by Amy Chua
In any case, whereas Salinas is now in disgrace and exile, Carlos Slim has never been wealthier. Forbes magazine recently listed him as Latin America’s richest man—every two minutes Slim reportedly makes $5,000, more than the average Mexican earns in a year—and he is popularly compared to the legendary American investor Warren Buffett. In the last few years, Carlos Slim has become an increasingly prominent figure in the United States as he continues to buy up large blocks of CompUSA, Barnes & Noble, OfficeMax, Office Depot, Circuit City, Borders, and other major U.S. retailers.
The bulk of Slim’s holdings, of course, are still in Mexico, where he controls most of Mexico’s local phone service, long distance, and Internet access, not to mention half of the nation’s stock market. Slim also owns Sanborns (Mexico’s most popular restaurant chain), a major ATM network, a mining company, numerous factories engaged in tire, metal, and other forms of industrial production, massive resort developments in Cancún, and Grupo Financiero Inbursa, a financial services company that sells insurance to, and invests the savings of, millions of ordinary Mexicans. The running joke about Slim is that he began investing abroad because there was nothing left to acquire inside Mexico.19
Slim’s focus these days is on the Internet and global markets. To attract Spanish-speaking web surfers, Slim began offering bilingual service through Prodigy, the U.S.’s third-largest Internet service provider, which Slim bought outright in 1997 for $100 million in cash and $150 million in debt assumption. After Slim took over, Prodigy’s subscriber base in the United States increased by 1,000 percent. Meanwhile, a month after acquiring CompUSA, Slim launched what he predicts will be the largest Spanish-language portal in all of North and South America, a joint venture between Telmex and Microsoft called Tlmsn. Most recently, Telmex spun off its fast-growing cellular phone and international division in a $15 billion listing of America Movil SA on the New York Stock Exchange; the Slim family still indirectly controls both companies. In addition to its U.S. holdings, America Movil has telecom, wireless, and broadband interests in nine Latin American countries. Slim’s goal is reportedly for America Movil to dominate both the U.S. Hispanic and Latin American cellular and Internet markets.
Needless to say, Slim has no Amerindian ancestors. As elsewhere in the world, the Lebanese community in Mexico is very tight: Slim’s late wife was also Christian Lebanese, and, reportedly, most members of Slim’s extended family have married other Christian Lebanese; virtually all are extremely wealthy.20
As Carlos Slim illustrates, the line separating rich and poor in Latin America is not as simple as “old Spanish” landowning families on the one hand and Amerindian and mestizo masses on the other. Instead, white wealth takes two very different forms: old Spanish (or in Brazil’s case, Portuguese) wealth, typically rooted in the plantation, or latifundia, system; and more recent immigrant wealth, often reflecting enormous entrepreneurialism. Although both result in white market dominance, the history and economics behind them are totally different.
Latifundia and Global Markets:
Nonentrepreneurial White Dominance
The market dominance of Latin America’s European-descended landowners owes as much to colonial oppression as to commercial dynamism. By all accounts the Spaniards easily conquered the vastly more numerous Amerindians they encountered in the New World. They managed this through a combination of superior technology, European germs that decimated an estimated 95 percent of the pre-Columbian indigenous population—and sheer trickery. In Guns, Germs, and Steel, Jared Diamond describes, in the words of a contemporary observer, the trap set by conquistador Francisco Pizarro for the Incan emperor Atahuallpa:
On the next morning a messenger from Atahuallpa arrived, and [Governor Pizarro] said to him, “Tell your lord to come when and how he pleases, and that, in what way soever he may come I will receive him as a friend and brother. I pray that he may come quickly, for I desire to see him. No harm or insult will befall him.”
Later that day, when Atahuallpa arrived with his squadrons of “Indians dressed in clothes of different colors, like a chessboard,” some dancing and singing, others bearing great quantities of gold and silver furniture—Pizarro’s troops ambushed them. “Cavalry and infantry, sallied forth out of their hiding places straight into the mass of unarmed Indians crowding the square, giving the Spanish battle cry, ‘Santiago!’” Once Atahuallpa was captured,
Pizarro proceeded to hold his prisoner for eight months, while extracting history’s largest ransom in return for a promise to free him. After the ransom—enough gold to fill a room 22 feet long by 17 feet wide to a height of over 8 feet—was delivered, Pizarro reneged on his promise and executed Atahuallpa.21
Similarly, in 1572, another Inca ruler, Tupac Amaru, a nephew of Atahuallpa, was seized by the Spanish and converted. At the Plaza of Cuzco he eloquently asked his subjects to abandon paganism. “After he finished his address,” as a Spanish chronicler put it, “his head was cut off; this caused the Indians incredible pain.”22
Through the colonial period, small numbers of Spanish administered and exploited vast indigenous populations through the encomienda, a notorious institution by which Amerindians were distributed among and forced to pay heavy tributes to conquistadores, or encomenderos. The theory was that the encomendero would “protect and civilize” (i.e., Christianize) his Amerindians. In reality, the Amerindians served as pools of forced labor for the encomenderos, who quickly amassed huge amounts of wealth. The encomiendas were often very large; in Peru, for example, some conquistadores had as many as ten thousand Indian heads of household under their control.
The psychological effects of the Spanish Conquest were crushing and lasting. “The death of the sun—the strangulation of the Inca,” writes sociologist Magnus Mörner, was a “profound shock, reinforced later on by the beheading of Tupac Amaru.” Contemporary indigenous dances still reflect the profound “Trauma of Conquest.” Meanwhile, the missionaries, backed up by Spanish military force, did their best to destroy indigenous rituals, traditions, and kinship systems, all viewed as incompatible with the Christian faith, again with devastating effects. For example, before the conquest, consumption of intoxicating drinks among the Andean Indians was confined to ceremonial occasions. After the conquest, alcoholism became an outlet for indigenous frustration and has remained so ever since.23
At the same time, the Spanish confiscated indigenous land wholesale. Conversion of communal properties into private holdings occurred in Mexico, Guatemala, Ecuador, Peru, Bolivia, and elsewhere in Latin America. Bit by bit the communal landholdings of Amerindians were turned over to the expanding plantation economy. By 1910 over 80 percent of all rural families in Mexico were landless while Amerindians in Guatemala had such minuscule holdings (minifundia) that most of them came under the vagrancy laws requiring them to work for subsistence wages on coffee plantations. In virtually all of the Latin American countries, latifundios—large agricultural estates owned by a handful of Spanish-blooded families—grew more and more immense at the expense of an increasingly demoralized, expropriated rural proletariat.24
Today, Bolivia, Mexico, and Peru are the major exceptions in Latin America. Because of extensive agrarian reforms, these countries (along with Cuba) have largely dismantled their latifundia systems, at least to a much greater extent than elsewhere in Latin America. Virtually everywhere else in Latin America, the latifundia system is not only intact but poised to boom with each new round of pro-market, pro-globalization reforms.
Export-oriented plantations of over one thousand hectares represent just 1.5 percent of all farms in Latin America yet account for 65 percent of the region’s total farm acreage. The exclusive social clubs of Latin America’s major cities—where multimillion-dollar business deals are casually arranged and foreign investors are often wined and dined—are typically still controlled by men whose families derived their original wealth from plantation farming.25 Not surprisingly, the market-oriented reforms of the 1990s disproportionately benefited Latin Am
erica’s Spanish-blooded latifundistas, who because of their capital, education, foreign connections, and conservative social policies historically have tended to be the soul mates, if not the relatives, of political leaders championing economic liberalization.26
Throughout Latin America’s countrysides, from Guatemala to Costa Rica, from Venezuela to Paraguay, the same stark pigmentocratic reality holds. Tall, light-skinned, Voltaire-steeped owners of latifundios dominate—and in many cases browbeat and brutalize through private militias—the vastly more numerous, shorter, darker, Indian-featured peasants who labor for them, usually barefoot, alongside children whose bellies are bloated with parasites.
In Brazil, which I’ll say more about in a moment, 50,000 (less than .01 percent) of the country’s 165 million population still own most of the country’s land. Again, the latifundio owners are unmistakably white; the peasants, however, are typically descendants of African slaves. The bodily differentiation between higher-class and lower-class Brazilians in the countryside is not marked solely by skin color and facial features. In the sugar-producing Zona da Mata, many of the dark-skinned plantation workers have lost a limb or several fingers due to the gruesome dangers of caning. Moreover, according to the late Brazilian nutritionist Nelson Chaves, even slaves were better fed than the contemporary sugar workers of the Zona da Mata. “[T]he rural worker of today,” Chaves wrote in 1982, “is primarily a carrier of worms, and his stature is diminishing considerably over time, so that it is actually approaching that of the African pygmy.”27
Latin America’s Immigrant Entrepreneurs
The other form of white market dominance in Latin America stems not from plantation wealth but from the entrepreneurial energies of relatively recent immigrant groups, who are dramatically overrepresented among the region’s business elite. Thus, a study from the 1960s found that of Mexico’s thirty-odd outstanding business leaders, almost half reported a foreign paternal grandfather. Similarly, a 1965 survey of Bogotá executives revealed that although Colombia has had relatively little immigration, 41 percent of the country’s leading entrepreneurs were foreign born.28
Some of Latin America’s most stunningly successful immigrant entrepreneurs have been Lebanese or Jewish. In terms of numbers, both groups are tiny, representing almost negligible minorities in their countries of residence. In terms of economic dynamism, however, both groups have been extraordinary. In addition to Slim, a surprising number of Latin America’s wealthiest businessmen are Lebanese. Moreover, Lebanese Latin Americans have held high-profile political positions. Both Ecuador’s recently ousted former president Jamil Mahuad, for example, and Argentina’s recently ousted former president Carlos Menem, were Lebanese—and avid proponents of privatization and market reform.
From the 1890s on, most Jews entered the countries of Latin America as poor peddlers. In Judith Elkin’s words, with “packs on their backs and account books in their pockets,” they trudged the streets of major cities and towns, selling small items of mass consumption such as matches, razor blades, scissors, sandals, cloth, tableware, and jewelry. Even the mountainous Andean countries were tackled by the indomitable Jewish peddler. As one foreign visitor observed in 1940:
In Bolivia you see the Eastern Jew who does not attend courses to learn Spanish, but who speaks the dialect of the Indios. They appear in the most outlying villages, where hardly any Europeans have ever been, and manage to eke out an existence, sleeping in their wagons under the stars. Hardly a German immigrant has dared or would dare to do this. . . . Without wishing to be critical, but to complete the picture, I must say that the first care of each German is to get an apartment. As far as the German is concerned, an apartment must have a bath.29
Jews are no longer peddlers in Latin America today. In a matter of a few generations the Jewish communities of Latin America have transformed themselves from struggling immigrants into financially powerful businessmen and professionals. In 1994 nearly 53 percent of employed Jews in Mexico identified themselves as directors, managers, or administrators while another 26 percent identified themselves as professionals. Throughout Latin America the rate of upward social mobility among Jewish communities has been astounding over the last century. In Brazil, the Jewish Klabin and Lafer families, linked by marriage ties, are among the wealthiest in the country; their jointly owned, diversified industrial firm is the largest newsprint producer in Latin America. More generally, approximately two-thirds of Brazilian Jews belong to the “elite.” In Panama, the minuscule Jewish minority—only .25 percent of the population—disproportionately dominates the country’s wholesale, retail, real estate, and services sectors and represents 40 percent of the traders in the Colon Free Trade Zone (after Hong Kong, the world’s second largest free trade zone), through which in 1997 alone over $5 billion worth of goods was imported and re-exported.30
In Argentina, the largest landowners and producers of beef in the country are now two Jewish brothers, rather startling in light of Argentina’s long, proud tradition of cattle raising. In fact, Eduardo and Alejandro Elsztain—who in 1997 doubled their rural landholdings to 1.1 million acres—are revolutionizing Argentine ranching with biotechnology. Their farm company Cresud recently entered into a joint venture with the Texas-based Cactus Feeders to begin fattening one hundred thousand head of cattle a year with corn rather than traditional pampas grass. Argentina’s gauchos were incredulous: Corn-fed cattle produce marbled beef, and as anyone who has tried (and been disappointed by) bife de lomo knows, Argentinians like their beef very lean. The Elsztains, however, have their eye on global markets. Cresud’s cows are being corn-fed both to increase yields and to appeal to the multibillion-dollar, fat-loving markets of North America and Asia.31 (Think porterhouse and Kobe beef.)
The presence of commercially dynamic immigrant populations—not just Jews and Lebanese, but also Germans, Italians, Palestinians (in Belize and Honduras), and other groups—is observable in virtually every country in Latin America. These relatively recent arrivals are important in that they have broken up the traditional economic stranglehold of the old, “Spanish-blooded” landowning oligarchies. But they have not altered the basic pigmentocratic reality of Latin American society. These immigrant groups have become part of the tiny white minority that, in almost every Latin American country, controls nearly all of the nation’s wealth, including the most advanced, lucrative sectors of the economy.
Countries without Market-Dominant Minorities
The major exceptions to the rule of pigmentocracy in Latin America are Argentina, Uruguay, and arguably Chile. These countries have only small or negligible Amerindian populations. In Uruguay, for example, the indigenous and famously fierce Charrúa and Guaraní Indians largely perished in seventeenth-century battles with Spanish and Portuguese forces. The last Charrúa Indian died in 1948, and supposedly only 8 percent of present-day Uruguayans are mestizos.32 Furthermore, all three countries saw enormous waves of European immigrants around the turn of the twentieth century.33 Unlike in the rest of Latin America, the descendants of these immigrants eventually came to represent a majority of the population. Consequently, the wealthy in Argentina, Chile, and Uruguay are not ethnically distinguishable from the less-well-off majorities around them. Indeed, by Western standards, most people in Argentina and Uruguay, wealthy or not, are “white.”
Chile is a slightly more complicated case. Chile’s indigenous peoples, including the increasingly activist Mapuche Indians in the south, currently number roughly 1 million out of a total population of 15 million. Compared to Argentina and Uruguay, a much greater percentage of Chileans are mestizos, but still this percentage is nowhere near a majority. Precise figures are difficult to obtain, in part because of the deeply subjective dimension of ethnic identity: Many Chileans who have some Amerindian ancestry would be the last to admit it. Throughout Chile, many among not just the upper, but also the middle classes, pride themselves on their “whiteness” and, according to historian Frederick Pike, “by and large believe[] in the inferio
rity of Indians and mixed bloods.”34
Unspoken White Dominance in Brazil
Brazil, famous for being a “racial democracy,” offers perhaps the most fascinating example of a deeply internalized but suppressed color hierarchy. For generations, Brazilians of all classes have been told, and to some extent have apparently believed, that centuries of racial mixing had erased the color line, making racism impossible. For many Brazilians, the contrast between the racial harmony in their country and the racial conflict in the United States has long been a source of pride.
But in fact, as throughout Latin America, the stark reality in Brazil is that a tiny, light-skinned, market-dominant minority has always had a stranglehold on economic and political power. Throughout Brazil the most prestigious and highest-paying jobs in business, politics, and universities are held by those with light skin.35 Brazil’s exclusive private schools are glaringly white. In a country where a vast majority of the population is (by U.S. standards) black, writes Eugene Robinson in his recent book Coal to Cream, the leading tycoons, wealthiest landowners, fanciest neighborhoods, and toniest social clubs, not to mention the virtual entirety of Brasilia’s limo-riding bureaucratic elite, are wildly disproportionately white.
In the opening scene of Coal to Cream, Robinson describes a remarkable exchange he had with acquaintances on Ipanema Beach. Robinson, who is African-American and an editor at the Washington Post, asked his colleague’s Brazilian girlfriend Velma—a small woman with “flaring nostrils, high cheekbones, and brown skin at least a couple of shades darker than mine”—what it was like being black in Brazil. Velma responded with a look of genuine surprise. “But I’m not,” she said. “I’m not black.”
