Why Is Latin America still Poor

[Music] high in the sonoran desert resides the city of nogales actually it's two twin cities that are separated by the u.s mexico border they have exactly the same geography and they largely share an identical culture but this is where the similarities end to the north just meters away in nogales arizona incomes are over seven times higher most adults have graduated high school life expectancy and healthcare are relatively high by global standards and the residents have access to all the basic public amenities despite all its inefficiencies and the occasional corrupt politician the government of these citizens is an axe in accordance with the population's wishes they do not live in constant fear that their investments businesses and homes will be taken from them nor that their safety is in jeopardy to the south in nogale sonora the picture is rather different despite having a population that is 12 times smaller it has 29 percent more homicides than st louis which is the u.s city with the highest homicide rate in 2019. most adults do not have high school degrees and because of a lack of sufficient health care mothers have to worry about high infant mortality rates opening a business is risky not just because of the high crime rate but because owners will constantly need to bribe and maneuver around corrupt local politicians in order to stay open by almost every metric the citizens of nogale sonora have it worse than the citizens of nogales arizona so how can two halves of basically the same city be so drastically different well it actually stems from and highlights a much larger disparity latin american countries are much poorer than their northern counterparts but this was not always the case in fact for most of history latin america was the most valuable and sought-after real estate in the hemisphere for both the indigenous peoples and for the early european colonizers northern america was sparsely populated by largely nomadic tribes with the huge and complex native civilizations residing close to the tropics even in more recent times countries like argentina mexico brazil and venezuela were all speculated to become global powers in their own right during the 19th and 20th centuries in fact by the 1950s venezuela was undergoing an economic boom the likes of which latin america had never seen before in just a span of 30 years it had become the third richest country in terms of income per person this was a result of the discovery that venezuela was essentially floating atop a sea of petroleum the largest such reserve in the world dwarfing those of the us soviet union and even saudi arabia with the end of world war ii the demand for oil steadily skyrocketed with the explosion of the car industry and a blossoming of global economic trade and venezuela was at the forefront to benefit from this commodity boom and for a few decades it did growing by over 800 percent in just 50 years but as we now know venezuela is an economic calamity in fact venezuela experienced the single largest downturn of any nation's economy in modern history millions have led the country and hyperinflation has rendered the venezuelan currency more worthless than toilet paper venezuela might then seem like a unique case but it's not most latin american countries have failed to live up to their economic potentials since they gained their independence yet south america is by a geographical standpoint better off economically than north america and as we discussed before the differences do not pertain to culture so then why is nogales arizona so much better off than nogales sonora why is northern america richer than latin america and not the other way around [Music] with the european discovery of the new world in the 15th century and the vast potential wealth it revealed one such expedition by spanish navigator juan diaz de solos forever altered the history of southern latin america in 1516 he sailed into a wide estuary disembarked from his ship and claimed the land for spain naming the river that flowed before him rio de la plata the river of silver in reference to the significant quantities he had found the locals to possess the charuwas and the kurendi who were both hunter-gatherers occupied either side of the river and met the foreign invaders with hostilities and as a result shortly after his arrival desolas was clubbed to death not discouraged and hungry for the spoils of the land spain sent out another voyage with the intent to colonize the area in 1534 the colonists led by pedro de mendoza founded a settlement on the land that makes up the modern capital city of argentina buenos aires which directly translates to good heirs unlike many of the lands to the north and in africa the climate here was temperate and very suitable to european habitation however the settlement was soon after abandoned see the settlers and conquistadors that came to the new world came looking not for a new home not for good heirs but for treasures riches and human labor the churuwas and kurundi were nomadic in fierce opposition and refused to give or trade goods to the spaniards even when captured as a result the settlers grew hungry as they did not anticipate the necessity to grow their own food the land ultimately lacked what the spanish desired silver to extract and native labor to exploit in a desperate last-ditch attempt the colony sent out expeditions in search for a more suitable land to conquer one such expedition led by juan de aiolas traveled up the piranha river in search for the source of silver they found the natives to possess they stumbled upon the guarani people who unlike the churuas and grundy were sedentary and agrarian and as a result already had an established hierarchical system with ruling elites that presided over the excess resources aiolas instantly saw the opportunity before him the spanish quickly overran the guarani founded the town of asuncion which would later become the capital city of paraguay the conquistadors forcefully married into the guarani royal family and placed themselves as the new elite of the already established social hierarchy they modified the systems already in place to demand tribute and forced labor the rest of the population in buenos aires quickly moved to the new town and herein lies the root strategy to spanish colonization and later the portuguese they sought out indigenous peoples that already had established social hierarchies so that they could forcibly place themselves a top said hierarchy and utilize and modify existing systems of exploitation for their own gain in essence the more advanced and populated a native society was the more desirable and easier it was to exploit but what aolas did in paraguay was just a copy of much more bloody and significant conquests to the north [Music] in 1519 king montezuma who against the advice of his own counselors welcomed irnan cortez into the aztec empire's capital city of tenno teachland he was immediately captured by cortes and his conquistadors where they used him as a hostage to gain access to all the treasures in the city where they melted down priceless aztec artifacts into gold bars to be shipped back to spain in just two years by 1521 the entire mighty empire fell to the spaniards then cortes started to divvy up the most valuable resource of the new world the native population through the institution of encomienda the encomienda system essentially was a grant given by the spanish crown allocating land and that land's population of indigenous peoples to each conquistador for which they would extract labor and tributes this system was a foundational institution for which the conquistadors ruled and exploited the native populations the entire system was built to bring the living standards of the indigenous peoples to just above survival so that any access production was to be taken by the conquistadors one by one these incredibly advanced and huge native empires were destroyed divided up enslaved and drained of resources a decade after cortez's conquest of mexico francisco pizarro began his journey to not only utilize but to perfect this strategy of conquering on november 15th 1532 pizarro and his fellow conquistadors lady trapped for the incan emperor atahualpa and his army the spanish slaughtered 2 000 incan soldiers with devastating efficiency and captured atahualpa they then tortured him and other incan elites demanding rooms to be filled entirely with gold and silver and all the riches at their disposal eventually burning them all alive even those that satisfied the initial demands again after conquering the mighty empire each conquistador would be granted an inca meander for which they would replace the former incan elites and enslave the population but eventually an even more pernicious form of population control was enacted and it all had to do with a single mountain high in the andes of modern day bolivia in 1545 diego guapa was in search of a shrine deep in the andes when he was pushed to the ground by a strong gust of wind right within eyesight of a huge exposed deposit of silver ore word got around and soon it was discovered that the mountain was basically made of pure silver it had so much silver in fact that for two entire centuries the mountain would produce eighty percent of global silver making it the single richest deposit in all of human history as a result the city of potosi was founded at the base of the mountain and its population exploded to 160 000 making it larger than either venice or lisbon at the time in order to fully utilize the mountain's insane deposit of silver the spanish needed an insane amount of labor spain sent out the chief colonial official francisco de toledo to try and solve the problem on how to mobilize such a massive labor force after five years in a survey of the entire incan adult male population he set motion a series of policies and institutions that have scarred the people of peru and bolivia to this day the first act was to move the entire indigenous population of the former incan empire into a small region stretching from cusco in the north to potosi in the south within this region the population was to live in cities called reducions or reductions in english from here toledo modified an existing institution called mita which was used by the incan elites to force labor on plantations however toledo used the new media system to drastically increase the exploitation of native labor one in every seven males was to work in the minds of potosi in which a total of three million would work and hundreds of thousands would die potosi would mine so much silver that at the time it was likely richer than madrid itself but this wealth did not fall on the indigenous but to the conquistadors and those back in spain this great lust for wealth by the spanish enabled systems in institutions similar to media in incomienda to spread all over the spanish colonial territory from the southern tip of argentina all the way up to california the spanish utilized these systems to extract as much from the indigenous populations as possible by expropriating land forcing labor setting huge taxes and paying extremely low wages in the end spain the conquistadors and their descendants became insanely rich however this web of interconnected institutions designed to exploit caused latin america to become the most unequal region in the world while destroying the economic potential of one of the naturally richest regions on earth while spain was building its empire england was recovering from a terrible civil war by the 16th century england was only a secondary player in european affairs leaving them without the means or capacity to colonize the new world however by 1588 the english managed to crush the spanish navy which was enroute to invade the british isles this was a major political turning point in european power dynamics that showed that britain was finally a force to be reckoned with on the seas it makes sense then that almost immediately after the first english settlement was founded in the new world by this point spain controlled all the most valuable areas with large native populations and so english colonization of the new world was due to it being the leftover scraps the first english settlement jamestown turned out to be a disaster they attempted to implement the spanish strategy of conquering the native peoples so that they could exploit their labor but just like in buenos aires the native population was sparse decentralized and unwilling to trade or be conquered after countless attempts it was decided that the spanish strategy would not work in north america but maybe if you could not exploit the native labor you could exploit the colonist labor as a result the virginia company employed draconian policies to force the colony into working however the new world was vast colonists could just leave and try to survive themselves or even attempt to assimilate with the native tribes which was growing in desirability with how terrible living conditions were in jamestown ultimately this strategy also failed and the last resort was an attempt to incentivize the colonists to invest and work hard on their own volition this included giving land to anyone willing to move to the colony and giving the colonists a voting assembly so that they could have a say in the laws that resided over them this was the foundation of democracy and capitalism that would ultimately become the united states slowly these assemblies grew in power and strength and since political power and wealth was distributed to a wide segment of the population it became increasingly difficult for a single person or group to use their power to benefit themselves at the expense of others as these assemblies grew in power they ultimately morphed into the first continental congress who decided they should be in control of their membership and taxation this ultimately led to the declaration of independence from britain to which the constitution was created affording an even greater distribution of political power including constraints on those in power this cemented highly secure property rights including those on innovation through patents people were now incentivized to invest their time energy resources and creativity in working and solving problems it then makes perfect sense that the united states experienced the industrial revolution quickly after it started in england with the distribution of political power being so broad the barrier to entry to create a patent get a loan from the bank and start a business became easy and widespread one startling statistic to back up this claim is that between 1820 and 1845 only 19 percent of patentees had parents who were professionals or were from major land-owning families in fact 40 of patentees had primary schooling or less education including the record holder for most patents ever thomas edison the us then was able to tap into the creativity productivity and hard work of its citizens because they were incentivized to do so eventually leading to the united states becoming the wealthiest country on earth this was all a result of the inability for england to enact the spanish colonization strategy in north america and the realization that the only way to make colonies productive was to incentivize the colonists to work hard and invest themselves while the united states declared independence as a result of increasingly distributed and broad political power this was contrasted drastically with latin american independence movements by the early 19th century the institutions of colonial exploitation still existed in latin america either in their original form or modified versions that better suited the elites the conquistadors and their descendants still ruled and exploited the vast majority of the population who had no say in how they were governed and thus did not slowly gain rights and freedoms like their northern counterparts another way to say this is that the elites were content with spanish rule and the exploited populations had no mechanism to free themselves however in 1808 french forces under the command of napoleon invaded spain the monarchy was quickly overthrown and a resistance government created a new constitution which dramatically limited the colonial elite's power to subjugate the populations in the new world out of fear of losing their political and economic stranglehold and while spain was weak one by one the elites of latin american countries declared independence from spain so instead of stronger more fair political systems as a result of becoming independent many latin american governments became even more tyrannical over the population the only way a new group could come into power was to violently overthrow the current government this caused latin america after independence from spain to be defined by political instability corruption and dictators nowhere is this better illustrated than in mexico shortly after independence between 1824 and 1867 there were 52 mexican presidents of which most rose to power not in accordance with the mexican constitution but with force such extreme political instability led to highly insecure property rights as well as a much weaker mexican state with little control over much of the country rendering the government largely unable to raise taxes or provide public services to the citizens this also led to the loss of most northern territory to the united states since they were left defenseless to external threats without a strong central government political stability or secure property rights the mexican economy suffered if someone had a good idea or invention they would likely be unable to get a patent and or profit off of their creativity this would be the result of government restrictions to protect the monopolies given to political allies of the current regime capital would also be hard to come by as the banking sector was very uncompetitive in fact while the us was undergoing a financial revolution going from 338 banks in 1818 to 27 864 in 1914 mexico by 1910 only had 42 banks of which two had 60 control on the entire market with a lack of competition interest rates were set extremely high rendering loans only useful to the already rich and established elites who used the capital to further clamp down and monopolize markets but what fundamentally stopped the us bankers from doing the same the incentive to do so was always there and this is why shortly after the us independence from britain some politicians started to allow for the creation of these monopolies who in return would give them some of the profit however the u.s and unlike latin america these politicians were subject to fair elections and as banking monopolies hurt the common person they were beaten by candidates running to disallow such activities the differences in access to economic opportunities also presented themselves significantly when the frontier lands opened up as a result of the introduction of trains while the us heavily incentivized land to be cultivated by offering free land to anyone willing to work it in latin america this land was expropriated by the elites who owned huge swaths of the frontier with the explosion of international trade with the onset of the industrial revolution in the us and europe many resource-rich countries started to see the huge value in these harder to get to lands however it was the elites who profited and not the common people in latin america growth in the monopoly run heavy industries saw huge growth however more important sectors for sustained income generation remain stagnant causing inequality to inflate even more rapidly this is partially the reason in which venezuela went from being one of the best performing economies in the world to a humanitarian crisis instead of broadly based political systems and economic markets to efficiently utilize the insane resource wealth generated from oil the country fell into the resource curse where abundant oil overvalued the currency causing other domestic sectors to falter as well as causing an insane social spending spree by the left-leaning government leading to hyper-inflation this happened at some point to almost all latin american countries from every resource from sugar tobacco precious metals lumber emeralds cattle etc causing significant wealth in incomes to grow only for a small group of elites in charge at the time democracy has come late slow and largely unfulfilled in most of latin america politicians to this day are corrupt and unaccountable and as a result economic institutions are geared to those with political power only nogales arizona is richer than nogale sonora because of these political and economic institutions that run their respective nations in the united states you can easily start a business or buy a home and feel assured that the government will uphold your rights on your property not because those in charge are looking out for your best interests but because they are subservient to your vote to keep them elected any attempt to undermine the access to political or economic institutions is met with a fierce opposition that leads to someone with a more popular view being elected in latin america the governments are still haunted by the ghosts of colonial institutions that were designed to exploit the common person the political instability that coincided with this also meant that the central governments of these nations were unable to become sufficiently powerful enough to enforce law and order throughout the country all this means is that for the average person it's difficult to build a business it's risky to invest because of a lack of competition as a result of rampant monopolies productivity has remained stagnant meaning that incomes have too latin america was colonized on the basis of exploiting the native populations whereas this was infeasible in north america the differences in prosperity was not due to geography culture or even the differences between the british and spanish empires but by the conjunction of native population distributions the evolution of historical events and the resulting differences in incentive structures that formed as a result [Music] you

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Keywords: Why is Latin America underdeveloped?, why is latin america poorer than north america?, why is south america poorer than north america, why is latin america poorer than united states of america, latin america, poverty in south america, poverty of central america, why is venezuela poor, why is america so rich, why is central america poorer than north america, why is north america richer than south america, Why is south and central america poorer than north america, South america

Id: XXhEjvWDuds

Length: 22min 29sec (1349 seconds)

Published: Thu Jan 06 2022