Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

Between the 1940s and 1970s income inequality in Argentina plummeted, and by the 1970s
Argentina was no more unequal than other developed countries. Over the last 30 years,
Argentina income inequality seems to have risen substantially, even more than other countries
like the U.S. One interpretation of these facts is that Argentina’s mid century policies achieved a
very real objective—reducing inequality. Unfortunately, they also seem to have done so at a
significant cost.
The final paper in the political section by Boruchowicz and Wagner examines the changing
nature of Argentina’s political institutions, and particularly the police force. A weak judicial
system is at least a plausible explanation for the low investment levels suggested by the Taylor
essay. Burochowicz and Wagner start by presenting a wide range of data suggesting that
Argentina has a policing problem. People say that bribing is common and effective. People say
that they don’t trust the police. Argentina’s policing problem appears particularly severe when
the country is compared to its near neighbor: Chile.
But Argentina doesn’t always seem to have had worse policing than Chile. At the start of the 20 th
century, Chile seems have had a corrupt and ineffective police force, while observers noted the
relative competence of Argentina’s police. Boruchowicz and Wagner take us through the
reforms that gradually improved Chile’s police force, which started in 1927. Many of these were
specifically intended to reduce corruption, like rotating police across areas. These reforms were
not unknown in Argentina, but it seems as if Argentina’s leadership lacked the political strength
to put them through. Rather than create a competent and strong police force, Perón, for example,
seems to have lacked the political power to change policing. Argentina’s decentralized political
power may also have slowed reform and keep Argentina on the path towards “institutional
decay.”
The last research paper in this volume considers the growth of Argentina since liberalization in
the 1980s. Many critics have argued that despite the economy’s opening, growth has been
lackluster. The paper by Gluzmann and Sturzenegger challenges this view. They present data
suggesting that price indices have been badly mismeasured over the past 25 years, and in
particular, prices have not been corrected adequately for the improvement in product quality.
Using data on food consumption, they provide suggestive evidence showing that Argentina has
actually gotten much wealthier since liberalization. This provides a somewhat upbeat ending to
the book. If their conclusions are correct, then Argentina did really turn the corner in the 1980s
and is now headed for a significantly brighter future.
V. Conclusion
The 20th century economic history of Argentina is a great drama filled with momentous actors,
like Perón, and seemingly full of missed opportunity. The trade essays in this volume leave little
doubt that barriers were quite costly to Argentina’s economy. The Taylor essay strongly suggests
that other policies, including the institutional decay discussed by Boruchowicz and Wagner, were
similarly problematic.