes it less likely that the Fed will raise interest rates again anytime soon. But Yellen walked a fine line in the hearing. She didn’t explicitly take another interest rate hike off the table. And in response to a question about whether recent market turmoil had convinced policy-makers to put off thoughts of further interest rate hikes, Yellen said…

(SOUNDBITE OF ARCHIVED RECORDING)

YELLEN: I think the answer is maybe, but the jury is out. We’ve continued to see progress in the labor market. Over the last three months, there’ve been 230,000 jobs per month averaging through.

YDSTIE: And, Yellen said, while economic growth was disappointing at the end of last year, she expects it to pick up, helped by lower oil prices.

(SOUNDBITE OF ARCHIVED RECORDING)

YELLEN: If you look at the difference in oil prices now relative to 2014, for the average American household, we’re looking at a savings of a thousand dollars a year.

YDSTIE: Yellen said that’s boosting consumer spending. Wall Street responded positively to Yellen’s testimony, but lost its gains later in the day. Also today, Yellen faced consistent questioning from African-American lawmakers about the continued high rates of unemployment in their communities, even as the national unemployment rate is at 4.9 percent. Here’s Minnesota Democrat Keith Ellison.

(SOUNDBITE OF ARCHIVED RECORDING)

KEITH ELLISON: White unemployment in Minnesota is 2.9 percent as of December 2015, but black unemployment is 14.1. What can we do about it?

YDSTIE: Yellen responded that the Fed’s main tool, manipulating interest rates to boost employment across the economy, could not be targeted at one group.

(SOUNDBITE OF ARCHIVED RECORDING)

YELLEN: The Fed, of course, has a role to play, but job training, educational programs, programs that address other barriers in the labor market, this is Congress’s job to address.

YDSTIE: Yellen will visit the Senate tomorrow. John Ydstie, NPR News, Washington.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.

Japan is venturing further into the terra incognito of negative interest rates, selling a 10-year government bond that actually costs its purchasers money over time.

In doing so, Japan joins a handful of European countries that have also lowered rates below zero.

The yield on the 10-year note sold by the Bank of Japan dipped to an unprecedented level of negative .05 percent, meaning that anyone who buys it will lose money.

But with global financial markets in turmoil, investors are evidently willing to pay a price for parking their money in an asset that is widely seen as very safe.

Like other central banks, the Bank of Japan has been steadily lowering interest rates for years in an effort to stimulate its economy. It cut rates so much that they eventually fell to zero, leaving the bank with no more ammunition

When interest rates fell to zero, it was widely thought that

With global stock markets in turmoil, investors have been pouring money into safe havens such as the yen. That’s sent the value of the yen rising against competing currencies such as the Euro, and made Japan’s exports less competitive.

Japanese officials are hoping that negative rates will lessen the pressure on the yen and stimulate growth.

“The hope is, and it’s a big hope, that going to negative would help to add more stimulus to the economy, particularly as the world economy slows,” said David Blanchflower, professor of economics at Darmouth and a former member of the Bank of England’s Monetary Policy Committee.

The Bank of Japan has a long history of using monetary policy to neglible effect. It long ago cut interest rates to stimulate its economy, but growth has remained well below expectations.

Like other major central banks, including the Federal Reserve, the Bank of Japan has now essentially lowered rates to zero.

long ago cut the interest rates on the money it pays for holding

The move by the Bank of Japan is aimed at stimulating its economy, but it increases the likelihood that other countries will try to do the same thing.

“In some sense this is an opening shot in a currency war. I’ve called it currency skirmishes,” “As one cuts and one goes to negative, others do too.”

in an effort to stimulate its economy, but growth has remained well below expectations. Like other major central banks, including the Federal Reserve, it’s essentially lowered rates to zero.

The analogy I would give, it’s like trying to play golf with only a one iron. You’ve only got one club, that’s what you’ve got to use.

“There’s that terrible thing called zero, which is looking and we all thought that the zero lower bound was as low as things could go. That was as much stimulus as you could put into the economy.”

The Gulf of Mexico is now open for commercial fish farming.

The National Oceanic and Atmospheric Administration (NOAA) announced last month that, for the first time in the U.S., companies can apply to set up fish farms in federal waters.

The idea is to compete with hard-to-regulate foreign imports. But opening the Gulf to aquaculture won’t be cheap, and it could pose environmental problems.

Harlon Pearce, the owner of Harlon’s Louisiana Fish, which supplies restaurants and groceries across the South, says he welcomes the change. Around this time of year, his refrigerated warehouse outside New Orleans is stocked with catch.

“You’ve got 30,000 pounds of fish right here, or more,” he says.

He’s freezing a lot of it to keep up with year-round demand. He says he’d like to sell nationwide, to big chains like Red Lobster, but “we never have enough fish to supply the markets. Never,” he says.

That’s true for a couple of reasons. For one thing, the seafood industry in the Gulf still hasn’t bounced back from the 2010 BP oil spill. Secondly, the industry has always fluctuated, because of hurricanes and pollution.

Pearce, who is on the board of the Gulf Seafood Institute, says aquaculture could solve that.

The rest of the world is already heavily invested in farming fish. According to NOAA, 90 percent of fish in the U.S. comes from abroad and half of this is farmed. While fish farms exist in the U.S., the industry has yet to really take off. And, until now, federal waters had been off limits. The U.S. government says that opening up the Gulf to fish farms would reduce American dependence on foreign food and improve security.

“We see it as another important step in building the resiliency of our oceans and fishing communities,” says NOAA Administrator Kathryn Sullivan. “This starts with the Gulf but actually opens the door for other regions to follow suit.”

In the coming years, NOAA will issue 10-year permits to companies that want to set up shop in federal waters, generally 3 miles offshore. The farms, which look like giant floating pens, are allowed to raise fish native to the area only. In the Gulf, that means species like red drum and cobia — not salmon or tilapia.

Some say the farms will hurt struggling fishermen.

“These systems will take up real space in the ocean and displace fishermen. In fact, there are going to be buffer zones around these facilities where fishermen can’t go,” says Marianne Cufone, an adjunct professor at the environmental law clinic at Loyola University.

And she says the farms run the risk of large fish escapes, which might wreak havoc on the local ecology.

“There have been millions of fish that have escaped all over the world and are causing problems — not just genetic problems, but things like spreading diseases between captive fish and wild fish,” Cufone says. Fish food and waste could also fall out of the pens and affect other marine life.

NOAA officials say they took all of this into account already by weighing thousands of public comments and enforcing certain environmental safeguards, like constant monitoring of cages.

Raising fish in the ocean won’t be quick or easy, says Rusty Gaude, a fisheries expert with Louisiana State University. He notes that NOAA is setting a lot of environmental rules, which can be burdensome. And then there’s the threat that hurricanes pose to floating fish farms.

“These initial efforts may go through some rather painful growing pains,” he says.

But he thinks the plan will become a reality.

“Eventually, the world and the Gulf of Mexico and Louisiana will see aquaculture here in the Gulf of Mexico,” he says.

NOAA and other federal agencies say the first permits could be approved in two years.