Episode Summary
In this episode of The Expat Files, Johnny Mueller provides a comprehensive overview of the political and economic realities in Latin America. He begins by addressing common misconceptions about the region's political instability, clarifying that most unrest involves the indigenous population rather than the middle class. He highlights the progress made by the middle class and the importance of learning Spanish to avoid being exploited by locals. Mueller also discusses the historical context of land ownership and the role of the Criollos in shaping the political landscape of Latin America.
Next, he delves into the historical impact of the conquistadors, emphasizing their role in looting, land seizure, and the subjugation of indigenous populations. He highlights the lasting effects of this colonial legacy, including the continued existence of a small upper-class elite in most Latin American countries, except Cuba, due to the influence of Fidel Castro. Johnny also explores the political empowerment of indigenous populations in countries like Bolivia and Ecuador, where they now hold significant political power, often due to their large population numbers. He notes that while indigenous leaders have faced challenges due to internal divisions among tribes, their growing political influence is a significant shift in the region.
Mueller then discusses the current state of governance in Latin America, pointing out the widespread corruption, incompetence, and cronyism within government systems, including the existence of fake university degrees held by officials. He contrasts this with the US system, where career politicians and civil servants can have long-term impacts. He shares a personal anecdote about his lawyer friend and his children witnessing a deputado (senator) who could not read or write, illustrating the low quality of political figures in the region.
In the final segment, Johnny discusses the political and economic challenges in Argentina, highlighting the country's ongoing financial instability and the impact on everyday life. He references the illiteracy of many politicians in Latin America, using examples like George W. Bush Jr. to illustrate how wealth and influence can override competence in politics. Johnny also touches on the broader implications of Argentina's economic policies, such as currency controls and protectionist measures, which have led to capital flight and a decline in living standards. He criticizes the government's handling of utility payments and the resulting blackouts in Buenos Aires, emphasizing the unsustainable cycle of debt and taxation. Additionally, he comments on the controversial investment strategies of Doug Casey, noting that his recent criticisms of Argentina's leadership contradict his own financial interests in the country.
Finally, he discusses the exorbitant cost of vehicles in Argentina compared to the United States, highlighting the impact of taxes and the cultural fascination with Jeeps among Latin Americans. He also touches on the high cost of luxury items like Porsche and the dangers faced by lawyers in Honduras, before promoting his upcoming expat seminar.
Topics
Political situation in Latin America, Middle-class experience in Latin America, Indigenous population and political struggles, Language and cultural adaptation for expats, Technological progress in Latin America, Colonial legacy in Latin America, Indigenous political empowerment, Corruption and cronyism in Latin American governments, Impact of historical injustices on current social structures, Political Dysfunction in Latin America, Cronyism and Revolving Door in Government, Contrast with US Political System
Chapters
00:00:00 Opening 00:00:34 Political Situation in Latin America 00:01:26 Middle-Class Experience and Political Stability 00:02:53 Class Struggles and Indigenous Population 00:06:05 The Legacy of Conquest and Colonialism in Latin America 00:06:54 Indigenous Political Power and Representation in Latin America 00:10:33 Cronyism and Corruption in Latin American Governments 00:11:59 Cronyism in Public Universities 00:12:52 The Cycle of Political Dysfunction 00:13:56 The Ineffectiveness of Latin American Governments 00:14:44 A True Story of Political Incompetence 00:18:49 The Political and Economic Chaos in Argentina 00:20:44 Why Argentina Is Not a Good Place to Live 00:21:32 The Blush is Off the Rose for Doug Casey 00:23:48 Introduction to Vehicle Pricing Discrepancy in Argentina 00:25:14 Transition to Discussing the Toyota Hilux and Porsche Costs 00:26:16 Introduction to the Lawyer Safety Issue in Honduras
Transcript
Automatically transcribed from the original recording; names and wording may contain errors.
[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now as I wonder My thoughts ever straight Hi everybody I'm Johnny Mueller and you're listening to the expat files Living in Latin America the show that tells you what it's really like to live work play and or retire in Latin America I tell it just like it is so let's get started Now I get a lot of emails from people asking me about the political situation down here You know all of us who went to school back in the states We heard about the revolutions and the uprisings and the coups and Ali North and Iran
[00:48] Contra and Noriega all scary things for us to hear back in high school in college made us think that Latin America was just a Kind of a cauldron boiling over We were told in no uncertain terms that unless we were in the Peace Corps or down there saving the coffee and banana pickers souls For Jesus the only safe places for us middle-class gringos to ever visit were possibly Acapulco or Cancun Or Tijuana for a day and Costa Rica and then only after we've met someone who'd actually been there and hadn't been rape Mutilated or help for ransom that was kind of the opinion that everybody I knew head of Latin America When I was young and stupid, too But nowadays with the u.s. Undergoing its inevitable collapse and people looking for an escape hatch a way out
[01:33] So many of you are ready and willing to make the jump But you still have a lot of questions in the back of your mind about political stability and why not? Since we all grew up hearing stories about Latin political boogeymen like Noriega Ortega and Castro not to mention the FARC those Colombian Jungle revolutionaries that appear on TV all the time with the masks on now one thing to understand about Latin America Is that any of the political uprisings you might see in the papers with people on the streets? Striking or holding sit-ins and stuff like that these days 90% of the time except in the case of Argentina Those people taken to the streets are the indigenous population Well who usually live out in the compo you know in the boonies though a lot of them have migrated to the big cities Looking for jobs, and they end up living together in their own poor little barrios
[02:21] Just like the undocumented aliens up in the states in the big cities like LA and Chicago They end up in their own isolated little barrios or slums and down here They call them a senta mientos or favolas and they end up living elbowed a butthole with other poor uneducated people just like themselves and they occasionally take to the streets because the government simply ignores them that is Until election time of course, and then they throw them a few bones So throughout Latin America with their half a billion people about 30 to 40 percent of those are poor lower-class under-educated indigenous people and the other 60 percent or so mostly middle-class Latinos and upper middle-class and the wealthy again I'm talking the definition of middle-class Latin style Down here middle-class US style would be like hitting the powerball lottery for them
[03:10] It's just such a long shot that it's not even on their radar So basically when you hear the words middle class down here Don't ever relate that to what you think middle class is up in the first world So down here you have the middle classes Latin style We're basically satisfied enough with their lives and their work and the way things are Socially and politically that they don't riot and they don't have ideas to overthrow the government or take to the streets or anything like that They have their shoulders to the grindstone and see that things are getting better little by little after all ten years ago the average middle-class Latino didn't even have a cell phone and he had to wait two or three years to get a Landline installed in his house And if you think about that look at the progress they've made everyone now even down to the shoeshine boy has a cell phone
[03:56] It's something that only the expat that's been down here a while can really appreciate It's like they jump from the horse and buggy age to the jet age in like 15 years when I first got down here It was a lot like roughing it, but now it's evidently enjoyable and comfortable once you learn the ropes which most expats tell me takes about six months and if you're off the tourist trail during that first six Months you'll have enough kitchen Spanish down to get around quite nicely even if you don't take any formal lessons However, if you're on the tourist trail like in Costa Rica or Panama You just might never learn your Spanish then you're always gonna be a mark for locals who want to hit you with gringo prices Whereas off the tourist trail, they don't even know what gringo prices are How would they since the definition of being off the tourist trail means that gringos are really scarce?
[04:47] So anyway in regards to the political situation Basically, you do have a class struggle going on in nearly every Latin country except Chile, Argentina Costa Rica and Panama where they have very few indigenous people and those are really the only Latin countries that don't that's four out of 20 countries with very few indigenous people but in the rest of Latin America, you've got a substantial indigenous population Who the government and ruling classes basically ignore and want to keep stupid and they do that by means of a hideously bad But free public school education for their kids where do you think all that cheap $10 a day labor comes from and it's them versus the middle and upper Classes and the ruling class which we call the Criollos or the oligarchs and the ruling classes are basically those white
[05:36] Criollo families that have been down here a long time Some of them going back to the days of the Spanish conquistadors and some of these families got huge land grants from the king and queen of Spain How do you think some of these gigantic banana tobacco sugar and coffee farms came into being those were original land grants given to? the first wave of Spanish mayors governors and conquistadors after they quote tamed the place for Jesus and made good Christians out of those heathen snake corn and sun worshipers Which basically meant looting the place taking the land from the indigenous people and making slaves out of the ones that they didn't kill Or infect with their European diseases. No wonder the indigenous Latins hate Columbus Day So those 10 or 20 upper-class families still exist in every country in Latin America except in Cuba
[06:25] Of course because when old Castro came in in 59 if they hadn't have hit the road They wouldn't be around to tell about it But they are around to tell about it though They lost their lands and their finkas they did get a lot of their money out and our big property owners in Miami now So anyway these days in most Latin countries you still have that basic class struggle And if you've noticed the indigenous populations have slowly gaining political power throughout Latin America for the first time in history You've got a real indigenous president not a puppet in both Bolivia and Ecuador And that happened mostly because the populations in those countries are well over 50% indigenous and thereby some miracle they did organize enough to get their man elected and Why most expats agreed that it was a miracle they pulled it off is simply because there's just not one indigenous tribe
[07:17] There's dozens and dozens of them and they speak different languages And they don't really like each other all that much in fact when Columbus and later the conquistadors did land they saw and documented firsthand how these individual tribes warred with each other constantly and stole each other's goods and women But what about these days in the 21st century well what you can look forward to Politically in the future is that most Latin American countries except the ones I mentioned will Probably end up with more real indigenous people at the top end which isn't a bad thing their time is come really and How's that going to affect expats well probably not at all because if you look at what happened in Ecuador and Bolivia? Expats I know who live there have absolutely nothing to report in regards to a negative change or a shift in their own
[08:08] Lifestyles or the safety factor sure some big oil and utility companies have been nationalized, and they've legislated some well-needed Land reformation there's always been a feeling of injustice among the indigenous since the oligarchs made those big land grabs years ago And really all the indigenous people one is their little plot of land to farm on They don't want to live in a high-rent district in the big city They just want that little piece of land that their fathers and grandfathers worked And those are some of the promises indigenous Candidates make in order to get elected in the past when a mining company came to town the government of the oligarchs or Controlled by them would just give the mining concession and kick the indigenous people off the land sure They needed them to work those grunt jobs at the mine
[08:55] But the land that they've been living on for hundreds of years well The government could always make a case that the indigenous people didn't have their titles properly filed in the land registry And often they were never filed at all because the people just couldn't read and write and speaking of corrupt Latin governments and believe me They're all corrupt but it's all about the degree and the power that they really have or don't have and It's really to our advantage that the people in government itself are very very lazy And in many cases very undereducated in fact totally incompetent. How could it not be? It's a crony system from top to bottom you get elected or appointed automatically your friends your family and your associates get government jobs And that's regardless if you have the credentials or not
[09:42] You'd be surprised how little correlation there is between a person's education and the job he holds for example a new president will appoint a new Chief of police who has no law enforcement credentials at all none zero you see that happen over and over again Or he'll put his cousin or brother-in-law in charge of the country's social security system And what professional credentials do these guys have don't ask don't tell Now I must mention that just like in the private sector most government white-collar positions have a minimum set of educational requirements to get the job in the first place for example a lot of the high-level Departmental positions require the applicant to have a minimum of a bachelor's degree and in Latin America
[10:28] That's called a lesson see a tura so even if the president appoints his brother-in-law Minimally he has to have a bachelor's degree, so there is some oversight however I'd like to report right now that one of the big Guatemalan newspapers has just uncovered a university diploma scam That's been going on for countless years turns out that in the halls of government if some bigwig elected official or appointee Has promised the usual patronage jobs to friends family and relatives and those persons don't have that bachelor's degree That's required for the position then some money changes hands and a few secret phone calls are made and the person in question suddenly has a Phonified degree from a registered local university now this Guatemalan newspaper the prince a libre reported that in just a preliminary
[11:17] Investigation the reporter uncovered more than 60 false University degrees held by people in high government office and unnamed sources at the biggest public University that's public now He told the reporter that surely this was the tip of the iceberg and that ten times the amount of false diplomas have been issued just in the last couple of years and When asked how could that be possible one of the Rector's at the University said how could it not be possible? It's been going on for years Everyone on the board of directors of the University the Dean his staff and all the heads of the University Departments are not only political appointees But after their terms in the University end they themselves end up working in high-level
[12:04] Governmental appointed positions to the whole public university system is a revolving door of cronyism But note I'm talking about the so-called free or nearly free Public school system the public university not the private ones the private ones always stay out of politics and are Unaffiliated with political candidates and don't think that this kind of thing just happens in Guatemala in the article It said that it's endemic in every Latin country and every big Latin American newspaper has done Exposé's on the subject and then the usual thing happens There's outrage in the media and there's some op-eds written on the subject and in the next week or two There's some Resignations and some firings then the furor dies down the press is on to another scandal then a new administration comes in
[12:52] They promise reform become darlings of the press and soon enough. It's business as usual So the point here is Latin governments are just filled to the brim with lazy incompetent under qualified Know-nothings which in a way sounds like a terrible way to run a country and basically those people really don't run the country they just don't know how the fact is Latin economies run as well as they do or Just limp along depending how you look at it not because of the government But because of the private sector and the private sector does all it can to keep its distance from the people in government Now you might be thinking that well up in the states We have incompetent imbeciles in government too But the thing is down here in Latin America every four to six years a new government comes in and everyone is
[13:41] Flushed out from the top and a whole new group of under qualified imbeciles get put into those positions and they start from scratch and this new group They just fumble along and feed at the trough for the next four to six years until the new group comes in and that continues ad nauseam Unlike the US government with their career civil servants and career politicians Who after years and years of shuffling through government can and do cause terrific damage to your freedoms and your pocketbook and these are the imbeciles that control the printing presses and they have access to the finest quality Technology available the Big Brother State didn't just appear these guys orchestrated it So what I'm trying to say is down here in Latin America the political system is in such a constant state of dysfunction
[14:28] That as an expat you really have no reason to worry about them They don't have career politicians or career civil servants and their central banks can't print excess money Or they'll destroy their purchasing power and they'll have bank runs and hyperinflation Now in the same vein I'd like to tell you another true story that happened about three weeks ago to my favorite lawyer and when I say he's my favorite Lawyer, I'm not saying that with any irony at all Like you would if you were saying the same thing about a lawyer up in the States up there Everyone hates lawyers even lawyers hate lawyers So anyway the other day he told me that he was in a bank about a week ago with his two young sons And they were sitting down in the customer service area Waiting for their turn at the window to talk to a customer service rep now like I mentioned before when you go to a bank
[15:17] In Latin America since everything is still done in triplicate or quadruple kit and every transaction You make seems to take 10 signatures and 20 pieces of paper Which means when you go to a bank it takes an hour sometimes, too So anyway my Latin lawyer friend and his two kids are sitting in the chairs in the lobby Waiting their turn at one of the customer service windows when a very well-dressed guy and his two very well-dressed body guards Sat down right next to them and generally down here in Latin America That's a signal that the guys either a high-level politician or a sophisticated high-end narco and in this case my lawyer friend recognized this guy as one of the Deputados in the Guatemalan Congress now down here the word deputado is the word for senator and
[16:06] Let me explain that for a second down here in Latin America. They don't have a bicameral Congress like they do up in the states They don't have a house of representatives and a Senate They just have one representative body called a congresso the Congress and all the members are called Deputados which translates in English to deputy which down here means senator and sometimes in the press They'll call a guy like that a conga assista which means congressman at least those words click with English speakers They sound like English words So anyway, the lawyer is sitting there with his two boys ones ten and ones twelve and it's their turn So they go up to one of the five customer service ladies and sit down and in the next few minutes the deputado and his two bodyguards walked up to the next customer service lady right next to the lawyer and his kids and
[16:55] Later on when the lawyer and his kids got out of the bank and were in the car one of his kids turned to him And said daddy was that guy really a deputado and then the kids started chuckling and his dad said yeah He's one of our congressman. All right, then his son said with some shock in his voice Dad I was sitting in the chair right next to him. And you know what that deputado is in alphabet Is out dad? How is that possible? Then the kid went on to say that he watched the whole time as the deputado made his bodyguard Discreetly repeat the words that were written on the bank papers. He was filling out then after he read it to the deputado He pointed to where he should sign and date it as it turns out The kid witnessed the embarrassing fact that the deputado could not read or write
[17:46] And the lawyer said that on the way home his kids were laughing and joking about it But the lawyer felt it was more a serious lesson that his kids could learn from and he told him so And of course when he told me the story I said the same thing his kid said How was that possible? How could someone in the highest levels of government be in alphabetizado? Which is a tough word for expats to say but it means of course Illiterate and he said johnny you don't realize throughout latin america There are tons of politicians like that and the illiterate ones are always from the far-off Rurobouni areas and he said he's just typical of his constituents a large percentage of them Especially the older adults are illiterate too, but that never stopped a good old boy from holding office before now
[18:35] Did it I mean come on look at bush jr Let's face it anyone who's got money a lucky face and a machine behind him can run for office and win these days So anyway, my point here is if that isn't stark enough proof for you Of how chaotic and basically retarded the whole political arena is down here Then i'm just not getting my message through to you guys, I guess Now that just goes to show that just when you think you've heard it all Well, you know the rest of that saying don't you? Now let's move on to something else lately I've been talking a lot about argentina a place that's a nice place to visit But I wouldn't want to live there unless of course you have a first world income and don't mind spending it Now I talk about how big brother in taxes and government intrusion have really taken over in a big way in argentina
[19:23] And i've mentioned that they're on that dark road to a financial collapse again now that they've reinstituted currency controls And the government did that because the wealthy people who can see the writing on the wall Have been slowly moving their money and their assets out of the country to places like uruguan chili Argentina's got a severe case of capital flight and they're about to go down again Well, I just want to tell you that today in all the buenos aries newspapers They're reporting that dozens of subdivisions in the capital are without power and light And it's not due to natural disasters or rolling blackouts or anything like that It's due to the fact that the local municipalities are going broke and they're not paying their electric bills And some of the towns and municipalities are behind paying the utility by over a year and a half
[20:11] And now the electric companies just cutting them off and those municipalities are claiming it's because tax revenues are down So, you know what? That means don't you they're surely going to petition the federal government for money to pay those bills And they'll get it, but it'll come with strings attached They'll have to fire employees or raise taxes at the municipal level and that's a stupid vicious circle Because when you raise taxes in a weak economy marginal businesses fail and tax revenues actually go down So I hope that tells you a little bit about what's going on in argentina right now It should tell you that you don't want to live there And I know a lot of you know that the famous alternative newsletter writer doug casey has been claiming for a Long long time that argentina is the place to be when the us finally does go to hell
[20:59] Well, it looks to me that argentina has got its own version of the titanic going now And I for one don't want to be on that boat when it happens now Personally, I think that doug casey is pushing it right now because he's got his own personal little enclave in the northern part of argentina He's heavily invested in his own private little community there right now You may have heard it's a real estate development that any one of us could go down and buy into but it's First world prices all the way believe me and he is very far away from any big city development So that's good. And if you move there you're going to be with like-minded people That's for sure But it seems to me at least that the blush is off the rose for doug casey Based on what he's been saying in certain interviews lately in an interview this year He said about the president of argentina kerchner whose husband by the way was president before her
[21:50] Casey just said this he said christina kerchner has outdone the stupidity of her husband Here's the quote. He said her husband was a total disaster All of his policies were completely wrongheaded and destructive Everything he did was the exact opposite of what was needed doing This is true of christina his wife, too But she's actually outdone her husband in implementing economically suicidal policies Unquote now remember this is coming from a guy who's got a huge investment in argentina physical investment A brick and mortar community for expats now. I gotta tell you I agree. She's totally nuts For example, did you know that her government recently tried to force legislation to ban the importation of all books?
[22:41] And it wasn't about censorship just that the argentine government needs money so badly It's so close to bankruptcy in default that there's a huge push to ban imports or limit them severely in general Just to encourage the sales of those items produced locally. That's what you call extreme protectionism. If not Isolationism and if you recall on a previous show I spoke about what she did to the auto industry she raised auto import taxes from 35 to over 100 percent depending on the current model And car manufacturers are being forced to come on board Because if they don't the car market's going to simply die a slow and painful death Now listen to these prices and then tell me if anyone in their right mind would ever want to move to argentina
[23:29] Here goes if you want to buy a toyota rav4, you know those mini suvs you can get one in the u.s for 24 235 bucks in argentina, you can get the exact same model for 42 600 did you hear that almost 100 percent more than the price in the states? Man, I hate to laugh, but that's unbelievable How about this one of those hyunde santa feis a kind of a mid-sized suv in the states You can get one for 25 490 bucks in argentina 44 000 bucks again almost double and where's that money going taxes? Taxes taxes, but here's the topper. You want a jeep grand Cherokee? By the way, I don't get the latin infatuation with jeeps. They just love them
[24:18] Of course, they'd never think to investigate or do their homework on the internet about it. They just want to have one It's part of their american dream fantasy And who am I to dissuade them of that fantasy, you know They always end up in the basement when you look at maintenance and repair reports in consumer reports magazine Ever since chrysler bought them, you know People can't afford them But you see them around once in a while and every big latin city does have a dealership And if you ask anyone who doesn't have a car yet They can't afford one if you ask them What would be their dream car if they did have the money a huge percentage of them will say jeep Cherokee Anyway, you can get one in the states for thirty two thousand nine hundred ninety-five bucks in argentina the very same one
[25:04] seventy three thousand seven hundred eighty Four bucks that's more than double over one hundred percent more than you'd pay for the same thing in the states again Due to ridiculous taxes now. I said that was the topper, but it's really not I was saving the best for last How about your standard workhorse of a pickup truck a toyota hilux sw4? Now in the states that's a high-end toyota pickup truck. It costs fifty two thousand nine hundred forty-five bucks That's way on the high end, but you ain't seen nothing yet down in argentina that same truck 210 800 bucks That's nearly 400 higher than in the states almost four times as expensive over 200 grand doug casey
[25:53] Are you hearing this? So basically if you want a hilux in argentina It's going to cost you as much as three corvettes or three boxers or three porches in the united states Oh, and by the way, if you want a porsche in argentina, it'll cost you as much as a luxury beach house Oh, and before I finish here today. I have to mention just one more thing about my lawyer friend He was telling me that the worst place to be a lawyer in all of latin america is honduras And with that he pulled out this little news clipping from his pocket. It says in the year 2012 at least 30 lawyers have been assassinated in honduras And I told him if that was to happen in the united states, they'd call that a pretty good start Now before I finish here i'd like to mention that I do have one or two places left for my january expat wisdom
[26:47] Seminar down in central america I had a few people who were forced to cancel because they found out that airfare from china and indonesia where they were coming from Is over 2500 bucks. I didn't know that myself sounds like argentina prices, you know Anyway, because it's just too expensive for them to come from that part of the world those spots have opened up So if you're interested go to expat wisdom.com and click on the seminar link and i'll even keep that early bird pricing for you too just the season and all that and don't forget to go to expat wisdom on facebook I am going to start uploading some very cool photos that i've taken myself You want to know how expats blend in with latin life down here Just go to expat wisdom on facebook and twitter and check in with me
[27:38] You've been listening to the expat files living in latin america coming to you each week from somewhere south of the border And don't forget you can email me on anything at all about latin america the expat files at gmail.com See you next time Ah, she was a picture