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The latest Netflix original drama series Narcos (streams Aug. 28) is one of its best.

The cheeky tagline is "There's No Business like Blow Business," but Narcos operates on two levels. On one, it is a gripping thriller about a pair of DEA agents out to bring down the Colombian cocaine king Pablo Escobar (marvellously played by Wagner Moura) in the 1980s. So, gun battles, intrigue and cocaine-fuelled craziness ensue. On another level, it is politically sharp, subversive and a serious cautionary tale.

We meet agent Steve Murphy (Boyd Holbrook) in Miami in the late 1970s. In a rueful voiceover, he explains that, back then, nabbing a guy with a big bundle of weed to sell was a coup, something to celebrate. Then, cocaine came to Miami and a very dangerous lunacy was unleashed. It wasn't about nabbing hippies with weed any more. Death and terrible violence engulfed Miami.

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Parallel to Murphy's story, there unfolds the rise and fall of Escobar. We meet him as a successful smuggler, bribing police to get stolen goods across borders. He seems more cunning than crazy.

The cocaine backstory is spun out, but elliptically. See, there was a thriving underground cocaine business in Chile. Then when General Pinochet came to power, with U.S. support, he targeted the producers. So they moved to Colombia. The eventual and ruinous discharge of cheap cocaine into the United States came about because, ironically, the United States government put a fascist dictator in power in Chile. The U.S. didn't ask Pinochet to stop the cocaine business. Oh, what tangled webs were weaved.

That perspective is largely the work of Narcos' executive producer Jose Padilha. One of Brazil's most influential filmmakers and intellectuals (though he would balk at being called that), the Oxford-educated, Rio-raised Padilha has famously said, "In Brazil, if you have a conscience, you have a social conscience."

He's got a conscience. Transfixed by the ceaseless violence of Rio and fascinated by the power structure that allowed teams of police to bring semi-control of the favelas through violence and murder, he became a filmmaker. His documentary Bus 174 and his movies Elite Squad (2007) and Elite Squad: The Enemy Within (2010) dealt directly with renegade police forces and the hopelessness of life in Rio's slums.

A trim figure, relaxed, in skinny jeans and tuque – to cope with a heavily air-conditioned Beverly Hills Hotel – Padilha told me about Narcos and what, under all that cops-and-drug-runner action, is going on.

"It's grounded in reality," he told me. "It's a true story and to emphasize the truth of it, I used real archival footage of Escobar and his story. Narcos is not a fantasy.

"By making it grounded, I want it to be an education as well as entertainment. The education is making the audience see what cocaine is – it's cheap to make, it's a natural product and it makes the human brain go haywire. The American approach to dealing with the cocaine problem is basically fighting cocaine by fighting supply. The approach does not acknowledge that the demand is always there, or that the place that supplies the cocaine changes. So yeah, you wage war on the Medellin Cartel. You kill Pablo Escobar. And then it goes to Cali. Then you wage war on Cali. And then it moves on and then it goes to Mexico. It's always there. Supply moves around and demand remains the same. And people die in this process. So there has to be something wrong with the approach.

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"Basically, the drug policy that we have doesn't work. And it hasn't worked the last 30 years and we haven't changed it. How you change it, I don't think it's my business to say. I actually don't understand it well enough. But, obviously, it has to change because there's so many people in jail. There's so many dead bodies in the story of cocaine. Look, for you to be at a party and snort a gram of cocaine, you must look at the body count, how many people died, how much corruption happened, how many lives were destroyed, policemen and drug dealers alike, for that one gram to hit you, that should maybe very clear. And I think the series does that."

While Padilha underlines that Narcos is not a fantasy, there is an insanity portrayed, particularly in the way Escobar's power in Colombia is dramatized.

He's rueful about this aspect. "That brings us to magical realism, which Columbia is very famous for, having top-notch important magical realist artists … most famously, Gabriel Garcia Marquez writes about magical realism. One of the things that I found out is that magical realism is magical for us. For Colombia, it's just realism. The place is, like, kind of crazy."

The 10-episode Narcos has, indeed, all manner of craziness. It's a searing thriller, but it's also an important work of South American storytelling. It's highly recommended, no matter what level of it you appreciate – cop drama or scathing political narrative.

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