南美洲避开了两次世界大战，为什么现在没有发达国家？South America Sat Out Both World Wars. So Why Isn't a Single Country Developed?

This year's Rio Olympics has taken all kinds of flak — over security, over venue construction, and so on — but none of it can dim my long-standing longing for South America and my hope of one day setting foot on that land. The silent, exquisite castle in the sky; the warm, uninhibited Brazil; the azure beaches, the football fans, the beautiful women; the grand Carnival — whatever you can imagine, South America has it all~

My thinking about South America has come in three rounds, each with a different emphasis.

1. The first round approached it through the mechanism of wealth regeneration;
2. The second round analyzed it through the lens of the grand sweep of history, political systems, human environment, and geopolitical factors;
3. The third round, drawn from more recent study and understanding, took a fresh angle.

Taken together, these three rounds turn out to be a process of understanding a thing and a phenomenon by moving from the surface to the depths.

I'll go in reverse, starting from the third round, and lay out my views one by one. Anyone who knows the subject, or is curious, or has studied it, is welcome to discuss it with me so we can learn together.

The Third Round

South America was very lucky to dodge both World Wars, but throughout the Cold War that followed, it was forgotten, never stepping onto history's grand stage. The Cold War's five or six decades were the fastest-growing period for Western and Eastern countries alike. The Second Industrial Revolution surged forward, technology advanced by leaps and bounds, America kept charging ahead and held onto its top-dog position, and Europe and Japan, with American backing, rapidly caught up. As for the Soviet Union, it goes without saying — it could practically arm-wrestle the United States.

But during the Cold War, all of Latin America was absent, entirely uninvolved. It stayed off in its own little "Eden," playing its own game. So at the very moment the whole world was surging forward and developing at its fastest — a development even more magnificent than the Industrial Revolution of that earlier era — Latin America failed to keep up.

Miss this one step, and you fall out of step at every step. To catch up afterward is already too late. And that line is my own recent reflection and takeaway.

There's one more small point, though not a major cause: while South America dodged the two World Wars, it had so many German, Italian, and Japanese immigrants at the time that it got caught in the middle and stayed out of the fighting — but it also missed out on any wartime windfall. America, by contrast, raked in enormous war profits in both World Wars, laying a whole set of economic foundations for its rise. That's the biggest difference between South America and the United States.

The Second Round

(Figure in original: Bolivia's Salar de Uyuni, the "Sky Mirror.")

History:

Look around the world: of the developed countries that rose during the First Industrial Revolution, apart from a handful in Western Europe, there were precious few anywhere else on earth.

Both North and South America started out as colonies. North America was a British colony; South America was a colony of Portugal and Spain.

Think back: the U.S., Canada, New Zealand, and Australia all grew out of British colonies. None of these four had much in the way of valuable natural resources to develop and exploit — so the colonists had to roll up their sleeves and develop the land the honest way.

South America was likewise a colony, but its misfortune lay in the special natural geography of the place — an abundance of precious metals and all sorts of crops.

When the Americas were first discovered, there wasn't much of a gap between North and South. When the United States was newly founded, it wasn't even a match for Mexico.

The first real gap opened up, I'd say, during the Industrial Revolution. Before it, gold- and silver-producing Latin America was the "nouveau riche" — richer than Wang Sicong, flashier than Jack Ma. But the tragedy was that all its wealth got plundered away by the colonizers, laying the groundwork for the Industrial Revolution. During the Industrial Revolution, European colonizers, standing on a mountain of capital, began building industrial systems.

Latin America, meanwhile, had a single-crop plantation economy — coffee, rubber, cocoa. It exported raw materials and imported manufactured goods; under the magical workings of that price scissors, how could it possibly develop? Next-door Argentina, blessed as it was with the Pampas grasslands, went in for large-scale ranching — but that's all primary industry, with nothing to do with heavy industry.

With a grand historical environment like that, its "tragic" fate was sealed.

(Figure in original: playing football on a Rio beach.)

Finance:

Survey the world, and a mature, powerful financial system and market are indispensable conditions for becoming a developed country or a first-rate world power. And forming a mature financial market and system requires certain prerequisites:

a. A stable political and economic situation

b. An open, relaxed economic and financial policy

c. A sound market operating system and financial environment

d. A well-developed financial system and framework

e. Advanced communications infrastructure and a superior geographic location

Compare: United States — New York; UK — London; China — Shanghai, Hong Kong; Japan — Tokyo.

Germany — Frankfurt; France — Paris; Singapore.

And South America? Nearly none of the prerequisites are within its reach, so naturally it has no corresponding financial center; and without finance, it was destined never to get the game going.

Politics: Survey modern political systems, and they fall roughly into two types: constitutional monarchy and democratic republic. The origins of these two systems are Britain and the United States, respectively.

Compare, and you'll find:

a. As early as September 22, 1862, the U.S. issued the Emancipation Proclamation, abolishing slavery

b. Brazil didn't abolish slavery until May 13, 1888

Brazil was the last country in the world to abolish slavery — a full generation behind the United States.

Compare again:

a. On July 4, 1776, the thirteen British colonies in North America passed the Declaration of Independence and threw off British rule;

b. Thirty-five years later, around 1811, South America's liberator Bolívar first took part in the fight for independence; it wasn't until 1819 that the first South American city — in Colombia — was liberated, another full generation later

Again, a gap of a full generation; a difference of nearly two generations. The disparity in development that follows goes without saying.

And luck, honestly, matters a great deal — it doesn't wait for anyone.

Look again at Latin America's political systems, forever swinging to extremes. There are basically two main types:

a. Military dictatorship and reactionary rule. b. The left takes power and pursues nationalization.

With politics in perpetual turmoil, the country was destined to have no great future. The Middle East is similar — the five Arab-Israeli wars, the Iran-Iraq War, and so on. It's all the same logic.

By contrast, China's stability seems all the more precious, especially on the matter of security. In Europe and America, walking alone late at night, you might get shot.

Human Environment:

America's white population is mainly of English and German descent, whereas Latin America bills itself as a great melting pot of races — peoples from all over the world mixed together over several centuries. Its whites are mainly of Portuguese, Spanish, and Italian descent.

If you look closely: Latin American whites have kept, deep in their bones, the Spanish and Portuguese habits of indolence, of not liking to think, of not liking to work — long on warmth and passion, short on the genes for hard struggle. Meanwhile, the virtues and the talent of the English and Germans got carried on and passed down in America.

Compare the PIGS countries with Germany and France and you'll get the gist. A country built by people who lack the genes for struggle in the first place naturally never amounts to much.

It's actually shaped, or determined, by geography. In Europe, or across most of the world:

a. The farther south, the warmer the people and the more the great food. Lots of beautiful women, and the economy is generally poor.

b. The farther north, the colder the people and the worse the food. No beautiful women, but the economy is pretty decent.

So in Spain, Portugal, Italy, and Greece, you can see lots of beautiful women and eat lots of great food, but their economies are the worst in the EU. Britain and Germany are the opposite.

(Figure in original: a Japanese TV survey asking ordinary Europeans which nationalities are "most reliable / most hardworking / least reliable / least hardworking.")

Geopolitics:

In the process of its own natural evolution, South America was never able to do what it wanted by its own will, because there was always a "covetous United States" right next door. The impact of that goes without saying. Compare how deeply the Soviet Union influenced us, and you get a glimpse of it.

As America's backyard, the U.S. naturally didn't want a fire in that backyard, didn't want complications, didn't want a little brother on its doorstep capable of talking back. So along came all manner of assassinations, wars, sanctions, and propped-up puppets. Just look up how many times Castro was targeted for assassination and you'll understand.

The same logic applies to China: it's entirely understandable that, faced with China's rapid rise, neighboring small states and Russia hold rather unfriendly attitudes toward it.

Nobody wants a great power they have to look up to for a neighbor.

The First Round

Look at the gap between Latin America and the United States and you'll understand how today's shortfall in domestic demand took shape. Latin America's poverty lies in its failure to form a sound mechanism for regenerating wealth — to borrow a fairly mainstream phrase, it lacks a kind of sustainable capacity for wealth accumulation.

Let me use a simple example to illustrate the difference.

The first scenario:

Suppose a gold deposit is discovered somewhere, and an investor comes and builds a mine, hiring a hundred workers to pan for gold, netting 10 million a year. The mine owner pays out 50% of that as workers' wages, so each worker earns 50,000 a year. They spend 10,000 renting housing, and the remaining 40,000 lets them marry, have children, and start a family and career. The owner still has 5 million left over, which he can put toward investment.

Because the workers have money and want to settle down, demand for housing appears. So the owner uses his money to build houses, renting or selling them to the workers. The workers need to eat and drink, so restaurants open up, earning back the money in the workers' hands. Opening a restaurant means hiring more workers, so the workers' wives get jobs, and income too. A single household's consumer demand grows even larger.

This way, after a few years, 100 households have sprung up in this place. The children need schooling, so a demand for education appears, and someone comes to open a school. The workers want to date, to consume, to get other things, so there are cinemas and shops. And so, after 50 years, when the mine here is nearly tapped out, the place has become a thriving city of about 100,000 people.

And the second scenario goes like this:

Suppose a gold deposit is likewise discovered, and someone likewise comes to invest and mine it, likewise hiring 100 workers, likewise netting 10 million a year — but the owner pays out only 10% of that as wages, so each worker earns 10,000 a year. That money is barely enough to fill their bellies; there's no money to rent a house, no money to take a wife, so they can only live in shacks. The owner makes 9 million a year, but he looks around and sees nothing but poor people, so reinvesting anything locally will find no demand.

So he moves his money abroad, because keeping it local isn't safe at all. He builds a few luxury villas and hires a few workers as bodyguards. The workers have no future — beyond working themselves to the bone to scrape by, they have no other demands. The one thing that might work out is finding some way to trick a woman into marrying them and produce a pretty daughter, who might then be married off to the mine owner as a wife.

Fifty years on, this place has nothing but luxury villas — still no other industry. When the mine is finally exhausted, the owner leaves with his fortune, and the workers either flee into exile, or the men turn to banditry and the women to prostitution.

These two very simple examples are, in fact, the different developmental trajectories of Latin America and the United States. Perhaps Americans today should say: thank Washington, who forged for America the most modern and scientific political system; and thank Henry Ford, who single-handedly created the American middle class. Latin America's countries weren't so lucky. Their great dictators created predatory economic systems, carving up society's wealth in a frenzy with the posture of overlords, until the whole economy collapsed from exhaustion, powerless to develop any further.

Here it's worth mentioning Henry Ford again. Among all the business figures in history, at home and abroad, no one has surpassed Henry Ford in his impact on the social economy. It was he who single-handedly created the earliest middle class with his Model T, and who first brought American society into the modern age (Europe, on this count, lagged America by several decades).

Henry Ford said, I want my workers to be able to afford the Model T I make — so he paid them high wages. He also created the assembly-line method of production, which drastically lowered the cost of the car; and so the Ford Motor Company vaulted into being the largest carmaker, and workers with money could buy cars, buy houses, and make other purchases — and so the middle class was born.

And so America, having completed its westward expansion with no more room to maneuver in terms of territory, discovered another gold mine: a rapidly growing middle class drove enormous demand, propped up a vast domestic market, and kept pulling the economy along at high speed.