Primary Drivers In South American Investment and 4 Pillars Of Understanding South AmericaSubmitted by Smudge Pot on Wed, 01/15/2014 - 03:17
As promised, my second article on South America. My first post on the subject caused a lot of confusion. In private messages people were kind of mystified: what does this have to do with us USA patriot libertarian types?
(Edited to include: And please ask any questions at all on the subject I'm here to help and I absolutely LOVE this topic, I find it endlessly fascinating.)
It's going to have everything to do with us and our future. The time has arrived. In the same way we're not dealing with a system that may collapse but ALREADY HAS, it's just getting propped up, South America is happening in a good way now.
The main drivers to South America are ones we already know:
- The economy here is in deep trouble, it's gonna get worse, it can only get worse.
- More and more people are shut out of life saving and enhancing medical care here.
- Laws, regulations and taxes make it harder and harder to start or maintain business here.
- We have this police state thing threatening our well being here.
- We live under a threat of all-out martial law.
- WWOCD? What will our children do?
You know this and you know these are powerful drivers. A lot of us behold this and feel trapped. Some of us behold this and feel inspired to fight and make a stand, Restore The Republic! Most of us feel afraid to some degree or another and this we deem wise. We prep, we practice, we preach and this does indeed give us reassurance but it's hard to get around that feeling of impending doom. Any day could be the day, let's hope it's not today.
South America represents a workable alternative for many of us and it can address each reason above. Since it does, this makes it not just a "will it happen?" but a "gonna happen" and a "is happening".
Read that again because I know for many of you South America might as well be Mars. OK let's look at why: we are bubble people. We live in our world of ideology, we talk to similarly minded people, we listen to ourselves on broadcast, we all see the same youtubes and read the same articles, we are a network, we are a family, we are 100% focused on OUR history and OUR body of laws and OUR Constitution. And that's our job as activists. This is our universe. And we're great activists and educators. Our very ideology asserts that the rest of the world is and should be the rest of the world's problem.
Well the idea of "escape" also makes a lot of sense to people and we're seeing the expat thing get into gear. The whole eco-tourism thing is established. There's some mega lucrative economic activity happening and South American banking still may represent a haven from the far reach of the USA. Add this to the fact that boomers, the elderly benefit-sponges (like myself soon) have basically no retirement, pensions and social security is a Ponzi scheme about to fold, well it doesn't take much to see that this trickle down to South America is about to become a flood. Plus there's stuff liberty minded folk like us can do there that we just can't do here.
Now I expect you think I'm gonna tell you point by point how South America solves all our problems but frankly others have done it right here on the DP, there's a million other places to get the sales pitches and really great information. And there's kind of a format to the expat sites, they all show you palm trees and beaches and just beckon us to join them in paradise. I'm actually kind of a devil's advocate. The downside is conspicuously missing from most of these reports. There's always a down side. And I'm not sure I'm interested in retirement packages, I'm interested in business. I'm into solutions and those are gonna take work. This work will exceed my life and my generation and this will be your work and our children's.
So how do you get into the dirt down there from right up here? How do you start making some informed comparisons in your mind?
There's 4 layers of understanding South America (and any nation in it) I find crucial. These will remain crucial no matter what you do in South America at least for any business/investment or relocation purposes.
- Pre-Colombian history.
- Political economics.
These are your 4 pillars of understanding. Everything else, all news, current events, stuff you read online, all of that sits on top of these 4 pillars. And I can't go into detail on each, we'll have to break these out over time but if I can introduce them to you, you will have them as guideposts for your understanding.
1. Pre-Colombian history.
In a word, this describes the people and the cultures you will be dealing with. Most brown people in Latin America are brown because they have some degree of indigenous heritage and people in large parts of the region still primarily identify TRIBALLY or NATIONALLY according to the political structures before "Columbus discovered America". These were dominated by massive and sophisticated cultures like Inca, Maya and Aztec. Many of these exist today in terms of social organization, language, religion and lifestyle. In some places it's hard to see "government" but there's an older existing social order governing things like land and resource allocation and the resolution of disputes. A lot of expats are making the mistake right now of not understanding these existing structures and the people in these communities. There is a building backlash in some locations, I tell you that for a fact.
Geography feeds directly into indigenous history because it primarily determines if the local culture is part of the former large, empire model or if they are a small, localized tribe. In higher, drier country we find the resources and mobility to build empires. Lowland equatorial jungles tend to foster smaller, more isolated and less mobile groups. Jungles are hard to travel through and they produce such abundant resources that people don't need to travel far to live. And if you have multiple languages in one country, you can start looking for geographical explanations: is there a river, a swamp or a mountain range between them? Natural borders and boundaries are the explanation for many modern political borders. This is one reason for the odd shape of Chile. The nearly impassible Andes Mountains leave this strip of lowland coast that is Chile and most of what's on the other side is Argentina. Most of Brazil is almost impenetrable equatorial jungle. Nobody fought over it because mounted knights in armor kept sinking into it. These same geographic features dictate borders, the flow of commerce (or the expense thereof) and again, whom you are dealing with, what languages they speak. And we can consider mineralogical and other natural resources to follow geographic patterns. Where are the forests and timber, where's the arable land, where are the minerals and what type they will be is part of our geographic and geological scope.
Conquest is the process of making a land and a people your chattel and subjects. Spain was the primary dominator and that's why most of the continent speaks Spanish to this day. Pretty much for the same reasons we speak English as opposed to French. And like King George, the King and Queen of Spain (Ferdinand and Isabella) were giving away land grants to their various loyal servants, usually nobility, and these nobility were in turn granting out administrative roles over their grants and these form the modern borders of the nations we see now. With occasional tweaking. A bit of adjusting went down over the 400 odd years since. However there's a few standouts. Brazil, massive Brazil, resource rich Brazil was a Portuguese franchise. The Dutch held some choice property in the Caribbean circle in little Suriname, Netherlands lost a Guyana to the Brittish (who also scooped our eency-peency Belieze), and France had a strong presence in the Caribbean along with (French) Guyana on the mainland. This is why these languages are still spoken on the Northeast coast of South America. And it also has a lot to do with the complexion and makeup of certain peoples or demographies. In these areas which might not have apparently had the golden treasures of the Inca empire but they were excellent for plantation agriculture and Europe was fast gaining a taste for sugar and other tropical delights as well as rice. Which is really hard to grow in Europe. And the didn't find the locals as well suited (or in plentiful enough numbers after conquest and enslavement) for the job. They very logically started importing slaves from Africa in very large numbers to make up the gap. This makes places like Suriname and the Guyanas about as linguistically and ethically diverse a place as you can find on the planet especially with later successive waves of Asian immigrants. And the influence of Caribbean culture is pervasive. Bob Marley is every bit as home on the coasts as in Jamaica. The cuisine, incidentally, reflects this. Wow. However there isn't this deeply enculturated tribal identity we find inland. Contrast this with Argentina, a land not well suited to plantation agriculture really, not nearly as many natives or slaves were required so most were exterminated. Argentina is the whitest, most European of all South American nations in my opinion for this reason. With continued immigration into Europe it might even be more European than Europe at this point. Take a random picture in an Argentinian city and there's a good chance you will simply say it looks like someplace in Europe. Geographic boundaries also reflect the competitive interest of the various land grants which evolved into states as the various grantees jockeyed for the choice resources and then attempted to maintain them. Eventually all but 3 of these grants evolved into contemporary nations. There's still 3 protectorates under European rule. The USA has Puerto Rico in similar servitude as well as the Virgin Islands. Basically South America is a post-feudal continent and these patterns remain to this day. It also solidifies the present borders as being political constructs by virtue of their very formative existence.
4. Political economics.
If you hear a dirty buzzword your economics training might be similar to mine, it's kind of a socialistic take on economics but as these nations gained independence, all of them have experimented with socialism to some degree even if that experimentation involved insurrection and civil war. This is ironic as most of the liberators who fought for independence were ardent republicans and sought to establish republican political models. Socialism as an ideology hadn't evolved yet. Later on, massive inequality and pervasive poverty saw these republics battling Marxist insurgencies which cost much blood and the scars still remain in the form of mass graves and veteran guerrilla fighters. But this is the layer of understanding that brings us closest into range for investment and other purposes. It includes the various regimes that push and pull for control and their contrasting policies. Some of these nations are re-embracing free markets, reducing government control and allowing things to flourish. There are some real miracle turn-arounds such as Chile, Panama and Costa Rica. To a lesser extent, Ecuador. Contrast this with Venezuela, another equatorial nation with just TONS of oil and due to socialist meddling in free markets, their poor and middle class are forced to buy staples like rice, beans and milk on the black market or in neighboring (and freer market) Colombia. In fact it's possible that after long struggle, South America will finally be John Maynard Keynes' grave. The free nations are just leaving the others in the dust and the example couldn't be more apparent than now.
These are the basics of understanding any one of these nations. And you'll find that each of these nations exists in a special relationship to it's neighbors, the continent, the region (Caribbean inclusive) and it's relationship to the global economy. It will always be in context and you need to orient each initiative or consideration along these four quadrants of understanding. Then you know a lot more about who your are dealing with and their likely agenda. Knowing this, you can make the deals that are good for you and that are likely to be stable over time.
All of this deals with what's in place right now. How we might hope to positively influence this scene and even envision constructing our own environment within it will continue this discussion. This discussion is in motion right now with real people, real resources and real investment so none of this is purely academic. It's reality. As we continue we'll begin to evaluate some of these nations along these lines and we'll also be able to develop our own custom-tailored risk/reward indexes for opportunities in them.
UPDATE: Allison Bricker has kindly invited me to do a weekly presentation on The Allison Bricker Show to help spread the word! We'll figure out how to let you know when.