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What happened to Argentina?

economix.blogs.nytimes.com

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Re: What happened to Argentina?

#51

Post by miked »

tayssir wrote: post #31
jseliger wrote: post #6

Earlier quoted context omitted.

"Apart from Peron's protectionist policies (which some call a drive toward self-sustenance)" Trade protection and autarky have long been defended by words like "self-sustenance," and the like, but such policies have never turned out well: just ask India and China before they modernized and liberalized their economies. "Peron might have been mistaken on many counts, but so many things are ignored behind the veil of ap…

Actually, Ha-Joon Chang pointed out that the economic powerhouses (US, UK, Japan, etc.) relied on enormous protectionism when they were developing. However, now that they're powerful, they "kick away the ladder" and push developing nations to struggle under the ineffective free-market principles that they knew to avoid. http://www.newamerica.net/events/2008/why_world_isnt_flat

the ineffective free-market principles that they knew to avoid

Compare and contrast:

The US, Canada, Japan, and western Europe, Australia, New Zealand.

Maoist China vs. Hong King, socialist India, the Soviet Union, Germany under the National Socialist German Workers Party versus today, East Germany vs. West Germany, Africa, Vietnam, Cambodia, etc, etc, etc...

Re: What happened to Argentina?

#52

Post by michaelkeenan »

vitaminj wrote: post #47
tokenadult wrote: post #2

This is an important issue to discuss, because the bad economic ideas that hobbled Argentina's growth (protectionism) are still current in many other countries. The graph about percentages of the population in primary schooling is quite interesting, and goes a long way to explain why Taiwan, poorer than Zambia within my lifetime, is now much wealthier than most other countries in the world.

The idea that protectionism is bad needs to be qualified. Whilst the successful Asian countries that are cited here (eg. Japan, Korea, Taiwan, etc) are export-oriented and encouraged trade, they were all quite protectionist early on. Big companies like Toyota, LG, Hyundai, Samsung were all heavily subsidised by their governments in the early years, and were aided by other protectionist measures (such as local content…

Are there any well-regarded economists who think the infant industry argument is a good argument?

Mankiw mentions it briefly in The Principles of Economics[1], which if I recall correctly is the most widely-used economics textbook, saying "Economists are often skeptical about such claims, largely because the infant-industry argument is difficult to implement in practice...many economists are skeptical about the infant-industry argument in principle...Protection is not necessary for an infant industry to grow."

Paul Krugman spends a few pages on it in International Economics: Theory and Policy[2], saying "The infant industry argument seems highly plausible, and in fact it has been persuasive to many governments. Yet economists have pointed out many pitfalls in the argument, suggesting that it must be used cautiously.

First, it is not always good to try to move today into the industries that will have a comparative advantage in the future...Second, protecting manufacturing does no good unless the protection itself helps make industry competitive

...

More generally, the fact that it is costly and time-consuming to build up an industry is not an argument for government intervention unless there is some domestic market failure. If an industry is supposed to be able to earn high enough returns for capital, labor, and other factors of production to be worth developing, then why don't private investors develop the industry without government help?

...

In practice it is difficult to evaluate which industries really warrant special treatment, and there are risks that a policy intended to promote development will end up being captured by special interests."

[1] Mankiw's textbook: http://books.google.com/books?id=oRgQ2goeFzwC&pg=PT222&#...

[2] http://books.google.com/books?id=L5DaCeXtNq0C&pg=PA257&#...

Re: What happened to Argentina?

#53

Post by michaelkeenan »

diego wrote: post #45
bokonist wrote: post #42

As the next figure shows, no variable from 1900 better explains success in 2000 than investment in education. How many other variables did Glasser analyze? And more importantly, how many variables from 1900 can we even quantify? Education is closely correlated with a number of other variables - quality of governance, IQ, culture, religion, level of development, etc. But there is no good way to quantify those variable…

More importantly Argentina's educational level is very good and has been for a long time. Argentina has five Nobel prize winners (three for science) and Brazil, for example, has none. The literacy rate in Argentina is 99% and has been for a long time, and so on. Picking 1900 as a random point to correlate with GDP in 2000 is arbitrary and meaningless. It seems like the author picked an arbitrary variable to make a po…

>Picking 1900 as a random point to correlate with GDP in 2000 is arbitrary and meaningless. It seems like the author picked an arbitrary variable to make a point without enough subject knowledge or citations to back it up.

I think it's unfair to focus on the lack of details in Glaeser's blog post, when it links to his 52-page paper[1] (which the post is a quick summary of). In the paper, he writes: "the Buenos Aires data suggests that less than one-half of the population could both read and write in 1869. By 1895, the next available data point, the literacy rate had shot up to 72 percent, which still meant that a substantial portion of the population was unable to either read or write. It isn’t until 1939 that more than 90 percent of the population in Buenos Aires is literate."

It appears that he is focused more on the historical conditions of Argentina's education than on present-day conditions.

[1]http://www.economics.harvard.edu/faculty/glaeser/files/Glaes...

Re: What happened to Argentina?

#54

Post by mediaman »

joeyo wrote: post #35
ckinnan wrote: post #25

A better comparison than Chicago is Argentina's neighbor Chile, which is far less endowed than Argentina and has been poorer historically. Chile, however, has pursued market economics since the 1980s and now enjoys a living standard that is more than twice as high as Argentina. Indeed, Argentina's per capita income today is just $6,500, despite the nation's amazing cultural and natural gifts. Argentina is, in fact, h…

Market economics? Is that what Pinochet's regime is being called now?

Do you disagree that Chile has developed much more market-oriented economic policies than Argentina?

If not, what is the point of your comment?

If you do, I'd be interested in your perspective beyond this quip, particularly your thoughts on the Chicago school's involvement in forming economic policy there.

Re: What happened to Argentina?

#55

Post by jseliger »

miked wrote: post #49
NathanKP wrote: post #38

From the article: Long-run national success is built on human capital, both because of the link between schooling and technology and because of the link between education and well-functioning democracy. That is a fairly profound statement when you consider the general state of the American educational system. I never fail to be amazed at how poorly US college and university systems are run. They are full of bureaucra…

That is a fairly profound statement when you consider the general state of the American educational system. I never fail to be amazed at how poorly US college and university systems are run. They are full of bureaucracy and little good teaching is done. I'm an American who's traveled in Europe a fair bit. I've had several conversations with Greek, Swedish, and Hungarian teachers. All were universally critical of teac…

"Research is not the same as learning, but its probably as good a proxy as we've got."

I'm a grad student in English Lit at the University of Arizona, and I'm not so sure: many of my freshmen talk about what it's like being in 500-person classes, their interactions with GATs who don't speak English, and so on, which appear to be common at big R1 schools.

It seems to me that the major thing the U.S. has going for it is competition between universities to a large extent; after (and sometimes during) high school, one has a wide array of choices, ranging from vocational schools to community colleges to liberal arts schools to R2 / R1 universities. But I'm not sure the latter are great for undergrads, though they're amazing for grad students.

The better question is whether the US will eventually implement real competition in the primary and secondary arenas, so as to avoid problems like this: http://www.newyorker.com/reporting/2009/08/31/090831fa_fact_... .

Re: What happened to Argentina?

#56

Post by mediaman »

kiddo wrote: post #48

There's a good book that covers this exact topic in much more depth. It's called "False Economy: A Surprising Economic History of the Word" by Alan Beattie. If I remember correctly, he focuses on how Argentinian land was owned by wealthy elites, satisfied with their wealth. In the US, small parcels of land were handed out to poorer individuals. Thus, the US held a greater attraction for immigrants. In the US immigran…

Along the lines of this thesis, Hernando de Soto wrote The Mystery of Capital which outlines this policy of establishing property rights among the lower and middle classes rather than just the rich as a necessary policy to stimulate growth, as property rights enable the holders to make bigger investments in capital.

He argues that one reason South Korea did so well after the war was that the US adopted enlightened economic policies with regards to property rights.

Re: What happened to Argentina?

#57

Post by BrandonM »

jseliger wrote: post #55
miked wrote: post #49

Earlier quoted context omitted.

That is a fairly profound statement when you consider the general state of the American educational system. I never fail to be amazed at how poorly US college and university systems are run. They are full of bureaucracy and little good teaching is done. I'm an American who's traveled in Europe a fair bit. I've had several conversations with Greek, Swedish, and Hungarian teachers. All were universally critical of teac…

"Research is not the same as learning, but its probably as good a proxy as we've got." I'm a grad student in English Lit at the University of Arizona, and I'm not so sure: many of my freshmen talk about what it's like being in 500-person classes, their interactions with GATs who don't speak English, and so on, which appear to be common at big R1 schools. It seems to me that the major thing the U.S. has going for it i…

Wow, I just read that article you linked and it is pretty mind-boggling how efficient the NYC public school system is. I'm sure it's not exclusive to NYC, either.

Re: What happened to Argentina?

#58

Post by brc »

I really need to write a script that logs on and comments 'correlation != causation'.

Are Argentines poor because they are poorly educated, or are they poorly educated because they are poor?

Re: What happened to Argentina?

#59

Post by demallien »

brc wrote: post #58

I really need to write a script that logs on and comments 'correlation != causation'. Are Argentines poor because they are poorly educated, or are they poorly educated because they are poor?

Ummmm, doesn't the article implicitly address that? If your country is well educated, wealth increases. It's change in wealth that is correlated with education, not wealth itself. Or to put it another way, I have trouble imagining how wealth in 2008 can affect education levels in 1900, and I can't really think of a third variable to arbitrate between the two either, seeing as they are separated in time...

Re: What happened to Argentina?

#60

Post by laut »

vitaminj wrote: post #47
tokenadult wrote: post #2

This is an important issue to discuss, because the bad economic ideas that hobbled Argentina's growth (protectionism) are still current in many other countries. The graph about percentages of the population in primary schooling is quite interesting, and goes a long way to explain why Taiwan, poorer than Zambia within my lifetime, is now much wealthier than most other countries in the world.

The idea that protectionism is bad needs to be qualified. Whilst the successful Asian countries that are cited here (eg. Japan, Korea, Taiwan, etc) are export-oriented and encouraged trade, they were all quite protectionist early on. Big companies like Toyota, LG, Hyundai, Samsung were all heavily subsidised by their governments in the early years, and were aided by other protectionist measures (such as local content…

Argentina is a good example of how much government can screw up a country. The anti-capitalism regime is not attractive for new investment, local or foreign, and existing capital flees the country. I live in the region and see it with my own eyes.

Protectionism is bad. The reason it's still here is that individual politicians and rent seekers can still benefit at the expense of the rest of society.

Protecting local industry until it is globally competitive is not a good idea and not without costs. Economists have known about this for centuries. Look at the work of David Ricardo. Do you think Ricardo is wrong, since you don't think protectionism is bad?

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