World on Fire World on Fire World on Fire

by Amy Chua

  We dined on quail eggs, homemade pâté, and fresh trout from Lake Titicaca, all prepared by Augusto’s Aymaran housekeeper. The conversation was principally in English. Although Bolivians typically stress that everyone in the country has some indigenous blood (“no one is pure white,” as one of Augusto’s friends put it), and although one guest at Augusto’s dinner looked distinctly indio, most were what North Americans would consider “white”—light-skinned, blond and blue-eyed, auburn-haired and green-eyed, and so on. They were also disproportionately good-looking and on average about a foot taller than the indigenous maid and manservant serving us. Most had European ancestors, and not just from Spain. Augusto’s mother, for example, was of Scottish descent.

  Characterizing Bolivia’s ethnic makeup is tricky, given the high historical rates of “racial mixing” and phenomena such as “encholamiento,” in which a white man and an Amerindian or mestiza woman (a chola) have a son, who, if successful, marks his success by marrying a white woman. Today, Bolivian society is loosely divisible into three layers. To use the terminology of Bolivia’s census as late as 1976, “whites” make up 5 to 15 percent of the population, “mestizos” make up 20 to 30 percent, and “Indians” 60 to 65 percent. These classifications are of course highly artificial; wealth can turn a “mestizo” or even an “Indian” into a white. As the Bolivian intellectual Tristán Marof wrote decades ago, “‘Whites’ are all that have fortune in Bolivia, those that exercise influence and occupy high positions. A rich mestizo or Indian, although he has dark skin, considers himself white.”7

  Nevertheless, the bottom line in Bolivia is this. The country’s Amerindian majority, many of whom lived as serfs until 1952, are largely excluded from the modern economy. Most live in poverty, with no secondary education, no access to sanitation, and terrible teeth. According to the government’s own statistics, 90 percent of rural Bolivians—overwhelmingly Amerindians—cannot satisfy basic necessities.8 Among the “mestizo” group, economic success is more mixed. But Bolivia’s whites* enjoy wildly disproportionate wealth and status.

  Together with foreign investors, Bolivia’s white elite, defining itself through European or North American cultural habits, controls the vast part of Bolivia’s wealth, including the country’s most valuable natural resources and its most modern and advanced economic sectors. Private schools, foreign degrees, international business contacts, and fluency in English (as well as French and German, in many cases) reinforce the market dominance of this minority over Bolivia’s Aymara and Quechua Indian majority, many of whom speak only indigenous languages.

  The market dominance of the white minority in Bolivia does not necessarily imply superior entrepreneurialism on their part. Most of the people I met through Augusto—even those in business—did not pride themselves on being particularly good entrepreneurs (although some clearly were). “Corporate law in Bolivia is not like in New York,” explained Augusto, who is also an essayist and political commentator. “I could, I guess I probably should, work harder—go out and find new business perhaps. But I prefer to spend my time reading books and writing.” Observers have long noted a disdain for commerce and industry among Hispanic elites. Some have attributed this disdain to Spain’s and Portugal’s eight-hundred-year conflict with the Moors, in which soldiers and priests were glorified while merchants and bankers—roles often occupied by Jews or Muslims—were denigrated. Whatever the reason, the Spanish and Portuguese colonizers of Latin America were famous for proclaiming their contempt for business and manual labor.9

  Something of this “gentleman’s complex” may persist today. On the other hand, many families in the Bolivian elite have strong entrepreneurial roots as well. In the late nineteenth and early twentieth centuries, small but enterprising waves of immigrants from Germany, France, Italy, England, and Spain developed Bolivia’s—indeed much of the Andean region’s—import-export, finance, mining, transportation, and manufacturing sectors.

  In the 1980s and 1990s, Bolivia, following the dictates of the World Bank and IMF, and advised by U.S. economists like Harvard’s Jeffrey Sachs, pursued aggressive privatization and free market policies. These policies were spectacularly successful in many respects. Under President Gonzalo Sanchez de Lozada—a mining tycoon educated at the University of Chicago—annual growth rose from negative rates to 4 to 5 percent, and foreign investment more than doubled between 1996 and 1999.10 Globalization, moreover, has definitely created opportunities for “mestizo” Bolivians; among the upper crust today there are those with darker skin and unmistakably Amerindian features. Globalization has even produced some benefits for the indigenous majority. Growing tourism means that Amerindian entrepreneurs can sell more animal fetuses, peddle more Coca-Colas, even act as tour guides if they learn a little English. On a less wholesome note, there are an increasing number of Aymaran merchants prospering from illegal contraband businesses.

  Yet global markets have, if anything, intensified the economic dominance of Bolivia’s white elite—the natural business partners of Western investors—over the country’s growth-stunted, impoverished indigenous majority. Certainly globalization has intensified the visibility of Bolivia’s wealth disparities, as condominiums and tony art galleries boom in the major cities of La Paz, Cochabamba, and Santa Cruz while the rural parts of the country continue to be mired in abject poverty. Indeed, for many indigenous Bolivians, market reforms have meant infuriating increases in utility rates, layoffs—to reduce hyperinflation a few years ago, the government slashed social spending and closed state-owned tin mines, sending the unemployment rate soaring—and hollow promises of trickle-down.11 “Free trade?” scoffed a Quechuan tour guide named Osvaldo, who accompanied us to the surreally beautiful Uyuni salt flats after we left La Paz. “That just means that we now sell our gas to Brazil, while there is no heat here in Bolivia.” Osvaldo added with a shrug, “The same families make all the money in Bolivia, whatever policies we have.”

  Bolivia is one of only four countries—the others are Peru, Guatemala, and Ecuador—in which Amerindians still constitute a majority or near majority of the population. In all these countries, the same basic ethnic reality holds. Centuries of racial intermixing and immigration have produced the ethnic complexity distinctive to Latin America. In Cuzco, for example, the former Inca capital of Peru, many among the elite have Amerindian features and speak Quechua. Similarly, the most recently elected Miss Peru publicly celebrated her mixed heritage, including a dark-skinned mother, a Chinese grandfather, and a great-grandmother who was a Spanish vice countess. Nevertheless, the fact remains that in all these countries, Amerindians represent a distinct, recognizable, mass underclass, often the object of condescension, controlling only a tiny portion of the nation’s wealth. Meanwhile, whites—however artificial the term and however permeable the category may sometimes be—are a starkly market-dominant minority.

  “Pigmentocracy” in Latin America

  But the phenomenon of white market dominance in Latin America is not confined to these four countries. It is equally visible even in countries where indigenous communities are much smaller and the vast majority of the population is “mestizo.” With the exception of Argentina, Chile, and Uruguay (where from early on indigenous peoples were largely extinguished), Latin American society is fundamentally pigmentocratic: characterized by a social spectrum with taller, lighter-skinned, European-blooded elites at one end; shorter, darker, Indian-blooded masses at the other end; and a great deal of “passing” in between. The roots of pigmentocracy are traceable to the colonial era.

  Unlike their (evidently more repressed) British counterparts in, say, India or Malaysia, the Spanish colonialists freely and prolifically procreated with indigenous women. From the outset, Spanish and Portuguese chroniclers waxed enthusiastic about the charms of Amerindian women, who were “beautiful, and not a little lascivious, and fond of the Spaniards” by one account and “very handsome and great lovers, affectionate and with ardent bodies” by another.12 In an important sense, the
Spanish Conquest of the Americas was a conquest of women. The Spanish obtained Amerindian girls both by force and by peaceful means—sometimes, for example, as tokens of friendship from the Indian caciques. Intermarriage, concubinage, and polygamy were common.

  Although this “racial mixing” might suggest a readiness among Latin America’s colonizers to transcend ethnic boundaries, in reality it was nothing of the sort. On the contrary, what emerged was an invidious social system known as the Society of Castes (sociedad de castas), in which individuals were classified in accordance with the lightness of their skin, with whites occupying the highest stratum.

  The names of the specific castas that emerged in Spanish America varied across different regions and changed over the years. The following list is illustrative of eighteenth-century New Spain:

  1. Spaniard and Indian beget mestizo

  2. Mestizo and Spanish woman beget castizo

  3. Castizo woman and Spaniard beget Spaniard

  4. Spanish woman and Negro beget mulatto

  5. Spaniard and mulatto woman beget morisco

  6. Morisco woman and Spaniard beget albino

  7. Spaniard and albino woman beget torna atrás

  8. Indian and torna atrás beget lobo

  9. Lobo and Indian woman beget zambaigo

  10. Zambaigo and Indian woman beget cambujo

  11. Cambujo and mulatto woman beget albarazado

  12. Albarazado and mulatto woman beget barcino

  13. Barcino and mulatto woman beget coyote

  14. Coyote woman and Indian beget chamiso

  15. Chamiso woman and mestizo beget coyote mestizo

  16. Coyote mestizo and mulatto woman beget ahí te estás13

  That the Spaniards were supposed to be “pure-blooded” is, to say the least, ironic. Among the numerous groups that, by the Middle Ages, had inhabited and commingled with each other on Iberian soil were Celts, Phoenicians, Greeks, Carthaginians, Romans, Visigoths, Jews, Arabs, Berbers, and Gypsies.14

  Nevertheless, the disdain of a “pure white” Spanish elite for the “colored” masses is a deeply ingrained feature of the history of every modern Latin American nation. In Mexico, mixed-blooded mestizos were for years prohibited from owning land or joining the army or clergy. In Peru, even intellectuals believed that “the Indian is not now, nor can he ever be, anything but a machine.” In Chile, victory in the War of the Pacific (1879–83) was often attributed to the “whiteness” of the Chileans, as compared with the “Indians” of Bolivia and Peru, the defeated nations. In Argentina, a popular writer wrote in 1903 that mestizos and mulattos were both “impure, atavistically anti-Christian; they are like the two heads of a fabulous hydra that surrounds, constricts and strangles with its giant spiral a beautiful, pale virgin, Spanish America.” And throughout Latin America, landowners preferred their daughters to marry penniless peninsulares (arrivals from Spain) rather than wealthy criollos (American-born Spaniards). The fact of being born in the Old World was supposedly good proof of being “pure white”—something that could not be assumed of even the wealthiest members of the colonial aristocracy, “whose ancestors had been living for years alongside not just the Indians but also the blacks.”15

  Today, while ethnic lines in Latin America are much more muted than elsewhere in the developing world, the phenomenon of a market-dominant, ethnically distinguishable minority—here, the light-skinned, landowning (and increasingly, stockowning), Western-educated elite—remains an important feature of all but a few Latin American countries.

  Mexico: Dark-Skinned Poverty,

  Light-Skinned Plutocrats

  Pigmentocracy certainly thrives in Mexico, where I spent a good deal of time between 1989 and 1991. During that period I was an associate with a Wall Street law firm, working around the clock representing the Mexican government in the landmark privatization of Teléfonos de México (Telmex), Mexico’s national telephone company. Almost without exception the Mexican officials, lawyers, and business executives we dealt with were light-skinned and foreign educated, with elegant European names. Meanwhile, the people doing the photocopying and cleaning the floors were all shorter, darker, and plainly more “Indian-blooded.”

  While considerable social fluidity exists in Mexico, it is also true that lightness of skin correlates directly and glaringly with increasing wealth and social status. Mexico’s roughly 9 to 10 million indigenous peoples, about one-tenth of the population, have the highest rates of illiteracy and disease in the country. In the state of Chiapas, just thirty-five years ago, Amerindians were forbidden to walk on sidewalks or look lighter-skinned Mexicans in the eye. Not surprisingly, according to Mexican writer Enrique Krauze, Indian women desire to have children with mestizos—“not to betray their race but out of a desire to spare their progeny a bleak future.”16

  At the other end of the spectrum, all of Mexico’s most lucrative corporate sectors—oil, finance, media and telecommunications, heavy industry, luxury hotels, transportation—are controlled by a small, clubby, light-skinned market-dominant minority who play golf with each other on weekends (and often weekdays). While working on Telmex, I remember being a little surprised when our local counsel, an elegant, baritone-voiced, European-looking man by the name of Alejandro Duclaud Gonzalez de Castilla, married the daughter of one of Telmex’s (equally elegant) senior officers. I was even more surprised when, in the spring of 2001, I learned that Alejandro—whom I liked enormously and had spoken with regularly for two years—was being sued by the U.S. Securities and Exchange Commission, along with his wife, his brother, and other family members, for allegedly making nearly $4 million from insider trading.17

  My surprise, however, was probably naïve. Although insider trading is of course illegal, insider profiteering from developing-world privatization is the rule rather than the exception. Back in the early nineties, I believed that the proceeds of privatization, as a World Bank official put it, would go to roads, “potable water, sewerage, hospitals, and education to the poor.” Like many in the 1990s, however, I was viewing emerging-market privatization through a rose-colored lens. Just a few years after the Telmex privatization was completed, Mexico City’s La Jornada reported, “The booty of privatization has made multimillionaires of 13 families, while the rest of the population—some 80 million Mexicans—has been subjected to the same gradual impoverishment as though they had suffered through a war.”18

  In retrospect, I still believe that privatizing Telmex, and bringing in Southwestern Bell to modernize the company, was on balance a good thing for the Mexican people. Since Telmex was privatized in 1990, more than $13 billion has been invested to upgrade and extend phone service, including in remote rural areas. A fiber optics network stretching more than twenty thousand miles has been built, and callers no longer have to wait two minutes for a dial tone. At the same time, many believe that the principal domestic beneficiaries of Mexico’s privatization process were former President Carlos Salinas de Gortari, his family, his cronies, and multibillionaire Carlos Slim.

  Slim, who has been outplaying his blue-blooded counterparts at the game of globalization, merits a brief digression. Before the Telmex privatization, Slim was unknown in the United States. I knew only that he was around fifty and the son of a Christian Lebanese immigrant, that his name was incongruous in light of his rather substantial figure, and that his investment bank Grupo Carso, along with foreign partners Southwestern Bell and France Telecom, were planning to bid as a consortium for a controlling stake in Telmex.

  Slim’s successful acquisition of Telmex catapulted him to international prominence, at least in financial circles. With Slim at the company’s helm, Telmex stock—once worth only pennies a share—soared after the privatization, and unlike many non-U.S. stocks, kept on soaring. Telmex’s market capitalization today hovers around $37 billion, making the company, as the Financial Times put it, “la blue chip numero uno” in Latin America. After Salinas’s presidency ended in 1994, there was a flurry of reports exposing pandemic corruption
within Mexico’s ruling PRI. Because of his close identification with Salinas, Slim was often mentioned in the U.S. press, but always vaguely, hintingly, never with any concrete allegations. Rumors, meanwhile, were flying.

  I’ll never forget an episode in 1996 when I was discussing the Telmex privatization in my International Business Transactions class (I had left Wall Street to go into teaching a few years earlier). In the middle of my lecture a slightly older student—she had worked as an analyst at Bear Stearns before applying to law school—raised her hand. “It’s pretty well accepted by now,” she announced knowingly to her other hundred classmates, “that in the Telmex privatization Carlos Slim was just a frontman for Salinas.” A buzz went through the room, but at that point another hand shot up, this time that of a young lawyer from Mexico who was getting a second master’s degree in law from the United States. “No, no, that is not true—you have it completely wrong,” he said indignantly. “Carlos Slim was not a frontman for Salinas. It was Salinas who was the frontman for Carlos Slim.”