General Atomics’ Energy Multiplier Module

Tuesday, February 23rd, 2010

General Atomics is launching a 12-year program to develop a commercial reactor that runs on nuclear waste:

The General Atomics reactor, which is dubbed EM2 for Energy Multiplier Module, would be about one-quarter the size of a conventional reactor and have unusual features, including the ability to burn used fuel, which still contains more than 90% of its original energy. Such reuse would reduce the volume and toxicity of the waste that remained. General Atomics calculates there is so much U.S. nuclear waste that it could fuel 3,000 of the proposed reactors, far more than it anticipates building.
[...]
The EM2 would operate at temperatures as high as 850 degrees Centigrade, which is about twice as hot as a conventional water-cooled reactor. The very high temperatures would make the reactor especially well suited to industrial uses that go beyond electricity production, such as extracting oil from tar sands, desalinating water and refining petroleum to make fuel and chemicals.

The technical hurdles are dwarfed by the regulatory hurdles:

High-temperature reactors place special stress on the metals used in reactor components, and there isn’t any commercial certification process at the NRC to assess the reactors’ unique characteristics and to verify that they could operate safely for an expected 40- to 60-year life. That process would need to be developed or such reactors couldn’t be certified.

The regulatory agency would also have to decide how to handle license requests from companies that might want to locate reactors near industrial facilities, such as oil refineries, something that current regulations don’t contemplate and that could pose special safety risks in the event of an industrial fire or explosion.

General Atomics was founded in 1955, by the way, when a name like General Atomics seemed perfectly natural.

Rome of the Ice Age

Tuesday, February 23rd, 2010

Klaus Schmidt has uncovered a Rome of the Ice Age in Turkey:

Schmidt has uncovered a vast and beautiful temple complex, a structure so ancient that it may be the very first thing human beings ever built. The site isn’t just old, it redefines old: the temple was built 11,500 years ago — a staggering 7,000 years before the Great Pyramid, and more than 6,000 years before Stonehenge first took shape. The ruins are so early that they predate villages, pottery, domesticated animals, and even agriculture — the first embers of civilization. In fact, Schmidt thinks the temple itself, built after the end of the last Ice Age by hunter-gatherers, became that ember — the spark that launched mankind toward farming, urban life, and all that followed.

Göbekli Tepe — the name in Turkish for “potbelly hill” — lays art and religion squarely at the start of that journey. After a dozen years of patient work, Schmidt has uncovered what he thinks is definitive proof that a huge ceremonial site flourished here, a “Rome of the Ice Age,” as he puts it, where hunter-gatherers met to build a complex religious community. Across the hill, he has found carved and polished circles of stone, with terrazzo flooring and double benches. All the circles feature massive T-shaped pillars that evoke the monoliths of Easter Island.

Though not as large as Stonehenge — the biggest circle is 30 yards across, the tallest pillars 17 feet high — the ruins are astonishing in number. Last year Schmidt found his third and fourth examples of the temples. Ground-penetrating radar indicates that another 15 to 20 such monumental ruins lie under the surface. Schmidt’s German-Turkish team has also uncovered some 50 of the huge pillars, including two found in his most recent dig season that are not just the biggest yet, but, according to carbon dating, are the oldest monumental artworks in the world.
[...]
Unlike most discoveries from the ancient world, Göbekli Tepe was found intact, the stones upright, the order and artistry of the work plain even to the un-trained eye. Most startling is the elaborate carving found on about half of the 50 pillars Schmidt has unearthed. There are a few abstract symbols, but the site is almost covered in graceful, naturalistic sculptures and bas-reliefs of the animals that were central to the imagination of hunter-gatherers. Wild boar and cattle are depicted, along with totems of power and intelligence, like lions, foxes, and leopards. Many of the biggest pillars are carved with arms, including shoulders, elbows, and jointed fingers. The T shapes appear to be towering humanoids but have no faces, hinting at the worship of ancestors or humanlike deities. “In the Bible it talks about how God created man in his image,” says Johns Hopkins archeologist Glenn Schwartz. Göbekli Tepe “is the first time you can see humans with that idea, that they resemble gods.”
[...]
Göbekli sits at the Fertile Crescent’s northernmost tip, a productive borderland on the shoulder of forests and within sight of plains. The hill was ideally situated for ancient hunters. Wild gazelles still migrate past twice a year as they did 11 millennia ago, and birds fly overhead in long skeins. Genetic mapping shows that the first domestication of wheat was in this immediate area — perhaps at a mountain visible in the distance — a few centuries after Göbekli’s founding. Animal husbandry also began near here — the first domesticated pigs came from the surrounding area in about 8000 B.C., and cattle were domesticated in Turkey before 6500 B.C. Pottery followed. Those discoveries then flowed out to places like Çatalhöyük, the oldest-known Neolithic village, which is 300 miles to the west.

The artists of Göbekli Tepe depicted swarms of what Schmidt calls “scary, nasty” creatures: spiders, scorpions, snakes, triple-fanged monsters, and, most common of all, carrion birds. The single largest carving shows a vulture poised over a headless human. Schmidt theorizes that human corpses were ex-posed here on the hilltop for consumption by birds — what a Tibetan would call a sky burial. Sifting the tons of dirt removed from the site has produced very few human bones, however, perhaps because they were removed to distant homes for ancestor worship. Absence is the source of Schmidt’s great theoretical claim. “There are no traces of daily life,” he explains. “No fire pits. No trash heaps. There is no water here.” Everything from food to flint had to be imported, so the site “was not a village,” Schmidt says. Since the temples predate any known settlement anywhere, Schmidt concludes that man’s first house was a house of worship: “First the temple, then the city,” he insists.
[...]
Dating of ancient sites is highly contested, but Çatalhöyük is probably about 1,500 years younger than Göbekli, and features no carvings or grand constructions. The walls of Jericho, thought until now to be the oldest monumental construction by man, were probably started more than a thousand years after Göbekli. Huge temples did emerge again — but the next unambiguous example dates from 5,000 years later, in southern Iraq. The site is such an outlier that an American archeologist who stumbled on it in the 1960s simply walked away, unable to interpret what he saw. On a hunch, Schmidt followed the American’s notes to the hilltop 15 years ago, a day he still recalls with a huge grin. He saw carved flint everywhere, and recognized a Neolithic quarry on an adjacent hill, with unfinished slabs of limestone hinting at some monument buried nearby. “In one minute — in one second — it was clear,” the bearded, sun-browned archeologist recalls. He too considered walking away, he says, knowing that if he stayed, he would have to spend the rest of his life digging on the hill.
[...]
Whatever mysterious rituals were conducted in the temples, they ended abruptly before 8000 B.C., when the entire site was buried, deliberately and all at once, Schmidt believes. The temples had been in decline for a thousand years — later circles are less than half the size of the early ones, indicating a lack of resources or motivation among the worshipers. This “clear digression” followed by a sudden burial marks “the end of a very strange culture,” Schmidt says. But it was also the birth of a new, settled civilization, humanity having now exchanged the hilltops of hunters for the valleys of farmers and shepherds. New ways of life demand new religious practices, Schmidt suggests, and “when you have new gods, you have to get rid of the old ones.”

Ignore Expiration Dates

Tuesday, February 23rd, 2010

Nadia Arumugam advises us to ignore expiration dates:

The fact is that expiration dates mean very little. Food starts to deteriorate from the moment it’s harvested, butchered, or processed, but the rate at which it spoils depends less on time than on the conditions under which it’s stored. Moisture and warmth are especially detrimental. A package of ground meat, say, will stay fresher longer if placed near the coldest part of a refrigerator (below 40 degrees Fahrenheit), than next to the heat-emitting light bulb. Besides, as University of Minnesota food scientist Ted Labuza explained to me, expiration dates address quality—optimum freshness—rather than safety and are extremely conservative. To account for all manner of consumer, manufacturers imagine how the laziest people with the most undesirable kitchens might store and handle their food, then test their products based on these criteria.

With perishables like milk and meat, most responsible consumers (those who refrigerate their groceries as soon as they get home, for instance) have a three–to-seven-day grace period after the “Sell by” date has elapsed. As for pre-packaged greens, studies show that nutrient loss in vegetables is linked to a decline in appearance. When your broccoli florets yellow or your green beans shrivel, this signals a depletion of vitamins. But if they haven’t lost their looks, ignore the printed date. Pasta and rice will taste fine for a year. Unopened packs of cookies are edible for months before the fat oxidizes and they turn rancid. Pancake and cake mixes have at least six months. Canned items are potentially the safest foods around and will keep five years or more if stored in a cold pantry. Labuza recalls a seven-year-old can of chicken chunks he ate recently. “It tasted just like chicken,” he said.

Aristocracy in Ireland

Tuesday, February 23rd, 2010

Alexis de Tocqueville did not just describe Democracy in America. He also described Aristocracy in Ireland:

Imagine an aristocracy which was born on the very soil it dominates, or whose origin is lost in the obscurity of past centuries. Assume that, not being different from the people, they could easily assimilate with them. Give this aristocracy an interest in uniting with the people to resist a power greater than that of the aristocracy or of the people alone, but weaker than that of the people and the aristocracy united together, so that the more rich and enlightened the people are, the more the aristocracy is assured of its preservation, and the more the rights of the aristocracy are respected, the more the people are certain of retaining the enjoyment of theirs. Imagine an aristocracy having the came language, the same manners, the same religion as the people; an aristocracy which would be ahead, but beyond the ken, of the people’s understanding; an aristocracy which surpasses the people a little in all respects, but immensely in none. Imagine a middle class gradually increasing in importance in the context of this state of affairs, and by degrees coming to share the power and soon afterwards the privileges of the ancient aristocracy, in such way that money which everybody can hope to obtain, gradually takes the place of birth which depends on God alone. Thus inequality itself will work to forward the wealth of all, for, everybody hoping to come to share the privileges of the few, there would be a universal effort, an eagerness of all minds directed to the acquisition of well-being and wealth. Make of this nation a huge centre of commerce, so that the chances of attaining the wealth with which all the rest can be obtained, multiply infinitely, and ever give the poor a thousand reasons for remaining satisfied with their lot.

Imagine all these things, and you have a people among whom the upper classes are more brilliant, more enlightened and wiser, the middle classes richer, the poor classes better off than anywhere else; where the State would be as firm in its plans as if it were governed by one man, as strong and as powerful as if it relied on the free will of all its citizens; where if they had made it themselves, and where order would reign as if it were only the question of carrying out the will of a despot: in fine, where everyone being content with his lot would be proud of his country and would wish to be proud of himself.

Now imagine an aristocracy that was established by a conquest at a time so recent that the memory and the traces of the event were present in all minds. Place the conquest in a century when the conqueror already had almost all the lights of civilisation and the vanquished was still in a state of half savagery, so that both in moral power and in intelligence the conqueror was as far as possible superior to the conquered. Give to these two, who are already so dissimilar and unequal, a different religion, so that the nobility not only distrusts the people, but also hates them, and the people not only hates the nobles but damns them. Far from giving the aristocracy so constituted any particular reason to unite itself with the people, give it a particular reason not to unite with the people in order to remain similar to the nation whence it came, from which it still draws all its strength, and to resemble which is its pride. Instead of giving it a reason to take care of the people, give it a special motive to oppress them, by placing its trust in this foreign support which provides that it should have nothing to fear from the consequences of its tyranny. Give to this aristocracy the exclusive power of government and of self-enrichment. Forbid the people to join its ranks, or, if you do allow that, impose conditions for that benefit which they cannot accept. So that the people, estranged from the upper classes and the object of their enmity, without a hope of bettering their lot, end up by abandoning themselves and thinking themselves satisfied when by the greatest efforts they can extract from their land enough to prevent themselves from dying; and meanwhile the noble, stripped of all that stimulates man to great and generous actions, slumbers in unenlightened egoism.

You would certainly have a terrible state of society, in which the aristocracy would have all the faults and maxims of oppressors; the people all the vices and faint-heartedness of slaves. The law would serve to destroy what it should protect, and violence would protect what elsewhere it seeks to destroy. Religion would seem only to lend it strength to the passions which it should fight and to exist only to prevent hatreds from being forgotten and men from establishing among themselves the fraternity it preaches every day.

The two societies I have just described were however both founded on the principle of aristocracy. The two aristocracies of which I have been speaking, have the same origin and manners and almost the same laws. But the one has for centuries given the English one of the best governments that exist in the world; the other has given the Irish one of the most detestable that could ever be imagined.

Aristocracy then can be subjected to particular conditions which modify its nature and its results, so that in judging one must bear circumstances in mind. The truth is that the aristocratic principle was conditioned in England by particularly happy circumstances, and in Ireland by particularly baneful ones. It would not be fair to make a theoretical judgement about aristocracy on the strength of either of these examples. The rule lies elsewhere.

From Journeys to England and Ireland. (Hat tip to Kevin J. Jones.)

The Unitarian Vatican

Monday, February 22nd, 2010

Arnold Kling is reading The New Holy Wars, by Robert H. Nelson, which interprets various economic and environmental ideologies in religious terms:

In the broadest view, one might say that, intellectually and theologically speaking, much of American history has reflected a struggle between the pessimistic Puritan view of fallen, sinful man and the optimistic Enlightenment view of rational, utilitarian man.

One commenter wonders why this is a particularly Puritan view, and I agree:

To view man as sinful and fallen is not specifically Puritan, but one can make the case that our academic clerisy descends from a Harvard-trained Puritan clergy.

But that misses the point that Harvard was taken over by Unitarians in the early 1800s, leading it to become somewhat secular and extremely progressive. After a couple hundred years of secularization and progress, what have you got? The modern academy.

Adam Smith’s Sufficient Conditions for Opulence

Monday, February 22nd, 2010

A while back, I cited a Forbes piece that included this statement from Adam Smith, supposedly presented two decades before The Wealth of Nations was published in 1776:

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”

Gavin Kennedy points out a slight problem:

It is true that Smith is believed to have read his paper at a Political Economy Club in Glasgow in 1755 and that it contained the passage quoted.

The problem is that only Dugald Stewart — the source for the quotation in 1793 — appears to have been the only person to have seen the paper and it was never published. His son, during a bout of mental illness, is believed to have burned it, along with some other of his father’s papers.

Babies and Bunnies

Monday, February 22nd, 2010

When Alicorn compares babies and bunnies, she finds the bunnies much cuter, which puzzles her:

Now, bunnies are not evolutionarily important for humans to like and want to nurture. In fact, bunnies are edible. By rights, my evolutionary response to the bunny should be “mmm, needs a sprig of rosemary and thirty minutes on a spit”.

She and all the commenters seem to be missing the obvious evo-psych explanation — probably because they’ve grown up in the suburbs, with zero exposure to farming or ranching.

We’re a race of hunter-gatherers who evolved into pastoralists and farmers. We instinctively take care of cute little animals — until they grow up and turn not-cute. Then, suddenly, they become edible. It’s almost as if we instinctively raise animals for food…

Edit: Apparently Alicorn is upset that I did not recognize her feminine nature by her user name, which is the technical term for a unicorn’s horn. I’ve since replaced neutral masculine pronouns with explicitly feminine ones. (I can be reached, by the way, at isegoria at this domain — which is a .net domain.)

How the U.S. government poisoned drinkers during Prohibition

Monday, February 22nd, 2010

Years ago, I assumed that denatured alcohol was alcohol that had undergone some useful chemical process that also made it undrinkable — when, in fact, denatured alcohol is perfectly drinkable alcohol that has been made undrinkable specifically to avoid the high taxes on spirits.

The moralistic attitude during Prohibition led the U.S. government to take this poisoning to another level:

The U.S. Treasury Department, charged with overseeing alcohol enforcement, estimated that by the mid-1920s, some 60 million gallons of industrial alcohol were stolen annually to supply the country’s drinkers. In response, in 1926, President Calvin Coolidge’s government decided to turn to chemistry as an enforcement tool. Some 70 denaturing formulas existed by the 1920s. Most simply added poisonous methyl alcohol into the mix. Others used bitter-tasting compounds that were less lethal, designed to make the alcohol taste so awful that it became undrinkable.

To sell the stolen industrial alcohol, the liquor syndicates employed chemists to “renature” the products, returning them to a drinkable state. The bootleggers paid their chemists a lot more than the government did, and they excelled at their job. Stolen and redistilled alcohol became the primary source of liquor in the country. So federal officials ordered manufacturers to make their products far more deadly.

By mid-1927, the new denaturing formulas included some notable poisons — kerosene and brucine (a plant alkaloid closely related to strychnine), gasoline, benzene, cadmium, iodine, zinc, mercury salts, nicotine, ether, formaldehyde, chloroform, camphor, carbolic acid, quinine, and acetone. The Treasury Department also demanded more methyl alcohol be added — up to 10 percent of total product. It was the last that proved most deadly.

By the time Prohibition ended in 1933, the federal poisoning program had killed an estimated 10,000 people.

Bloom Box

Monday, February 22nd, 2010

Bloom Energy received $400 million from Kleiner Perkins and others to develop its $800,000 fuel-cell power plant in a box, the Bloom Box:

The box consists of a stack of ceramic disks coated with green and black “inks.” The disks are separated by cheap metal alloy plates. Methane (or other hydrocarbons) and oxygen are fed in, the whole thing is heated up to 1,000 degrees Celsius, and electricity comes out. Bloom estimates that a box filled with 64 ceramic disks can produce enough juice to power a Starbucks.

As of right now, Bloom isn’t angling for the residential market — the box is far too expensive. But major companies like eBay, Google, Staples, and FedEx have already secretly started using the boxes. So far, the Bloom Box has been a success — eBay has already saved $100,000 in electricity costs since its 5 boxes were installed nine months ago. EBay even claims that the boxes generate more power than the 3,000 solar panels at its headquarters.

So, a $4 million investment has saved $100,000 over nine months. Well then, it should pay for itself in “just” 30 years. (Does a Bloom Box last 30 years?)

Three Great Lessons

Monday, February 22nd, 2010

Back when the Persians were a force to be reckoned with, they raised their young men to learn three great lessons:

While the Persians were in their healthy and vigorous state, the three great lessons the youth were taught, from five to twenty years of age, were to ride, to shoot with the bow, and to speak truth.

Lieutenant Colonel Jeff Cooper agreed; one of his compilations of gun columns is called, To Ride, Shoot Straight, and Speak the Truth.

Hardihood, Force of Character, and Patriotism

Sunday, February 21st, 2010

The strength of a nation stems from the strength of its people and their patriotism, Andrew Bisset explains:

The fundamental element of a nation’s strength is the physical hardihood of its people, combined with that force and energy of character which are the consequences of such hardihood, and the patriotism, or love of and pride in country, which is the consequence of some degree of good government. Accordingly, all nations which have been at any time strong have encouraged the use of manly and athletic exercises; the neglect of which has a most pernicious effect, not only on the bodily strength, but on the bodily and mental health and courage of the community.

For a coward — a man incapable of defending himself — as a celebrated writer has observed, wants one of the most essential parts of the character of a man, being as much mutilated and deformed in his mind as a man who is deprived of some of his limbs, or has lost the use of them, is in his body. And to prevent that sort of mental mutilation, deformity, and wretchedness which cowardice necessarily involves in it, from spreading through the great body of the people, deserves the most serious attention of the government; in the same manner as it would deserve its most serious attention to prevent a deadly pestilential disease from spreading itself among them.

Bisset is writing in Britain in 1859. Attitudes have changed.

The Strength of Nations

Saturday, February 20th, 2010

The Wealth of Nations is not necessarily The Strength of Nations:

Since the publication, in 1776, of Adam Smith’s immortal work on the “Wealth of Nations,” the wealth of nations has, in this country at least, engaged so much attention, that but little has been left for another quality of nations — their Strength; without which their wealth, with all its advantages, may be of little use, since it may be destroyed at any time with fearful rapidity. There appears to be a time in the history of all powerful nations at which, while their wealth goes on increasing, their strength begins to decline, till — to use the words of Bacon — it comes to “that, that not the hundredth poll will be fit for a helmet; and so there will be great population and little strength.”

And it is also well to bear in mind another remark of Bacon in the same Essay: “Neither is money the sinews of war (as it is trivially said) where the sinews of men’s arms in base and effeminate people are failing; for Solon said well to Croesus (when in ostentation he showed him his gold): ‘Sir, if any other comes that hath better iron than you, he will be master of all this gold.’” As soon as this current has fairly set in, unless its course can be arrested — which is a difficult if not an impossible operation — the decay of that nation has commenced, and will continue, till the time arrives when its strength is inadequate for its defence, and its wealth becomes the prey of an invader.

Do you know anybody who makes anything?

Friday, February 19th, 2010

Shannon Love talks about makers and talkers:

Way back in the ’80s the columnist William Raspberry wrote about a conversation he had at a Washington party.

Looking around at the collection of lawyers, bureaucrats, journalists, academics, etc., he turned to a friend and asked:

“Do you know anybody who makes anything?”

It had suddenly occurred to Raspberry that his entire professional and social circle was comprised of people who more or less did nothing but talk for a living. He had no personal contact with anyone who participated in the creation of any material good. After asking around, he found that he didn’t know anyone who even made things as a hobby. He said, “I couldn’t even find anyone who had made so much as a bookcase.”

That little newspaper column opened my eyes up to the most profound division in modern society. It is not rich vs. poor or ethnic-group/race A vs. ethnic-group/race B or male vs. female etc. It is the division between those who create the real physical wealth of our civilization and those who merely manipulate others by persuasive communication.

The trouble is that the manipulators are always inherently more politically powerful because politics is about persuasion not creation. Worse, the manipulators are completely oblivious to their own ignorance about the materially creative and the process of material creation. Even when they approach a problem with a sincere, unselfish intent to do good, their lifelong restriction inside an insular subculture prevents them from understanding the practicalities of material production.

So we end up with an elite political/culturally-creative class that functions as did the mandarins of traditional China, who were so prideful of their distance from material production that they grew their fingernails to ridiculous lengths to intentionally cripple their hands. They did so to demonstrate that they worked only with their minds. They could not even feed themselves and were proud of it. When the subculture of the mandarins reached that state, their administration of the empire became actively delusional and the collapse of the dynasty soon followed. Then a new crop of mandarins who did value the materially productive would rise from the ashes, but within a generation or two they also would grow just as distant and insular as their predecessors and the cycle would repeat itself.

Now, we too are governed by a class of people who see no value in material production. Oh, they value nebulous “jobs”, but they think any job is as valuable as any other, and so see no problem with driving the materially productive out of their communities (and eventually the country as a whole) and replacing their jobs with jobs in which people just talk to each other. They are actively proud that they shut down factories, farms and prevent the construction of infrastructure. They sneer at the materially productive for being greedy, even while their own lives are fully devoted to obtaining more coercive power over their fellow human beings.

Perhaps, as in many things, the Chinese are the template for all human civilizations. Perhaps the talkers are in the long run always destined to dominate and then destroy every polity. Perhaps we too must suffer through collapse, destruction and rebirth.

While I share the disdain for manipulators, whose rent-seeking behavior — as economists obliquely call it — destroys wealth, it’s a bit too easy to side with those who create concrete things over those who “just” buy and sell or “push paper” — when allocating resources is immensely important for creating wealth.

Progressive Competition

Thursday, February 18th, 2010

Eric Falkenstein considers progressive competition oxymoronic:

In Minnesota, we have 3 health care providers, and they all have highly regulated choice offerings. We have 68 mandates, meaning, I am paying for things I would not otherwise pay for (osteopathy, chiropracter, port-wine stain elimination). Insurance means exchanging a certain small payment for an uncertain large payment; in this case, I’m paying for many things I’ll certainly never use. If providers all have to provide identical service menus, entitling consumers all they can get from that list, this is not competition.

It’s as if the state decided that food was too important for the mere market, and so gave us all food insurance. We paid a special food contribution (not a tax!), and we were all entitled to a buffet offered by 3 different private companies. The buffet has to include traditional American fare, as well as Chinese, Mexican, Italian, Korean (dog), etc.–68 mandates in all. Most people don’t want all the choices they pay for, but as they don’t pay when they eat most people do not notice they are paying for things they don’t eat. Now, as the food budget as a percent of GDP in America grows, and Americans are not any healthier than other developed countries, people ask, hey, can I just buy what I want to eat? The government tells you ‘no’, that is just a race to the bottom, and your stupid, irrational inclinations will cause you to buy the medical equivalent of a pet rock.

So we have 3 buffets but the same menus, no out-of-pocket spending, and no real competition. This is what progressives think of as ‘the market’. They convince themselves things will get better if they have even more top-down control (single payer) because then they could implement technological and logistic innovations (cutting out the darn middle man) that will lower costs, all the while keeping health care employment levels and compensation rates the same. One might be tempted to say, it can’t get worse than the status quo, but that what the Russians said in 1917, and boy were they wrong.

Xalisco Business Model

Thursday, February 18th, 2010

The Xalisco business model has changed heroin distribution dramatically:

Immigrants from Xalisco in the Pacific Coast state of Nayarit, Mexico, they have brought an audacious entrepreneurial spirit to the heroin trade. Their success stems from both their product, which is cheaper and more potent than Colombian heroin, and their business model, which places a premium on customer convenience and satisfaction.

Users need not venture into dangerous neighborhoods for their fix. Instead, they phone in their orders and drivers take the drug to them. Crew bosses sometimes call users after a delivery to check on the quality of service. They encourage users to bring in new customers, rewarding them with free heroin if they do.

In contrast to Mexico’s big cartels — violent, top-down organizations that mainly enrich a small group — the Xalisco networks are small, decentralized businesses. Each is run by an entrepreneur whose workers may soon strike out on their own and become his competitors. They have no all-powerful leader and rarely use guns, according to narcotics investigators and imprisoned former dealers.

Leaving the wholesale business to the cartels, they have mined outsize profits from the retail trade, selling heroin a tenth of a gram at a time. Competition among the networks has reduced prices, further spreading heroin addiction.

Competition among Xalisco (pronounced ha-LEES-ko) dealers has cut prices from $25 to $12.50 per dose of black-tar heroin:

The dealers have been especially successful in parts of Appalachia and the Rust Belt with high rates of addiction to OxyContin, Percocet and other prescription painkillers. They market their heroin as a cheap, potent alternative to pills.

There are no official estimates of how much money Xalisco networks make, but narcotics agents who have busted and interrogated dealers say that a cell with six to eight drivers working seven days a week can gross up to $80,000 a week.

Among the idiosyncrasies of Xalisco dealers is that they generally do not sell to African Americans or Latinos. Instead, they have focused on middle- and working-class whites, believing them to be a safer and more profitable clientele, according to narcotics investigators and former dealers. “They’re going to move to a city with many young white people,” Chavez said. “That’s who uses their drug and that’s who they’re not afraid of.”

Again, heroin is a cheap, potent alternative to pills:

OxyContin pills cost $80 apiece and addicts needed five or six a day. Black-tar heroin was stronger and cost less than $50 for a day’s fix.

Xalisco is now among the top 5% of Mexican counties in terms of wealth, according to a government report.