In 1700, Mexico Was as Rich as America. What Happened?

In 1610, a silver boomtown in the Andes was one of the biggest cities in the Americas, while English colonists in Jamestown were starving. By the best estimates, colonial Mexico was about as rich as the future United States as late as 1700. Today, the average American produces about six times as much as the average Mexican. So what happened? This video tests every popular explanation — Protestant vs. Catholic, "they don't work as hard," geography, and "the US stole it" — against the data, and finds something stranger: the most dangerous thing a society can stumble into is easy money. From forced labor at Potosí to bird-poop booms, hyperinflation, and a currency Brazil invented out of thin air, this is the 500-year story of how two halves of one hemisphere ended up worlds apart, and what it teaches about your own money. IN THIS VIDEO Why the English tried to copy Spain's playbook in Virginia — and why failing was the best thing that happened to them How a forced-labor boundary drawn in the 1570s still shows up in Peruvian household budgets today The Scottish con man who sold bonds for a country that didn't exist Why Brazil restricted land ownership two weeks after banning the slave trade How Argentina went from one of the richest countries on Earth to nine sovereign defaults The 1982 debt crisis, hyperinflation, and the clever trick that saved Brazil's currency Why Mexicans work about 400 more hours a year than Americans — and what that really proves The man who took a sledgehammer to his own country's army Six personal finance lessons from five centuries of booms and busts CHAPTERS 0:00 Potosí vs. Jamestown: The Bet You'd Lose 6:48 What Spain Found 14:29 England's Failed Copy 20:10 Sugar, Slavery, and the American South 26:59 The 400-Year Shadow 31:36 Two Revolutions, Two Outcomes 41:03 Poyais and the First Debt Crisis 46:03 Who Gets the Land? 53:53 Schools and Votes 57:58 Banks, Patents, and Railroads 1:02:54 Argentina: Rich, Then Not 1:08:25 Guano, Nitrates, and Rubber: The Resource Curse 1:17:07 Building Factories Behind Walls 1:24:33 1982: The Phone Call 1:30:13 Hyperinflation and the Imaginary Currency 1:39:25 Reform, Tequila, and Argentina's 2001 Collapse 1:46:10 The Commodity Supercycle and Venezuela 1:51:45 Was It America's Fault? 1:59:45 Culture, Work Ethic, and Geography 2:08:10 The Exceptions: Costa Rica, Uruguay, Hispaniola 2:13:59 Latin America in 2026 2:22:36 What This Means for Your Money 2:34:18 Back to Potosí KEY NUMBERS 1700: Mexico ~89% of US income per person (Coatsworth); by 1900, about a third 2026: US GDP per person ~6x Mexico in dollars, ~3.5x adjusted for prices (IMF) Literacy around 1900: US ~90% vs. Argentina 52%, Brazil ~26%, Mexico ~22% Mexico: ~72 heads of government between 1821 and 1900 Hyperinflation peaks: Bolivia ~11,750% (1985), Peru ~7,500% (1990), Argentina 3,000%+ (1989) Average hours worked per year: Mexico ~2,205 vs. US ~1,800 (OECD, 2025) Same Mexican worker earns ~2.5x more in the US, adjusted for prices (Clemens, Montenegro & Pritchett) Tax revenue: Latin America ~21.5% of GDP vs. ~34% OECD average (2022) SOURCES & FURTHER READING Engerman & Sokoloff, "History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World," Journal of Economic Perspectives (2000) Melissa Dell, "The Persistent Effects of Peru's Mining Mita," Econometrica (2010) Acemoglu, Johnson & Robinson, "The Colonial Origins of Comparative Development" (2001) and "Reversal of Fortune" (2002); Why Nations Fail (2012) Maddison historical GDP estimates; John Coatsworth on Mexican economic history Stephen Haber on banking and industrial concentration in Mexico and Brazil Clemens, Montenegro & Pritchett, "The Place Premium," Review of Economics and Statistics (2019) Federal Reserve History, "Latin American Debt Crisis of the 1980s" IMF World Economic Outlook (April 2026); OECD Revenue Statistics in Latin America and the Caribbean; ILO Labour Overview 2025 Disclaimer: The content on this channel is provided strictly for informational, educational, and entertainment purposes only. It is not financial advice.