We Are the Imperial Race

It is early spring in the southern hemisphere. A fresh warm breeze blows across the Rio Plata. Trees along Buenos Aires’ broad boulevards are budding out. Cherry trees are in bloom. Here and there, groups of American tourists peer in shop windows. Birds sing. Lovers stroll arm in arm. It looks as though it might be the beginning of something.

Americans abroad have a mixed reputation. They are loud. They dress badly. And they have a superior attitude that foreigners take for arrogance. But they tip better than Europeans.

In our trip through Argentina, we were no different, no better. None of us had bothered to learn Spanish properly. We spoke it badly, if at all. We expected the locals to speak English…and often commented on how bad the hotel clerks’ command of our mother tongue was, hardly noticing that it was still far better than our knowledge of Spanish.

We Americans are not mean-spirited or pompous about it; still, unconsciously, we expect a little deference…a little obsequiousness…a little bowing and scraping in our direction. After all, we are the imperial race. We are the alpha nation. We have the most popular culture. We have the most powerful military. We have the money.

"Why do so many Americans hate the French," asked a member of our party. The answer is obvious: the French refuse to bend. The unmitigated Gauls actually turn up their noses at American tourists and make them feel like bumpkins. The French don’t dispute that our army could whip their derrieres, if it came to it. They concede, too, that the average white American probably has more money in his pocket than the average Frenchman. But neither of those things counts, say the French; what matters is culture and French culture is superior.

"God*mmit…I’m an American," says the ugly tourist. He is convinced that the frogs, the Huns, and the A-rabs are all incompetent and uncivilized. He is the heir of his English cousins, who used to say: "The wogs begin at Calais." He demands better service than they give each other. He can’t understand why they can’t seem to do things the way they do back in the states…can’t pick up the trash…and can’t be trusted. Why do they drive old cars? Why don’t they have more ATM machines? How come they are always taking passport numbers and demanding papers; don’t they know that freedom is the way to go?

He is convinced, too, that the whole world yearns to be just like him, and that it is just a matter of time before they succeed. This conceit is so deeply felt he is not even aware of it. Besides, he sees more evidence of it every time he takes a trip abroad. He leaves the airport in London and sees McDonald’s along the way. He reads the classified in Paris and sees apartments advertising their "American style" kitchens. He picks up a menu in Buenos Aires and finds he can order an American breakfast. He goes to the Far East and finds familiar brands everywhere he looks (he may not even realize that they are made there…not in America).

He judges the quality of everything he sees by how American it is. Is the toilet paper soft…just like it is at home? Do the shops take credit cards, just like they do in Flagstaff? Are the roads paved as well as they are in Michigan?

If not, they soon will be, he tells himself; for he is convinced that the whole world is going his way. At least, that is what we thought on this trip to Argentina. The country is big, beautiful and cheap. Surely, Americans will want to live here. The Atlantic coast of Argentina is just like the Carolinas…but empty. The far northeast is like Utah or Montana…but at a third the price. And down in San Martin, isn’t it just like Aspen…as it was in 1965?

But won’t Americans find Argentina too, well, foreign? Not at all, down on the pampas they are becoming just like us back on the Great Plains. Soon, we will be able to live as comfortably in Patagonia as in Pennsylvania.

At the peak of an imperial cycle, the imperialists always seem to delude themselves. Looking at the world, they see neither a glass half empty nor one half full, but one spilling over. The Romans spread out all over their empire, building villas in France, in England, and out on the banks of the Black Sea. The Moorish empire reached its peak in the eighth century. Then, too, they were making plans for new mosques in Poitiers, just before they were chased from the country. And all over Africa, you see the ruined houses of the European imperialists who colonized the country. "I used to have a farm in Africa," they still tell people.

The trouble with being on the top of the world is that the world turns, and there is nowhere to go but down. In national economies and markets, as in the movement of the planets, there are small cycles and big cycles. The world turns, and also revolves around the sun. Day follows night; winter follows summer. National pride is self-correcting.

Argentina recently had a dark night of crisis…one of many in a long season of bad weather. The 1930s brought Peronism — a popular brand of socialism — to the country. The nation’s politicians shot the country in the foot, and then in the leg. By the 1980s, they had the gun to their heads — with inflation running at 1,000 percent, per year and war with the English. One problem lead to another and in the 1990s, intending to stop inflation, the Argentine currency was pegged to the dollar, but at too high a rate. The economy collapsed again; much of the middle class was ruined.

But in 2002, the sun peeked over the horizon and began what might be not only a new day, but a new season. Since the second quarter of 2002, the country has seen 12 consecutive quarters of growth, with GDP shooting up at twice the rate of America’s "recovery." We put the word in quotes to signal that we think there is something fishy about it. America’s dawning prosperity came without pain or sacrifice. Americans never stopped borrowing and spending in the recession of ’01—’02; they merely borrowed and spent even more coming out of it. See, they said to the world, our economy can’t be beat. Because, god*mmit, we’re Americans. But the recovery was phony. There was never much of a correction to recover from. So, when the time for an upturn came, all consumers could do was to borrow more money and go further into debt. They had never stopped spending, so they had no money saved.

South of the Rio Plata, on the other hand, the recovery seems to be real. Here is an economy that seems to be getting back on its feet, after a long spell on the sickbed. The recovery is driven not by debt, but by real savings…and not by consumption, but business investment, which rose recently at rates as high as 11.2% per quarter. Consumers couldn’t lead a recovery in Argentina even if they wanted to. Who would be foolish enough to lend them money? Credit card debt is extremely limited. And if you want to buy property down here, we were told, "you have to pay cash." Or, if you have good credit, you may get a bank willing to finance half of the price.

Not surprisingly, real estate is not very expensive. Apartments on Buenos Aires’ most fashionable streets sell for about a quarter of what they would fetch in Paris, London or New York. Out in the boondocks, prices fall even further. How much would you expect to pay for a vineyard/winery in the Napa Valley? Out in Salta Province, one is available at a price that must bring tears to the eyes of a California vintner: 1,000 acres of mature vines for only $1.5 million. And there, he would pay only $10 a day for a good worker, and only $2.50 for a steak dinner.

North of the Rio Grande a homebuyer needs only a pulse. He will pay $25 for dinner, and at least $50 a day for labor. His $1.5 million will barely buy a trailer.

In both Argentina and in the United States, there is a light on the horizon. But on the pampas is the light of dawn. In America, alas, it is probably evening stretched out across the sky…like an emperor’s corpse on a viewing table.

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and Empire of Debt: The Rise Of An Epic Financial Crisis.