A pot of money

Could something other than Rick Perry’s business-friendly policies be keeping the Texas economy buzzing?

Governor Perry and his spin machine, while not openly declaring his candidacy for the Republican presidential nomination, are extolling his record of jobs creation in Texas as proof of his economic acumen, one of the many purported qualities that make him presidential timber. Is he really that good?

Texas is a jobs monster. Over the past two years, 37 percent of the net new jobs in the country were created in the state, a track record that governor and maybe GOP presidential candidate Rick Perry is quick to tout. He credits his conservative, pro-business policies; skeptics say it’s mainly owed to immigration and the high prices the state is getting for its oil. But there’s another possible contributor to Texas’s growth that no one is talking about: the drug trade.

How so? Well, money pours across the US-Mexico border, proceeds of drugs sales in the US going back to Mexican cartels. Does the money then stay in Mexico?

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.

Yet there is more, and the rest is not as intuitive as this example.

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.