Why Latin America is poor
Dear M,
I haven't read How Europe Underdeveloped Africa, but I imagine it reads like how the U.S. underdeveloped South America. Simply put, we had the industry first and South America had the resources.
What else could have happened? Once Americans had the first shoe factories all the cobblers in Panama were at a loss. Panamanians could have thrown up protective tariffs, but who had the money — the influence — the guns? We did.
So their big-wigs got together and made what they could of it: they looted the land and got paid handsomely for it, and the peons and laborers filled our factories for pennies*. Then, with those pennies, they bought sneakers from us too. The millions the rich made were spent on yachts — also from us, as the people who made sneakers had almost nothing to sell them.
There was no indigenous tycoon big enough to counter Nike, or Adidas. And when United Fruit had the tractors and the sprays and the fertilizers the little farmers couldn’t keep up either; so United Fruit got richer than they already were, the landlords and the politicians got a payout, and the little guy got sprayed with pesticides — not the way of God, but apparently the laws of physics.
This is the dilemma we’re up against with big business. It's true the big-wigs in our country are too big for our country. They carve it up amongst themselves, and flaunt the laws, and buy the men and women who are supposed to represent us**. They tell us what to think and when we think things they don’t like they shut us out. But if there’s anything worse than being run over by your own people it's being run over by somebody else's own people*** — and our tycoons are like generals, in a sense: they conquer the other tycoons so the rest of the world can’t conquer us first.
The question is, how far do you want our businessmen to go with it? And if we do take them down a notch, and put them in their place before Big Tech and Blackrock swallow us up too, will their place be taken by somebody else — a foreigner who cares for us even less? Or to put it another way, do we want to shop at Walmart — or to be looted by them?****
Yours,
-J
*My story about Panama is of course completely made up for illustration; but the reality is much more sinister. According to John Perkins' Confessions of An Economic Hit Man, the banksters showed up in Latin America with wild promises of development. Those promises were given in deeply flawed statistics. Those counterfeit developments were financed with loans from the International Monetary Fund. And when the developments fell through and the loans were too much to pay back, the IMF cashed in on the country's resources for cheap (According to Howard French, in China’s Second Continent, almost the same tactic China currently employs in Africa). And if the leader of, say, Ecuador didn't want to do the deal? Well, the IMF would team up with the CIA and he’d die in a freak accident.
It turns out this is also the "nice” explanation. After penning the above essay I was worried my theory was wrong, so I picked up Eduardo Galeano's Open Veins of Latin America and found this quote of Marx in the first chapter:
The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalized the rosy dawn of the era of capitalist production.
Galeano proceeds, in his own words,
Ernest Mandel has added up the value of the gold and silver torn from Latin America up to 1660, the booty extracted from Indonesia by the Dutch East India Company from 1650 to 1780, the harvest reaped by French capital in the eighteenth-century slave trade, the profits from slave labor in the British Antilles and from a half-century of British looting in India. The total exceeds the capital invested in all European industrial enterprises operated by steam in about 1800. This enormous mass of capital, Mandel notes, created a favorable climate for investment in Europe, stimulated the “spirit of enterprise,” and directly financed the establishment of manufactures, which in turn gave a strong thrust to the Industrial Revolution.
But at the same time the formidable international concentration of wealth for Europe’s benefit prevented the jump into the accumulation of industrial capital in the plundered areas: “The double tragedy of the developing countries consists in the fact that [...] they have had to try and compensate for their industrial backwardness [...] in a world flooded with articles manufactured by an already mature industry, that of the West.”
So it was conquest — and then on the backs on the conquered, capitalism. And then after the tycoons came the banksters. I remind you that slavery adds an additional problem**: rich men buying captured men from non-productive men and then not paying any wages for production. This means almost nobody but the slaveholder benefits from the cacao farm; and instead of pouring his income into developing his own locality, like even a bad medieval lord, he sends his growing fortune to a foreign manufacturer. And even this fortune wasn’t as much as you’d think. Galeano wrote, in 1973,
Rich countries […] profit more from consuming […] than Latin America does from producing […]. The taxes collected by the buyers are much higher than the prices received by the sellers.
From here things got worse. It turns out you don’t need money in order to breed; and, in fact, when you're dirt poor, breeding and God are the only two things you have to hang on to. Galeano says the Latin Americans make love with enthusiasm and without precaution, and the explosion of people was so dire that by the 1950’s and 60’s, American Presidents were exporting pills and condoms and IUD's to Latin America — an attempt, as Galeano puts it, not to create dinner, but to get rid of the diners; and to solve Latin America’s problems by getting rid of Latin Americans.
The question is whether Galeano, a leftist, has a better solution. Cuba, he says, broke precedent by taking their resources into their own hands — a disaster which never brought them any nearer to Western wealth, liberty, or security. He mentions the opulence of West Germany without mentioning the barbed wire and machine gunners — on the Soviet side — keeping people in East Germany. He wrote well before the socialists “took Venezuela back” — one of the richest countries in Latin America — and Venezuelans lost what they had, and ended up eating stray cats. He complains about American imperialism in South America without giving any regard to Soviet imperialism in South America. The things Soviets and Chinese and North Koreans were doing to their own people were horrific, and I doubt the Soviets would have treated foreigners any better.
I’m not saying what happened to Central and South America was good, or just, or honest. I’m asking what options they had other than the worst of capitalism and the best of communism. And I doubt the latter is better than the former.
**Slavery destabilizes a country not just for the slaves, but for the free inhabitants. Tocqueville noted this disparity sailing along the Ohio river, which served as a border between Ohio and Kentucky.
The traveler who, placed in the middle of the Ohio [river], [...] navigates so to speak between freedom and servitude. He has only to cast glances around himself to judge in an instant which is more favorable to humanity.
On [Kentucky's] bank of the river, the population is sparse; from time to time one perceives a troop of slaves running through half-wild fields with an insouciant air; the primitive forest constantly reappears; one would say that society is asleep. Man seems idle — it is nature which offers the image of activity and of life. From [Ohio's] bank, on the contrary, rises a confused noise that proclaims from afar the presence of industry; rich harvests cover the fields; elegant dwellings announce the taste and the care of the laborer; on all sides comfort reveals itself; man appears rich and content: he works.
The state of Kentucky was founded in 1775, the state of Ohio only twelve years later: twelve years in America is more than a half-century in Europe. Today the population of Ohio already exceeds that of Kentucky by 250,000 inhabitants.
The fact is, slavery, like usury, amasses capital. The question is, where — and how, and for whom — is it spent?
***In 2 Samuel 24 King David sinned against God and was given the choice of three punishments. Israel could suffer three years of famine, three months of domination by their enemies, or three days of a plague. Saying God was more merciful than men, David picked the plague. Latin Americans were never given a choice and they got all three — the plague for decades, servitude for centuries, and extreme poverty, in the midst of plenty, to the present day.
Once you understand all this it’s easy to feel bad for Latin America; but Galeano strangely deflects this. Aside from the fact that before we got there, South Americans felt comfortable skinning each other (in one passage, Galeano describes the natives burning children’s entrails), there’s the pesky fact that modern Latin Americans oppress each other too. He writes,
the endless chain of dependency has been endlessly extended. The chain has many more than two links. In Latin America it also includes the oppression of small countries by their larger neighbors and, within each country’s frontiers, the exploitation by big cities and ports of their internal sources of food and labor.
Thus Open Veins of Latin America isn’t just a diatribe against Europe, or the U.S. It’s an acknowledgement of the struggle of life — that human relations are a second food chain, that oppression is the norm between races or within them, and that if we can’t fix it so easily, we ought to at least stare it right in the face.
The question is, can awareness actually keep us from perpetuating the problem? Or does it just place us further down the chain of domination, prey to somebody less self-conscious? And if this is the case, I might ask, would victimhood make us better people anyway? Especially when later on, generations down the road, none of the victims would be choosing it — and would happily change places with the dominant?
I leave these questions, which pit prudence against goodness, unanswered.
****The dilemma of whether we want to shop at Walmart or be looted by them is of course rhetorical. If the history of industrialization in America is any proof, we can do both at the same time. The domestic nature of an industry isn't any protection from its rapacity. The idea that any big-wig cares about us just because he’s an American is false on its face — I just propose that he’s more likely to care than a foreigner.
P.S. I listed some of the reasons Latin America is poor here, but certainly not all of them. Conservatives will object that there were cultural issues besides the systemic ones. T.R. Fehrenbach states in his must-read Lone Star: A History of Texas and The Texans that the English way of taking over was the total opposite of the Spaniards and the French. Whereas the Latin countries waited for the government to move in first, the Anglos went in individually. The Spaniards looked for get-rich-quick schemes; the Anglos wanted farmsteads. We were natural colonizers and the Latins were natural conquerors. We wiped the slate clean and either killed or drove everybody out. The Latins took over and tried to put everybody to work.
Thus the difference in spirits made the same outcomes almost impossible. While lands claimed for the King of Spain languished, and were easy prey for the North American Indians, Anglo colonies grew fast and constantly pushed their boundaries. The Latin colonies were largely illiterate and poor, which made development and equality impossible. In Anglo societies a top-down feudal civilization was unthinkable. By the time we took California, Arizona, New Mexico and Texas from the Latins, the whole region was “populated” by only a few thousand of them. They couldn’t build it. They couldn’t people it. They couldn’t hold it. The idea of the Reconquista is a sham. Latinos never really conquered North America in the first place, and were constantly at risk of losing it to the Apaches and the Comanches.
I mention the systemic problems above because they’re a handicap — and a serious one, but not the whole thing in itself. I know only that I myself couldn’t have beaten the odds. I take pride in my white American ancestors, and I’m grateful for them, but I can’t see myself being born into Latin America and rising above the Latin Americans.