2025-10-23 17:20:34
There are four types of economies: developed, developing, Japan, and Argentina.1
Buenos Aires, 2020s:
Buenos Aires, 1930s:
Last week, we saw how Argentina’s geography is unbelievably good, yet the country is not that rich. Why?
Try asking this question and see the immediate flood of: Perón took power and destroyed our country!
But the timing doesn’t quite work.
Perón had a role, as we will see later, but the roots must run deeper: Compared to the average wealth of developed countries, Argentina peaked in 1896! The country started a continuous decline around WW1. The beginning of the end for Argentina must have hit around then.
It might help to figure out what made up Argentina’s economy around that time. By the eve of WW1, 35% of Argentina’s GDP came from… agriculture. An additional 22% of GDP came from trade, but 95% of exports were agricultural. In fact, the lion’s share of Argentinian exports is still agriculture.
It’s fair, then, to say that most of Argentina’s economy was agricultural during the country’s apogee, so the original problem in Argentina’s economy must be linked to it: Somehow, Argentina’s agricultural productivity slowed down, and the economy never fully moved on from its dependence on it. Why?
Argentina’s economy went through a massive economic boom starting around 1880.
Compare that with this:
Crop production boomed in the late 1800s: Wheat acreage increased by ~5x between 1890 and 1910.2 93% of the increase in agricultural production until 1930 was due to the addition of new arable land. But that growth decelerated heavily in the early 1900s:
Why? A big factor was land:
So what happened is that, in the late 1800s and early 1900s, there was a massive agricultural boom in Argentina, and people raced to convert new land from pasture into cropland. This lasted until the 1910s, when all the good land was taken.
This growth in cropland until the 1910s was furthered by other factors:
A wave of European immigrants arrived to work the land and the cattle
Landowners bought agricultural machinery
They also sourced genetically superior cattle
Argentina built its railroads around that time
Refrigeration technology started appearing, after being invented in the 1860s in the US
Steam boats and bigger ships allowed for cheaper transportation of cargo overseas
The combination of these last three reduced the cost of transportation from ~40% in the 1880s to ~10% before WW1.
So more farmers with better machinery produced more crops, while better cattle produced more meat, leather, and wool, all of which could now be transported more cheaply to Buenos Aires, and from there to the world. On the eve of WW1, Argentina’s exports per capita were 2x those of the US! By the 1920s, these developments rendered Argentina’s agricultural yields similar to those in the US.
Dig a bit deeper, though, and differences between the US and Argentina become apparent:
Why were Argentinian crop yields lower than the US’s until the early 1900s?
By the time Argentina started planting crops, the US had been doing it for centuries in the East Coast and in the Midwest. Why so late in Argentina?
Argentina had a much longer tradition of ranching than farming. Why?
I mentioned that Argentina started building its railroads in the late 1800s. By then, the US was already criss-crossed with railroads. Why the disparity?
The US’s population had been growing dramatically for over a century by the time Argentina’s started growing. Why?
Argentina’s agricultural land was more concentrated than in the US. Why?
The US was in full Industrial Revolution by the late 1800s, when Argentina was still agrarian. Why?
Answering these questions will get us closer to understanding why Argentina is poorer today than it could have been.
By the early 1914s, the average farm in Argentina was much bigger than in the US or Canada.
Just 2.5% of landowners held half of Argentina’s farmland! Why? The typical answer to this is:
“Institutions!”
Hold on, not so fast.
US East Coast farms were small, but those in states like Texas, Oklahoma, Kansas, or Missouri were much bigger—just 33% smaller than those in the Argentinian Pampas. Why? The climate in the Pampas is most similar to the climate in these Midwest states.
The rain in the Pampas region is more like that in the ranching part of the US Midwest:
Also, whereas the Mississippi Basin irrigates the US Midwest, the Rio de la Plata Basin doesn’t irrigate the Pampas, which must rely mostly on rain for agriculture.
Less rain means less irrigation, and a harder time growing grains, but enough for grasses, which begets ranches.
Of course, this also meant that the Pampas didn’t have the navigable waterways of the Mississippi, which meant grain couldn’t be easily transported by boat to the sea. In fact, there was no easy way to transport grain to the coast because there weren’t even railroads in Argentina until the late 1800s. The only way to transport food production to Buenos Aires (the port to the world) was by making the food walk—that is, to have cattle. But as we mentioned before, cattle could hardly be exported because meat couldn’t be refrigerated until the late 1800s.
Additionally, as we just saw, the big wave of immigration into Argentina started late in the 1800s, so there weren’t many farmers to take care of farms anyway. Ranching requires fewer workers per acre, so it was a much more reasonable solution in a world of near-infinite land and limited people.
Ranches have economies of scale: The bigger the ranch, the more cattle heads, and the fewer cowboys / gauchos needed to take care of them.
So these are most of the reasons why Argentina had lots of ranching and little crop production until the 1800s. We’re just missing one.
We saw that the majority of the farm size gap between the US and Argentina was due to geography, but not all, as Argentinian farms are still bigger than in the US region where they’re biggest. This paper suggests that the other cause of big farms was institutions: Spain and the UK had different ones, and they transposed them into Argentina and the US respectively.3
2025-10-22 09:25:11
I visited Navier last week during the Progress Conference:
This is their boat:
2025-10-16 23:22:47
Encuentra este artículo en español debajo del inglés.
Argentina used to be rich:
Its capital, Buenos Aires, was “the Paris of South America”.
For decades, Argentina (which means “the country of silver”) was among the richest countries on Earth—richer than France, Germany, Japan, or Italy:
Millions of Europeans flocked there during its Belle Époque, dreaming of being “as rich as an Argentine”.
But then, this happened:
Not only did the Western world leave Argentina behind. Traditionally poorer countries like Chile and China are now richer! And Brazil is catching up!
How is this possible?
Because, unlike most countries I write about, Argentina is poor despite its amazing geography. With better management, it could become the United States of Latin America. Here’s why.
The US is big, but Argentina isn’t too far behind—they’re the world’s 4th and 8th biggest country respectively. Argentina is much bigger than most people realize! It can easily contain France, Spain, Italy, Germany, and over 20 more European countries.1
Argentina claims to be quite a bit bigger, though.
With such a great size comes massive resources and defensibility.
The defensibility of the US and Argentina are surprisingly similar.
One advantage that Argentina has is that it’s even more isolated than the US.
The Pacific is too big for any threat trying to cross it, and Argentina’s western neighbors are even farther than the US’s (Japan is much closer to the US than New Zealand is to Argentina). And of course, Australia and New Zealand are more culturally aligned (and hence less threatening) than the US’s “neighbors”, Russia and China.
The Atlantic Ocean is not as big as the Pacific, but nevertheless much too vast for big powers to threaten Argentina from afar. Again, the US is close to the action (to Europe and Russia), while Argentina’s neighbors on the other side of the Atlantic are much poorer and weaker African countries. As a result, there have been very few naval battles on the coasts of Argentina.
Argentina has no neighbors to its south, and no threat can come from frozen Antarctica. Plus, the Antarctic Ocean is one of the coldest, windiest, most inhospitable oceans in the world. Argentina is safe there.
To its west and northwest, one of the tallest mountain barriers on earth protects Argentina from Chile and Bolivia, the Andes:
That mountain range is pretty desertic, too. No army can pass to invade Argentina from there.
To the north, the border with Paraguay is quite flat, but if anyone should be afraid, it’s Paraguay, as Argentina’s economy dwarfs its own.
Paraguay already experienced this in the War of the Triple Alliance against Argentina, Brazil, and Uruguay, in which it lost over half of its population and nearly 40% of its territory.
Argentina only has one threat, but it’s significant.
Can you guess?
Brazil is much bigger than Argentina, in surface area (3x), population (4.5x), and economy (3.5x).
This means Argentina’s first (and nearly only) geostrategic priority is a good relationship with Brazil.
In Never Bet Against America, I highlighted one of the best sources of US power: The Mississippi River Basin.
Since the entire Mississippi river basin is quite flat, it doubles up as an amazing irrigation field for crops and the perfect highway to bring produce to world markets, as it’s the biggest network of natural navigable waterways in the world.
Well, Argentina is the same!
It has a huge flat plain in warm and temperate climates, which is ideal for growing lots of food.
It’s flanked by two mountain ranges that concentrate water into a navigable river basin that reaches the ocean and makes transportation dirt cheap.
And if you think it’s a coincidence, think again, for both lateral mountain ranges have the same origins in the US and Argentina! On the western side, we find the tall mountain ranges.
That’s because they’re young, the product of the ongoing subduction of oceanic plates (the Pacific plate is pushing Cocos and Nazca eastwards) under continental plates (the North and South American ones).
Meanwhile, to the east, the Appalachians, the Canadian Shield, the Brazilian Shield, and Africa used to be part of the same ancient continent!
And in between? Both North and South America had inland seaways in the past!
And this is why both areas are low-lying flat plains, with similar soil quality: They formed the same way! A sea formed in between mountain ranges, sediments accumulated, and after the sea receded, rivers and wind slowly deposited more sediments.
Here are the resulting soils in North and South America:
This is the result of these amazing soils:
Of course, for this type of agriculture, you need more than flat terrain full of sediments and great rivers. You need the right climate, including proper temperature and precipitation.
Not only do the US and Argentina have a similar geography for the same geological reasons. They’re also at similar latitudes, just on opposite sides of the equator!
Let’s fold the map around the equator:
This is the key reason why the main climates of these countries are so similar:
Due to the rotation of the Earth, the prevailing winds around the globe look like this:
This makes the US West Coast, the Amazon, and southern Chile very wet. But these rains also affect the north of Argentina, feeding the Río de la Plata basin, and dropping tons of water on the eastern Andes:
And that’s why northern Argentina gets a lot of rain (and is therefore much greener), while the south is drier and is browner, with more grasses.
The US has a sea to its south that affects the rains,2 so instead of a north-south difference, it has an east-west one. This determines the type of food it produces:
The equivalent for Argentina is agriculture in the north and ranching in the south:
And that’s why you get cowboys in both the US and Argentina—gauchos!
In other words, the US has the Great Plains, Argentina has the Pampas. And with their similar soils and climates, they can produce and export inordinate amounts of food.
Compare Argentina’s farmland with the rest of South America’s!
Each dollar invested goes much further in Argentina than anywhere else in South America, because it’s much easier and cheaper to build on flat land. You don’t need to level the ground, build retaining walls, fill slopes, displace much soil, build deep, deal with uneven foundations, break hard stone, spend a lot to ship materials and machinery, risk landslides, or pay high insurance premiums to cover for natural risks.
As a reminder, water transportation is 10-30x cheaper than over land, and yet just halving transportation costs can increase trade by up to 16x! That means water transportation can make a region hundreds of times richer. US and Argentinian farmers can make much more money, accumulate more wealth, and invest more easily than those from other countries.
This is why it’s so important that the Río de la Plata system is so navigable:
This is crucial in this area, which produces lots of agricultural and mining products that cost little but are heavy—therefore expensive to transport by road. Without this river system, it’s possible that none of these products could be successfully exported.
Compare this to Russia, the biggest country in the world with some of the best farmland. It should be the biggest exporter of food in the world. Instead, it sometimes runs out of food because it spoils due to bad weather and transportation!
Argentina, Paraguay, Uruguay, and Brazil fought over their borders after the independence of Latin America in the first half of the 1800s. But after the War of the Triple Alliance, they were done. The countries haven’t gone to war with each other in over 150 years, and a key reason for this is the Río de la Plata system.
As we discussed in Never Bet Against America, the Mississippi is a cultural and political unit because local populations constantly trade with each other and their trading interests are the same. This was not the case on the East Coast of the US (as rivers flow from the mountains to the coasts), and isn’t the case in Europe either, which is why so many nations emerged there and they fought so many wars.
The Río de la Plata is the same, a single river system that promotes trade, cultural exchange, communication, and cooperation. It’s the second biggest interconnected navigable river waterway in the world after the Mississippi, and Argentina holds the key to the system: Buenos Aires.
Look at the Río de la Plata:
It is not a coincidence that Buenos Aires, Argentina’s capital, is found right where the Paraná and Uruguay rivers meet to form the Río de la Plata: It’s the perfect hub to trade all the products from the north of Argentina, Paraguay, southern Brazil, and Uruguay.
This gives Buenos Aires an incredible economic clout and lots of leverage on all its northern neighbors, who must go through Argentinian waters and the Buenos Aires port to trade with the world.
Chile is one of the biggest exporters of minerals (copper, lithium, silver, iron), but Argentina is not. Yet they’re both on the same mountain range!
Chile has been a bit luckier here, because the rains on their side have created more erosion and exposed more ores, which are easy to transport to the nearby coast. Argentina needs more prospecting and infrastructure to bring trains, roads, and water to its mining regions. This is possible but it requires more investment.
With all these assets, Argentina could be a world superpower. But it’s not. What happened? We saw that Argentina’s GDP per capita is much lower than the US’s despite having a similar geography. But it’s not the only difference. Here is Argentina’s population density:
You can notice a few things:
See that huge spike? Buenos Aires concentrates a huge share of Argentina’s population: 38%!
The dark circle represents the Pampas, with the good climate we saw. But it has very few big cities. Look how it compares to the US’s Midwest.
Outside of the Pampas, you can see population along the fall line of the Andes mountains
This is very typical of cities: People live on flatlands because it’s easier and cheaper, but stay close to mountains to benefit from their resources.
Outside of Buenos Aires and the Andes’ foothills, there is very little population, even in areas that have a similar climate in the Northern Hemisphere and are more populated there!
The US is not very densely populated: Germany hosts 240 people per km2, while the US only has 37 (6.5x less). Argentina is less populated still, at 16.8 people per km2, or 55% less than the US and 93% less than Germany! If it had the same population density as the US, it would be a sizable 94M strong. If it had Germany’s, it would have 680M!
Why so unpopulated despite ideal land?
Over the last 250 years, while immigrants were pouring into the US, Argentina was only growing as fast as Canada, which has a much worse climate.
What can we make of all of this?
Argentina is basically the US of the Southern Hemisphere:
Very similar defensibility, with oceans, mountains, and ice on three sides, and weak neighbors on the other
The huge exception is Argentina’s neighbor, Brazil.
Very similar land and climate, allowing for a world-class agriculture industry and cheap infrastructure.
A very similar navigable river basin in the heartland, helping reduce transportation costs, and creating wealth and political harmony, all controlled from Buenos Aires.
Huge, untapped mineral deposits.
Despite these striking advantages, Argentina has not been able to translate them into immigration and wealth. Geography is not destiny.
One way to put it: Geography is the hardware, our institutions are the software. When both work well, a country is unstoppable. With bad hardware but intelligent software, a country can go far. But it’s easy to waste good hardware with very bad software. This is what Argentina has done. Another way to put it: Geography is the chessboard: How you play on it determines your success, and Argentina hasn’t played very well. Why? This is what we will explore in the next article. Subscribe to read it!
Versión en español:
Argentina era rica:
Su capital, Buenos Aires, era “el París de Suramérica”.
Durante décadas, Argentina (“país de la plata”) fue uno de los países más ricos del mundo—más que Francia, Alemania, Japón o Italia.
Millones de europeos emigraron allí durante su Belle Époque, soñando con “ser tan ricos como un argentino”.
Pero ocurrió esto:
Argentina se ha quedado atrás en comparación con el resto del mundo occidental. Países tradicionalmente más pobres, como Chile o China, son hoy más ricos. ¡Y Brasil la está alcanzando!
¿Cómo es posible?
Porque, a diferencia de la mayoría de países de los que suelo escribir, Argentina es pobre a pesar de su geografía extraordinaria. Con una mejor gestión, podría convertirse en los Estados Unidos de América del Sur.
He aquí el porqué.
Estados Unidos es grande, pero Argentina no se queda tan atrás: son, respectivamente, el cuarto y el octavo país más extensos del mundo. Argentina es mucho más grande de lo que la mayoría se imagina. Podría contener sin problema a Francia, España, Italia, Alemania y más de veinte países europeos adicionales.
Argentina afirma ser aún más grande.
Este tamaño gigantesco le otorga recursos inmensos e impregnabilidad.
La capacidad de defensa de Estados Unidos y Argentina es sorprendentemente similar.
Una ventaja argentina es que se encuentra aún más aislada del resto del mundo.
El Pacífico es demasiado vasto para que vecinos del otro lado puedan amenazar a Argentina. Además, esos vecinos están incluso más lejos que los de EE. UU. (Japón está mucho más cerca de Estados Unidos que Nueva Zelanda de Argentina).
Y Australia y Nueva Zelanda están más alineadas culturalmente —y, por tanto, son menos amenazantes— que los “vecinos” de Estados Unidos, Rusia y China.
El Atlántico no es tan inmenso como el Pacífico, pero sigue siendo demasiado ancho para que potencias lejanas puedan proyectar fuerza hacia Argentina.
De nuevo, Estados Unidos está más cerca de los focos de tensión (Europa y Rusia), mientras que los países al otro lado del Atlántico de Argentina son naciones africanas más pobres y débiles. Resultado: muy pocas batallas navales se han librado en las costas argentinas.
Argentina no tiene vecinos al sur, y ninguna amenaza puede llegar desde la helada Antártida. Además, el océano Antártico es uno de los más fríos, ventosos e inhóspitos del planeta. Por allí, Argentina está completamente segura.
Al oeste y noroeste, una de las barreras montañosas más altas del mundo protege a Argentina de Chile y Bolivia: los Andes.
Esa cordillera, además, es bastante desértica. Ningún ejército puede atravesarla para invadir el país.
Al norte, la frontera con Paraguay es bastante llana, pero si alguien debe tener miedo, es Paraguay: la economía argentina supera con creces a la suya.
Paraguay ya lo experimentó durante la Guerra de la Triple Alianza contra Argentina, Brasil y Uruguay, en la cual perdió más de la mitad de su población y cerca del 40% de su territorio.
Argentina solo tiene una amenaza, pero es significativa.
¿Puedes adivinar cuál?
Brasil es mucho más grande que Argentina: tres veces en superficie, 4,5 veces en población y 3,5 veces en economía.
Esto significa que la primera —y casi única— prioridad geoestratégica de Argentina es mantener una buena relación con Brasil.
En Never Bet Against America, señalé una de las mayores fuentes del poder estadounidense: la cuenca del río Misisipi.
Como toda esa cuenca es bastante llana, sirve tanto como un excelente sistema de riego agrícola como una autopista natural para transportar productos a los mercados mundiales, ya que es la red de vías navegables naturales más grande del planeta.
Argentina es igual!
Tiene una vasta llanura cálida y templada, ideal para producir alimentos en cantidad.
Está flanqueada por dos cordilleras que concentran el agua en una cuenca fluvial navegable que desemboca en el océano, haciendo que el transporte sea baratísimo.
¿Casualidad? Qué va. Ambas cadenas montañosas laterales tienen los mismos orígenes en Estados Unidos y Argentina. En el lado occidental se encuentran las cordilleras altas:
Estas montañas son tan altas porque son jóvenes, producto de la subducción actual de las placas oceánicas (la placa del Pacífico empuja las de Cocos y Nazca hacia el este) bajo las placas continentales (la norteamericana y la suramericana).
Mientras tanto, al este, los Apalaches, el Escudo Canadiense, el Escudo Brasileño y África formaban parte del mismo antiguo continente.
?Y entre ambas cordilleras? ¡Tanto Norteamérica como Suramérica tuvieron mares interiores en el pasado!
Y esta es la razón por la que ambas zonas son llanuras bajas y planas, con suelos de calidad similar: se formaron del mismo modo! Un mar se formó entre las montañas, se acumularon sedimentos, y cuando el mar retrocedió, los ríos y el viento siguieron depositando más.
Éste es el resultado en la tierra de América del Norte y del Sur:
Éste es el resultado de esos suelos excepcionales:
Por supuesto, para este tipo de agricultura no basta con un terreno llano lleno de sedimentos y grandes ríos. Hace falta también el clima adecuado: temperatura y precipitaciones en el punto justo.
Estados Unidos y Argentina no sólo tienen geografías parecidas por razones geológicas. También están en latitudes similares, solo que a lados opuestos del ecuador!
Doblemos el mapa alrededor del ecuador:
Esta es la clave de por qué los climas principales de ambos países son tan parecidos:
Debido a la rotación de la Tierra, los vientos dominantes del planeta son así:
Esto hace que la costa oeste de Estados Unidos, la Amazonia y el sur de Chile sean muy húmedos. Pero esas lluvias también afectan al norte de Argentina, alimentando la cuenca del Río de la Plata y dejando enormes cantidades de agua sobre los Andes orientales.
Y por eso el norte de Argentina recibe mucha lluvia (y es, por tanto, más verde), mientras el sur es más seco y más pardo, con más pastos.
Estados Unidos tiene un mar al sur que influye en las lluvias, lo que cambia la predominancia pluvial norte-sur por este-oeste. Esto determina el tipo de alimentos que produce.
El equivalente argentino es la agricultura en el norte y la ganadería en el sur.
Y por eso hay cowboys en Estados Unidos y gauchos en Argentina!
En otras palabras: Estados Unidos tiene las Grandes Llanuras, Argentina tiene las Pampas. Y con tierras y climas tan parecidos, ambos pueden producir y exportar cantidades desmesuradas de alimentos.
Compara la superficie agrícola de Argentina con la del resto de Suramérica:
Cada dólar invertido rinde mucho más en Argentina que en cualquier otro lugar de Suramérica, porque es mucho más fácil y barato construir en terreno plano: no es necesario nivelar el suelo, levantar muros de contención, rellenar pendientes, mover grandes volúmenes de tierra, excavar profundamente, lidiar con cimientos irregulares, romper piedra dura, gastar demasiado en transporte de materiales y maquinaria, asumir riesgos de deslizamientos, ni pagar primas de seguro elevadas para cubrir riesgos naturales.
Recuerda que el transporte por agua es entre 10 y 30 veces más barato que el terrestre, y que reducir a la mitad los costos de transporte puede multiplicar el comercio hasta 16 veces! Si combinas estos efectos te das cuenta de que un buen transporte fluvial puede hacer que una región sea cientos de veces más rica. Los agricultores estadounidenses y argentinos pueden ganar mucho más dinero, acumular más capital e invertir con mayor facilidad que los de otros países.
Por eso es tan importante que el sistema del Río de la Plata sea tan navegable:
Esto es crucial en esta región, que produce muchos bienes agrícolas y mineros de bajo valor unitario pero muy pesados, por lo tanto caros de transportar por carretera.
Sin este sistema fluvial, es posible que ninguno de estos productos pudiera exportarse de forma rentable!
Compara con Rusia, el país más grande del mundo y con algunas de las mejores tierras agrícolas. Debería ser el mayor exportador de alimentos del planeta. En cambio, a veces se queda sin ellos, porque se echan a perder por las malas comunicaciones del país
Argentina, Paraguay, Uruguay y Brasil disputaron sus fronteras tras las independencias latinoamericanas en la primera mitad del siglo XIX. Pero después de la Guerra de la Triple Alianza, no se han vuelto a enfrentar en más de 150 años, y una razón clave de esa paz es el sistema del Río de la Plata.
Como vimos en Never Bet Against America, el Misisipi constituye una unidad cultural y política porque las poblaciones locales comercian constantemente entre sí y comparten los mismos intereses económicos. No ocurría lo mismo en la costa este de Estados Unidos (donde los ríos fluyen de las montañas al mar), ni ocurre en Europa, motivo por el cual allí surgieron tantas naciones y tantas guerras.
El Río de la Plata cumple el mismo papel: es un único sistema fluvial que favorece el comercio, el intercambio cultural, la comunicación y la cooperación. Es la segunda red navegable interconectada más grande del mundo después del Misisipi, y Argentina posee la clave del sistema: Buenos Aires.
Mira el Río de la Plata:
No es casualidad que la capital argentina esté justo donde el Paraná y el Uruguay se unen para formar el Río de la Plata: es el centro perfecto para comerciar todos los productos del norte de Argentina, Paraguay, el sur de Brasil y Uruguay.
Esto le otorga a Buenos Aires un peso económico enorme y una gran capacidad de influencia sobre todos sus vecinos del norte, que deben pasar por aguas argentinas y por su puerto para comerciar con el mundo.
Chile es uno de los mayores exportadores del mundo de minerales (cobre, litio, plata, hierro), pero Argentina no. Y, sin embargo, ambos países comparten la misma cordillera!
Chile ha tenido algo más de suerte en este aspecto, porque las lluvias de su lado han generado más erosión y expuesto más vetas minerales, que además están cerca de la costa y son fáciles de transportar. Argentina, en cambio, necesita más prospección e infraestructura para llevar trenes, carreteras y agua a sus regiones mineras.
Es factible, pero requiere más inversión.
Con todos estos recursos, Argentina podría ser una superpotencia mundial.
Pero no lo es. ¿Qué pasó?
Vimos que el PIB per cápita de Argentina es mucho más bajo que el de Estados Unidos, pese a tener una geografía similar. Pero no es la única diferencia. Observa la densidad de población argentina:
Hay varias cosas que saltan a la vista.
Ese enorme pico representa Buenos Aires, que concentra una parte desproporcionada de la población: 38%!
El círculo oscuro marca las Pampas, con el buen clima que vimos antes.
Pero allí hay muy pocas ciudades grandes. Compáralo con el Midwest estadounidense.
Fuera de las Pampas, se nota población a lo largo de la línea de contacto con los Andes.
Esto es muy típico: la gente vive en las llanuras —porque es más fácil y barato—, pero cerca de las montañas, para aprovechar sus recursos.
Fuera de Buenos Aires y del pie de los Andes, hay muy poca población, incluso en zonas con climas equivalentes a otros lugares del hemisferio norte que sí están mucho más poblados.
Estados Unidos no es particularmente denso: Alemania tiene 240 habitantes por km², mientras que EE. UU. solo 37 (6,5 veces menos). Argentina está aún menos poblada, con 16,8 habitantes por km², es decir, 55% menos que Estados Unidos y 93% menos que Alemania! Si tuviera la misma densidad que Estados Unidos, su población sería de unos 94 millones. Con la densidad de Alemania, alcanzaría los 680 millones!
¿Por qué están estas tierras ideales tan despobladas?
Durante los últimos 250 años, mientras los inmigrantes inundaban Estados Unidos, Argentina crecía al ritmo de Canadá, que tiene un clima mucho más duro.
¿Qué podemos concluir de todo esto?
Argentina es, en esencia, el equivalente de Estados Unidos en el hemisferio sur:
Defensibilidad muy parecida, con océanos, montañas y hielo en tres flancos, y vecinos débiles en el restante.
La gran excepción es su vecino, Brasil.
Tierras y clima muy similares, que permiten una agricultura de clase mundial y una infraestructura barata.
Una cuenca fluvial navegable en el corazón del país, que reduce costes de transporte, genera riqueza y estabilidad política, y está controlada desde Buenos Aires.
Enormes yacimientos minerales aún sin explotar.
A pesar de todas estas ventajas impresionantes, Argentina no ha logrado transformarlas en inmigración ni en prosperidad. La geografía no es destino.
La geografía es el hardware; las instituciones son el software. Cuando ambos funcionan bien, un país es imparable. Con mal hardware pero buen software, también puede avanzar mucho. Pero es fácil desperdiciar un gran hardware con un software pésimo. Eso es lo que ha hecho Argentina.
Otra forma de decirlo: la geografía es como un tablero de ajedrez que determina el juego. Cómo se juega en él determina el resultado.
Y Argentina no ha jugado bien.
¿Por qué?
Eso es lo que exploraremos en el próximo artículo.
I played around to see how many European countries I could fit in Argentina, comparing its landmass of ~2.8M km2 to the European countries ranked from smallest to largest. I took this list and excluded Akrotiri, Dhekelia, South Ossetia, Abkhazia, Transnistria, European Turkey and European Kazakhstan.
To be equivalent, Argentina would need a sea to its north, since it’s on the other side of the equator.
2025-10-10 22:37:50
In the previous premium article, we saw how Europe had no gold and silver left in the Middle Ages, and how that triggered a massive search for these precious metals which transformed the continent. Europe discovered the Americas and reinvented mining in Central Europe, flooding the continent with silver. But this also had massive, unpredicted side-effec…
2025-10-07 20:00:23
In Internet Will Kill the Nation-State, we explored how communication technologies destroyed the feudal system and the Church, and created the nation-state. In Pax Mercatus, we saw how agricultural and transportation technologies also contributed. Finance had a major effect as well: We saw in How Silver Made Chinese Empires the ways in which silver made and unmade Chinese empires. In Europe, silver also triggered the discovery of America, a technological explosion, and a runaway chain of events that replaced feudalism with capitalism and nation-states. If you understand this, you’ll be able to understand why nation-states are threatened by cryptocurrencies today, and how their inevitable success will weaken nation-states. In this premium article, we’re going to explore how Europe starved for silver, and how the reaction to this flooded the world with silver. In the next article, we’re going to look at the consequences in the modern era, and the takeaways for today.
It’s 1460, and Europe is starving for money. Silver and gold are so scarce that their value is skyrocketing compared to other commodities, so their prices plummet. With deflation, everything will cost less tomorrow than today, so people hoard their precious metals. The more they do so, the less gold and silver are in circulation, the more their value climbs, the more prices drop, and the more the economy grinds to a halt: Without money, people must resort to barter, which slows down trade. Bankers stop lending because it’s unclear whether they’ll be paid back. Investment drops. The economy grinds to a halt.
How did we get here?
A century earlier, around 1350, the Black Death spread across Europe, killing 25-50% of its population.
Men were dying, but coins were not.—David Herlihy
For a century, there was more coin than people, so they didn’t notice when silver and gold production slowed down. But it did; first, because of fewer miners.
Second, because mines ran out of gold and silver.
Third, the supply of gold from Africa collapsed after the Mali Empire civil war in the 1360s and the Songhai Empire instability.
Fourth, mines in southeastern Europe, in Serbia and Bosnia, fell to the Ottoman Empire.
So new sources of silver and gold shrunk. Meanwhile, silver sinks continued. Europeans kept buying Chinese silks, Indian cotton cloth, dyes, and spices, Middle Eastern sugar and drugs… But Europeans had little to export: wine, slaves, wood, salt, and little more. Italian traders paid one third in merchandise and two thirds in precious metals.
As silver and gold became scarcer, people started debasing the currency: Diluting it with other metals, clipping its edges…
Between the Black Death, the scarcity of metals, the debasement of currency, the incessant warfare, and taxes, people did everything they could to hoard and hide their precious metals, whether through hidden coins, filled chests, plates, and any other conceivable way.
Fear that debtors would not repay loans reduced the issuance of loans. Without them, trade and investment stopped, further tanking the economy and fueling the vicious cycle. Deflation across Europe reached 35%.
But these issues had far-reaching consequences. A huge one was feudalism.
If you’re a farmer, how can you sell your harvest if nobody has coin? As a noble, how can you hire somebody to work on your lands if you can’t pay them? You pay in kind, which in this case means with the harvest itself. So in large part, feudalism was a system of duties because there was no money.
So how did Europe get out of this?
When we say some resource is exhausted, what we generally mean is… with current technology. People abandoned mines when they couldn’t figure out how to reach more ore, or when they couldn’t get more metal out of them.
One of the most typical issues was that ore is in mountains, but mountains also have something else: rain. Mining shafts would get flooded, so mining was restricted to the surface.
As silver became more and more valuable, flooded mines suddenly became attractive. How could we get this water out so we can keep mining?
This new tech is so incredible that I couldn’t stop myself from playing with these tools. This was the original:
This is a photorealistic rendition:
And this is a 3D version of what these works might have looked like:
Romans knew about waterwheels and pumps, but they never used them for extracting water out of mines. Central Europeans put them together into ever more complex systems to dry up mines and extract more ore.
Streams were not available everywhere, though. How could Central Europeans lift water where there was no stream to power their wheels? With horses:
The horse gin could pull humans, ore, and water out of the hole, but how did miners get the ore out of the mine? In the 1500s, they were already using carts and tracks.
Minecart from the 16th century, found in Transylvania. Source. Versions of this with iron fittings were already described in De Re Metallica in the 1500s.
Many related technologies, invented earlier, were rediscovered during the Great Bullion Famine and became popular, spreading across Central Europe first and later all of Europe.
Another example is the camshaft, which allows rotation into vertical motion.
It enabled the spread of the stamp mill:
Which enabled crushing ore much more efficiently. Blast furnaces allowed the extraction of more bullion from the ore (bullion is the processed metal, as pure as you can get it, but not yet shaped into money. Ingots are a good example). All these are precursors of the industrial revolution that saw massive development as a result of the Great Bullion Famine, which makes you wonder: If there had been no Black Death, the Bullion Famine would have hit earlier. Would modern world development have happened earlier?
But there were two significant innovations that allowed Europe to increase its silver production by 5x between the 1460s and the 1540s.
Both innovations were new processes to extract more silver from ore. The first one is called liquation, and was first discovered in southern Germany in the mid-1400s, just as the Great Bullion Famine was hitting hardest. Of course, that’s not a coincidence: It was the bullion famine that was spurring mining innovation. Within 15 years, it had spread throughout Germany, Poland and the Italian Alps.
For thousands of years, people knew how to use lead to extract silver, in a process called cupellation. But there was no more lead-silver ore left to mine economically. There was, however, a lot of copper with silver. Metallurgists just didn’t know how to separate them. This is where liquation came in: Metallurgists learned how to liquefy the metal to a high enough temperature (thanks to blast furnaces) so that copper would rise to the top and silver would concentrate at the bottom. They would take out that bottom with lots of silver (still mixed with some copper), and then they’d add a lot of lead to that and melt it again. Silver prefers lead to copper, so it would attach to the lead. Once they obtained the silver-lead mix, smiths used the existing cupellation process to extract the silver from the lead.
Slowly, Europe’s supply of silver increased, but it wasn’t enough. Europeans were desperate to get more silver. This was one of the key drivers behind the expeditions to America.
We’ve already explored how Portugal’s discovery of an alternative path to Asia was made to bypass the Ottomans, who had taken control of Istanbul and blocked Christian trade through the Silk Road. But that trade still required gold and silver, and Europe didn’t have any. So the Portuguese were also looking for gold and silver deposits to mine. They found some in Western Africa—remember the Mali Empire—but that was not enough.
Now you know why Spanish Conquistadors were so obsessed about finding gold and silver in the Americas. It was not just a matter of greed. It was an existential matter for Europeans after the Great Bullion Famine. This is why Columbus mentioned gold 65 times in his diaries!
Spaniards didn’t find much gold in the Americas, but they did find silver. Unfortunately, the high-quality silver ore quickly ran out, and Spaniards were left with ore that didn’t contain enough silver to be extracted.
That’s when they invented a new technique to get more silver from the lower quality ore: amalgamation, via the patio process.
The concept is quite similar to liquation, except you don’t need to melt the metals, and you use mercury instead of copper and lead. Mercury binds to silver and gold, but not base metals like iron, copper, or lead. So the Spaniards took the finely crushed ore, added salt to bind to the silver, then added mercury to bind to the silver salts, and finally used cupellation to separate mercury and silver (or gold). It’s called patio (“courtyard” in Spanish) because all that stuff was just mixed in shallow pools, treaded on to mix well, and left for the sun and wind to bake. This was the result:
We already covered the consequences of this massive supply on China, but in Europe the consequences were even more intense:
The rise of the Spanish Empire
Its destruction
The rise of some specific families that changed geopolitics forever
The winning countries were not the obvious ones
This undermined feudalism
The nature of wars changed, and that ushered in nation-states
The Industrial Revolution was made possible
We’ll cover these in the next article!
2025-10-03 19:02:47
This article is the third on the topic of why warm countries are poorer. The first laid out the theory, and the second and this one address the comments.
In the previous article, we discussed why many alleged examples against the theory were wrong, including examples like rich mountainous countries (eg, Switzerland, Austria), poor low-lying countries (eg…
