Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

instability, σ, a worried leader has more incentives to transfer illegal resources to the police, in
order to to retain its loyalty. They key mechanism that makes the leader prefer bribes is that
they are cheaper for the short run budget constraint of the government. In the model we use the
concept of “bribe” b as a theoretical device, but in practice we really mean any socially
undesirable investment to get the loyalty of the Police. This means much more than petty
bribing in the streets. For example, we think of the involvemenent of the Police in the
protection of illegal activities (e.g. illegal games, prostitution...), as well as on the biased
appointment of loyal friends as chiefs of the Police. In fact, privileging loyalty above
knowledge of the Police duties has been a trend in Argentina when appointing Police bosses,
because leaders tended to nominate either politicians without experience in the organization or
military officers (Rodriguez et al, 1999) . This “glass ceiling” in the organization breaks career
concerns and destroys incentives for the performance of high level policeman. In contrast, in
Carabineros de Chile, the Director has almost always been a career Carabinero 29 . This is not to
mean that in Chile politics does not play any role in the appointment. The difference is that by
selecting among people validated within the Police, then the organization has an easier time
keeping its own culture and the tacit incentive system.
2. Discussing the predictions and the difficulty of reform
The above framework rationalizes instability as root causes behind the degradation of
Argentinean Police institutions. Up to a level, it shares commonalities with Mancur Olson’s
view that for a country is preferable to have a “stationary bandit” to a myopic “roving bandit”,
who is only in power for a short time. 30 Our story departs from Olson’s, because in his
narrative the roving bandit has a short time but with known exit date. In our framework, the
leader’s survival is endogenous to the level of loyalty he tries to induce. Our argument explains
the degradation of Police as a by-product of a scared leader’s last resorts to remain in power.
Having established an incentive to degrade institutions, we have to recognize that in the last
20-25 years there has been a generalized movement towards more political stability in Latin
America. In our framework this is represented as a reduction in latent instability σ, which
would predict that leaders today are much less worried about a potential coup. To justify why
Police institutions are still very poor in Argentina, despite more than two decades of
constitutional order, we need to argue that reforming the Police is a hard task. Although a
formal model is beyond the scope of this chapter, we discuss below why we think bad
institutions are sticky and hard to reform. The first empirical point is that low quality of Police
is ubiquitous, despite the great waves of democratization around the world. In fact, according
to the Global Corruption Barometer (2008), the Police Forces are the single most bribed
organizations in the world. A second reason is that Police Organizations accumulate a wealth
of knowledge of past behavior of politicians. At a provincial level in Argentina, for example,
the Police has developed a slow cooked set of connections with the ruling political parties, and
vice-versa. Since leaders usually need to be loyal to the local political machinery to climb the
ladder, this may self-select leaders likely to be involved in some “secrets”, that the Police can
tell to the public in case of reforms that menace their status quo. A similar problem can also
happen to clean politicians, that might be scared to face personal vendettas and framing. A third
issue is that reforms to the Police has synergies with reforming the judiciary, because to
provide effective security both need to be perceived as functional and honest. The judiciary,
however, has been systematically manipulated, using various legal tricks to appoint people
loyal to the government. 31 A fourth family of problems is that building a strong national Police
29 at least after the first ten years.
30 Olson, M. 2000. Power and prosperity: Outgrowing communist and capitalist dictatorships Basic books
31 This has been especially relevant in the nominations for Supreme Court