Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

urban-rural conflict.
At that point, distributive conflict between urban factors of production and landowners emerged
and paved the way for the possibility of populism as an equilibrium point. Rogowski (1989),
among others, argues that backward economies with abundant natural resource endowments in
which both labor and capital are relatively scarce are likely to display political cleavages that are
protectionist in nature. The urban manufacturing sector will seek to protect itself, by taxing both
exports and imports, against rural activities. However, this analysis, which was widely applied to
Argentina during the Perón era, is at best incomplete, as our model demonstrates. This prediction
holds only for certain configurations of the parameters of the model and certain histories. In
particular, we stress that protectionism and protectionist cleavages arise in resource-rich
economies after the potentially protected activities are initiated spontaneously in response to
changing market conditions (see also Galiani et al. (2009) for a discussion on the role of skilled
labor and unskilled labor in the formation of political coalitions in this context).
By 1940, the labor movement had matured; moreover, industrial capitalists had been aspiring to
self-sufficiency and economic independence ever since 1930. Conditions were therefore ripe for
Perón to build a mass workers movement. He started to engineer this when he was the Labor
Secretary, right before he was elected President in 1946. Industry-wide bargaining was instituted;
labor courts were set up to enforce the rather progressive new labor laws; social security coverage
was greatly expanded; minimum wages were increased; and the system of aguinaldo (one month's
extra pay at Christmas time) was introduced. Finally, Professional Associations Act was adopted
in 1945, which provided for the withholding of union dues by employers, recognition of only one
union organization per branch of activity and direct union participation in political activity under
state supervision. As a result, the growth of union density during the 1940s was astonishing rapid,
rising from 10% in 1936 to 40% in 1948 and to 49% in 1951 (see Galiani and Gerchunoff, 2003).
In this manner, a new national populist coalition was brought to power in 1946 under the
leadership of Perón. The Peronist coalition left behind the traditional dispute between radicals and
conservatives that had marked the political arena since the electoral reform. This pattern of
opposition was replaced by one which had a greater share of class content and was rooted in the
expansion of social rights and the political and social integration of the working classes. Indeed,
the political history of Argentina in the 20th century is divided into two: before and after the
emergence of Peronism (see Torre, 2002).
4.4 The Peronist Era (1946-1955)
By 1950, most of the countries of Latin America had implemented an import-substitution strategy.
Although it was a pragmatic endogenous response to the conditions created by the Great
Depression of the 1930s and the Second World War, this strategy was not necessarily the optimal
response to the new international conditions of the post-war era. To a great extent, the decision as
to what sort of strategy would be the best depended on what could be expected of the future
evolution of the international economy. By the late 1930s, it was reasonably clear that the
laissez-faire approach was finished in international economic relations. In this context, the
import-substitution strategy can be seen as a defensive measure against an uncertain future of
trading relations.