A report passed by me close to 4 months ago but recent violence in Brazil returned my mind to this topic. Brazil is prepping like mad for the 2016 Olympic Games. Much of this prep no doubt will be centered on getting violence under control in the country’s most popular city, Rio de Janeiro. A big part of the problem at least in Rio has to do with a poor public administration which has resulted in a corrupt police force. However, another interesting wrinkle in Rio at least compared to Brazil’s other large metropolis, Sao Paulo, is Rio lays claim to 3 prominent competing drug factions compared to Sao Paulo’s 1.
What this boils down to is Rio dealers need to work harder, longer hours, and gain competitive advantages in order to clear marginally small break-even points with regard to revenue and expenditures. The report I’m referring to quoted the following:
Total Annual Drug Sales = $182M
Total Expenditures = $167M
Total Profit = $15M
What we’re looking at is an 8% profit split among three rival competing gangs. Moreover, the wage structure appears to be quite flat which is ironically not the case among Brazilians in general – a country marked by wide gaps in income inequality. What this boils down to is to gain an edge over a competitor each of these three gangs needs to pilfer clients from the other while simultaneously weakening the other. This is achieved through violence.
One could argue, if they’re killing each other what’s the big deal. Well, not only are law-abiding citizens being killed as well but with such small margins gangs have had to branch out into other areas of business, the most popular being shaking down local politicians in the areas of the illicit provision of electricity and other local utilities. This fuels an already corrupt public administration and keeps the vicious cycle turning.
The knee-jerk reaction from Sao Paulo is thank goodness we have one controlling drug family. Indeed, getting citizens hooked on crack is not an ideal situation, but a monopoly in this respect keeps the violence down which for Brazil and the world community come 2016 might be an ideal short-term recipe.