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July 6, 2007 - Freedomain Radio - Stefan Molyneux
58:13
818 Red South America - A Conversation

Notes from the front lines of the Marxist tide

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So, how's it going? Oh, fine.
How are you? Very, very well.
Thanks. So, you sent me some very interesting links.
What on earth is going on down there?
Oh, well, basically, there's a red tie in Latin America.
It would sound like an exaggeration, but these characters, these very colorful characters that are becoming presidents are deeply inspired by Karl Marx or Keynes or even Polanyi.
And these thinkers, of course, are a very dangerous thing to be inspired on.
Yeah, I think technically they'd be called banditos.
Is that not correct?
Right, right. And of course, they are trying to overthrow what they see as neoliberalism, which is, of course, we all know it's a mixed economy, but they see it as too liberal, which is kind of ironic.
Now, there's something which maybe you know more about, I hope you know more about than I do, since my knowledge of it is fairly limited.
But there seems to be a program that's been going on throughout Latin America and other countries since...
About the 1980s, sort of early to mid-1980s.
And it has to do with the IMF and currency support and a slashing of the public sector, which always seems to translate into cutting essential services without alternatives like education and so on, which seems to be bad.
That, of course, is arousing a lot of popular resentment.
People say, well, if enslavement to foreign financial interests is one option, then we don't want to be a banana republic anymore supplying the materials for the gringos.
What is going on with that?
Do you know much about the history of that?
What is the IMF doing?
Is there any market stuff behind it?
Because it just seems to be like a pretty good old pillage of the economy.
Right. Well, you have a very interesting phenomenon that has at least two heads.
Let's picture just a simple piece of land which the state takes from you.
Basically, this piece of land has the only lake, so you have the fishing confiscated by the state.
And then this neoliberalism or supposed slash of the state functions It just comes in name because the land is not given back to the community.
People cannot own or just start enterprises or companies inside the land or the piece of land.
But at the same time, the state is not operating or using or making use of the resource.
The thing is, you have economies that have stopped depending on the state, but the state isn't doing the things it used to do in the past, as well as it doesn't let entrepreneurs enter that activity.
So it happens with education, with health, it happens with the so-called utilities or public services that include these basic And the other thing is, of course, a system of international mercantilism sponsored by the IMF and that has been going on since 1948,
that the Latin American countries can really feel in their Daily life because all the IMF does and the World Bank basically do together is to ask for more taxes or for more efficient ways of collecting taxes such as the value-added tax instead of the income tax or maybe both.
Most countries in Latin America have both.
And these kind of things that the United States and Europe didn't have when they got out of poverty.
So you have a state that doesn't let people do things for themselves, for their lives in very different aspects of them.
And also it is part of a system of international expoliation, of course sponsored by the big banks and financial companies that are very happy that we It went out of the gold standard 60 years ago.
Right. And that's great.
I really appreciate that.
Good clarity. So the pattern, as I see it, and tell me what's right and wrong about this view, is that you kind of had a wave of post-war socialism, where in a lot of the Latin American countries, the governments would nationalize a whole bunch of stuff.
And what that caused, of course, was economic collapse, either quickly or slowly, and then they tried to combat that with Borrowing from other countries, governments from printing fiat currency and what happened then was that they kind of ran out of, they grabbed all the loot they could and they tried printing all the money they could and then you get this Argentinian style inflation and so they have to go to the IMF and then the IMF says well we'll bail you out but you have to sell everything off or a lot of stuff off that you've nationalized But of course,
if you say like you and I are fishermen on a lake and the government nationalizes the lake, when the IMF comes along, it's not like we get a chance to bid on that or it's not like we get the lake back.
It just gets sold off to other interests, usually politically connected.
Is that fair? Totally true.
And of course you get monopolies and oligopolies along the way.
And this is very interesting because the progressive era in the United States was happening along the 1910s and 20s.
But at the same time Latin America was being subverted too.
Schools stopped teaching ethics and basic civic You know, topics, because they tended to be libertarian or classic liberal leaning, of course, because if you respect other people's rights, you end up in a free society, no matter what.
So, this was very troublesome for the socialists, and they took over education, basically, in our countries.
And so it took around 40 years of this endocrination process for it to really translate into a government program.
Carried on ironically by the social democrats because they were more palatable for the masses here and for the elites.
And the elites were just put against the wall by these socialist ideas because they were called reactionaries if they didn't think in terms of process equaling progressivity or equaling progressive policies.
So, in the 60s and 70s, we already tried nationalizing industries.
We already tried high taxes.
We already tried galloping inflation.
We already tried closing our countries to protect the so-called vital interests from imports.
And all that didn't work.
It just made us more paternalistic and more fixed on the idea of the state as a Right, right, of course, of course.
So then when the economy begins to really collapse, the IMF comes in and says, we'll bail you out, but you have to follow these rules.
And of course, when the government cuts spending, it's not like they cut the spending that is touching the higher classes, right?
They always end up cutting the spending.
That touches the lower classes, right?
So in some of the Latin American countries, there was a 20-year decline in the standard of living for the average person, right?
After 40 years of fairly significant progress, there was a decline.
And I think, if I understand it rightly, the average person in South America thinks that capitalism has caused the problem.
Right. That's totally true.
And why is that? Why do people think that?
Because the IMF, of course, and the United States who sponsored these status policies represent the West and represent capitalism in the eyes of people here.
So if you lower your standard because the state confiscated some social activity or function like education or health or the other services or social services, But then it doesn't give it to you back in terms of production.
It only cuts it from the budget to pay external debt, which of course is part of the international program of the IMF. People will resent that.
And that, of course, makes presidents like George W. Bush the best friends of characters like Hugo Chavez or Fidel Castro, ironically.
Sure, of course. He came in and said he could smell El Diablo in the room.
Very Catholic imagery.
Now, it's also, of course, not the first time by many centuries that South America has been pillaged in one form or another by the imperialists in Europe and North America.
How much of the wealth is flowing out of the countries in South America at the moment?
Because it's got to be quite a bit in the form of interest payments, in the form of the transfer of property to non-domestic concerns.
Is there quite a lot of outflow of capital to deal with all of these debts that have been accrued?
Without accounting or accounting for opportunity costs, you could easily say it is over 30% of our production.
Because most people make, well, you know, these growing economies or undeveloped economies, as they are known, grow faster than those of the developed countries.
Just as an example, Microsoft pays a dividend of 8% if I have the correct The correct figure.
Super Maxi or Pronaca in Ecuador pay 30% to 38% a year.
Why isn't money flowing to our countries?
It's pretty clear for people that have studied these things.
Basically, you don't have the set of institutions that foster internal growth.
You don't have an inclusive economy which would be based on inclusive institutions, basically a society where people would be able to be owners instead of just workers.
That would enable people to Think in terms of the future.
And the same happens to the big entrepreneurs here or the big capitalists.
Of course, you can make your money grow three or four times at least faster than in the United States or Europe.
But then again, Your money is probably more times safer in a bank in Miami or in Switzerland.
Especially if you made your money, as you said, in a very clear way, If you made your money with connections, because those connections can come back with a price or maybe tied to political favors that have to be paid in some way or another.
Maybe you will be persecuted by these same political interests and groups that put you there in the first place.
So these economies are not open, they are not open not only to competition, to internal and external competition, but also they are not open in the cultural sense.
We have mixed societies, not only mixed economies, in the sense that our countries are of mixed cultural and racial origins.
And we have not made a successful transition to accepting our countries as Mestizo, neither Spanish nor Indian.
We have a unique and different identity we should acknowledge in cultural terms, of course, but also without rejecting the Western values in terms of them being classic liberal or at least pluralistic.
Right, right, right.
There must be something that the government is doing to destabilize the internal security of capital, because in the absence of government intervention or a government monopoly, there would be such an enormous profit to set up a Switzerland or Miami-style bank.
In the various countries within South America, there must be some interference that is preventing people from coming up with this kind of solution.
Do you know of anything?
Is there some you can't start a bank without the government or the taxes are so high if you're new bankers?
Is there some barrier to entry to start a bank to stabilize the problem of capital instability within the country?
Well, actually, the libertarian movement is fighting right now a very interesting battle against Correa, our friend of Chavez's president, over a banking regulation law.
Basically, this character, our president Correa, wants to lower interest rates by decree, by force, by the use of a law or legislation, to be more precise.
And to make some modifications to the institution.
But that's, of course, in terms of the state, creating the environment for banking, for example.
The least harm done would be achieved by copying at least the best practices of other states.
And if the private sector was to regulate or to establish these institutions for banking, it would have established long ago several things that have come to our attention on these months.
We are on this battle for this law, this piece of legislation.
Because, as you know, Ecuador is dollarized.
We are into dollarization right now.
We're not using a local kind of currency.
So that is really important for the Ecuadorian people.
Last six years have seen an increase of the percentage of middle class as opposed to poor people and we have never had better standards.
So one thing that really caught our attention was that there's no Bankruptcy laws in Ecuador.
And of course, when you study here marketing or business administration, you take that things for granted.
But we never, in the libertarian movement, questioned why Or what is the piece of law, legislation, or at least an institutional framework that is needed for there to be venture capitalists?
Because here, in order for you to get a grant, to get some money on a loan, you would need basically a collateral.
But as we already said, property here is not massified.
It's not of massive access to the people.
We were focusing all of our efforts there, that people get a title over the piece of land they have been living in for at least 10, 20 years.
But of course... And then they have some collateral, right, that they can use to go and create a loan to put land improvements in or build a bridge or a road or whatever, right?
But they can't, because they don't have title to the land, they can't use it as collateral.
Is that right? Right, and that's one.
Two, or second, you will have the absence of bankruptcy law.
What does this do, basically?
It allows the bankers to invest in projects.
Not necessarily in something that is already in place, but in a project that's very well conceived and It's a project that they can study and agree on and they lend the money.
That's the definition of venture capital because it's venturous, it's risky.
But of course, if you can liquidate the assets and pay back the bank and pay back your suppliers and pay back the workers, there's no problem basically.
Of course, the venture entrepreneur would end up with a With a debt to the bank, but that's something that you can easily Find ways to solve.
So that's second.
But third and most important, as we said, only free economies allow individuals to plan for the future.
So the banks will not finance venture projects simply because consumption credits are cheaper, easier to To collect if something goes wrong and basically that will certainly privilege consumption over investment in the middle run.
You said, sorry, consumption credits?
Was that the phrase you used? Yes.
What does that mean? Well, just loans to buy a car or to buy maybe an apartment or a house.
Now, what is it going on?
I mean, this is quite remarkable to think of up here, that in your country, there's what have been six or seven presidents who've been thrown out over the past 10 years, six times?
What's going on? Are they not paying off the right people?
What's happening? Well, when a libertarian here discusses the possible handling of functions that now the states have confiscated or have confiscated nowadays from us, of course, the case of Ireland comes to mind.
It had 900 years of stability without a state, without a monopoly of force, of monopoly of legislation.
And in the United States, you have a civil war with limited government in 65 years.
So that's less stable.
But on the other side of the spectrum, you have Ecuador, where you change the government every two or three years.
I mean, that seems like anarchy to me in the worst sense of the word.
right that that That's total democracy.
If you can manage to get 20,000 people on the street, you can overthrow a president here.
Because too much depends on the presidency because it's a very centralized state design.
So people have been able to throw presidents every two or three years.
So compare that 900 years where you know the regime is so-and-so, in that case, pre-Turkey, And in Ecuador you have total democracy where people can go as a mob to the streets and just take the Bastille every now and then.
Of course you cannot plan your family or your company for more than two years.
When in Switzerland you can find the company or even state project plans for 40 years or from 40 years ago.
This tunnel built inside or across this mountain, very famous recently in Switzerland, was planned 40 years ago and built recently.
So that's an impossibility in Latin America.
And of course with that comes high interest rates, which is a common signal of this malaise, of this short-term thinking.
And that prohibits physically or tangibly projects that may privilege the long run.
For example, you can build a philosophy school here, but people are not thinking, probably, or most people are not thinking in terms of cultivating themselves and capitalizing for, say, 10-20 years.
They don't start careers that are going to pay up in 10-20 years.
The accumulation of human capital for yourself, like going to an eight-year study program or something, you just don't know what it's going to be like when you graduate, so there's not that same incentive to really invest.
If you want to become a doctor in the US, you go to school for six or eight years, you do your internship.
It could be ten years before you start really making money, but you know That there's going to be a job for you.
Whereas I guess in Ecuador, because of the instability, there's not that same desire or incentive to really capitalize yourself.
Right. And so let's caricaturize this.
Let's make it an exaggeration.
But you would privilege going out on Friday.
So you would turn in...
Using the terms that Professor Hans-Hermann Hoppe has cleverly used, you will turn philosophers into drunks.
That's what happens when you put institutional barriers to long-term thinking and planning.
I apologize for this following stereotype and I apologize in advance, but my sense has always been that in the sort of Latin American countries, I've only visited I guess Mexico and Belize and Guatemala, but I get a sense that when people don't have economic opportunities,
They tend to turn inwards towards the church, towards the family, towards their community, and try and derive their satisfaction out of that, which is not great, but it's, you know, I guess better than a kick in the head.
Is that something that has changed?
Because I get a sense that the same amount of cultural satisfaction that you can get absent political opportunities is not quite as rich as it used to be.
Right. This is a really interesting topic.
Thank you, Stefan. Why?
Because people here think that if they adopt liberal economic policies, they will become cold or Or, you know, like workaholics like in Japan or the United States.
That's not true. We can see the very fine examples of Italy and Spain despite all of those countries' problems.
You can see they are both rich and very Latin.
You can see Spanish people that in the summer they end the They work around six or seven with some friends and they go to a bar and have some beers or wine and they make a lot of social life for at least two or three hours a day.
So I think the cultural character will not change and that's a thing that worries a lot the people here.
Another thing which is important is that of course and totally related to your question that people here They don't establish impersonal institutions.
Of course, that's the definition of an institution to begin with.
They don't establish institutions because it's all about the people and people relations because you don't trust one another.
It's really graphic to see that Ecuadorians in particular are, well, we are a country of migrants, two or three million Our people have gone out of the country since this IMF sponsored crisis have hit the region and our country, particularly in 1999.
What's the thing with this?
Ecuadorians go out and they don't trust other Ecuadorians.
They make restaurants and projects and any kind of commercial activities they engage with.
They do them with Argentinians, they do them with people from Chile, from Mexico, from anywhere else, not from Ecuador.
Why is that?
Because the distrust here is so big that...
Well, this figure will surprise you, of course, Stefan.
There are only eight companies that are on the stock market here in Ecuador.
Eight. In the whole country.
You said eight. Eight. So that's sort of like the Netherlands in 1622.
Right. Totally, totally.
And that's exactly the case with the institutions and the culture and our relation to the Enlightenment ideas.
That's very precise.
You made a very important comparison.
We have not gone through the stages that other countries have.
And then, since you don't have these institutions that of course need to be impersonal and they need to be called and they need to be judgmental, that's a problem.
People in Ecuador tend to trust their partners, their families, their friends and their couples, their romantic couples in order to do business.
Because the institutions depend so much on the names that are behind them.
And it's really interesting.
When you see a bank or you see a restaurant or you see, say, a club, a disco, people immediately ask who's the owner.
And it's really interesting because, of course, some of us who went to college, like, of course, 3% of the country, 2 or 3% of the country, are accustomed to thinking in terms of institutions, ideas, standards, brands, etc.
But most people here won't go for that.
They just ask who's the owner.
That establishes the credibility of the place if they're going to be nice to you, if it's going to be a safe place, if there's going to be anything weird going on on the disco or the bar or the restaurant.
You know if some politician owns the restaurant that you will find yourself around politicians if you go.
You know, the Italian families that created the mafias in the beginning of the 20th century just lived kind of the same situation.
Basically, they trust only the family.
They call it the family. That's tribal thinking, if you allow me the harshness of the term.
Yeah, no, that's quite right.
But it's interesting, and I find this to be very common in people's thinking with regards to society and the government, because you say the Ecuadorians don't like institutions.
And, you know, I mean, in some ways I can understand that.
You have to get a bit of Protestant salt in the wound of vanity to get a love for institutions.
The weird thing that I always find, and maybe you can explain this from the Ecuadorian perspective, is if you don't like institutions, why is it that everybody thinks the government is the solution?
I mean, isn't the government the biggest institution of all?
But you say they were like a mother or a father.
Is that how it's viewed? Well, there's a phrase I really love.
It says basically that right-wingers or people on the right want the state to be our father.
People on the left want the state to be our mother.
And we libertarians want to be treated as adults.
So libertarian ideas, classic liberal ideas, enlightenment ideas have not really reached our cultures.
They have not made a deep transformation.
People just change the name of the father from church or the Catholic church to the state.
And then to the leftist state, we have not really changed anything.
We're just changing the cover or the mask.
But the emperor still has no clothes.
Right, you take off the hat of the pope and you put on the suit of the politician and it's the same kind of thing.
Yes, and it's the same need of the people to have a father, to have a political leader, to tell them what to do, what is forgiven, what is forbidden, what is allowed.
Now, do you think the cultural side of Ecuador, because everyone thinks that the Enlightenment is about the free markets and the rational individual, and it is, of course, but a lot of what people forget about, particularly in the US, is the degree to which the Enlightenment Thank you.
Thank you.
Well, of course our parents are still alive.
Mine weren't especially religious.
They have taken me to church at most five times in my whole life.
I'm 31 years old.
But my generation and the people that are 10 years younger than me They don't go to church.
At least, or at most, 5% of these young people, and my generation included, go to church.
So I see a very interesting secularizing trend in our culture, but that of course can be taken by socialists as easily or even more easily because they work with our money in the form of taxes than by liberal and libertarian-minded people.
That's the irony of the Enlightenment leaders.
They were teaching us how to stop depending on them.
That's the definition of an Enlightenment cultural leader.
And we need that. We need people that teach people that they don't need anybody to lead them, at least in political terms.
They should be really skeptical there.
I'm sorry to interrupt, but I'm really fascinated by the cultural side of these kinds of things.
To me, it sort of seems that when people end up, as adults, continuing to look for someone to tell them what to do, that's gotta be how they were raised, whether that's by the parents or the priests or by the teachers.
Is there something in the way that children are raised That doesn't sort of set them on their own two feet to think independently?
I mean, you went to school there, you grew up in that cultural environment.
How are children treated?
Are they at all encouraged to think for themselves, to question things, or is it very much, you know, be seen and not heard, or obedience is key?
Well, you're taught here that you have to respect your elders, no matter what.
They cannot be wrong. You don't have to criticize them or you can't.
That's my grandmother's generation.
My parents' generation was far more often.
Of course, they lived through the 60s and the 70s with all the influence from outside, but we're talking about higher middle class or high class.
Most of the people here of the middle or the lower middle classes or the lower classes didn't have that contact with the rest of the world.
And they are repeating these patterns that are not healthy.
They have been repeating them for at least 500 years, at least.
And this is very interesting.
People here have adopted Quechua or Quechua in Peru as the The indigenous language that they need to recuperate or revive as a way to fend off the perverse effects of the system of globalization.
But, of course, that's the language of the Incas who were here only 40 years in an invasion or, of course, a conquest.
But before that, you could find in Ecuador 7,000 years of very interesting civilizations, stateless civilizations, commerce-oriented civilizations.
So my bet is that before that, we didn't have as much paternalism as before the Incas came.
But then the Incas came for four years.
They followed the Inca, the prince or the king, that was the son of the sun, with total devotion.
And you had a really centralized economy and culture and religion, of course, because you didn't have separation of state and religion.
After that, of course, the Spanish came and our culture was then overdosed with the paternalism because you were taught again the machoistic and classist trends that are still with us today.
So it's really interesting.
Just focusing at the moment on the family, how we are educated.
I'm not going to include myself right now, but I can see how most families in Ecuador are being educated.
Young people are taught to respect their elders no matter what.
The boys need to be macho and don't cry, and they should be the caretakers in terms of financial security for the home.
Women should help their brothers, and girls should help their brothers clean their rooms if they don't do so, cook for them, etc.
Men are always right.
Sorry, can I interrupt you for just a sec?
I'm making a list for my wife.
I think I've got it.
I think we've become honorary Ecuadorians.
Ecuador is really open to people from all parts of the world, but of course this is the internal culture and that figure of the father As severe as a punisher, and that figure of the mother as a caretaker, tender, and forgiving no matter what.
They have mixed themselves in the fear of these centralized institutions.
First the church and then the state.
And of course the cultural scenario is really set for paternalistic trends here.
So it's really not surprising.
As you were talking, I just got a sense of course, and it's not particularly original, but the father is sort of modeled on the Old Testament God and the mother is sort of modeled on the Virgin Mary, right?
Right. Totally right. And, of course, you have these interesting dynamics or social dynamics or personal dynamics here that people like Esteban Lasso, the Hayekian libertarian social psychologist, have studied. Even in the couple, in the romantic A couple.
You can find these trends at work.
Men should not express their feelings and women should forgive them even if they are unfaithful.
Girls set their eyes on the bad boy and of course They try to render that bad boy into submission and the guys here, the boys, need to play the bad boy until they are rendered into submission or appear to.
So it's a really perverse dynamic.
If you're a good guy, You're not ugly, you have whatever attributes girls are looking for.
You need this aspect of treating them bad because there's some masochistic trend, if you allow me, going on here, which goes in the same way with the presidents.
That's why we overthrow presidents every two or three years.
Ecuador is fascinating. Because they're bad boys who can't be reformed, right?
Right. They didn't comply.
They were not put into submission by society.
And if they go their way, You just change them.
So people want a mix of a punisher but also someone that can be manipulated or molded into some sort of mixture of Fidel Castro with Rousseau and Robespierre because this is a really interesting case.
Ecuador doubles the next country in sympathies for Fidel Castro and Hugo Chavez.
This is the only country that in the 90s never did any privatization, any reform, any deregulation efforts, any whatsoever.
The only thing that the Ecuadorian economy has that's been improving our lives or allowing us to improve our lives, which is a more precise way of putting it, is dollarization, a healthy currency.
Right, right, right.
Well, it's interesting, just to go back for a second, you were talking about how the women see the bad boys that need to be reformed.
That also, to me, has religious overtones in that the women treat the men the same way that the church treats its idea of the human soul, sort of innately bad, but it can be saved with enough love and devotion and so on.
So it seems like there's a flow through almost from the baptismal well through to the highest office of the same kinds of views of human nature.
Right, and you need to...
To put your animal part or your animal aspects into submission, the same way that women who are more spiritual and sensitive and tender here in our Latin view, the woman represents all that, has to render into submission the man who is, of course, more animal, more instinct-oriented, more full of appetites.
It's a very castrating view of human beings.
It's a very simple philosophical problem.
If you see human beings as entities that are fragmented with parts that are in tension and that are competing with each other, this animal part with this spiritual part, And who's going to win?
Instead of seeing human beings as whole beings, as individuals that can clearly have instincts and intuitions and the other forces that make conflict sometimes,
but just as a single entity that can be happy, that has no moral obligation to To comply with others' needs.
This is a really interesting text I found from a pamphlet by Ayn Randor, some speech she gave.
She was saying that altruism, basically this idea that you have to give your life for others or give your life goals and your happiness for others' sake, is only a tool And I was just thinking about it when I found the speech by Ayn Rand.
It's only a tool to make you comply with some other's wishes.
It was the church first and now it's the state.
Because they have taught you that thinking about your own goals, what do you want?
What do you really want in life?
What do you really want to be?
In terms of what do you want to study instead of being a doctor or a lawyer?
As your father said, you can be a graphic designer or you can be a Transvestite dancer, whatever.
But you don't ask these questions, or if you do, you become a rebel and families here will lament that you are not following your father's steps and so and so.
It's interesting and I certainly do agree with you that if a culture has a view that human nature is fundamentally broken and needs to be controlled and restrained, then it is very, very hard to escape the general consequence of a dictatorial government or a dictatorial church.
There has to be something fundamentally broken in a human soul if you're never going to accept that it grows up and is self-sufficient and can be happy in and of itself.
You are always going to need to put it in a cage or put it on a leash like a wild dog or something.
So you need a benevolent view of human nature.
I think in the culture and a general positive view of human efficacy if you're going to have a free society and that's part of the journey that Very few cultures seem to have made it through yet.
Right. A really interesting case in our region is Argentina.
Contrary to the now common view that Chile is the most liberal society in Latin America, Chile is actually a very conservative country.
They just approved of abortion laws.
The fact that you could We have a legal divorce.
I mean divorce, not abortion.
Abortion is very far away from Chile's standard.
Divorce was approved like four years ago.
Four years ago. In Ecuador, you have it since the 1930s.
Chile is really conservative for the region.
But Argentina is the country I was getting to because they were inspired by Juan Bautista Alberti in the 1800s.
They wrote this liberty-oriented constitution, really famous and inspired by both Magna Carta and the American Constitution.
Alberti wrote it with all these other liberty-minded thinkers in Argentina in 1853.
And since then Argentina started growing culturally and economically in an amazing way.
It's very much so that people and workers from Switzerland, Germany, Italy and Spain went to Argentina because wages were very much higher than in their countries.
They had a comparable Per capita of cars at the turn of the century, of cars, of telephone lines or telegraph lines, of railroads, etc., to the United States or to Australia, which are the most typical countries to compare Argentina with.
Argentina was in the first world.
Argentina had a capital city that rivaled Paris and New York and London in terms of Fashion and cultural trends.
It was a really vibrant city.
And what happened?
In the 1910s and 1920s, of course, the socialists of different sorts, national socialists in their first stages, but of course, in general, these German thinkers that allowed for the rise of National Socialism, And Marcusians and Gramscians and Marxists, of course, of different types, Stalinists and Trotskyists, etc., took over the universities.
So they took basically the heart or soul of Argentina.
And with that, they started controlling how people felt about that development degree they had achieved, how they felt about those economic freedoms they had, how they felt about those civil liberties they had.
And of course, they made them suspicious of freedom and of human nature, because that's what it boils down to, as we already established.
And in the 1930s, Juan Domingo Perón of course came as the embodiment of that new, really old, in fact old ideas of paternalism, statism and basically government managing cultural and economic affairs of society.
And Argentina It started then, in the 1930s, very fast decay.
It's the only country that we have known to go back again to the third world.
And that's really a shame, a pity, because it was a really interesting case that demonstrated that it was not a racial thing or even a cultural thing, With some fine leaders,
you could really change the culture, the way people see each other, see themselves, and with some really basic institutions that the Constitution established and letting people to be free.
Yeah. Letting people be free.
You could really have some very interesting cultural and material results.
So Argentina until now has been becoming It's really interesting, I think, when you say the Ecuadorians don't trust the other Ecuadorians and so on, or they don't trust institutions, the one thing that's terrible at an emotional level when governments control a country is that culture doesn't get challenged.
Culture doesn't get challenged by profit and self-interest.
So people would learn to trust other people more if there was more profit in it.
And people would learn to trust institutions more if there was more profit in it.
But because the government controls it all and there's no profit in these things, culture stagnates in a terrible kind of way.
And I think that makes people's thinking get really circular and they stop looking for creative new solutions to things.
And I do find that...
Well, I think.
But South America was on its way.
Liberal democracies, a small government, the establishment of property rights, free flows of capital, low taxation, a popular Western language.
I mean, it was really on its way in a way that Africa never was.
I mean, Africa is a total basket case.
Africa was never on its way.
But South America had this – it's like three lost generations of people who could have had unbelievably different lives if different decisions had been made, if more people had fought for classical liberal or free ideas.
And so to me, that's just something very, very sad because there's such opportunity that was not realized because of these terrible ideas.
Right, and that's where we come back to the beginning of our talk, where we can ask ourselves, why did Latin American leaders start becoming more influenced by French ideas and German ideas, especially the socialist ones and the social democrat ones of right or left,
it doesn't matter. Instead of being inspired by these experiments in freedom that they could find up north, the United States and Canada are really interesting, and they are American, so if you have any sense of continental sovereignty, as we claim we do, we should be copying the United States and Canada, not France or Germany or Stalin's Russia.
But what happened here?
I think that the imperial adventures of the United States here have discredited classical liberalism and libertarianism or capitalism, to be sure, of course, in the region.
And that's incredible.
Sorry, I agree with that.
I think it's a real shame when people mistake a state system for an ethical or property rights philosophy.
I think the other thing that happened too was that it was because South America didn't have as strong and as long a tradition from the, as you could say, really from the sort of 16th century to the 19th century is a couple of hundred years of pretty intense approach to individual rights.
Because it didn't have the momentum of the United States, it was easier to turn on a dime towards some other thing.
It's taken longer for the United States to become more socialist because it had more momentum, but I think South America didn't have that same cultural momentum.
It could go either way because it didn't have that sort of inertia.
Let me suggest another term for momentum.
Cultural capital. Yes, very good.
The United States had been building that cultural capital.
Of course, in Europe, before and then, they went to the United States, the people that made the United States.
And of course, people in Argentina already had that good background.
But of course, they didn't try freedom for so long.
For as long as the United States, it was 60 years as opposed to say 150.
So when the socialist ideas came, you didn't have as much cultural capital to resist these bad ideas or ideas that really damaged yourself really visibly.
You could be persuaded that you were becoming poorer or your societies were becoming, I don't know, more conflictive.
A variety of reasons.
It's really important that we have in mind that it's not the things that speak for themselves, it's who teaches us how to interpret reality, who has the pan by the handle.
So, Argentina is, of course, a true case of this.
And, of course, what happened in Latin America was happening in Spain at the same time.
Spain was closing itself from the rest of Europe.
It isolated itself basically the same 500 years from Europe.
And it, of course, A great cost in terms of cultural capital not being built in Spain.
In other terms, they didn't evolve to the Western mentality of skepticism, science, reason, freedom that other peoples in Europe did.
That's Portugal too, of course, and Greece and other countries, Albania, etc.
Spain went through 400 years of a bad economy after pillaging all the gold from South America, right?
That must have taught them that gold is not wealth, that money is not wealth, it's production.
But what happens with Spain is recently when last year three guys from Ecuador, including me, went to Madrid, Spain, And we were talking to this Spanish economics teacher.
You might have heard of him.
His name is Jesus Huerta de Soto.
He's a very renowned Austrian economist.
And he was telling us that Spain did, in ten years, under President Asnar, who liberalized the economy and And opened up Spain to the rest of Europe, what they didn't do in the past 400-500 years.
And of course he told us something really important.
He said, you people in Latin America are so fixed with the idea that the Spanish influence in in Latin America is so strong and that makes you poor and ignorant but of course Spain's influence or the Spanish influence in Spain is bigger,
is far bigger than in Latin America and we have made the jump to a developed country or to a developed state of things.
So sometimes it's an excuse, Stefan, this thing with our countries not being Conquered or colonized by Anglo-Saxons and them being colonized by Spanish people.
Yes, we were colonized, or we colonized, or our ancestors colonized with Spanish ideas.
But that's the key word there is ideas, not Spanish.
The thing is the legacy that the Spanish were bringing.
And it was, of course, paternalistic, it was machoistic, it was racist, etc., etc.
So that's a real drag on us.
But from the cultural perspective, But that's also a motive or a reason for optimism, because if Spain could do it, and Spain has the whole full load of Spanish influence upon Spain, of course, we can do all the changes and jump to the first world in just a generation.
If Ecuador started growing 6 or 7% a year, With just some liberalization of the economy, with a massive distribution of property tiles, and with the free commerce, with the world, you could become Spain, instead of our people going massively to Spain, in only 20 years, just a generation.
You could be in $20,000 per capita.
When you think just how close everyone is to having a great life in the world, it drives you mad, right?
Because you just know everybody is so close to having such a great life.
If the boot would just get off our neck, we could all have such a fantastic, the whole world, right?
I always feel like we're this close to having that, but it just goes on generation after generation.
Right. Listen, I'm going to stop.
I really do appreciate the chat.
I just don't want to overburden my podcast listeners with three hours of Latin American history.
I find it fascinating, but I'm going to wait to see what the feedback is like.
Is there anything else that you wanted to add?
Is there a website you'd like to mention or anything else that you'd like to get out to the people who listen?
Well, no, just thank them very much for listening, just to forgive me for my, you know, Ecuadorian English standard.
But at the same time, just they can look up for my name in Google.
They can Google my name, Juan Fernando Carpio, and they can find some articles and discussing the problems in the region from a libertarian point of view.
Well, thank you very much. Thank you very much.
I'll post your name on the board so that people can, gringos like me who can't spell very well, will be able to find you as well.
Thank you so much. I really do appreciate your time and I'll talk to you soon.
Thank you very much. Bye-bye.
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