Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 584

Australia is lucky the British were the first 'intruders'

The recent article by Nigel Biggar in The Australian, providing context around Admiral Arthur Phillip’s settlement in Australia in 1788, was enlightening. The thrust of it being that colonisation by Europeans of unexplored lands, was one of global mass migration as opposed to colonialism for colonialism’s sake.

Around that time, the British, and others including the French, Spanish, and Portuguese, were active explorers in search of new lands. And Biggar made the argument that “intrusion” into Australia was inevitable, and that it was fortunate that the British arrived here first.

And while Biggar’s article covers the direct impact of British settlement on the Indigenous population here, it’s worth considering other impacts British colonisation may have had around the world, compared to alternative European explorers of the time.

Comparing the wealth of former European colonies

An area worth exploring is the wealth today of former European colonies, and what effect different colonising countries might have had on that. Consider the Americas.

North, Central, and South America are all former colonies. North American countries, the United States and Canada, were colonised by the British, and to some extent the French (in Canada, Quebec). Whereas Latin America, which is basically Mexico, Central and South America, characterised by Romance-speaking countries, was colonised by the Spanish predominantly, and also the Portuguese.

And there is a stark difference today in per capita wealth of the US and Canada which are wealthy, versus Latin America which by comparison is not.

In fact, the GDP per capita of the former, is approximately eight times that of the latter. According to worldometers.info, the combined US and Canada GDP per capita was $US72,600 in 2022, versus a combined $9,300 for Latin American countries. That difference is staggering. The population of Latin America being around 70% more than total US and Canada, at around 650 million.

The Latin American country with the highest GDP per capita was Uruguay at $21,000, with the biggest contributor being Mexico at about one fifth of the total population and a GDP per capita of just $11,000. Meanwhile, Canada’s GDP per capita was $55,000, with the US dominant at $74,500.

And it’s not as if North America is an outlier, because if you look at the GDP per capita of other Anglosphere countries, Australia comes in at $64,000, the UK $45,000, and New Zealand $48,000. With Australia the twelfth most prosperous nation worldwide in 2022.

What accounts for the differences?

So why is that measure of wealth so much less in Latin America? Why are former British colonies that much more wealthy? Could it be because of differing legal systems brought to the new founded shores by the Europeans?

In Nigel Biggar’s article, he made the point that Arthur Phillip sought to avoid conflict between white convicts, sailors and soldiers, and the Aboriginal people “by declaring the life of a native equal to that of a white man under the law; by punishing white abusers”. This is a reference to the rule of law under the Common Law legal system that the British brought to the Australian colony.

British law was rooted in Common Law, a system that is built on precedents, and allows the law to evolve. The Common Law legal system was installed in all British colonies, including those in North America. The main alternative to Common Law is Civil Law, predominant in continental Europe, the system of law that ruled in Spain and Portugal, and taken to Latin American colonies. Unlike Common Law, prior judicial decisions only play a minor role in shaping Civil Law. The primary difference between the two legal systems therefore being the role of past decisions and precedents.

A Common Law legal system is more conducive to a capitalist style economy, as it allows flexibility for economies to adapt and evolve with changing economic developments due to judicial interpretation. Common Law encourages private ownership with strong protection laws engendering confidence in markets. Regulation is market driven, with limited government intervention.

Meanwhile, a Civil Law system may be more attuned to a socialist economy with more rigidity in legal codes, and greater government control over rules and regulations covering resources and economic activities. This system provides more legal certainty which suits socialist structures requiring predictability in long term planning.

In reality, a country’s legal system does not strictly determine whether it pursues capitalism or socialism. Rather, it can be more favourable to one economic system over another. And a blend of economic systems is possible, and often implemented.

An economic system, be it capitalist or socialist, links to economic prosperity in complex ways. And even then, the nature of prosperity can differ under different economic systems.

If economic growth is the major focus in an economy, then a capitalist one seeking to maximise profit in a generally market driven private sector, should theoretically produce a better outcome.

If greater equality in the distribution of wealth is desired, then a socialist economy with government control over production and redistribution policies, might be better equipped to achieve that goal.

And both systems may claim to be maximising prosperity, each with a different focus.

The theory therefore dictates that capitalist economies should deliver higher economic growth when influenced by a Common Law legal system that facilitates flexibility in market regulation and corporate law, innovation, and market efficiencies. That is, a system that has delivered high GDP per capita measures in Anglosphere countries.

Meanwhile, socialism has been a dynamic force in Latin America with a complex history taking many forms across most of its countries under a Civil Law legal system, presenting alternatives to capitalist economic systems. And with wealth measured by GDP per capita comparatively low in those countries, the question as to the influence of a legal system on a nation’s wealth, at least historically, is a valid one.

Perhaps then it was just plain luck of the draw as to who colonised who around the globe at the time. And while Biggar concluded that it was fortunate for the Aboriginal people that the British got here first, that may be disputed by some.

But when it comes to economic prosperity, it might indeed be fortuitous that we don't today shout “olé” at the footy, or say “bon appétit” over a "plat du jour”.

 

Tony Dillon is a freelance writer and former actuary. This article is general information and does not consider the circumstances of any investor.

 

42 Comments
Frank
November 05, 2024

& if the off chance there were no colonisers, but remaining as disparate tribes at constant battle over territory - it would have been more difficult to have interaction with the rest of the World, & may have remained in a stone-age existence, with an average lifespan of 40 years. Undoubtedly there were upheavals for both the Aboriginal & colonising populations (many of the latter being brought here unwillingly) at the time, though for at least the Aboriginal descendants in modern-day Australia, they are in a much better position that where they could have been.

Adam
November 03, 2024

Well reasoned article, thank you.

Franz
November 03, 2024

I wonder if Latin America would be better off if the US had not meddled in their internal affairs.

Alan
November 03, 2024

Great article! The history of the world from day one has been one of invasion and conquering with the vast majority of people living as slaves or serfs. British colonisation brought many benefits to Australia, not only civil and common law, but technology, science and education, farming systems, construction methods as well as Christian principles. Everyone has benefited. We should stop playing the victim and race card and get on with it. Australians should be the richest people in the world!!

Steve
November 03, 2024

I have always theorised that countries that attract migrants should do well in the long run. Very simply, those who migrate are more likely to be motivated, productive and "good citizens", the less motivated will stay at home and moan about their circumstances. It's no small thing to move yourself and your family to a new country. So we cherry pick the gene pool to a degree. In Australia the population is roughly 25% people born overseas and 50% with at least one parent born overseas. I would be interested in comparison of these numbers versus other countries and how well they do. Canada, the US, Aust & NZ have quite high net migration. Other (former) British colonies like South Africa, the Caribbean countries, India etc, I expect much lower percentages of net migrants. Same for most of the former Portuguese, Spanish, French colonies etc. Just a theory......

Petros Gionis
November 02, 2024

Francis Fukuyama’s The End of History and the Last Man is worthwhile reading and makes similar points made within this article although attributing different economic growth characteristics to the adoption of liberal principles over and above just differing legal systems.

Dimi
November 02, 2024

So, indigenous Australians really do have a lot to celebrate? The legacy of the 'intruders' is immeasurable suffering and disadvantage. Perhaps reread the famous Redfern speech.

Dudley
November 02, 2024

"Highland Clearances, the forced eviction of inhabitants of the Highlands and western islands of Scotland, beginning in the mid-to-late 18th century and continuing intermittently into the mid-19th century. The removals cleared the land of people primarily to allow for the introduction of sheep pastoralism. The Highland Clearances resulted in the destruction of the traditional clan society and began a pattern of rural depopulation and emigration from Scotland."
https://www.britannica.com/event/Highland-Clearances

The displaced Scots migrated throughout the British Empire and made their own luck.
Most 'displaced' Aborigines were concentrated in reserves and did not 'get lucky' for many decades.
I wonder if the CCP has taken note and applied the methods to the Western Tajikis.

Tony Dillon
November 02, 2024

In response to Stephen and similar posts, I came across this paper, https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.91.5.1369, after reading John Hawkins’ article in Firstlinks last week. Which had a number of references to which my way of thinking is aligned. I found the paper after I had completed my piece here. Some relevant quotes:

“Countries with better “institutions,” more secure property rights, and less distortionary policies will invest more in physical and human capital, and will use these factors more efficiently to achieve a greater level of income (e.g., Douglass C. North and Robert P. Thomas, 1973; Eric L. Jones, 1981; North, 1981).”

“Frederich A. von Hayek (1960) argued that the British common law tradition was superior to the French civil law, which was developed during the Napoleonic era to restrain judges’ interference with state policies (see also Seymour M. Lipset, 1994). More recently, Rafael La Porta et al. (1998, 1999) emphasize the importance of colonial origin (the identity of the colonizer) and legal origin on current institutions, and show that the common-law countries and former British colonies have better property rights and more developed financial markets. Similarly, David Landes (1998 Chapters 19 and 20) and North et al. (1998) argue that former British colonies prospered relative to former French, Spanish, and Portuguese colonies because of the good economic and political institutions and culture they inherited from Britain.”

“the institutions of law and order and private property established during the early phases of colonialism in Australia, Canada, New Zealand, the United States, Hong Kong, and Singapore have formed the basis of the current day institutions of these countries.”

Of course there will be factors other than legal systems that contribute to a nation’s wealth, as alluded to by Stephen. But it would appear that the legal system introduced to a colony was noteworthy.

And finally just to clarify. My article does not conclude that Common Law is a superior legal system. Rather, that Common Law was “more conducive to a capitalist style economy”.

paul
November 02, 2024

i read Nigal Bigger's article,
for a different anglo perspective on Australians settlement read True Girt by David Hunt, you may be surprised.
for a different perspective of what the locals were up to when Phil arrived read Dark Emu by Bruce Pascoe, you will be surprised.
for an understanding why some have more than others read Guns, Germs & Steel by Jared Diamond
Or don't!

Stephen
November 02, 2024

Whoa! I’m not sure Mr Dillon makes valid comparisons about the success of countries with Common versus Civil law systems. The now wealthy countries such as the US, Canada and Australia were relatively less populated and have enormous agricultural and natural resources. Where the British occupied more populated lands with less natural resources, such as Pakistani and India or simply more populated, such as South Africa, the economic outcomes weren’t so good. Maybe the level of population to the amount of natural resources had some part to play in later economic destiny of those countries occupied by Europeans.

The conclusion about the superiority of Common law system is due to the selective use of examples. If the Common law system is so superior, why are counties in Western Europe, none of which use Common law, so wealthy?

Philip Gomes
November 02, 2024

Wow, I have to say this is a ahistorically bad take. We've learned today that the editors need better judgement before wading into deeply complex histories where slavery, violence, murder, looting and extraction of wealth in the service individual private property and Empire continue to resonate and is today reflected in the relative economic and democratic performance of nations who should apparently be grateful for the example set by British "rule of law" and its systems of governance. Again, do better.

Cancel not
November 02, 2024

No no no! Democratic & British influences allow us to publish and have discussions about these things. The systems of governance around the world that disallow such freedom of speech have an efflux of their citizens and are not so admired. A wide array of different and provoking articles make this website such a good read.

SMSF Trustee
November 03, 2024

Agree 100%.

DanM
November 01, 2024

Surely there has been an uncharacteristic lapse in editorial oversight here. The insensitivity of this article and the subsequent commentary is appalling and regrettable.
I think it best if Mr Dillon's article and the commentary are removed. An apology should be considered.

Tony Dillon
November 01, 2024

Hi DanM,

I am sorry that you feel that way. There was certainly no disrespect or insensitivity to anyone intended in the article. I merely posed a question based on observations and facts, concluding the piece with: “the question as to the influence of a legal system on a nation’s wealth, at least historically, is a valid one.”

Freedom of expression and robust debate is vital for the functioning of a healthy democracy, while censorship is most definitely not. And I applaud Firstlinks for promoting a diversity of views.

Neil
November 01, 2024

Just because you disagree with someone's dissertation does not give you a right to ask to censor / have a retraction. 

Geoff
November 03, 2024

Apology to whom?

I'm sorry you feel unable to read articles with different viewpoints than yours without getting upset.

john
November 03, 2024

Agree 100% as do most here

john
November 03, 2024

I think in the 1700s, when the British first arrived the mindset wasn’t one of “invasion” . They saw themselves as establishing a penal colony and new settlements

Milkus
November 04, 2024

Call it what you want John, England invaded/colonised/ set up house in over 100+ countries. The outcome for the existing population have been a significant loss of culture, loss of history, death of their society, loss of productive land etc. Whether its India/Pakistan, Ireland, America or Austaralia, where these countries are now doesnt excuse the systematic approach the British took to build their Empire. Making out they were just 'giving things a go' is niave at best.
Woohoo for old blighty and their ignorance of what they were doing (not), these cultures have not been able to thrive and have been changed forever by this. 

john
November 03, 2024

I believe it was being considered by the united nations for there to be a jewish nation somewhere in the kimberley region north western australia ? Wonder what the outcomes would have been then as an alternative 'what if' historical scenario ?

John
November 01, 2024

Wonder what would have happened way back then if certain different cultures arrived instead of the British. Imagine there could have been some horrific outcomes. Two words: Nanjing, China.
Also the defence of Australia during WW2 would not have been possible without western culture predominance.
The social security regime, even if considered minimal still provides a much higher standard of living than existed here 250 years prior

Garry
November 01, 2024

Absolutely agree we should all be very grateful the English got here first, we also gained the English language which is the dominant language for the world.

Peter B
November 01, 2024

My Brazilian friend said we were so lucky to have the British come to Australia.
When I asked why, he said:
"When the British came, first they built a jail, then they built a church and then they built a school.
When the Portuguese came to Brazil, first they built a church and then they built a jail."
He also explained the land tenure tangles in Brazil where someone turns up with a piece of paper to claim they own a certain area of land that was granted to their family by a past emperor. Without am effective and centralised land tenure system established during colonial times, it is exceedingly hard to sort out who has a legitimate claim and who does not.
Plus the arguments in the article above do not explain why some middle eastern countries are so rich compared to others in the same region.

Brian
November 01, 2024

Funny how ~all the former Brit colonies _
- until independence - were going ok. Not perfect but ok; unlike the basket case colonies of others prior to and after their independence, if any.
Yes there are exceptions.
Yes one group whacked it over others at times. Guess what, that human trait endures widely and will continue!
Should we wring our hands and try and embark on reparations?
Not on your Nelly. It’s done.
Look forward everyone and make the most of what you have and what you can earn not be given.
Pip pip.

Edward
November 01, 2024

What a nonsense, sorry, but it has to be said. Including India, Pakistan, the Caribbean countries and all the former African colonies would paint a different picture. Having said that: any explanation of complex situations based mono causality is generally simplistic and wrong. Finally: it seems that the author has no idea about how civil law (in its different variations) functions and indeed evolves.

Russell Wadey
November 01, 2024

je suis d'accord

Peter S
October 31, 2024

Not to mention all the wonderful sports that originated in England and are played to varying degrees around the world.

Mart
October 31, 2024

Surely Lidia Thorpe's outburst in Parliament last week wouldn't have been any different regardless of who the first intruders were ? The point is they were intruders. But, yes, I guess if you do have to 'suffer' intruders at least pick one with a decent system of law etc etc !

Geoffrey Weaver
October 31, 2024

Bottom line is our laws allowed individuals to flourish because their property rights were respected and their hard work rewarded. This is in contrast to so many nations where centralised authority exerts control to the detriment of individuals.

Kym
November 01, 2024

Were indigenous property rights respected?

Dan F
October 31, 2024

I don't agree that viewing the impact through a solely economic perspective gives a fair view.

Looking at demographics, 15% of Mexicans identify as indigenous, and 80% have some indigenous ancestry. In Brazil, the figures are 10% and 30% respectively.

By contrast, in the US only 1% identify as indigenous and 3% identify as "some indigenous ancestry". In Australia, the indigenous population is 3% (I could not find Australian figures for partial ancestry, but likely well behind Latin America.)

In summary, if I were a native and I saw a European boat come over the horizon, I'd be hoping the flag was Spanish or Portuguese, not British.

Dennis
October 31, 2024

It’s a shame you were born 150 years too late!

Dudley
October 31, 2024

"Australian figures for partial ancestry":

'812,728 people identified as being of Aboriginal and/or Torres Strait Islander origin, representing 3.2 per cent of the total population.'

https://www.abs.gov.au/statistics/people/aboriginal-and-torres-strait-islander-peoples/aboriginal-and-torres-strait-islander-people-census/latest-release

Identifying as Aboriginal does not require having an Aboriginal ancestor - only need to claim to be and recognised by others as such.

pala
October 31, 2024

Whats your point ...

Janice
October 31, 2024

What about India?

Tony Stevenson
October 31, 2024

Perhaps we'd be better off if we'd been invaded by Vikings. The Nordic countries of Sweden, Norway and Denmark on average have 38% greater GDP per capita than the United Kingdom (2023 via Trading Economics). The Nordic Countries follow a unique tradition known as "Nordic Law". It is pragmatic and less formalistic than typical Civil Law systems, focusing on practical solutions and fairness, giving judges interpretative flexibility. Not only are the Nordic people wealthier they also lead the world in happiness. Now that's something to aspire to.

Micko
November 01, 2024

In 2024 Norway was higher, Denmark about the same and Sweden 12% less than Australia. I think the oil from Norway is giving a false impression of Nordic wealth. At least the British tried to establish governing democracies, where Spain, France and Portugal just left a mess.

Tony Dillon
November 01, 2024

The Nordic countries are interesting. Often referred to as a successful blend of capitalism and socialism, with a strong private sector capitalist structure, and a healthy welfare system supported by high taxation.

Cam
October 31, 2024

Thanks for having the courage to write a factual article like this. Obviously there are negatives in our history; there are negatives in everyone's history. The economic facts you've noted have occurred for a reason. The fact that migrants around the world try to get to English speaking countries is another fact that occurs for reasons.

JohnS
October 31, 2024

Aren't we ALL lucky that Britain got here first

We got the rights of Britain to things like free speech and law, not dependent upon class or wealth

 

Leave a Comment:

     

RELATED ARTICLES

A Nobel Prize for work on why nations succeed and fail

Why China and Russia's partnership threatens the West

How powerful are Xi Jinping and the Chinese Communist Party?

banner

Most viewed in recent weeks

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

Warren Buffett is preparing for a bear market. Should you?

Berkshire Hathaway’s third quarter earnings update reveals Buffett is selling stocks and building record cash reserves. Here’s a look at his track record in calling market tops and whether you should follow his lead and dial down risk.

US election implications for investors and Australia

The return of Donald Trump to the US presidency brings the prospect of more US tax cuts and deregulation, but also more tariff hikes, trade wars and policy uncertainty. Here's what it means for markets going forward.

Avoiding wealth transfer pitfalls

Australia is in the early throes of an intergenerational wealth transfer worth an estimated $3.5 trillion. Here's a case study highlighting some of the challenges with transferring wealth between generations.

Taxpayers betrayed by Future Fund debacle

The Future Fund's original purpose was to meet the unfunded liabilities of Commonwealth defined benefit schemes. These liabilities have ballooned to an estimated $290 billion and taxpayers continue to be treated like fools.

The rising tension between housing debt and retirement balances

Australians are taking more mortgage debt into their 60s than ever before. Retirement planning assumptions haven’t adapted and could result in future income projections that ultimately disappoint retirees.

Latest Updates

Shares

Australian stocks will crush housing over the next decade, one year on

Last year, I wrote an article suggesting returns from ASX stocks would trample those from housing over the next decade. One year later, this is an update on how that forecast is going and what's changed since.

Superannuation

Addressing the gender super gap

The harsh reality is that most women retire with significantly less superannuation than men. There are many reasons for the gender super gap and here are some possible solutions to fix the long-running issue.

Superannuation

Meg on SMSFs: Where are the risks in our major super sectors?

Given the amount of money in super, it’s not surprising that there is a lot of focus on risk. SMSFs are often portrayed as the riskier option for the community as a whole, but does that tell the full story?

Superannuation

Global pension reforms and how Australia can improve

With plans to retire next year, Mercer's David Knox looks back at the global pension index he helped create, the key trends and developments since inception, and what Australia can to do to get better.

Shares

Cyclical stocks will drive markets higher in 2025

Magellan's Head of Global Equities, Arvid Streimann, thinks that although stock price momentum will slow next year, cyclical companies will lead the pack. He outlines the risks to his forecast and the stocks he likes best.

Economy

How this GDP per capita recession compares to history

GDP was 0.3% for last quarter but the real story is this was Australia’s seventh consecutive quarter of negative GDP per capita growth. How does this economic drought compare to past ones, and what can we expect in future?

Investing

The mispriced investment opportunity in global defence

Markets benefitted from peace for 40 years, but a military resurgence is now underway, fuelled by geopolitical tensions and technological advancements. Defence spending is soaring, offering potential opportunities for investors.

Sponsors

Alliances

© 2024 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.