Reagan Revolution

The Reagan Revolution functions in The Power of the Dog as an economic analogy for Adán Barrera’s reorganization of the drug trade, not as a separately narrated political episode. Adán draws a lesson from lowering taxes: a smaller share from many independent operators can produce more than a larger share from a few. The comparison helps explain how his cartel becomes not merely a hierarchy that collects proceeds, but a business system that recruits entrepreneurs, sells services, and converts commercial dependence into political power.

The Reagan Revolution as a Business Lesson

When Adán explains his proposed reduction in the cartel’s cut to Raúl Barrera, he puts the reasoning plainly: “Twelve percent from many,” he says, “will be more than thirty percent from a few.” The novel explicitly links this calculation to lessons Adán has observed from the Reagan Revolution. His model treats a lower rate not as a concession but as a way to enlarge the number of people willing to do business with the Barreras—and therefore to increase the total business from which they can collect revenue.

That principle is part of Adán’s effort to rebuild his Baja cartel while the Barreras are fighting Güero Méndez. Raúl attributes their gains chiefly to force; Adán believes that economics matters more. In his view, the Barreras can take business from a rival by offering a more attractive arrangement: a distributor can earn more under their lower overhead, while choosing the more expensive competitor may mean less profit and the threat of violence. The novel’s Coke-and-Pepsi comparison gives the policy its sharpest edge: apparent choice and market competition operate alongside “silver or lead.”

From Tribute to Services

The reduced cut anchors a larger change in the organization’s relationship with independent traffickers. Operators report what kind of drugs they are moving, how much, their prearranged sale price, and when they expect to deliver to a retailer in the United States. They owe the Barreras 12 percent of the stated price within forty-eight hours after delivery. The stated price also protects the Barreras’ share if the actual sale brings in less; if the operator sells for more, the higher figure determines what is owed. A trafficker who cannot pay is expected to arrange terms with Adán—or face Raúl’s violence.

The fee buys passage through the plaza, not a guarantee against seizure. Operators may arrange their own protection with local police, federal agents, or an army commander, and still owe the 12 percent if a shipment is caught. The Barreras also offer a paid security package: they arrange protection and guarantee a shipment’s safety on the Mexican side, from Baja to the border. If it is seized, they reimburse the wholesale purchase cost, not the hoped-for United States retail value. Raúl and his gunmen enforce the guarantee against both hijackers and rival dealers.

Finance extends the same strategy beyond transport and protection. The 12 percent need not be paid up front; it comes due after the drugs have been sold. The Barreras also offer to launder the resulting cash. The going rate is 6.5 percent, while bribed bankers give the organization a volume rate of 5 percent, leaving it an additional 1.5 percent on each customer’s dollar. Participation is presented as optional, but the service makes the cartel useful at multiple stages of a trafficker’s business and gives Adán another source of income.

The Federation’s Commercial Reach

The business model rests on a change in what the Federation treats as its principal product. In Art Keller’s analysis, Operation Condor was intended to suppress the Sinaloan drug trade but instead spread it. The traffickers recognized that their lasting advantage was not cultivation but access to the two-thousand-mile border with the United States. The novel emphasizes the striking difference in value across that line: a product worth cents just inside Mexico can be worth thousands just across the border.

The Federation makes that geography the basis of a transportation business. Under its arrangement with the Medellín Cartel and the Cali Group, Colombian suppliers pay $1,000 for every kilogram the Mexicans safely deliver inside the United States. The Mexicans receive the cocaine, move it to staging areas near the border, carry it into safe houses, and return it to the Colombians; the Colombians then take it to laboratories, process it into crack, and send it toward United States streets. With Florida routes under heavy pressure from the DEA, the Mexican route becomes the neglected “back door.” The novel’s account makes the Federation’s profit depend on connecting supply, transport, border access, and protection rather than on growing the drug itself.

Adán extends this circulation of goods and money into arms deals. When FARC needs weapons, he recognizes that his aircraft can carry guns into Colombia on the return leg of cocaine flights. The exchange is set at one kilogram of cocaine for each standard rifle; more powerful weapons can command a larger cocaine allowance. Adán accepts the arrangement without bargaining. In a later arms negotiation with the People’s Liberation Army, he insists on paying cash in American dollars, reasoning that the supplier needs foreign currency. The resulting cycle links American dollars to Chinese weapons, weapons to Colombian cocaine, and cocaine back to the United States market.

Political Leverage and the Peso Crisis

The novel also presents the Federation’s commercial power as political power. Adán understands that the organization has helped the Institutional Revolutionary Party retain office through election fraud. Four years after an opposition victory appeared likely, the computers counting the votes malfunctioned. The passage identifies this as an arrangement between the Federation and the ruling political establishment, making electoral manipulation part of the background to cartel influence rather than a separate matter of ordinary corruption.

That influence becomes especially visible after a new Mexican president takes office on December 1, 1994. The next day, two brokerage houses controlled by the Federation begin buying government bonds known as tesobonos. A week later, the cartels withdraw their capital from the national bank, and the peso is devalued by 50 percent. The Federation cashes in its bonds as the economy collapses, then uses dollars to buy devalued pesos before an American bailout helps the currency rise again. It also buys property, businesses, real estate, and pesos during the crisis, turning financial disruption into an opportunity to acquire assets.

The president subsequently invites the drug lords to bring their money back into the country to help revive the economy and repay the loan. Adán accepts, but demands a favorable trade environment: the president can publicly promise to break the cartels, while being expected not to act against them. The United States supplies a list of Institutional Revolutionary Party officials on the Federation’s payroll; three are appointed state governors, another becomes transportation secretary, and another takes charge of the national institute responsible for combating drugs. The Reagan Revolution analogy thus belongs to a much broader portrait of the Federation: its business methods expand private enterprise within the cartel, while its money and political bargains help shape the institutions meant to govern and restrain it.