The Failure of the Great Wealth Machine
North America was settled by the English, Dutch, French and even the Spanish, but in our early history the settlers soon realized that those who put their energies and souls into the land would “own” that land. And the early colonial governments recognized that concept of preemption….that if someone improved the soil they could lay claim to that land. Even though some other person or government could have owned the land that the settlers were toiling on and improving, they could claim that land and then purchase it for a fair price.
And that began the great wealth machine for North America…it recognized contracts, ownership, agreements and debts in a formal documented format. That meant that people could buy and sell…they could improve their lot by working hard and make a better life. But this was not the case in South America…..which was settled almost entirely by the Spanish.
Spain left a heritage that unfortunately would not benefit South America, but would instead mire it down in an endless and expensive bureaucracy. Even today, the time required for setting up a legal business or even purchasing a home is a long and demanding process and so it is not done for that reason. As a result, illegal businesses represent maybe two thirds of the economic wealth producing machine in South America, but it is a dead machine…as these businesses cannot be expanded nor sold and the players involved cannot better themselves.
This heritage is the social structure that existed in Spain five hundred years ago and continues to survive throughout most of South America today. That social structure consisted of an oligarchy that controlled the wealth and the poor that had no wealth and no opportunity to ever achieve wealth. As you travel through the great cities of South America, much like we did on this trip, we did not see the poverty; we generally did not see houses made of scraps of trash because the guides that showed us their country talked of the beauty and the great accomplishments.
The guides would talk about the poor and we could catch glimpses of this poverty from time to time, but who goes to visit faraway places to see hardship and destitution. And over the years, the oligarchy wanted to keep it this way…they would continue to control the wealth and thereby the poor as well. The establishment that existed did not want business to be legalized, they did not want land to be purchased, and they did not want people to improve their lot in life so they made it impossible to do these simple tasks…well, they are simple to us in North America.
Even when the poor people in these countries rallied to support leaders who said they would improve life for the very poor, these leaders would give money to the poor, but that was money that was soon spent and the poor were once again poor. They never changed the system, so that the poor could find jobs that would pay a decent income, which enabled them to create wealth, which enabled them to better themselves.
So when one visits the very beautiful cities of South America, much like we have ….they see the magnificent architecture of their majestic buildings, the monuments and the parks. But we also see endless lines of street vendors and small shops most all of which are not legal…and the streets are breeding grounds for pickpockets, theft, muggings by those who have little or no opportunity to produce income as part of the economy….all a part of the underground economy.