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Saturday, October 17, 2015

Brazil needed a man like Alexander Hamilton

That's one of the conclusions to be drawn from this blog post by Walter Russell Mead on Brazil's rise as an economic power: Brazil:  What Could Go Wrong?  As Mead notes, in the 19th century the United States and Brazil had strikingly similar economies. The reason why the United States surged ahead and Brazil stagnated at the time is to be found in the divergent economic policies the two countries pursued. Brazil clung to an obsolete agrarianism while the United States followed a more realistic economic policy, crafted first by Federalist Founding Father Alexander Hamilton and then by Whig leaders like Daniel Webster and Henry Clay:
In the 19th century Brazil, like the United States, was a commodity producer tied to the British market.  Britain was the leading investor in both the US and Brazil, and Britain ate up the lion’s share of their exports.  But there was a difference: the United States did some things that Brazil did not.  We established manufacturing and financial sectors in our economy that could ultimately rival Great Britain in those fields, and we became a producer of new technologies and world-class companies.  
19th century Brazil never managed to build those additional dimensions of a strong market economy.  In a sense, all of Brazil continued to develop like the American South: a commodity exporting economy based on slavery (not abolished until the 1880s) and peonage.  And like the Confederacy, Brazilians long favored a decentralized form of government in which states largely ignored the central government in Rio.    
Decentralization spared Brazil some of the bitter social conflicts that shook countries like Mexico and Argentina in the first century of independence, but there was nobody like Alexander Hamilton, Henry Clay and Daniel Webster with the power and the will to turn Brazil into a cutting edge economic power. 
Read it all. It cannot be emphasized enought that the prosperity of the United States is built not on an agrarian Jeffersonian vision -- the kind of economic policy that lead Brazil into over a century of economic malaise -- but on the vision of men like Alexander Hamilton.


Tom Van Dyke said...

The US, especially the North, was--unlike the rest of the Americas save Canada--essentially culturally European, its colonization model one of settlement, not mere economic exploitation.

That it assumed the same contours of its mother countries during industrialization is no surprise.

By contrast, the internet tells us that although governed by the Portuguese elite, in Brazil, "at the time of independence in the 1820s, slaves comprise half the population (of nearly four million, about 52% are black, 24% European, 17% mestizo, 7% indigenous Indian)."

That societies respond to change according to their cultural foundations is uncontroversial; in the case of Brazil, the spirit of enterprise and individual initiative lacked critical mass, as it does in any top-down society. If you check the link, there were indeed several leaders who established industry, banking, and other Hamiltonian institutions, which took root as deeply as Brazilian society as a whole could sustain them.

Mark D. said...

Yes, quite right --- and Mead makes the point that Brazil & the American South shared certain fundamental characteristics that made each resistant to developing the kind of commerical-entrepenurial-inventive economies necessary for a modern developed economy. The South was dragged kicking & screaming into the modern economic world, leaving behind a social & economic model that was pre-feudal in its mentality (there's a reason all those Southern plantation owners loved to read the Roman poets & Cato). America was blessed both with a Hamilton and with a Lincoln (who was aided by a Grant & a Sherman). While there were spots of innovation and entrpeneial spirit in the South, like in Brazil those bright lights were not enough to cut through the overwhelming inertial of the slave/sharecropper economy. In the end, it bas bad for the slaves, bad for the propertied classes, bad for the merchant classes -- bad or everybody.

Tom Van Dyke said...

America was blessed both with a Hamilton and with a Lincoln (who was aided by a Grant & a Sherman).

Yah, there's that too. ;-)