This essay is quite different than your previous ones. You usually have a relatively straightforward thesis concerning geographical determinism. This essay is much more comprehensive with social-economic and governance factors, but it’s also necessarily less lightbulb-over-head insightful.
It doesn’t seem like Argentina did anything particularly “wrong” it’s just that they did and continue to do everything wrong.
But it’s all motivated (I think that subtext is in your piece) from the baseline inequality that plagues South America in general, combined with the populist and revolutionary type movements that are in constant tension with the old monied landholding elite. Anybody who’s read South American literature knows this.
Beyond the culture and history, I would also posit that South America occupies a special, maybe privileged position in space and time. The geographical distance from the rest of the world is striking.
It was spared the destruction and renewal of the word wars. It didn’t have the first mover advantage of places like the U.S. or the UK but also didn’t have the knowledge and clean slate position of the Asian tigers.
South America (especially Argentina and Chile) has its own systems based on history and geographical isolation that kinds of meanders and limps along. Democracy, socialism, populism, conflict, peace, the 19th, 20th, 21st centuries…it all seems to average out to a middle income - mid level stasis.
People there do tend to be happier than in the rest of the world. So that’s something?
You're right that this is less light-bulby, but I think it's because the complexity of causality obfuscates it. If we're to summarize the insight, I think it's that
1. Unmanaged agricultural ownership leads to inequality and causes social conflict in a way that's probably more intense than mining or industry.
2. Agricultural wealth (like other commodities) causes a tremendous amount of heartache due to the swings in income and currency mgmt. This is an underdiscussed aspect of the resource curse, and it's only obvious in this article because Argentina suffers from these things yet doesn't qualify for the traditional resource curse.
If you think about how South America differs from Asia, it's that the entire LatAm continent was managed for natural resources by cultures that suffered from the resource curse: Spain and Portugal became centralized "dictatorships" (absolute monarchies) because of that resource curse. And then it didn't suffer from a power redistribution from world wars.
Asia had both thousands of years of functioning societies that weren't exposed to the resource curse, and then the post-WW2 redistribution.
Which is interesting in its own right, because what would have happened to the world without WW2 redistribution?
Very interesting. One take-away - I didn't know any Argentinian companies, although I knew Mercado Libre (not as a customer, so it doesn't know), I just didn't know it's Argentinian.
I think, overall, there is a sadness here, as so much potential has been squandered by bad policies…
Ah, the land of such beautiful music can't do so many things wrong, come on!
On the origins of this inequality which seems to be the original sin of the continent, and especially in light of the comparison with the Asian tigers, something that stands out is that rich Iberian families have essentially remained the same families since the reconquista.
In contrast, Asian tigers benefitted from brutal elite ventilation after WWII: defeat and MacArthur's Zaibatsu-busting in Japan, Japanese and then American domination for SK/Taiwan, cultural revolution, you name it. The heirs of centuries old castes were screwed and had to... (gasp) work ?!?!?! Compete with the hard-working proles, you mean ?!?!? with fair rules ??!?!? exactly. Well, more or less.
Yeah, when to be rich in countries with a more continuous timeline just means having some ancestor a few centuries back that won big by taking risk - charging a muslim fort in Andalucia, or taking the dangerous trip to the new world a couple centuries later. The contempt for work in the aristocratic caste there may come from there too - plenty of opportunities to win gold by doing something dangerous, rather than getting acquainted with commerce, like the british lords eventually did.
I'm sure somebody who spent his life studying this may find a bunch of errors in the above, but I do think lack of elite renewal, a tendency for those in the good spot to just stay there is something I've noted in my long experience with the iberian culture. With some notable exception, in some particular areas, which I hope will eventually prevail over old money.
Interesting theses. I just asked ChatGPT what it thinks about your Spanish thesis, which I had never thought about, and it seems like there's a bit of it, but not too much. It did trigger something super interesting though.
Spain lost its LatAm properties because of its proximity to Europe: It got steamrolled by France in the Napoleonic Wars, and the nationalistic fight for independence was an inspiration for its LatAm empire to do the same. Similarly, this proximity to Europe pushed Spain to do lots of redistribution (eg desamortizacion de Mendizabal). Also, Spain's loss of empire meant it had to reform itself, it couldn't survive just on resources (and their curse). This might explain why Spain is a much more equal country today than LatAm
Your writing weaves heartfelt inquiry with precise data analysis. It was fascinating to explore the edge of whether Argentina might return to wealth and greatness.
I'd be really interested to se your take on why Australia (I'm an Aussie) has succeeded when compared to Argentina especially considering that:
1. we were very similar economies in terms of relative size at the turn of the 20th century,
2. we probably still have very similar economic types when you compare resource extraction to manufacturing (though my guess is that we have much more natural resources than Argentina) 3. we also have strong unions.
4. I think we also have large scale farming that is highly concentrated into a few hands
5. We also spent a long time, until the 80's, with strong tariffs aimed at protecting import substituting companies rather than export growing companies.
How did we manage to avoid argentinia's fate - and will that continue. I know the answer may be strong governmental institutions, but we all know that they can get degraded very quickly.
I agree that this comparison would be very illuminating. The similarities are uncanny, and that will highlight the differences. One thing though, Australia's land concentration didn't start as intense as it is today!
Ah yes please do! I was going to correct a ChatGPT translation, but this would be better!
To get in touch, if you're a sub you can reply to any newsletter email and I'll get it! Sometimes they go to spam so if I don't reply, write a comment and I might see that
Absolutely brilliant!! I could not help pick the point that the culture of a people has such an effect on how they direct their economies , whether educated or not ; in my view how poor a country reflects of the impact of its culture on its economy. I would like to hear your view on this. It would be interesting to look at this broadly choosing countries with diverse cultures.
This article is totally beyond brilliant and insightful. Would love to speak with you about this and ideas I have for another Caribbean / Latin American / South American country I will not mention in this article - that could greatly use your decades long knowledge and experience. Michael Smolens - NYC - mlsmolens@gmail.com - 1 - 917 - 742 - 0158 (if you call, leave a message) starting 11th and for sure last company now all over the world called INSATIABLE INTELLECTUAL CURIOSITY LLC (nothing at all online yet) - but I have had 10 successful startups in 8 global developing countries over the past 50 years with over 20,000 employees
Very interesting Tomas. Do you plan to write a similar series about France ?
There are many similarities between what Argentina experienced and what France is currently experiencing: an omnipresent, interventionist state, an outdated policy “software” that can’t keep up with today’s realities, a powerful yet increasingly obsolete unionism that freezes reforms, chronically high public spending and structural deficits, one of the heaviest tax burdens in the developed world, rigid labor rules and steep payroll costs that entrench insiders and keep youth unemployment high, dense bureaucracy that throttles permits, housing, and industrial investment, deindustrialization with persistent trade deficits, a street-veto politics that punishes incremental reform, and an aging welfare state whose promises outpace its funding.
I hope you will also look at Chile's vast underutilization of wave sourced energy, which could be used to desalinate the unlimited waters on the coast and so could bring some growth to the desolate northern desert. Immense bureaucratic obstacles.
This essay is quite different than your previous ones. You usually have a relatively straightforward thesis concerning geographical determinism. This essay is much more comprehensive with social-economic and governance factors, but it’s also necessarily less lightbulb-over-head insightful.
It doesn’t seem like Argentina did anything particularly “wrong” it’s just that they did and continue to do everything wrong.
But it’s all motivated (I think that subtext is in your piece) from the baseline inequality that plagues South America in general, combined with the populist and revolutionary type movements that are in constant tension with the old monied landholding elite. Anybody who’s read South American literature knows this.
Beyond the culture and history, I would also posit that South America occupies a special, maybe privileged position in space and time. The geographical distance from the rest of the world is striking.
It was spared the destruction and renewal of the word wars. It didn’t have the first mover advantage of places like the U.S. or the UK but also didn’t have the knowledge and clean slate position of the Asian tigers.
South America (especially Argentina and Chile) has its own systems based on history and geographical isolation that kinds of meanders and limps along. Democracy, socialism, populism, conflict, peace, the 19th, 20th, 21st centuries…it all seems to average out to a middle income - mid level stasis.
People there do tend to be happier than in the rest of the world. So that’s something?
Super interesting feedback, thank you.
You're right that this is less light-bulby, but I think it's because the complexity of causality obfuscates it. If we're to summarize the insight, I think it's that
1. Unmanaged agricultural ownership leads to inequality and causes social conflict in a way that's probably more intense than mining or industry.
2. Agricultural wealth (like other commodities) causes a tremendous amount of heartache due to the swings in income and currency mgmt. This is an underdiscussed aspect of the resource curse, and it's only obvious in this article because Argentina suffers from these things yet doesn't qualify for the traditional resource curse.
If you think about how South America differs from Asia, it's that the entire LatAm continent was managed for natural resources by cultures that suffered from the resource curse: Spain and Portugal became centralized "dictatorships" (absolute monarchies) because of that resource curse. And then it didn't suffer from a power redistribution from world wars.
Asia had both thousands of years of functioning societies that weren't exposed to the resource curse, and then the post-WW2 redistribution.
Which is interesting in its own right, because what would have happened to the world without WW2 redistribution?
Brilliant piece. I’m from Argentina myself and could not have explained this nearly as well. Super comprehensive and detailed
Me alegro!
Very interesting. One take-away - I didn't know any Argentinian companies, although I knew Mercado Libre (not as a customer, so it doesn't know), I just didn't know it's Argentinian.
I think, overall, there is a sadness here, as so much potential has been squandered by bad policies…
Ah, the land of such beautiful music can't do so many things wrong, come on!
On the origins of this inequality which seems to be the original sin of the continent, and especially in light of the comparison with the Asian tigers, something that stands out is that rich Iberian families have essentially remained the same families since the reconquista.
In contrast, Asian tigers benefitted from brutal elite ventilation after WWII: defeat and MacArthur's Zaibatsu-busting in Japan, Japanese and then American domination for SK/Taiwan, cultural revolution, you name it. The heirs of centuries old castes were screwed and had to... (gasp) work ?!?!?! Compete with the hard-working proles, you mean ?!?!? with fair rules ??!?!? exactly. Well, more or less.
Yeah, when to be rich in countries with a more continuous timeline just means having some ancestor a few centuries back that won big by taking risk - charging a muslim fort in Andalucia, or taking the dangerous trip to the new world a couple centuries later. The contempt for work in the aristocratic caste there may come from there too - plenty of opportunities to win gold by doing something dangerous, rather than getting acquainted with commerce, like the british lords eventually did.
I'm sure somebody who spent his life studying this may find a bunch of errors in the above, but I do think lack of elite renewal, a tendency for those in the good spot to just stay there is something I've noted in my long experience with the iberian culture. With some notable exception, in some particular areas, which I hope will eventually prevail over old money.
I think Peter Turchin thinks along these lines?
Interesting theses. I just asked ChatGPT what it thinks about your Spanish thesis, which I had never thought about, and it seems like there's a bit of it, but not too much. It did trigger something super interesting though.
Spain lost its LatAm properties because of its proximity to Europe: It got steamrolled by France in the Napoleonic Wars, and the nationalistic fight for independence was an inspiration for its LatAm empire to do the same. Similarly, this proximity to Europe pushed Spain to do lots of redistribution (eg desamortizacion de Mendizabal). Also, Spain's loss of empire meant it had to reform itself, it couldn't survive just on resources (and their curse). This might explain why Spain is a much more equal country today than LatAm
Your writing weaves heartfelt inquiry with precise data analysis. It was fascinating to explore the edge of whether Argentina might return to wealth and greatness.
Thank you, I'm glad to hear!
great analysis.
I'd be really interested to se your take on why Australia (I'm an Aussie) has succeeded when compared to Argentina especially considering that:
1. we were very similar economies in terms of relative size at the turn of the 20th century,
2. we probably still have very similar economic types when you compare resource extraction to manufacturing (though my guess is that we have much more natural resources than Argentina) 3. we also have strong unions.
4. I think we also have large scale farming that is highly concentrated into a few hands
5. We also spent a long time, until the 80's, with strong tariffs aimed at protecting import substituting companies rather than export growing companies.
How did we manage to avoid argentinia's fate - and will that continue. I know the answer may be strong governmental institutions, but we all know that they can get degraded very quickly.
I agree that this comparison would be very illuminating. The similarities are uncanny, and that will highlight the differences. One thing though, Australia's land concentration didn't start as intense as it is today!
Hey Tomas I can translate the article to Spanish for free if you want. My girlfriend is a professional translator and we're both from Argentina.
Ah yes please do! I was going to correct a ChatGPT translation, but this would be better!
To get in touch, if you're a sub you can reply to any newsletter email and I'll get it! Sometimes they go to spam so if I don't reply, write a comment and I might see that
Absolutely brilliant!! I could not help pick the point that the culture of a people has such an effect on how they direct their economies , whether educated or not ; in my view how poor a country reflects of the impact of its culture on its economy. I would like to hear your view on this. It would be interesting to look at this broadly choosing countries with diverse cultures.
I agree. There are strong geographic factors (the agricultural wealth) but they were not enough I think to make Argentina poor
This article is totally beyond brilliant and insightful. Would love to speak with you about this and ideas I have for another Caribbean / Latin American / South American country I will not mention in this article - that could greatly use your decades long knowledge and experience. Michael Smolens - NYC - mlsmolens@gmail.com - 1 - 917 - 742 - 0158 (if you call, leave a message) starting 11th and for sure last company now all over the world called INSATIABLE INTELLECTUAL CURIOSITY LLC (nothing at all online yet) - but I have had 10 successful startups in 8 global developing countries over the past 50 years with over 20,000 employees
Thanks Michael!
You shouldn't put your personal info on the Internet, bots can scrape it!
Please do share your ideas, you can respond to this newsletter and I'll get the email
TL; DR: People don't need help from the government, they need the government to get out of the way.
I mean... The Asian Tigers had massive government intervention?
Very interesting Tomas. Do you plan to write a similar series about France ?
There are many similarities between what Argentina experienced and what France is currently experiencing: an omnipresent, interventionist state, an outdated policy “software” that can’t keep up with today’s realities, a powerful yet increasingly obsolete unionism that freezes reforms, chronically high public spending and structural deficits, one of the heaviest tax burdens in the developed world, rigid labor rules and steep payroll costs that entrench insiders and keep youth unemployment high, dense bureaucracy that throttles permits, housing, and industrial investment, deindustrialization with persistent trade deficits, a street-veto politics that punishes incremental reform, and an aging welfare state whose promises outpace its funding.
I hope you will also look at Chile's vast underutilization of wave sourced energy, which could be used to desalinate the unlimited waters on the coast and so could bring some growth to the desolate northern desert. Immense bureaucratic obstacles.
Wave tech?
Not ready, very hard to make.
But it can use solar!