It’s a twenty-two-year-old novel, and would probably be the last place one would look for economic forecasts or assessments. But on page 178 of his book, Caribbean (Random House, 1989), James Michener provides an insightful commentary on macroeconomics in the course of his contrast of the wealth of Spain and the wealth of England in the middle of the 17th Century:
“In Spain in these critical years, when its entire future hung in the balance, her galleons continued to bring in untold wealth while her artisans and shopkeepers languished. Up the Channel, English ships brought little or no gold, but did bring the produce of the new lands [the colonies] and took back to them the surplus goods produced by England’s shrewd and industrious citizens. Year by year Spain imported only bullion while the English exported and imported the goods by which men and nations live, and although that year English watchers must have envied the enormous fortune which Don Alfonso [Ledesma] delivered to Madrid, had they been all-wise they would have realized that their small trading ships were bringing to England the more important treasure.”
After Columbus had discovered the Americas, Spain had proceeded to pillage them of their mineral wealth, especially gold and silver. Much of the bullion was minted into currency and used to fund the wars Spain was fighting on various fronts. Its reliance upon riches it had not produced proved fatal in the end.
There is a lesson here. When a nation has its goods manufactured somewhere else just so they can be made more cheaply, its industrial and artistic energy quickly wanes. When a nation fabulously rich in resources sends them somewhere else just so they can be sold at a higher price, its people become frustrated and reliant on foreign goods themselves.
This little economic lesson of Michener’s should be taught on both sides of the 49th Parallel.