Spain Won Again, 500 Years Later

0:00David McWilliams: Coming up on the podcast today, I know it's a bit of a strange one, but we're looking at the World Cup. We're looking at Spain. We're looking at Argentina. We're looking at North America. We're going to talk about the economic history of colonialism in North South America, the differences, the legacy, and today, the different consequences of different types of economic colonialism. That's all coming up in a couple of minutes.

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1:41David McWilliams: How you doing there? Welcome to the podcast on the day after the night before. The night before being the World Cup final, which is fair to say, John, was a little bit of a disappointment. Most finals are though, aren't they? It's all the run-up stuff that is the best stuff. finals always tend to over promise and under deliver and it did last night completely now as you know dear listeners my heart was with Argentina John and I off air I've been having this discussion actually for the last three weeks I've always said Argentina are a great team yeah they're a bit of dogs they're a bit of niggle but you know what they're grateful for it but last night I think yeah they were rabbit dogs last night they were just gurriers they just they disgraced themselves and it's just It's such a shame because they have so much talent.

2:28David McWilliams: They play with such... When they play and when they play properly, those little passes and obviously Messi, but people like McAllister, you've got a lot of brilliant, brilliant players. But last night, they just couldn't do anything except foul the Spaniards. And Spain were imperious. And Spain, I mean... Yeah, Spain were great. The big question now for football, don't worry, guys, we're going to be on to economics in two seconds, but the big question now for football across the world, John, is how do you stop Spain? Who can beat this team? Yeah. Who can beat them in the Euros? who can beat them in the World Cup.

2:57You know, they seem to be at a different league to everybody else.

3:01David McWilliams: Norway can. Norway, okay. We're going for Norway. Or Pigford, one or the other. Pigford, exactly. Anyway, welcome to the podcast. The World Cup is over. But on the back of the final, between Spain, Argentina, and being played in New Jersey, what we're going to give you is a sort of an economic history lesson about different types of colonialism. That might sound a bit weird, but of course, during the week, you had all this stuff about the Malvinas and the Falklands and colonialism, et cetera, et cetera. What we're going to look at is the different colonial experience between Latin America, which was colonized by Spaniards, and between North America, which was colonized by the British in the main, the French initially, but mainly the British.

3:51David McWilliams: and what lessons can be learned from that experience for today? Because what we have is a strange situation where North America continues to outperform Latin America. Both colonies, both colonized by Europeans, but very, very different outcomes. And John, before we start, do you know the name of the man who actually founded and first saw and first named the Falkland Islands, John? Tell me. The man's name was John Davis. That's actually true. My long lost cousin. It is your long lost cousin. John Davis is the man who actually found the Falklands. I didn't know that. The year of our Lord is 1592, John.

4:44An English navigator, Captain John Davis, first sighted the Falkland Islands. So it's your fault. The whole thing. That's brilliant. Oh, I have a whole new respect for the Falklands. Yes, exactly. You go down to Port Stanley, putting around the Davis, the Davis Herald, the Davis coat of arms saying... Was he from Longford? You never know. Jesus, I mean, they should be called the Davis Islands or Isla de Visos. I know, I know. Anyway, come here. Today's podcast, dear listener, It's not going to be about our discussions, Argentina and whatever. What I want to do is when I was watching the World Cup, there's one thing lovely about the World Cup, which is the way it turns economic and political hierarchies on its head.

5:30So, for example, the United States, the world's big boss economy, the world's big boss power is a sort of an also-ran. It's sort of a non-entity in the World Cup, right? China, the up-and-coming superpower is completely absent. It doesn't exist. It doesn't... Yeah, yeah. Football does nothing in China. It's a funny one, isn't it? But give them a few years, they'll be there. The major European powers, the Germans, the French, the Brits, the Italians, etc., even though the Italians weren't there, all kind of humiliated. And countries that have made the aims of things like Argentina are elevated.

6:07So in a way, the World Cup kind of turns the hierarchy of the world on its head. And I think that's one of the reasons why lots of people embrace it, enjoy it, all this sort of stuff. But I want to talk about, because it's really interesting, and again, the Falklands is in the background because, of course, this was the sort of the framing of the game of England and Argentina was, you know, the Malvinas and all that sort of stuff. And I want to talk about colonialism, because what I want to talk about is, we're in New Jersey, where the game has been played by a colonist power against a former colony.

6:42David McWilliams: And I want to talk about what happened in America, economic history of America through the lens of colonialism, because all history is in effect economic history. And I want to talk about the culture, because you know when they talk about the culture of the Argentinian football team, and the culture of the Mexican team, and the culture of the Brazilian team, and of course, the culture of the European teams. And I want to see, where does all that come from? Is there a cultural influence on society that comes from its historical experience of colonialism. And as a result of that might explain the difference between New Jersey, where the game has been played, and the likes of Argentina, Mexico, Brazil, and of course, in the background is the imperial power that is Spain.

7:30So that's what we're going to do. We're going to use the final game to talk about colonialism, economic history, culture, and can economic history explain today's economic development or underdevelopment between North America and South America. So that's where we're going to go, John. A small task. A small task indeed. But it is interesting, you know, when you lay it out like that, when you look at the former Spanish colonies compared with the former English colonies. They're totally different. And their whole development and their history is very different. So it kind of begs the question, why is that?

8:12Why do they turn out so different economically and politically?

8:16David McWilliams: Well, let's set the system up. Let's just set up what we're talking about, right? So in the last 400 years, Spain and England have largely controlled at various stages the entire of the continent of America. That is the fact. And that's an interesting fact that we forget sometimes, right? So of course, the Spaniards arrive in, in the 16th century, they control most of South America, most of the Caribbean, all of Central America, Mexico, western parts of the United States. They controlled Florida. We forget all that. So the Spanish, you know, in the 16th century controlled and 17th century controlled a huge swathe of what we call now the Americans.

9:01The British came in a little bit later, but by the beginning of the 20th century, the British Empire included Canada. Of course, they had the Americas before the American independence, Australia, New Zealand. We know all that, right? But when we look at the situation with regard to America, what you have is two huge superpowers, Spain and England, controlled the vast majority of this continent from the very tip in Quiera del Fuego in Chile, all the way to the very top of northern Canada, right?

9:37David McWilliams: So the question then, John, is to address your question, why did both sets of colonies end up completely different, number one? And number two, Why did both sets of colonies bequeath completely different economic systems to this day? That is the interesting thing, right? So the first thing to look at is the Spanish model. What was the Spanish model of colonialism in Latin America? And it was, in a sense, a combination of plunder and Christianity. So the Spaniards sent out conquistadors who were licensed by the king of Spain, in effect privateers, self-financed conquistadors to go out. And what the Spanish crown said to them is, as long as you convert the natives to Christianity and you impose upon them our religion, So we're doing this for God.

10:38David McWilliams: You can do whatever the hell you like there, right? That was the... Very Christian of them. Exactly. And the entire strategy was called enconomía. And enconomía means to commandeer in Spanish. Right. English word to commandeer. And it was the policy that the Spanish crown deployed initially against the Muslims in the caliphate of Andalusia. So when Ferdinand and Isabella in 1492 or through the 1480s attacked and dislodged and disenfranchised the Muslims and the Jews of the caliphate that was Andalusia, they had a policy called enconimeda, which means to commandeer. So what they said was if you're the local bully lad and you are hard enough, you can commandeer the lands of these people, not unlike the colonization of Ireland, which was deployed on the very same metrics after Cromwell.

11:40So if you can go and it's up to you, you basically enslave these people, these natives, and away you go. So the first thing is... Shocking, really, isn't it? It is, but this is the Spanish model, right? So the major idea for the Spanish was to go, for all colonies and all colonists, the objective is to extract wealth out of the colony. That's the job. That's why you do it, right? And what did the Spanish find? The Spanish found gold, they found silver, and they enslaved the local native people in order to mine that silver. So it was kind of a brutal state-mandated labor system where one-seventh of the entire male population annually were forced to mine gold and silver for the Spaniards, right?

12:30And wages, and they were paid wages, but they were about one-third or a half of free market wages at the time. When those poor native Indians died in huge numbers,

12:44David McWilliams: the Spaniards began to import African slaves. Because 5 to 15 million people in Mexico alone died in the first century of the Spanish rule, which is extraordinary. And 100 ,000 Africans were shipped to Mexico alone between 1521 and 1650. So it was very, very clear that what the Spanish system was, elite at the top, mining. and of course what happened was by the 1540s the Spaniards found enormous silver reserves in Mexico they found also enormous silver reserves in what is called Potosi in modern Bolivia just to give you a sense of how much silver they found John mining was so intense in Potosi the population grew from 14 ,000 to 160 ,000 between 1550 and 1611.

13:43Wow. So it rivaled one of the biggest cities in the world. And all it was, was a massive, massive silver mine. Yeah. It had a bit of a housing problem there. It was a small housing problem, right? But the scale of the mineral extraction in Latin America requires people to get their heads around, right? between 1500 and 1800, Spanish Latin America produced 150 ,000 metric tons of silver, which accounted for 80 to 90 % of total global silver production during those three centuries. 300 tons of silver a year

14:24David McWilliams: came out of Peru and Mexico and went to Spain. So what you see is that The Spaniards got so lucky in Latin America that 60 % of all the world's silver ever mined came from what we now know to be Spanish America, Latin America. Of course, the silver is still in circulation. Yeah, of course it is. Of course it is. And ironically, one of the places it ended up was the Ming Dynasty in China, who had a ferocious, ferocious appetite for silver because they didn't have any silver themselves. Right, right, right. So you get this crazy system where the silver is being exported from Bolivia, Peru, and Mexico.

15:13It's going to Spain. It's finding its way, bizarrely, to China

15:19David McWilliams: because the Spaniards are swapping silver for Chinese goods. and in total$130 billion of raw metal at today's money were extracted from Spanish mines. And that was used to finance the multiple Habsburg Wars, the Spanish Armada, wars with the Ottomans, Italian wars, all that sort of stuff. You know, wars with the British in North America, which came later, wars of religion, all those sort of things. They were all financed by this goal. But what it did, John, is it gave a systemic structure to Spanish colonialism, which was one, an elite at the top got all the money. Surprise, surprise. Two, an elite at the top, the conquistadors, were anointed by the Spanish crown.

16:11Three, the Spanish crown got 20 % of every single gram of silver that was mined.

16:19David McWilliams: So they soldered the Spanish crown onto the silver and gold of Latin America. Four, the local people, be they the native people, the indigenous people, or the black slaves had absolutely no rights at all. Right? They were used explicitly as slave or indentured labor. And five, created a system that was vertical, very, very top down. And that, of course, was what Spanish colonialism gave the Americas. Now, the question we have is, is that the reason that Latin America is now still poorer than North America? Keep that in the back of your head, because that's the question you're trying to ask. Can I just ask you, just as a little aside, so this was the relationship between the Americas and Spain, and all the silver was being shipped directly back to Spain.

17:13What was the impact for the average Spanish person in Spain? Was this being dished out? Did all boats rise, as it were?

17:23David McWilliams: The story of Spanish gold is one that all most Spanish boats rose, but as this was not a democratic country, the boats that rose most were the people at the very top. Yeah, and they built beautiful cities like Madrid, which is beautiful. When you go to Madrid or Seville or Córdoba or Cadiz, all these amazing buildings were built with silver that came out of Latin America. That's the story. The problem for the Spaniards was that they had a superannuated version of Dutch disease, which we've spoken about quite a bit over the last couple of podcasts. But basically what happened was it became much easier for the Spaniards to simply take the silver from the Incas and the Aztecs and swap that for nice goods built by other people and produced by other people.

18:13David McWilliams: So what it did was it made Spain very rich but highly un-innovative. And over time, the gold and the silver ran through Spain like a dose of salts, most explicitly evidenced by the fact that the Spanish real, the gold coin, in the country that got most gold ever in the world, devalued four times in the 17th century. So it means they didn't have enough gold. Why? Because the gold disappeared because they were basically like, imagine Spain was like a country that won the lotto. The other way when you win the lotto, you always hear these stories of, you know, bloke wins the lotto and blows it all in 10 years on coke and hookers and holidays and fast cars and all that.

18:58That's basically what happened to the Spaniards, right? Yeah. Okay. Sounds kind of cool. But didn't a lot of the gold go to Holland?

19:06David McWilliams: A lot of them went to Holland because the Dutch, after having fought the Spaniards in the late 16th century, became this unbelievably dynamic country because what does Holland never have? Holland has no natural resources and it's very small. Well, apart from Dutch gold. Apart from Dutch gold. Dutch gold and a bus stop. If you want to get an image of John and me as our 15-year-old selves, imagine a wet bush shelter in Dun Laoghaire and a can of Dutch gold. A can of Dutch gold between us. Between us, exactly. So I'll come back to it. So that's what the Dutch did. So what did the Brits do? So the Brits have quite a different model of colonialism.

19:52David McWilliams: And this is an interesting thing. So the Brits go, and the one thing we know about North America and Canada, where the Brits went, is there is no silver. They didn't find silver and they didn't find gold. They didn't find extractive industries. So straight away, you have to do something else, right? Were they expecting to find it? Yeah, that's where they went. They were expecting to find it. I mean, the whole idea was that you would go there and you'd find great riches. The Spaniards had found enormous amounts of gold. The Brits thought, you know what? We're going to try and see if we can find gold and silver.

20:29David McWilliams: So they arrive, the first colony in North America is in Virginia. Of course, Virginia is called Virginia after the Virgin Queen, Queen Elizabeth I. It's founded in 1607, and they all starve. So just so you know, right? So in the same way, the Spanish colonies were driven by the royal family of Spain. The British colonies were driven by private-run enterprises, right? That's the difference. So the British colonies were financed by private companies in London that put up the money, and they thought that they would actually, at some stage, come very good, right? So that's the first thing. So the English model is very different in terms of how they financed it.

21:13David McWilliams: So they followed an already established model, which was privately run companies like the East India Company. So Massachusetts was set up by the Massachusetts Bay Company in 1629, the Hudson Bay Company for around New York, different types. The purpose was the same. They expected gold and silver, but they actually found neither. So then they had to figure out, well, what are we doing here, right? Because at the beginning, the colonialization of North America was very, very unpopular. And they have two different types of colonialism in America. The first one is what we know to be the southern states of America, John.

21:51David McWilliams: In the southern states of America, Maryland, Virginia, and the colonies in the south became reliant on indentured servants and enslaved labor to generate the agriculture that subsequently became the tobacco plantations and the cotton plantations, etc. That was a very similar pattern to the sugar plantations in the Caribbean. and this was really along the lines of the Spanish model, right? Where you basically had posh person on the top, that posh person enslaved lots and lots of mainly black slaves. Those black slaves worked the plantations and enriched the people there. So that was quite similar to Spain in Mexico and Latin America.

22:35But there was another model, which was the New England model.

22:39David McWilliams: And this is the interesting part. This is a much more pluralistic model. So the New England model was family-based agriculture with towns that were self-governed. So they developed decentralized local government. They had town hall meetings, strong property rights, common law courts, encouraged farmers to come from England and other Protestant countries to the United States. So they were very religious-based though, weren't they? Very, very religious people. But you have a very, very, you straight away have a different culture. So in the north of the New England, you have a bottom-up system of small farmers, very religious, very democratic, having their town hall meetings.

23:26You know that expression, the town halls? That all comes from this era of town hall meetings, all that sort of thing. You know, this is most evidenced by Salem and Salem witches and all that, Massachusetts, all that sort of stuff. Evocative stuff, people with bonnets and their hair and all that. Now, of course, what did they do? they enslaved and eradicated the locals, the natives. Yeah, very Christian.

23:46David McWilliams: That is what the Spanish did, exactly. But the question is, why did the English colonies become richer than the Spanish ones, and why are they still richer? There's a core argument which basically says that culture matters, okay? And the attitudes towards science and modernity are the main drivers of long-term prosperity. This is articulated by a guy called David Landay's book called The Wealth and Poverty of Nations, published in the late 1990s. It's a very, very interesting book, right? And his basic argument is that the English people in the north of the United States, because there was no real resources to plunder, they had to make agriculture work for them.

24:37David McWilliams: They were much more open to ideas. They were much more open to innovation. They were much more open to taking the best practices in Europe. They had free markets. They had a greater degree of free thinking. And they, in effect, created the conditions for what we would know, John, as the Schumpterian gales of creative destruction. Okay, right, yeah. Because they were an open, innovative society that was rewarding success success for small-scale individuals, in a sense, quite different to the Spanish model. The Spanish model was developed in a culture of extraction. So you take the gold. English colonies were developed in a culture of production, right?

25:20Yeah.

25:20David McWilliams: We're producing. Can I just stop you there, though? I mean, the English colonies would have followed a similar route to the Spanish ones if they had found enough gold in silver. You're absolutely right. So it wasn't by design in that sense? No, it wasn't like they were nice people because the way they treated the natives was the same on both sides. Yeah, yeah, yeah. You know, the way they treated the natives was the English and the Spaniards exterminated the native peoples in enormous numbers. Spaniards probably more, but the reason they exterminated more was there were more natives to exterminate.

25:56Because, you know, because Mexico and the Inca,

25:59David McWilliams: they were highly, highly populous places. Yeah, yeah. Whereas North America was much less populous in terms of the North American native population. But what is really is fascinating, and I think it's well worth saying, is that we do know that in economic history, the more open you are to ideas, the more likely you are to generate economic growth. We know that. Yeah. And we also know that the more closed you are, the more extractive you are, the more top-down you are, the more you enslave people, and the more you dismiss cultures of curiosity, of innovation, the less likely you are to have economic and commercial innovation and the less likely you are to grow.

26:46David McWilliams: So a fascinating piece of research, John, I'm just going to mention this, right? I read it a couple of weeks ago, was a piece of research on the long-term, the long, long-term impact of the Spanish Inquisition on Spanish growth. It's an amazing piece of research. And it shows that in towns today in Spain that had a much heavier Inquisition prosecution in the Middle Ages and subsequently, right? Yeah. They still have lower incomes and lower levels of education today than the towns in Spain where the Inquisition was less intense. Which is amazing. What's the link? How could that be? The link is that towns that adopted the Inquisition became adverse to education, to curiosity, with a lower level of social trust because you basically don't trust your neighbours who are grassing on each other, right?

27:51David McWilliams: And to this day, those towns have suffered from lower levels of education and lower levels of income in contrast to the Spanish towns that were more chilled out. Isn't that amazing? Yeah, yeah, that's incredible. And you can see even like literacy rates in even the mid-17th century in England and Netherlands were at about half the population. Spain was still at half the population in the 1910s. So what you have is that education, literacy, open markets, all those sort of things count enormously. The other factor that counts enormously for economic growth is geography, John. You can never get away from geography.

28:36Yeah.

28:37David McWilliams: Geography is what determines so much of economics, and yet we never ever think about it. And of course, climate is the other thing. So if you are in countries where the climate is absolutely inhospitable, and where lots and lots of the new immigrants die quickly from disease, it is much more likely that you will have a smash and grab culture. So we find gold today, we mine gold, we don't do anything else, simply because the environment and the inclemency of the climate prompts in humans a sort of a desperation to get rich quick because you mightn't be around that long. Yeah, get in, get out. Yeah, exactly.

29:23David McWilliams: So all these things are factors, but the main cultural factor is that difference between the Spanish being top-down, vertical, and the English by necessity, Necessity, not by design, John, you're absolutely right, not by choice, but by necessity being more horizontal, bottom-up, more democratic, more collegiate. And because they didn't have a spigot spouting gold for them, they had to become innovative to survive. And that innovation comes from property rights, knowledge transfer, all those sort of things. So fast forward to today, what were the long-term implications? How do we see the impact of this colonialism on today's economies?

30:07But before you answer that, let's do a bit of this.

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32:35So, Mac, we're talking about the difference between the Spanish colonial model and the British colonial model. And they've given rise to different kind of societies and economies and political systems. So bring that up to today. Where do we see that now? How does it manifest itself here? And in a way, because we're talking about the World Cup, John, and because we're talking about Spain and Argentina and New Jersey, the Americas give sort of almost like an economic laboratory. So you've got two massive colonies coming in more or less at the same time, two different cultures, one being extractive, extractive, one being less extractive, but still extractive.

33:24And more importantly, we have this division in Latin America between North America, Canada and the United States in effect, and Latin America and Central America, Mexico, all the way down to Argentina.

33:39David McWilliams: What we know now is that that southern part has GDP, which is much less dynamic than the northern part. And the question is, why is that? This is the great economic question that should animate all economists, is why do certain countries grow quickly? And why do other countries grow slowly? Why do certain countries generate enough wealth for the people to have a nicer life? And why do other countries not deliver? And there's a whole gamut of stuff and a whole gamut of causes and policies and this, that. I just find that today, what's kind of interesting for us, given that we've been watching the likes of Argentina is why what happened in Latin America happened in Latin America.

34:23And we're just going to look at the colonial impact, but we're also going to look at geography and climate. And

34:30David McWilliams: so, of course, climate is an enormous driving force of every economic outcome, simply because it's a very simple thing. The warmer a place is, the less you're more inclined to work because you lose energy quickly. I mean, there's lots of basic ideas. You know, humans are animals, that we expend energy. But it also gives rise to different styles of agriculture and crops, etc. All that sort of stuff. All that sort of stuff. But let's focus on colonialism. And this was, of course, animated by the sort of the Falklands thing that's been sort of reinforced this week, particularly in this part of the world.

35:09The Davis Islands. And the fact that John Davis fired the fucking Falklands, which I can't believe. Anyway. Los Davies. Los Davidos. Exactly. Son Argentinos. Anyway, let's go back. So one of the ideas is, did colonialism endure?

35:30David McWilliams: And by that I mean, was the Spanish extractive elite model simply adopted by the newly independent independent Latin American states who had got their independence in the 19th century and into the 20th century. And can you explain at least some of the underperformance of the Latin American countries through the lens of colonialism? So what did they inherit? They inherited extractive industries. They inherited a very small elite. They had an extremely illiterate and uneducated and enslaved local population. They had no property rights. They had no tradition of democracy. They had no tradition of bottom-up town halls having an impact on communal decision-making.

36:27David McWilliams: And they had an elite at the very top that because the elite at the very top was enriched by extractive industries, not only did they not encourage other industries, but maybe, John, they didn't want to encourage other industries because they had captured the state. And if you capture the state, the last thing you want is some clever little bollocks coming up with a new industry who's going to make more money than you and maybe undermine your thing. So you're sitting pretty there. And we know that for a lot of the history of independent Latin America, the people at the top were mainly white Spanish descendant, conquistador families that ran Mexico, Bolivia, Colombia, Venezuela, Argentina, all those sort of things.

37:16I can imagine the fellas at the top, though, were saying, you know, hey, this is working for us. If it ain't broke, don't fix it. Exactly, exactly.

37:23David McWilliams: So that's the first thing. And I think that And if you look at, there's a very interesting book called Why Nations Fail, right? Yeah. Won the Nobel Prize for the winners. And their basic idea is that the most important thing are political and economic institutions, not geography, not culture, are the elite ignorance. Now, I actually think it's too limited. I think it's too narrow of view. It basically says that countries with secure property rights, with an unbiased rule of law, with broad political participation, experience sustained growth over centuries, while those that are concentrated on elite power, forced labor, servitude, serfdom, no property rights for the majority, become purely extractive entities, enriching the elites, and they generate temporary growth, so they do well for a little while, but over a long-term period, they don't.

38:18David McWilliams: Why? Because creative destruction, our friend Schumpeter, is elbowed out by this, right? It's implicitly encouraged in the more inclusive economies while it's blocked by the elites in the extractive economies. And this, of course, leads to lower innovation, lower growth, et cetera, et cetera. But you know what's interesting, though? Even if you took just five seconds to think about that, it is kind of the bleeding obvious, isn't it? Yeah, that's why you win Nobel Prizes, John. You know, we should win Nobel Prizes. For the bleeding obvious. The bleeding obvious. the Dutch gold approach to economics, right?

38:51So it is quite clear that the legacy of colonialism in Latin America has led to elite reproduction in Latin America and elites enriching themselves.

39:09David McWilliams: And maybe the great example of that is Argentina, which has went from the 10th richest country in the world to the 70th richest country in the world in 100 years. And that happened in the 20th century. That's the interesting thing. But what you find is there, the elites were not just the conquistadors, but they were also trade unions. They were also political elites. They were also the Peronist Party that extracted. So you don't necessarily have to be a sort of posh bloke with loads of medals, previous army experience, and have a massive hacienda. You can be an elite in lots of different ways.

39:50David McWilliams: But the moral of the story, John, is, I think it is really interesting to see, is that there is a difference in economic performance between the former English colonies and the former Spanish colonies. And it also seems that the dye was cast many centuries ago. This is the interesting thing, that because the Brits in North America were forced to be innovative because they didn't find extractive industries, they came up with property rights, the rule of law, all those things. They had reasonably strong local institutions, which were largely, largely driven to enrich the white population. Yeah. That population used to be and was up until 1850 exclusively Protestant.

40:45David McWilliams: It then became quite Catholic when we arrived, when the Italians arrived. Then it became, there's lots of Jews arrived. And we know the story, right? Yeah. But that's the economic, political, institutional legacy. In Latin America, you have a totally different legacy. and maybe that explains a significant amount, but not all of the underperformance that we see today because the key question is, why do these disparities of growth and income endure? Why, for example, and this is going to leave you with this, right? Why, for example, are American kitchens full of, in restaurants, full of people from Mexico and Honduras and Guatemala who look like indigenous people and not full of people who look like us or look like Spaniards.

41:39David McWilliams: That's the key question, you know? Why do the poor of the world look as they do? And that's one thing I like about the World Cup because with respect to Argentina, the poor become rich for a brief moment, right? But I will also say one of the things that more inflamed the commentariat this week after the English-Argentina debacle. And it was a debacle for the English. You know, we won't go into it, but it's hard to understand what happened in that game, right? In the last 30 minutes, you know. But, I mean, just ask Trump. He was talking about tactics there during the week. Exactly. But I think one of the things that really, it was a bit of shithazery on the part of a guy called Endo Fernandez, the guy who scored for Argentina.

42:29and they were saying, do you hate English people? And he's a little Argentinian guy, plays for Chelsea. And he says, no, no, I love English people. Look, it's nothing to do with the Malvinas. He says, I live in London. Most of my best domestic staff are English.

42:45And what he was doing, that was shithousery of the highest. What he was actually doing was basically trying to invert that thing. And for the first time, the people who are on the top look like him, which are Latino looking dark, etc., small, and the people at the bottom look like us, you know, pale face, whatever. So what you're saying then, Mac, is that culture really matters.

43:09David McWilliams: I think that culture matters more to economics than policy. And I really believe that. Right. You can get certain things right policy-wise. You can cut and base best practice from other countries. You can say, did that work over there? Well, maybe it did, so we'll import it. here. But I think that at the end of the day, culture matters enormously in economics and in football. The Spanish have a culture of football, which is passing, which is ticky tacky, which comes from somewhere deep they've learned over decades. And that culture is extraordinary and successful. The Argentinians have a culture of football.

43:49David McWilliams: At the top, you maligned it, but you know what I was saying you do need that little bit of a dog in you to win games yeah yeah the english have a culture of football and it's the english only up to a semi-final level though but you know what i mean but people talk about the english culture of football yeah it's the culture the inability to pass out from the back all that sort of stuff you know big fast guys with pace which was what the french depended on too that was seen to actually not necessarily be sufficient to win games and i think in economics in the same way as football, culture matters enormously.

44:24We leave it there, and we'll talk to you on Thursday.

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