America: Banana Republic?

By Bill Moore

Posted: 07 Nov 2010

I have nearly finished reading Eduardo Galeano's "Open Veins of Latin America," an early 1970's treatise chronicling the exploitation of South and Central America, first by the Spanish conquistadors, then the British Empire, and most recently the United States. This was the provocative book that Venezuelan president Hugo Chavez gave President Barack Obama back in April 2009, making it an overnight best seller. If you've not yet read it, I would recommend it even though it is somewhat out-of-date now. However, its recounting of the early history of the region is eye-opening, especially the history of Potosi, Bolivia and the War of the Triple Alliance.

The conclusions Galeano reaches -- confirmed by the candid admissions of John Perkins in "Confessions of an Economic Hitman" and his sequel, "Secret History of the American Empire" -- is that capitalism, as it is currently structured, is designed to drain wealth -- like a vampire or parasite -- from some countries to enrich others; in the process creating poverty that only serves to perpetuate the cycle of impoverishment and enrichment. The poorer (and more illiterate) your population is, the cheaper is the labor pool and the more you have to export of your national wealth: minerals, quano or beef. And to keep all those poor in their place, you need terror and dictators to implement it. The result is what we often derisively refer to as "banana republics" where most of the wealth, land and power are held by a handful of ruling families who have the military and secret police to keep the masses of poor subjugated and working for poverty wages. And because the movement of the nation's wealth flows through fingers of power brokers and latifundista, they continue to become richer and richer.

So, I don't think it's coincidental that NY Times' columnist Nicholas Kristof warned today that America has now become what it once joked about: "Our Banana Republic":

You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

What Galeano writes about 19th and 20th century Central and South America, Kristof notes is now happening here:

In the past, many of us acquiesced in discomfiting levels of inequality because we perceived a tradeoff between equity and economic growth. But there’s evidence that the levels of inequality we’ve now reached may actually suppress growth. A drop of inequality lubricates economic growth, but too much may gum it up.

Robert H. Frank of Cornell University, Adam Seth Levine of Vanderbilt University, and Oege Dijk of the European University Institute recently wrote a fascinating paper suggesting that inequality leads to more financial distress. They looked at census data for the 50 states and the 100 most populous counties in America, and found that places where inequality increased the most also endured the greatest surges in bankruptcies.

Here’s their explanation: When inequality rises, the richest rake in their winnings and buy even bigger mansions and fancier cars. Those a notch below then try to catch up, and end up depleting their savings or taking on more debt, making a financial crisis more likely.

Another consequence the scholars found: Rising inequality also led to more divorces, presumably a byproduct of the strains of financial distress. Maybe I’m overly sentimental or romantic, but that pierces me. It’s a reminder that inequality isn’t just an economic issue but also a question of human dignity and happiness.

Mounting evidence suggests that losing a job or a home can rock our identity and savage our self-esteem. Forced moves wrench families from their schools and support networks.

In short, inequality leaves people on the lower rungs feeling like hamsters on a wheel spinning ever faster, without hope or escape.

Economic polarization also shatters our sense of national union and common purpose, fostering political polarization as well.

The other lesson that I learned from "Open Veins" is that what Britain did to Latin America in the wake of the War of the Triple Alliance, fought while America was occupied with reconstruction after its own destructive Civil War, was that the institution of "free trade" policy eventually led to the destruction of local manufacture. Factories that produced saddles, stirrups, linens, and panchos -- as well as canon -- gradually were driven out of business by cheaper and better goods from England. And because the wealthy few were indebted to their British bankers, Galeano argues, they even passed laws that forbade, in some cases, the production of certain goods. What did Latin America have left to pay for these imports? Coffee, sugar, iron ore, silver, tin, bird dung; all labor intensive industries dependent on cheap, hungry workers, made possible by deliberate impoverishment policies.

Sound familiar, Gringo?

Where Galeano contends that the dictators of Latin America were essentially owned by British and later U.S. and European banking interests, I submit that the United States now finds itself similarly indebted to China and Arab oil interests. Even former Secretary of State Condolezza Rice said as much: our over reliance on oil is distorting our foreign policy.

This past weekend, my wife and I spent a few minutes in a local Bed, Bath and Beyond store. She was looking for household items, I was looking at barcodes. A distant relation of mine had forwarded me an email purporting to describe how by knowing the numbers on the barcode, you can tell the country of origin. In fact, you can't. The email is a fraud. But you don't need a cheat sheet in your wallet to know where stuff is made. Just turn over the box and it tells you; and most of it is made in China. Period. I defy you to go into a place like Bed, Bath and Beyond and find anything that is made in the United States. I couldn't.

This must be how the owners and workers at bankrupt saddle makers and stirrup foundries in Argentina and Paraguary must have felt a century and half ago when everything then was British made. Sure, it was cheap, there was great variety, and everyone benefited... that is until no one had enough money to buy it anymore. That too, sound familiar, my fellow North Americano?

Permit me to quote you this one passage from "Open Veins:"

"Is Latin America a region condemned to humiliation and poverty? Condemned by whom? Is God, Is Nature, to blame? The oppressive climate, racial inferiority? Religion, customs? or may not its plight be a product of history, made by human beings and so, unmakable by human beings?

"Veneration for the past has always seemd to me reactionary. The right chooses to talk about the past because it prefers dead people: a quiet world, a quiet time. The powerful who legitimize their privileges by heredity cultivate nostalgia. History is studied as if if were visitising a museum; but this collection of mummies is a swindle. They lie to us about the past as they lie to us about the present; they mask the face of reality. They force the oppressed victims to absorb an alien, dessicated, sterile memory fabricated by the oppressor, so that they will resign themselves to a life that isn't theirs as if it were the only one possible."

Of all the book that last paragraphy struck me the most. We have been sold a bill of goods, all of us, the purpose of which isn't to make life better for all, but to ultimately enrich the few. What we in the West collectively did to third world countries -- effectively making them "third world" despite their enormous natural wealth and resources -- is now being done to us. Galeano, who lives in Montevideo, Uruguay, recently stated, "I'm a writer obsessed with remembering, with remembering the past of America above all and above all that of Latin America, intimate land condemned to amnesia."

That the United States also suffers from the same amnesia was demonstrated this past week, as far too many of us failed to vote, and too many of those that did, did so against their own self-interests, re-electing or voting into office the very people who would consign us to the same fate we thrust on Latin America.

Welcome to the world's newest and largest 'banana republic.'

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