The rise of oligarchs
The Castillo family has dominated Central America for 500 years. The origin of the family can be traced back to the generation of Bernal Diaz del Castillo, who participated in the Spanish conquest war in Central America with the commander-in-chief Hernan Cortes, and also wrote conquest-related editions. Year history. Under the "feuding system", the Spanish monarch gave Castillo the current Guatemala, giving him the right to control all non-Christian labor in the fief. After the establishment of the Central American Brewery in 1886, the wealth of the Castillo family surged. In the past few decades, this brewery has been in a monopoly position in the country. The company gradually split into two independent large groups, and expanded its business to areas such as coffee, sugar, finance, amusement parks, and Pepsi bottling.
About 33 million people live in the "Northern Triangle" of Central America, namely Guatemala, El Salvador and Honduras. In their hearts, a family like Castillo is a special existence. For decades, the so-called "fourteen big families" that dominate the country's destiny have been circulating in the population of El Salvador. Guatemalan people often talk about the "eight big families", while the Honduran version is the "five big families." We don't know how many, but the social inequality and stagnation behind these legends are not fictional.
The Central American family is a special existence in the hearts of local people.
Here, poverty and violence are rampant, and the fragile government cannot solve it. The tide of immigrants going north is like an exhaust valve blown away by the pressure of despair. Family businesses are visible all over the world, but few businesses can dominate but not be trusted like the Central American family in the "Northern Triangle". There is no publicly listed family business in the region. Most companies are very hidden, and no one knows how rich their bosses are.
After civil war, military dictatorship, and democratic government, the relationship network of the Central American family in the region remains unbreakable. Although few families have held wealth and power for such a long time like Castillo, most of the surviving families have existed for at least a century.
In El Salvador and Guatemala, Spanish colonists sold indigenous farmers’ labor products such as indigo dye and silver to their home countries. But it wasn't until the advent of local coffee in the 19th century that agricultural exports flourished. The wealthiest families persuaded the government to pass laws to hand over public land to them. In addition, the relevant provisions of the "crime of wandering" force indigenous farmers to work for six months each year, and any form of resistance will be severely punished.
Honduras is different. In the early 20th century, the main crop here was not coffee, but bananas. Exports are controlled by foreigners, and companies like "United Fruit" build ports and roads in exchange for land. The result is that there is no agricultural upper class in the country. No wonder there is a popular joke among Hondurans: "We are so poor that we can't even support the oligarchs."
Such a deformed social contract is destined to be unsustainable. By the middle of the 20th century, popular uprisings had become widespread. The banana plantation workers in Honduras went on strike frequently. In 1944, the people of Guatemala overthrew the dictatorship and began a 10-year democratic experiment. But the flames of democracy were extinguished by a coup planned by the CIA, and Guatemala was plunged into a 36-year civil war. In 1979, a group of Salvadoran soldiers launched a coup with the support of the United States, aimed at combating the growing guerrillas in rural areas. Once the country is in conflict, the elites fled abroad.
In the 1990s, Central America ushered in a period of peace, and the economy of the "Northern Triangle" region became more active. Millions of migrants who fled during the Civil War began to send money to their hometowns. Family-run shopping malls and hotels emerged, and business and tourism developed. In Honduras, many elite families are beginning to get rich. The landlord’s family married other families and entered the business world from the agricultural sector. Industry and commerce are the most prosperous in the richer and more educated societies. This principle makes big families have to consider the interests of ordinary people while weighing their own interests.
The question of “whether it is a model or a parasite” of large family businesses that are common in poor countries has sparked intense academic debate. Some people pointed out that they created a lot of jobs and contributed a lot of taxes. Many oligarchs talked about their moral responsibility to use their power to let the people live a good life. Some people also feel that it is unfair to be demonized in a place where there is no shortage of bad guys.
Other scholars argue that family businesses are both a symptom and cause of bad governance. In a state of good governance, successful companies are often known for their superior product quality, as well as precision and expertise. But where governance is poor, political relations have the final say, and companies with this magic weapon can extend their tentacles into multiple unrelated industries. In this way, small businesses are excluded, and the middle class cannot be born.
Once the roots are deep, the family business can further influence the rules. El Salvador does not levy property and inheritance taxes and is a paradise for the rich. Despite several attempts to increase, the highest income tax rate in Guatemala has remained at 7%. The most recent effort was in 2010, when Juan Alberto Fuentes resigned from his position as Minister of Finance for this reason, and was also very upset that the patriarchs of the "Eight Big Families" spent longer in the office of the President than himself.
The opinions of the oligarchs can still determine important matters. In 2009, the Honduras military policy became supported by most of the most powerful families. For many years, the UN-supported "International Committee against Impunity" (CICIG) has been investigating government scandals and military aggression in Guatemala. However, when it comes to political donations of unknown arrival, the oligarchs will strongly object to continuing the investigation. The organization was finally dissolved in 2019.
The big families have their own minds. Compared with the old coffee family, the later rich industrial families are often more willing to accept change. Companies that rely on cooperating with the government, such as aviation and construction companies, are eager to plunge into the arms of every president. Guatemala’s oligarchs have always been known for their conservatism. "Compared to Guatemalan businessmen, our entrepreneurs look like San Francisco hipsters." A Salvadoran teased.
Many families got rich because of trade protectionism. When the government shuts out foreign competitors, they can charge higher fees to local consumers. The advent of globalization has not caused them as much damage as expected. Foreign companies need local partners, and oligarchs can open up relationships. Multinational companies such as Burger King, Hilton, and Sala eventually grant franchise rights to local companies. In El Salvador, family businesses sold banks, supermarkets, breweries and tobacco farms to multinational companies, and the funds they received helped them further expand their scope of operations.
There are signs that the dominant position of large families in Central America will be weakened. First, the succession problem of family businesses is inevitable. Wealth and family, but three generations, children born with a golden spoon often lack the spirit of struggle. In addition, in-laws and cousins have further expanded the size of the family and made the power struggle more complicated. A businessman said that most families now hire consultants to deal with generational changes. His children signed a "Code of Family Conduct" on their 16th birthday, promising good behavior and financial independence. The prerequisite for them to enter the family business is to obtain two bachelor degrees and work in another company for five years.
Democratic government and the breeding of crime also make it difficult for oligarchs. The generals, the underworld and the politicians drag me and weave a net that wraps Guatemala. In order to maintain their reputation, the established family business must not only avoid entanglement with the underworld, but also ensure that it is invincible in the competition for influence. A CICIG report in 2015 estimated that three-quarters of Guatemala’s political contributions were related to corruption and drug smuggling. After entrepreneur-backed Oscar Berger won the general election in 2003, there has never been a "pro-business" candidate who entered the presidential runoff in Guatemala. The same situation happened in El Salvador, where presidential candidates championed by entrepreneurs were defeated in elections after 2005.
In Honduras, the century-old two-party system gave birth to a powerful political class, leaving little room for large families. But the influence of drug lords has grown, especially after the 2009 coup. Most established business families stay away from drug money, but some politicians are not necessarily so.
El Salvador’s elite has suffered from the enemy, perhaps because the “Nationalist Republican Alliance”, the party representing their interests, has been losing the election. In 2009, the left-wing president was in power, followed by the wealthy but not part of the old family "post-80s" Naib Bukley. Bukley concentrated his power, formed alliances with some of the top families, and weakened others at the same time.
Central American leaders now find that it is easier to reject large families than before. In the context of the new crown epidemic, politicians' implementation of a blockade policy that harms the economy has not been greatly hindered. Buclay plans to pass laws that are disgusted by large families and involve pensions, water resources, and taxes.
As the political influence of large families fades, perhaps they will gradually realize the benefits of clean governance. After all, in this region cursed by corruption and incitement, politicians who want to get their roots back are still indispensable for the support of oligarchs.