What Drives Latin Americans Left?

My wife, who has accompanied me on my travels to most Latin American countries except Brazil, invariably comes home with the same refrain: “If I lived there, I’d be a Communist.” Since her political-economic philosophy is to the right of mine, this always shocks me a little. After our last trip, I asked her to elaborate, and this is the gist of what she said:

“Capitalism doesn’t work in Latin America because the Latin character is repelled by the two concepts on which capitalism rests: industry and saving. The few wealthy businessmen in each country sit on the coast and live like feudal lords. If there’s any money left over, they don’t reinvest it as true capitalists would, but put it in Swiss banks for fear that the Communists will someday take over. This leaves only two sources of financing: the American ‘imperialists’ and the government. American investment today is unacceptable—largely for emotional reasons. Latin Americans are tired of being ‘colonies’ of the ‘Colossus of the North’ and made to feel inferior by the insensitivity of the American businessmen who live among them. But there is a valid economic reason too. The capitalist, of course, makes his profit, and Latins fail to see why that cut should go abroad. Now that American investment is being expropriated or phased out in most countries, the government is the only supplier of capital. So two options remain. Under state capitalism (Colombia, Venezuela, Argentina, Brazil) the oligarchies survive with limited power. Under state socialism (Cuba, Peru, Bolivia, Chile) the primitive economies are managed to indulge the masses, who got nothing out of oligarchic free enterprise. Both systems are horribly inefficient compared with genuine laissez-faire capitalism, but it’s pointless to talk about that. You can’t have capitalism without capitalists. At least under the second system the governments can survive without the constant threat of being overthrown—no small advantage in Latin America.

SR

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Selden Rodman

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My wife, who has accompanied me on my travels to most Latin American countries except Brazil, invariably comes home with the same refrain: “If I lived there, I’d be a Communist.” Since her political-economic philosophy is to the right of mine, this always shocks me a little. After our last trip, I asked her to elaborate, and this is the gist of what she said:

“Capitalism doesn’t work in Latin America because the Latin character is repelled by the two concepts on which capitalism rests: industry and saving. The few wealthy businessmen in each country sit on the coast and live like feudal lords. If there’s any money left over, they don’t reinvest it as true capitalists would, but put it in Swiss banks for fear that the Communists will someday take over. This leaves only two sources of financing: the American ‘imperialists’ and the government. American investment today is unacceptable—largely for emotional reasons. Latin Americans are tired of being ‘colonies’ of the ‘Colossus of the North’ and made to feel inferior by the insensitivity of the American businessmen who live among them. But there is a valid economic reason too. The capitalist, of course, makes his profit, and Latins fail to see why that cut should go abroad. Now that American investment is being expropriated or phased out in most countries, the government is the only supplier of capital. So two options remain. Under state capitalism (Colombia, Venezuela, Argentina, Brazil) the oligarchies survive with limited power. Under state socialism (Cuba, Peru, Bolivia, Chile) the primitive economies are managed to indulge the masses, who got nothing out of oligarchic free enterprise. Both systems are horribly inefficient compared with genuine laissez-faire capitalism, but it’s pointless to talk about that. You can’t have capitalism without capitalists. At least under the second system the governments can survive without the constant threat of being overthrown—no small advantage in Latin America.