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flowchart LR
S["State security<br/>agents"]
C["Criminal<br/>entrepreneurs"]
Z["THE GRAY ZONE<br/>where state and<br/>crime intersect"]
R["Informal rules:<br/>who traffics<br/>where"]
Q["Quiet markets,<br/>little visible<br/>violence"]
S --> Z
C --> Z
Z --> R
Z --> Q
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classDef cr fill:#f7e2db,stroke:#b44527,stroke-width:3px,color:#1e293b
classDef gz fill:#f0e6c9,stroke:#b7943a,stroke-width:4px,color:#1e293b
classDef ok fill:#e2ede9,stroke:#4a7c6f,stroke-width:3px,color:#1e293b
class S st
class C cr
class Z gz
class R,Q ok
The Politics of Corruption
Lecture: 12
Today
How do criminal organizations influence public officials — and govern in their place?
By the end of this session you should be able to:
- Explain plata o plomo: why bribes and bullets are substitutes
- Explain how party alternation broke Mexico’s state–cartel protection pacts
- Predict how enforcement crackdowns reshape trafficking routes and violence
One warning: today’s material is close to home for many of you. Speak only as much as you want to.
I. When Crime Competes for Governance
The puzzle: democracy arrived, killing rose
Criminal groups do not only break rules
They also make them.
- They sell protection: settling disputes, enforcing debts, deterring rivals
- They tax: extortion payments in exchange for being left alone
- They police: punishing theft in territories they claim
- Where the state is thin, someone supplies these services
- Political scientists call this criminal governance
So the real competition is not crime versus order. It is who provides order.
The gray zone of criminality
Concept and wording from Trejo and Ley (2020, ch. 1).
So what?
- Organized crime needs officials — it cannot operate on violence alone
- The gray zone is an exchange, and exchanges have prices
- So we should ask: what does capturing an official actually cost?
- And what changes when the buyer can also shoot?
Next: a simple model that answers both questions.
II. Plata o Plomo: The Logic of Armed Influence
The influence problem
Imagine one official who must decide one thing: raid a warehouse, or look away.
- Looking away carries a personal cost: guilt, career risk, prosecution
- Call that total cost c — the price of a corrupt decision
- An ordinary lobby has one instrument: pay a bribe b
- To win, it must pay the whole cost: b = c
- An armed group has a second instrument: threaten harm p
The question is what that second instrument does to the price.
The offer always adds up to the same number
Result 1: violence makes capture cheap
- The group pays only c − p, never the full c
- “Politicians being coerced will sell their favors relatively cheaply”
- Groups too small to afford a full bribe can now buy influence
- So more groups become active, and capture becomes more common
- Money observed in politics badly understates the influence bought
This resolves a long-standing puzzle: why is so little money spent on lobbying?
Dal Bó, Dal Bó and Di Tella (2006), Propositions 2, 4 and 5.
Result 2: it also changes who runs
- Facing an armed group, the official ends up worse off either way
- Refuse and you are punished; accept and the bribe covers costs
- Expected pay from office falls from w to w − p
- Talented people with good outside options stop applying
- Violence therefore produces more corruption and weaker officials at once
Bad politicians are not only a cause of violence. They are also a product of it.
Dal Bó, Dal Bó and Di Tella (2006), Lemma 4 and Propositions 3 and 6b.
Result 3: reforms can push on the wrong lever
- Make bribes riskier, and the group substitutes toward threats
- Make threats cheaper, and it substitutes toward plomo as well
- Shrinking what officials control removes the prize, and helps
- Where courts are weak, immunity can shield officials from manufactured charges
- “Plomo” is not only bullets: also lawfare and media smear campaigns
The lesson is not “do nothing.” It is: know which lever you are pushing.
Dal Bó, Dal Bó and Di Tella (2006), Lemma 5, Propositions 7 and 8.
When does this logic hold?
These results are not a universal theory of politics. They need assumptions.
- The threat must be credible: the group can reach the official
- Punishment must be cheap relative to what the favor is worth
- The official must control something the group actually needs
- Where these fail, ordinary bribery is the better model
- The model does not explain how groups acquire coercive capacity
So plata o plomo explains armed influence, not influence in general.
Exercise 1 — Which reform backfires?
In pairs — 5 minutes.
A country cleans up its customs service. It doubles inspectors’ salaries and installs strict auditing, so taking a bribe is now far riskier. The main smuggling network can still hire gunmen very cheaply.
Using the plata o plomo logic, predict what happens to:
- The size of bribes paid to inspectors
- The amount of violence against inspectors
- Who applies for inspector jobs next year
Then name one additional reform that would not backfire.
So what?
- The model says armed influence is cheap, quiet, and stable
- A protection pact can hold for decades without visible violence
- But it is informal: no court will enforce it
- It survives only while its signatories stay in power
Next: what happened in Mexico when those people were voted out.
III. Mexico: How Democratization Broke the Pact
The old equilibrium, 1929–2000
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flowchart LR
A["One-party rule<br/>PRI, 1929-2000"]
B["Political police:<br/>the DFS,<br/>closed in 1985"]
C["Traffickers pay<br/>and accept<br/>limits"]
D["Routes<br/>allocated"]
E["Rivals<br/>restrained"]
F["Trafficking grows,<br/>killing stays<br/>low"]
A --> B
B --> C
C --> D
C --> E
D --> F
E --> F
classDef pol fill:#e2eaf3,stroke:#334155,stroke-width:3px,color:#1e293b
classDef crm fill:#f7e2db,stroke:#b44527,stroke-width:3px,color:#1e293b
classDef out fill:#e2ede9,stroke:#4a7c6f,stroke-width:3px,color:#1e293b
class A,B pol
class C,D,E crm
class F out
Author’s illustration of Trejo and Ley (2020, ch. 1).
The shock: elections start changing governors
- 1989: Ernesto Ruffo Appel wins Baja California for the PAN
- He is the first non-PRI governor since 1929
- Opposition wins spread across states through the 1990s
- 2000: the PRI loses the presidency after 71 years
- Incoming governors replaced police chiefs and state prosecutors
- Those were exactly the offices where protection had been negotiated
Democratization was real. Police and judicial reform was not.
Trejo and Ley: how a pact becomes a war
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flowchart LR
A["Opposition wins<br/>the state"]
B["Protection<br/>network<br/>dismantled"]
C["Uncertainty:<br/>who is protected<br/>now?"]
D["Cartels build<br/>private militias"]
E["Rivals attack<br/>the weakened<br/>group"]
A --> B
B --> C
C --> D
D --> E
E --> C
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classDef unc fill:#f0e6c9,stroke:#b7943a,stroke-width:4px,color:#1e293b
classDef war fill:#f7e2db,stroke:#b44527,stroke-width:3px,color:#1e293b
class A,B pol
class C unc
class D,E war
Author’s illustration of Trejo and Ley (2018, 2020). The loop back to uncertainty is self-reinforcing.
Territory is the prize
Cartels and their claimed areas of influence in Mexico, 2008
Source: U.S. Senate Committee on Foreign Relations (2008), via Wikimedia Commons (public domain). Overlaps mark contested ground — the places where wars are fought.
2006, and the rival explanations
- December 2006: federal troops deploy to Michoacán, then to other states
- Decapitating leaders splits organizations rather than dissolving them
- Others credit drug-market shifts, Colombian enforcement, or weak courts
- Trejo and Ley do not deny that any of these mattered
Their claim is narrower and testable: political alternation explains where and when the violence escalated.
Dell (2015): comparing near-ties
Dell (2015): what crackdowns did
- Assume parties cannot fine-tune the outcome of a near-tie
- Then municipalities just above and below the line are comparable
- After a PAN mayor took office, drug-trade killings rose sharply
- The monthly chance of a killing rose about 9 percentage points
- Most victims were people already in the trade, killed by rivals
- Traffic then shifted to the next-cheapest route, carrying violence along
Non-drug homicides did not jump. Enforcement moved the problem, and enlarged it.
Dell (2015), American Economic Review 105(6).
Exercise 2 — Predict the spillover
In pairs — 5 minutes.
A new mayor in a northern municipality launches a crackdown. The highway that carried most shipments through her town is now heavily patrolled.
- Where would you expect trafficking to move next, and why?
- Where would you expect homicides to rise over the following year?
- Name one thing that would make your prediction wrong.
Be ready to say what evidence would settle the question.
So what?
- Mexico’s wars followed political change, not just drug-market change
- Crackdowns redistributed violence more reliably than they reduced it
- Both papers describe transitions, not permanent states of the world
- Two questions remain: do they agree, and what should states do?
Next: the answer, and a case showing how long the costs last.
IV. Disruption and Its Long Shadow
Do these two papers tell the same story?
- Trejo and Ley: politics breaks the pact, then rivals arm
- Dell: enforcement weakens the incumbent, then rivals enter
- Different shocks, same shape: an existing equilibrium is disturbed
- Violence rises where the old order breaks, not where crime is
- Neither paper claims the old equilibrium was good for citizens
The shared lesson: disturbing a criminal order can raise violence before it lowers it.
The uncomfortable question
- If disruption raises violence, should the state leave cartels alone?
- Tolerating an illicit order buys quiet at the cost of sovereignty
- That bargain still delivered extortion, disappearances, and captured police
- So the live question is how to disrupt, not whether
- Sequencing matters: build courts and police before removing protection
Notice that “do nothing” is also a policy — with its own victims.
Sicily, 1893: where a mafia comes from
Peasants of the Fasci Siciliani storm the town hall at Mazara, January 1894
Source: Dante Paolocci, L’Illustrazione Italiana, 21 January 1894, via Wikimedia Commons (public domain).
A shock that built an institution
- 1893: drought cut Sicilian crop production by up to half
- Hardship swelled the socialist Peasant Fasci across the island
- Landowners faced a threat the state would not handle
- They hired private violence specialists instead: the Mafia
- Up to 37% of Mafia strength in 1900 traces to this
- Where it took root, literacy was ~10 points lower in 1921
Only the 1893 rainfall predicts any of this — which is what makes it causal evidence.
Acemoglu, De Feo and De Luca (2020), Review of Economic Studies 87(2), Tables 1 and 8.
Takeaways
- Plata o plomo makes state capture cheap, quiet, and hard to measure
- Raising the price of bribes can buy violence when coercion stays cheap
- Protection pacts are informal, so elections can destroy them overnight
- In Mexico, alternation without police reform broke those pacts
- Enforcement reshapes criminal markets far more often than it eliminates them
A month from now, keep this: shocks to a criminal order redistribute violence before they reduce it.
References
Acemoglu, D., De Feo, G., & De Luca, G. (2020). Weak states: Causes and consequences of the Sicilian Mafia. The Review of Economic Studies, 87(2), 537–581. https://doi.org/10.1093/restud/rdz009
Dal Bó, E., Dal Bó, P., & Di Tella, R. (2006). “Plata o plomo?”: Bribe and punishment in a theory of political influence. American Political Science Review, 100(1), 41–53. https://doi.org/10.1017/S0003055406061995
Dell, M. (2015). Trafficking networks and the Mexican drug war. American Economic Review, 105(6), 1738–1779. https://doi.org/10.1257/aer.20121637
Trejo, G., & Ley, S. (2018). Why did drug cartels go to war in Mexico? Subnational party alternation, the breakdown of criminal protection, and the onset of large-scale violence. Comparative Political Studies, 51(7), 900–937. https://doi.org/10.1177/0010414017720703
Trejo, G., & Ley, S. (2020). Votes, drugs, and violence: The political logic of criminal wars in Mexico. Cambridge University Press. https://doi.org/10.1017/9781108894807
Data and image sources
World Bank. (2025). Intentional homicides (per 100,000 people) — Mexico [Data set]. World Development Indicators, indicator VC.IHR.PSRC.P5 (source: UN Office on Drugs and Crime). https://data.worldbank.org/indicator/VC.IHR.PSRC.P5?locations=MX
Isaacvp. (2024). Casilla electoral 2675 en Orizaba, Veracruz [Photograph]. Wikimedia Commons (CC0 1.0). https://commons.wikimedia.org/wiki/File:Casilla_electoral_2675_en_Orizaba,_Veracruz_01.jpg
Paolocci, D. (1894). The insurrection of the Fasci Siciliani in Mazara [Engraving]. L’Illustrazione Italiana, 21(3). Wikimedia Commons (public domain). https://commons.wikimedia.org/wiki/File:The_insurrection_of_the_Fasci_Siciliani_in_Mazara.jpg
Trolvag. (2013). Corleone, Palermo, Sicily, Italy [Photograph]. Wikimedia Commons (CC BY-SA 3.0). https://commons.wikimedia.org/wiki/File:Corleone,_Palermo,_Sicily,_Italy_-_panoramio_(13).jpg
.jpg){kind=link}
U.S. Senate Committee on Foreign Relations. (2008). Cartels and their areas of influence [Map]. Wikimedia Commons (public domain). https://commons.wikimedia.org/wiki/File:Mexican_drug_cartels_2008.jpg
Popescu (TEC) Politics of Corruption Lecture 12