They are much more savvy then they were in the 20s, and let's not forget little facts (which aren't popular around here), that any declines in violence have a whole lot to do with better law enforcement, more money given to law enforcement, better technology, and the enactment of more laws and stricter penalties being imposed.

If you think these cartels are just going to throw up their hands and say, "Oh, drugs are legal in the US, so we won't do business there, and we'll have to go get real jobs to make up the shortfall!" then I have some ocean-front property in Arizona to sell you. Drugs are only part of their business model (and that's assuming they don't get into the legal drug trade, but don't bet they will give up violence even if they do).

Still, legalization would deliver a significant short-term hit to the cartels -- if drug trafficking were the only activity they were engaged in. But cartels derive a growing slice of their income from other illegal activities. Some experts on organized crime in Latin America, like Edgardo Buscaglia, say that cartels earn just half their income from drugs.

Indeed, in recent years cartels have used an extensive portfolio of rackets and scams to diversify their income. For example, they used to kidnap rivals, informants and incompetent subordinates to punish, exact revenge or send a message. Now that they have seen that people are willing to pay heavy ransoms, kidnapping has become their second-most-lucrative venture, with the targets ranging from businessmen to migrants.

Another new source of cartel revenue is oil theft, long a problem for the Mexican government. The national oil company, Pemex, loses hundreds of millions of dollars' worth of petroleum every year to bandits and criminal gangs who tap into pipelines and siphon it off. Now the cartels are getting involved in this business, working with associates north of the border to sell the oil to American companies at huge markups.

SNIP

Cartels are also moving into the market in pirated goods in Latin America. The market used to be dominated by terrorist groups like Hezbollah and Hamas, who operated in the triborder area of Argentina, Brazil and Paraguay. Now the field is being overtaken by Mexican cartels, which already have so much control over the sale of pirated CDs, DVDs and software that many legitimate companies no longer even bother to distribute their full-price products in parts of Mexico.

Taking another page from traditional organized crime, cartels are also moving into extortion. A cartel representative will approach the owner of a business -- whether a pharmacy or a taco stand -- demanding a monthly stipend for "protection." If those payments aren't made on time, the business is often burned to the ground, or the owner is threatened, kidnapped or killed.

A popular cartel racket involves branded products. For example, a cartel member -- most often from Los Zetas and La Familia Michoacana, two of the largest and most diversified cartels -- will tell a music-store owner that he has to sell CDs with the Zetas logo stamped on them, with the cartel taking a 25 percent cut of the profits. Noncompliance isn't an option.

With so many lines of business, it's unlikely that Mexican cartels would close up shop in the event of legalization, even if it meant a serious drop in profits from their most successful product. Cartels are economic entities, and like any legitimate company the best are able to adapt in the face of a changing market.