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By Root 1812 0

in the War of the Pacific (1879–83) was often attributed to the “whiteness” of the Chileans, as compared with the “Indians” of Bolivia and Peru, the defeated nations. In Argentina, a popular writer wrote in 1903 that mestizos and mulattos were both “impure, atavistically anti-Christian; they are like the two heads of a fabulous hydra that surrounds, constricts and strangles with its giant spiral a beautiful, pale virgin, Spanish America.” And throughout Latin America, landowners preferred their daughters to marry penniless peninsulares (arrivals from Spain) rather than wealthy criollos (American-born Spaniards). The fact of being born in the Old World was supposedly good proof of being “pure white”—something that could not be assumed of even the wealthiest members of the colonial aristocracy, “whose ancestors had been living for years alongside not just the Indians but also the blacks.”

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Today, while ethnic lines in Latin America are much more muted than elsewhere in the developing world, the phenomenon of a market-dominant, ethnically distinguishable minority—here, the light-skinned, landowning (and increasingly, stockowning), Western-educated elite—remains an important feature of all but a few Latin American countries.

Mexico: Dark-Skinned Poverty,

Light-Skinned Plutocrats

Pigmentocracy certainly thrives in Mexico, where I spent a good deal of time between 1989 and 1991. During that period I was an associate with a Wall Street law firm, working around the clock representing the Mexican government in the landmark privatization of Teléfonos de México (Telmex), Mexico’s national telephone company. Almost without exception the Mexican officials, lawyers, and business executives we dealt with were light-skinned and foreign educated, with elegant European names. Meanwhile, the people doing the photocopying and cleaning the floors were all shorter, darker, and plainly more “Indian-blooded.”

While considerable social fluidity exists in Mexico, it is also true that lightness of skin correlates directly and glaringly with increasing wealth and social status. Mexico’s roughly 9 to 10 million indigenous peoples, about one-tenth of the population, have the highest rates of illiteracy and disease in the country. In the state of Chiapas, just thirty-five years ago, Amerindians were forbidden to walk on sidewalks or look lighter-skinned Mexicans in the eye. Not surprisingly, according to Mexican writer Enrique Krauze, Indian women desire to have children with mestizos—“not to betray their race but out of a desire to spare their progeny a bleak future.”

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At the other end of the spectrum, all of Mexico’s most lucrative corporate sectors—oil, finance, media and telecommunications, heavy industry, luxury hotels, transportation—are controlled by a small, clubby, light-skinned market-dominant minority who play golf with each other on weekends (and often weekdays). While working on Telmex, I remember being a little surprised when our local counsel, an elegant, baritone-voiced, European-looking man by the name of Alejandro Duclaud Gonzalez de Castilla, married the daughter of one of Telmex’s (equally elegant) senior officers. I was even more surprised when, in the spring of 2001, I learned that Alejandro—whom I liked enormously and had spoken with regularly for two years—was being sued by the U.S. Securities and Exchange Commission, along with his wife, his brother, and other family members, for allegedly making nearly $4 million from insider trading.

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My surprise, however, was probably naïve. Although insider trading is of course illegal, insider profiteering from developing-world privatization is the rule rather than the exception. Back in the early nineties, I believed that the proceeds of privatization, as a World Bank official put it, would go to roads, “potable water, sewerage, hospitals, and education to the poor.” Like many in the 1990s, however, I was viewing emerging-market privatization through a rose-colored lens. Just a few years after the Telmex privatization was completed, Mexico City’s La Jornada