U.S. and Canada vs. Latin America Lecture

What Has Happened in the New World?

Four areas:

• U.S.-Canada
• Mexico-Brazil
• Caribbean + slave Brazil
• southern cone

U.S.-Canada very rich: rest not so. Why?

• $80K per worker per year in the U.S. $10K-$20K more common in Latin America..
• All have (or had) favorable land-labor ratios after conquest and plagues...
• All had abundant natural resources...
• Southern cone keeping up with North America until the 1930s--I will not deal with that today...
• Two lines of explanation: problems of slavery and ex-slavery; problems of mainland Latin America

The Puzzle: We Explain United States Growth as Markets + Resources = Accumulation + Technology

• But what happens when we go to Latin America?
• From the perspective of 1700, the United States is a marginal new-world economic area
• Yet Latin America today lags far behind the United States and Canada
• To explain U.S. vs. Latin America, you need "institutions"
  • What are institutions?
  • Where do institutions come from?

Three Theories:

• "Legal origins" (Shleifer et al.)
• "Tropical diseases and grab and run" (Acemoglu et al.)
• Engerman and Sokoloff
  • A historians' story--which means, "it's complicated"
  • Legal origins is broadly wrong--or at least overemphasized
  • Grab-and-run due to tropical diseases also greatly overemphasized
  • Factor endowments
    • Indigenous population oppression
    • Resource curse--slavery
    • Key paragraph: "The British colonies in the New World evolve quite distinct societies and sets of institutions.... The majority that failed shared certain salient features with Latin America.... [These features] allowed for average standards of living that were high at that time... [but] less well suited for the realization of sustained economic growth..."

The Details

The Poverty of Riches:

• All "began" with an abundance of land relative to labor
• European migrant standards of living 2x or more those in Europe throughout the colonial period--$1000 of today's dollars per capita per year
• European standards of living 4x those in Europe in slave-staple-hacienda colonies--$2000 of today's dollars per capita per year
• Staple crops: sugar, coffee, rice, tobacco, cotton easily produced by slave labor in the Caribbean and Brazil. Haiti 3x as rich as United States in 1790?
• Extensive indigenous populations in Mexico and Peru
• Less than 20% of Mexican, Peruvian population "white" as of 1800
• Family farms on the North American mainland. Why?
  • Swann River
  • Slavery in the Connecticut River valley
  • Slavery in New York City *80% of American population "white" as of 1800
• "Non-white" a proxy for savage economic (and political!) inequality
• Economic and political equality a very good thing

Advantages of Equality:

• Land policy
• Immigration policy
• (Mercantilist) trade policy
• Commerce

• Middle-class demand for manufactures: "American system"

• Timing of industrialization

• Education
• Other human capital: familiarity with technology or markets

Comments

[Johnson Woods]

I would like to introduce to you one of the first Mixed-race Personal Listings Service you may find on the Internet! It is created to balck relationships between Black Men and White Women. This will also serve as a forum for all BM and WW to meet, share, and grow together. As stated in simple terms, this group will serve to provide support, interact, online resource, and up coming events. http://www.interracialfriends.com/

[Patrick Traughber]

Might equality also increase competition, which would lead to more innovation and creativity? With more people in a similar situation (British colonies), each citizen had to compete with more people in their respective economic situation. This is compared to Latin America, where inequality was much higher. In that situation, those at the top of the economic ladder were competing with fewer people and had less to gain (they were already at the top). Any thoughts?

[Thorstein Veblen]

Brad-- You're web site is a gold mine! You've really done a service to scholarship and academia by posting all of this...