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    NBER WORKING PAPER SERIES

    PERONIST BELIEFS AND INTERVENTIONIST POLICIES

    Rafael Di Tella

    Juan Dubra

    Working Paper 16621

    http://www.nber.org/papers/w16621

    NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts Avenue

    Cambridge, MA 02138

    December 2010

    We thank Esteban Aranda for suggestions and exceptional research assistance and Andres Velasco

    for introducing us to Acario Cotapos. We also thank Juan Carlos Torre, Torcuato Di Tella, Lucas Llach,

    Juan Carlos de Pablo as well as participants at the Argentine Exceptionalism seminar in Cambridge

    2009, for helpful comments and discussions. For support, Di Tella thanks the Canadian Institute for

    Advance Research. The views expressed herein are those of the authors and do not necessarily reflect

    the views of the National Bureau of Economic Research.

    NBER working papers are circulated for discussion and comment purposes. They have not been peer-

    reviewed or been subject to the review by the NBER Board of Directors that accompanies official

    NBER publications.

    2010 by Rafael Di Tella and Juan Dubra. All rights reserved. Short sections of text, not to exceed

    two paragraphs, may be quoted without explicit permission provided that full credit, including notice,

    is given to the source.

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    Peronist Beliefs and Interventionist Policies

    Rafael Di Tella and Juan Dubra

    NBER Working Paper No. 16621

    December 2010

    JEL No. D64,J42,L40

    ABSTRACT

    We study the logic of Peronist interventionist polices and the beliefs that support them. Instead of

    a comprehensive approach, we focus on three elements. First, we study beliefs and values about the

    economic system present in Perons speeches during the period 1943-55. Second, we study survey

    data for the 1990s on the beliefs of Peronist and Non Peronist voters in Argentina and Democrat and

    Republican voters in the US. While income and education suggest that Peronists (in relative terms)

    look like the American Democrats, their beliefs and values suggest that Peronists are the Argentine

    equivalent of the Republicans. Third, given that these beliefs are non-standard (for economists) we

    present a model formalizing some of their key aspects (for example, the idea that there is something

    more than a material exchange in labor relations).

    Rafael Di Tella

    Harvard Business School

    Soldiers Field Rd

    Boston, MA 02163

    and CIFAR

    and also NBER

    [email protected]

    Juan Dubra

    Universidad de Montevideo

    Montevideo, Uruguay

    [email protected]

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    2

    I. IntroductionInaseminalstudy,DiazAlejandro(1970)blamedArgentinasrelativedeclinetothelowratesofcapital

    accumulationwhichfollowedthereplacementoftheexportoriented,marketfriendlypoliciesby

    populist,interventionistpoliciesaroundthetimeofthegreatdepression(seealsoTaylor,1994).Inthis

    account,broadly,Argentinasrelativedeclineduringthe20th

    centurycanbeattributedtotheprevalenceofpopulistpoliciessuppliedbyleaderswhooftenexploitamassofuneducated,poorvoters.

    PeronandhisfollowersplayaprominentroleinsuchnarrativesofArgentinasexceptional

    underperformance.Therearevariationsinthisbasicaccount.Forexample,itisoftenclaimedthat

    policymaking,evenduringrelativelycentristadministrations,wascomplicatedenormouslybythe

    presenceofapopulistpartydemandinggovernmentintervention.Andthatpoliticalinstabilityarising

    fromattemptsatsuppressingthePeronists,particularlysincethe1960sanduntilthe1980s,hasbeen

    responsibleforthelowlevelsofprivateinvestmentandweakoveralleconomicperformanceofthe

    country.Inotherwords,inthisaccounttheproblemhasbeenArgentinaspopulisttraditionwhichhas

    fueledbadpoliciesandpoliticalinstability.

    Atroublingaspectofthisaccount,however,isthatitdoesnotexplainwhyvotersfindpopulistpolicies

    appealing.Asstated,thisnarrativesoonhastoconcludethatdemocracyisnotareasonablewayto

    electthecountrysleaders.Paradoxically,itshouldsomehowalsoquestionthebenefitsofmarkets.

    Indeed,humansinthisaccountmusthavesometypeofdualtypeofrationality:ontheonehandthey

    areabletomakereasonableuseofinformationsothatmarketsareinfactquiteefficient,butonthe

    otherhandtheyareunabletoseethattheleaderstheyelectarebadforthem.Rationalityinthis

    accountofdemocraticcapitalismisabitliketheCheshirecatofAliceinWonderland:nowyouseeit,

    nowyoudont.Inbrief,whileitisclearthatpopulistpoliciesplayabigroleinArgentineexceptionalism

    byinterferingwithcapitalaccumulation,itislessclearinthisnarrativeiswhatthelogicofpopulist

    policiesandwhatexplainstheirpopularity.Ourstudyisconcernedwiththesequestions.

    EconomistshavenotmadesignificantprogressinunderstandingLatinAmericanpopulismbecausethey

    tendtofindtheinterestgrouptheoryofpolicyquitecompelling.Inthestandardaccount,badpolicies

    areputinplacebyspecialinterestsandvoterswouldgetridofthemifonlytheycaredtovote.

    Interestingly,however,votersdovoteinlargenumbers,sotheempiricalappealoftheinterestgroup

    theoryofpolicyformation,atleastinitssimplestform,islow.Amorepromisingapproachacceptsthat

    populistpoliciesareinfactappealingto(atleastsomegroupof)votersandtriestoexplainthisappeal

    withinarationalmodel(bywhichwemeanamodelwhereagentstrytodothebesttheypossiblycan,

    giventheirobjectiveswhichmaybebroaderthanmaterialpayoffs).Thatis,broadly,thestrategywe

    adopthere.ThedemandforpopulismiscentraltothepoliticalandeconomiclegacyofPeronismwhich

    hasmarkedtheperiodgoingfromPeronsascenttothesecretaryofLaborin1943untilthepresent.

    Indeed,partofthepoliticalinstabilitythatcharacterizesArgentinaafter1943originatesintheintense

    appealofPeronistpoliciestoalargegroupofvotersandthedifficultyingeneratingconsensusarounda

    setofbasicpoliciesthatwouldhaveallowedthecountrytoavoidmacroeconomicinstability.

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    3

    Ouranalysishasthreemainparts,whichfollowabriefsectiononthehistoricalandpoliticalbackground

    ofPeronistpolicies(sectionII).Inthefirstsubstantivepart(sectionIII),weusequalitativedatafrom

    Peronsearlyspeeches(194455)toprovidesomeevidenceonPeronsbeliefs(i.e.,positivedescriptions

    ofhowtheworldworks)andpreferences(i.e.,normativevaluesdescribinghowtheworldshouldwork).

    Thesespeechessuggesttousthreesimplebutimportantpoints.First,Peronspolicieswereknownto

    hisvoters(incontrasttolaterPeronistpresidents,suchasCarlosMeneminthe1990s,whowaselected

    onaplatformbutchangedituponbeingelected).Second,whatPeronisdoinginthespeeches,atleast

    inpart,isprovidingmeaningbyinterpretingtheevidenceavailableinthelightof(whatwewouldcall)

    acoherentmodeloftheworld.Althoughsuchinterpretationisunusualineconomicmodels,itisoften

    discussedbyscholarswhostudybeliefs(andindiscourseanalysis).Thethirdandfinalelementinhis

    speechesthatwethinkisworthemphasizingisthathegivesaprominentroletotheforcesthat

    determineincome.Incontrasttowhattheliteratureonvarietiesofcapitalismhasemphasizedinterms

    oftheoriginsofincome(distinguishingbetweeneffortversusluck),Peronemphasizestheroleofothers

    indetermining(reducing)ourincomethroughexploitation.Thisemphasisresultsinafocusonactors

    (foreigncountriesandrichlocalelites,whowouldratherbelivinginEuropethaninArgentina).1 Andin

    afocusondistinguishingthecomponentsofwelfare:thereareutilitylossesfrombeingexploited,

    whichgobeyondthemateriallosses(losingonesdignity).

    Inthesecondpart(sectionIV),westudyPeronistbeliefsafterPeronsdeathandplacethemin

    comparativeperspectivebylookingatdatafromtheWorldValuesSurveyinthe1990s.Respondents

    thatdeclareanintentiontovoteforPeronismarealsothoseonrelativelylowincomeandeducation.

    ThisisconsistentwithouranalysisofPeronsspeechesofthe194455period,whichappeartobeonthe

    leftsideofthepoliticalspectrum,andwithspecificeventsofthatperiod(theburningoftheJockeyClub,

    theantiAmericanslogans,etc).Indeed,asmallliteratureonthesubjecthasclaimedthatPeronismis

    thelocalversionoftheAmericanDemocratsortheBritishLabourParty.However,wecaninvestigate

    thebeliefsofthesePeronistvoterswithrespecttotheoriginsofincome(e.g.,luckvseffort)andcomparethemwiththoseofAmericanvoters.OurresultssuggestthatPeronistbeliefstendtobemore

    ontherightofthepoliticalspectrumthantheopposition(althoughallArgentinevotersarequitelefty).

    Inrelativeterms,Peronistbeliefsinthe1990sappeartobesimilartoRepublicanbeliefs.Inother

    words,theoppositiontoPeronseemstohavecomefromtheconservativeswhiletheoppositiontothe

    Peronistsinthe1990sseemstohavecomefromtheideologicalleft(althoughinbothperiodsthe

    oppositionseemstohavebeenonhigherincomethanthePeronists).

    Inthethirdandfinalsection(SectionV)wedevelopamodeltoexplainthislowdemandfor

    capitalism.Ifvotersmaximizesomethingelsethanjusttheirmaterialpayoff,thenevenwithcorrect

    beliefsabouthowtheworldworks,theymaydemandbadpolicies(fromthenarrowpointofviewof

    1OneoftheSpanishwordsfortraitorisvendepatrias(literallysellerofthemotherland).AcarioCotapos,a

    Chileanartist,oncecommentedonthepossibilityofsellingthemotherland,addingyes,andletsbuysomething

    smaller,butclosertoParis.BetrayalbytheoligarchyduringthedecadepriortoPeronsfirstgovernmentis

    emphasizedforexample,inTorres,(1973)andHernandezArregui(1973).

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    4

    maximizingincome).Avoterconcernedwiththefairnessofoutcomesisacaseinpoint.Specifically,we

    assumethatvotersdemandthatfirmsbehavekindly(andthismustbetrueinsomescenarios).When

    theydonot,votersexperienceangerwhichdecreaseswhensuchfirmsarepunished.InArgentinafirms

    aremorelikelytomisbehavethaninrichcountries(perhapsbecauseoflowcompetitionorbecauseof

    lowproductivity)sotheStatemustintervene(regulatetohumanizeCapital).SectionVIconcludes.

    II. Peron,InterventionistPoliciesandArgentinePolitics:BackgroundBeyondtheobviousinterestinabetterunderstandingofthedemandforpopulism,workonPeronismis

    importantbecauseofthecrucialroleofpoliticalinstabilityinArgentinasrelativedecline. In1930,as

    theWorldeconomiccrisisaffectedArgentina,amilitarycoupbyagroupwithneofascistinclinations

    resultedinthefirstmilitarygovernmentofthecountry.Thesuccessionofnondemocraticgovernments

    (seven)whichfollowedincludedepisodesofseriousviolence,andendedinthepresidencyofJuanPeron

    in1946.Since1930,anduntiltheMenemadministrationofthe1990s,nodemocraticpresidentwas

    abletocompleteitsterm,withtheexceptionofthefirstPerongovernment.Thiscoincidedwith

    Argentinaseconomicwoes.Indeed,Argentinascomparativeeconomicperformance(seeFigure1in

    Llach,2010)revealstwoperiodswheredivergenceappearstobepresent:the1930s,whentheseries

    appearstobegintofall(withtheexceptionofthePeronadministration),andthe1970s,anotherperiod

    ofheavypoliticalinstability,whenthedeclineappearstoaccelerate.

    Thissuggests,atleastatthisbroadlevelofgenerality,thatthereissomemeritinthehypothesisthat

    politicalinstabilityandrelativeeconomicdeclinearepositivelycorrelated.Interestingly,therateof

    investmentduring193040(theinfamousdecade)appearslow(9.1%),particularlywhencompared

    withthatoftheXXthcentury(14.4%),orwiththerateofinvestmentprevailingduringthedecadeprior

    tothestartoftheFirstWorldWar(19.3%),oneoftheperiodswherethegovernmentwasinthehandsofelitistgovernmentsandtheeconomywasrelativelyopentointernationaltrade.Figure1reveals

    thatinvestmentoverGDPriseswithPeronism,withanincreasinglylargerroletakenbypublic

    investment(whereasintheearlyyearsitismainlyprivateinvestment)untilthefiscalcrisisoftheearly

    1980s.2Asimplehypothesissuggestedbythedataisthatpoliticalinstabilitycauseslowerprivate

    investment,andthatthisisthemaincauseforArgentinasrelativedecline.Thisisanaturalcomplement

    totheoriesofArgentinasrelativedeclineemphasizinginvestment.DiazAlejandro(1970,1988),for

    example,hasemphasizedthedifficultiesinmaintaininghighlevelsofinvestmentoncetheexport

    oriented,marketfriendlyregimewasreplacedbythemoreinterventionistregimesthatfollowthegreat

    depression.Taylor(1994)alsoemphasizestheroleoftheextremelyhighratesofcapitalaccumulation

    pre1913,explainingthatlowsavingsrateconstrainedcapitalaccumulationuntilthe1930swhilethesubsequentprotectionistpoliciesresultedinahighrelativepriceofimportedcapitalgoodsalso

    contributedtoretardcapitalaccumulation(forevidenceontheroleofmachineryinvestmentingrowth,

    seeDeLongandSummers,1991).Anaturalextensionofthislineofresearchisthatpoliticalinstability

    2ForanalternativeviewoftheInvestmentperformance, seeTaylor(1998).

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    5

    playsasimilarroleinterferingwithprivateinvestmentandcontributingtoArgentinasdecline.Ofcourse

    then,akeyiswhydotheseinterventionistpoliciesgetimplementedandwhydoespoliticalinstability

    persist.

    Figure1:TotalInvestmentoverGDP.SourceGerchunoffandLlach(1998).

    SeveralauthorshaveemphasizedtheroleofPeronisminArgentinasdevelopment.3SinceGeneral

    PeronsascenttotheLaborSecretariatin1943(withtheMilitaryGovernmentofGeneralRamirez)he

    wasthepreeminentpoliticalfigureofArgentina. Evenafterhisdeathpolicieshavebeendefinedwith

    relationtothePeronistpoliticallegacy(see,forexample,ODonnell,1977andPortantiero,1973).SeveralhypotheseshavebeenadvancedtoexplainthecausesofPeronistsupport.Germani(1962),for

    example,hasemphasizedtheemotionalfragilityofinternalmigrants(fromtheprovinces)andthe

    charismatic,paternalnatureofPeronsleadership.Heprovidesanestimateof83,000migrantsperyear

    tothegreaterBuenosAiresareafortheperiod193647,increasingthereafter.By1957,Germani

    estimatesadoublingofthepopulationintheBuenosAiresmetropolitanarea(form3.4to6.3million).

    Thus,laborbecameacentraleconomicandpoliticalforceinthecountry.Duringthisperiod,theshareof

    outputaccountedforbyindustryincreased,sothatthePeronistprolaborpoliciesgoalongwayin

    explainingitspopularsupport,evenifvotersonlyhadmaterialconcerns.Someauthorsestimatethe

    3Thereis,ofcourse,alargeliteratureonArgentinaseconomicperformanceandontheroleplayedbyPeronism

    whichisinnowaysummarizedorreviewedintheshortparagraphsofferedhereascontextfortherelatively

    narrowsetofpointswetrytoemphasize.Foradescriptionofeconomicpoliciesunderthe194655Peron

    government,seeGerchunoff(1989).SeealsoDiazAlejandro(1970),CortesConde(1998),Waisman(1987),

    HalperinDonghi(1994),LlachandGerchunoff(1989),interalia.

    0

    0.05

    0.1

    0.15

    0.2

    0.25

    0.3

    1880 1900 1920 1940 1960 1980 2000 2020

    Investment/GDP

    I/GDP

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    6

    increaseintherealwageofunskilledlaborintheBuenosAiresareaat17%.4Itisunclearhowmuchof

    thisincreasewassustainable,althoughtherewerepresumablysomeeconomiesofscaleastheinternal

    marketexpandedandhigherprofitsfromthecontinuingprogramofimportsubstitution(seeGalianiand

    Somaini,2010).Itisworthpointingoutthatantiexportpoliciesalsocontributedtotheincreaseinreal

    wagesthroughlowerpricesoffood(seeBrambilla,GalianiandPorto,2010).Besidespoliciesthat

    directlysupportedlabor,avarietyofsocialprogramsindifferentareaswereputinplace,rangingfrom

    increasedaccesstothefreehealthcare,tothecreationofacomprehensivehousingprogramtothe

    establishmentofageneroussystemofsocialsecurity(foragooddescriptionsee,forexample,Gaggero

    andGarro,2009).TherewasalsothepublicprivatepartnershipsymbolizedbytheEvaPeron

    Foundation,aprivateentityrunbyPeronswife,fundedthroughcontributionsfromtheprivateand

    publicentitiesandwhichdistributedconsiderableamountsofsocialassistance(see,Stawski,2005).

    Atthesametime,institutionalweaknessesplayedanincreasingroleinlimitingtheabilitytogenerate

    politicalanswerstothecountryseconomicproblems.Somehavearguedthatspecificaspectsplayeda

    keyrole,suchaselectoralinstitutionsgivingpreeminencetothepartyinthedecisiontoreelect

    politicians(seeJones,Saiegh,SpillerandTommasi,2000).Othershavepointedoutthattherehavebeenmanypoliticalinstitutions,particularlysince1946,thatdirectlyledtounexpectedchangesineconomic

    policy(see,forexample,SpillerandTommasi,2004),althoughelectoralfraudprecededPeronandmay

    havelentsomelegitimacytosomeoftheabusesofthePeronistregime(see,forexample,Alstonand

    Gallo,2009).Naturally,theabilitytoprotecttherightstopropertyunderweakinstitutionswaslimited

    andthereisthepossibilitythatthisiswhatledtoweakerinvestmentperformance(see,forexample,

    Adelman,1999,CortesConde,1998andAlstonandGallo,2009).5Itisworthnotingthattherewasless

    accesstoexternalcapitalafterthegreatdepression(seeTaylor,1994).Foreigndirectinvestmentfell

    somewhatinimportance,albeitfromveryhighlevels(DiazAlejandro,1970reportsthatforeigners

    shareofthestockofcapitalin1927was34%,downfrom48%priortotheFirstWorldWar).

    AsomewhatdifferentpictureemergesfromtheperiodleadingtothePeronistadministrationofthe

    1970s.Therelativelyclosedeconomyofthe1960sexperienceddifficultiesadjustingtoeconomic

    expansionsasincreasedimportsoftenledtoperiodicbalanceofpaymentscrisesandinflation.Against

    thisbackground,andwiththepoliticalproscriptionofPeronism,attemptsatusingwageandincome

    policiestostabilizetheeconomywereunsuccessful.Moreoftenthemilitarygovernmentsfocusedon

    reducingwagepressure,typicallybyrestrictingtradeunions(forexampletheOnganiagovernment

    4SeeMurmisandPortantiero(1971).Ontheroleofthesupportofsocialisttradeunions,seeTorre(1989).See

    alsoHorowitz(1990),DiTella(2003)andTorre(1990),aswellasODonnell(1977),andthecontributionscollected

    inBrennan(1998)andMiguensandTurner(1988).

    5Saiegh(2007)emphasizesthat,evenduringtheearlymarketfriendlyphasefollowingthepassingoftheliberal

    constitutionin1853/60,thesecurityofsomerightstoproperty(forexampleonpublicdebt)dependedonpolitical

    considerationssuchastheextentofpartisancontroloverthelegislature.

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    imposedawagefreeze,attemptedtoincreaseworkinghours,limitedlabourstrikesandsuspendedthe

    legalstatusofseveraltradeunions).Tensionssoonfuelledthepresenceofleftwingelements,and

    fightingcommunismbecameaseriousgovernmentconcern.AsriotseruptedinCordoba,leftwing

    terrorismbecameapoliticalforce,withsomelegitimacy(giventhelackofdemocracy)andaclaimto

    centralityinthePeronistmovement.ThereissomeevidencethatPeronhimselfencouragedthis

    identificationwiththeleft.6Duringthe1970skidnappingsandassassinationsreachedtheirpeak,asthe

    terroristorganizations(theMarxistPeoplesRevolutionaryArmyandtheMontoneros ofPeronist

    extraction)clashedwiththepoliceandarmedforces(seethedataontheassassinationofpolicemenin

    theprovinceofBuenosAiresinBoruchowiczandWagner,2010).Eventually,inthe1970s,withthe

    terroristorganizationsstillactiveafterhisreturntothecountryspresidency,Peronbrokewiththemin

    adramaticspeech,ejectingthemfromthePlazadeMayo.Thus,incontrasttotheearlyyears,when

    PeronismarrivedandlaunchedatrueworkersmovementopposedtotheConservatives,duringthe

    1970stheoppositiontoPeronseemstohavecomefromtheleft.Thesurveydatareportedlateris

    consistentwiththisdescription.

    Inbrief,itseemsclearthatPeronsarrivalonthepoliticalsceneinthe1940scoincidedwiththeincreasedimportanceoflaborinArgentinaseconomy,andareducedimportanceofopennessto

    foreigncapitalandtradeastheglobaleconomywasaffectedbythewarandtheGreatDepression.

    Accordingly,Peronsideologyreflectedadegreeofnationalismandfaithingovernmentintervention

    thatwouldpersistovertime.Theopposition,however,seemstohaveevolvedfromatraditional

    conservativepositiontoapositionthatismuchmoreontheleftofthepoliticalspectrum.

    III. PeroninhisownwordsThereissomedifficultyindefiningexactlywhatPeronspoliticallegacyis.Somehavearguedthatbecausehewasafascistsympathizer,hisideologicallegacymustsimplybefascism.Thiswouldanswer

    thequestionofhowbadpoliciescometobeimplemented:Peronsauthoritarianruleimposedsuch

    polices.Forourpurposes,thebiggestproblemisthatsuchpoliciesappeartobepopularwiththe

    electorateandtheycontinuedtobesoevenafterPeronwasdeposedandthemostegregiousaspectsof

    hisauthoritarianrule(suchasindoctrination)werenolongeractive.7Furthermore,Peronismseemsto

    6Forexample,whileinexileinMadrid,PeronappearstohavedesignatedJohnWilliamCooke,amanwhoargued

    forarmedstrugglebasedontheCubanmodel,ashismainrepresentativeinthecountry.Thereisample

    evidenceofthearmedgroupsidentificationwithPeron(seeBaschetti,2004).

    7One(ofseveral)possibledifferenceswithfascism,forexample,isthattradeunionleaderswerecloser(more

    loyal)tomembersoftheunionthantothegovernment(perhapsinspiteofPeronswishes).Also,therewere

    attemptsatconstructingPeronismwithoutPeronandinstancesoftradeunionleaderswhowereperceivedto

    bequiteindependentofPeron(leadingtotheextremeviewthatPeronhimselfwasinvolvedinthekillingoftrade

    unionleaderVandor).And,mostimportantly,largeincreasesintheLaborshareofGDPtookplaceunderPeronist

    administrations(forhistoricalevidenceandacomparisonwithAustralia,seeGerchunoffandFajgelbaum,2006).

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    involveopinionsabouteconomicindependencethatarecentralandeasilycompatiblewithless

    authoritarianpoliticalforms.ItisofsomesignificancethatPeronspoliticalideologywasdevelopingin

    theimmediateaftermathoftheFirstWorldWar.Bornin1895,hewas28yearsoldastheWeimar

    republicwasstrugglingwiththewarreparations,whichbecameaconvenientscapegoat,togetherwith

    bankers,Jewsandforeignspeculators,soitisperhapsunsurprisingthatattribution(particularlyto

    externalforces)playsabigroleinhisspeeches.Andhewas35astheGreatDepressionaffectedthe

    worldeconomyandrichcountrieswerestartingtocopethroughpublicworksprogramsand

    governmentspending(inpartlinkedtorearmament).Perhapsevenmoresignificant,in1935oneofthe

    firstactionsofthenewlycreatedcentralwasabailoutofthebankingsystematalargesocialcost(della

    PaoleraandTaylor,2002).Thus,itmusthavebeencleartohimthatlargeshockscoulddisruptthe

    macroeconomytoaverylargeextent,makingindividualeffortoftenirrelevantinthedeterminationof

    income.

    ThePeronistregimeofthe1940sand50saccompaniedtheeconomicchangesthatwereimplemented,

    firstfromtheLaborSecretariatandthenfromthePresidency,withapowerfulnewrhetoricthatgave

    workersapreeminentroleintheformationofpolicy.Keynesianideaswerebecomingknown,atleastthroughRooseveltsactionsandsomeofthemainideasweremakingtheirwaytoArgentina.8Rhetoric,

    ofcourse,wasonlyoneelementinabroadattempttocreatesupportforthesocialandpolitical

    changesthatwouldsustaintheredistributionofincomeatthecoreofPeronistpolicies.Otherelements

    includedasetofpoliticalritualslinkedtomassmobilization,theemotionalappealofEvitaandaclear

    attempttoinfluencepeoplesperceptionsandbeliefsthroughpropaganda.AlthoughwestudyPerons

    speeches,wenotethatthismightbearelativelynarrowfocus,particularlygiventhediscussionofthese

    elementsappearingforexampleinPlotkin(2003).Ofcourseapotentiallyimportantdeterminantof

    beliefsistheeducationsystemandthePeronistregimeheavilyintervenedinthedesignofthenational

    curriculumandthepublicschoolssystem(see,forexample,BernettiandPuiggros,1993,Bianchi,1992,

    andEscude,1990).

    ThereisimportantpreviousworkinthefieldofdiscourseanalysisfocusedonPeronsspeechesbySigal

    andVeron(2003).9Theyanalyzeseveralaspectsofhisspeechesandputspecialemphasisontheir

    Howevermuchweightonegivestotheseconsiderations,itseemsthedistancebetweenfascismandPeronism,at

    leastintheirauthoritarianstylesandrhetoric,isnotlarge.SeeGermani(1962)andLewis(1980),forinteresting

    discussions.

    8FedericoPinedoandLuisDuhau,togetherwithRaulPrebisch,putinplacethePlandeAccinEconmicaNacional

    in1933.TheywereinfluentialinaffectingforeigntradeandinthecreationoftheArgentineCentralBankin1935.DellaPaoleraandTaylor(1999)describeheterodoxmonetarypolicyafter1929,thechangeinbeliefsand

    expectationsfollowingtheshiftinmonetaryregimeandtherelativelymildeconomicdepression.

    9ThereareseveralinterestingculturalaspectsofPeronismthatwedonotdiscuss,includingthefocusononedate

    (October17th

    ),whenPeronismstarts.Foradiscussionandseveralofthekeydetailsofthemassmobilization

    thattookplaceduringOctober17th

    ,1945,seeJames(1988).

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    9

    politicaldimension.Forexample,SigalandVeronputforwardtheinterestinghypothesisthatPeron

    activelyconstructsthenotionthathearrivestotheState fromtheoutside(alifededicatedtothe

    military)toprovideunity/harmonytoadividedcountry(during19734,themainfocusoftheiranalysis),

    whichissignificantgivensomeoftheelectoraldecisionsmadeatthetime.Incontrastwefocusonthe

    economicdimensionofhisspeeches.Thematerialwestudiedwascontainedin62speeches,delivered

    betweenOctober15th1944andMay1st,1953.Theyincludeafewspeechesduringrallies(asreportedin

    themedia),somespeechesduringparticularcelebrations,aswellasmessagestocongressandother

    legislativebodies.

    PeronsSpeeches

    Thefirststrikingpoint(toaneconomist)ofhisspeechesistheirlowinformationalcontent.Incontrastto

    whatmightbeexpected,theyarenotoftheform:IaminformingthepeopleofArgentinathatweare

    facingashockwiththefollowingcharacteristics,andhereiswhatwearegoingtodoaboutit.Inother

    words,theyarenotpredominantlyexercisesinthetransmissionofinformation.Rather,theyareheavily

    interpretednarrativesofwhathashappenedinthepast,andhowtheconclusionsthatwedrawfrom

    lookingathistorycanhelpusshapepolicyinthepresent.Inbrief,akeyelementofthespeechesisthat

    theyareprimarilycenteredonthereinterpretationofalreadyavailableinformation.Also,scholars

    workingonanalysisofdiscoursewouldsayheisengagedintheproductionofmeaning.Inparticular,

    suchresearchisconcernedwithestablishingthesourcesrelationshiptothecontent(relatedinthis

    casetothesourcesstatus).Undertheassumptionthatmindsandmemoryaremalleableinthisway,an

    economistwouldhavenoproblemmodelingitasa(selfinterested)activityofthepolitician.Anexample

    isGlaeser(2004),wherepoliticianssupplystoriesandvotersfailtoinvestigatetheiraccuracy.Finally,

    thespeechescanalsobeinterpretedastryingtoinfluencethesystemofvaluesofthepopulation.Inthis

    regard,Rokeach(1973)isaninfluentialstudyofvaluesystemsandtheirimpactonbehavior(also

    focusing,inpart,onthewritingsofmajorpoliticalfigures).SeealsoConverse(1964)andforarecent

    review,Kinder(1998).

    Thesecond,andperhapskeypartofthisinterpretationexerciseisthatPeronassumestheroleofa

    heroicwhistleblower,denouncingacorruptstateofaffairswherepoliticiansareboughtbyone

    particulargroupinsociety(theeconomicandculturalelite,whoareseducedbyallthingsforeign)in

    ordertoenactpoliciesagainstworkersandthepoor.ItisavariationofthethemeofPeronsarrivalas

    anexternalplayer(asemphasizedbySigalandVeronbutwithspecialsignificanceforthebeliefsabout

    thegenerationofincome).Oneexampleis:

    Itcanbeseenthat,notknowledgeableoftheartofpretending,Ihaveexposedtheanguishing

    situationsthatburdenedmyfeelingsasIabsorbedtheDaedalusoflawsanddecrees()which

    inalargenumberofcasesrestrictedtherightsofworkers,or,iftheyrecognizedthem,itwould

    betokillthelasttraceofthehopeofjustice.May1st1945

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    Ihavebeenaccusedofhavingagitatedtheconscienceofthecountrysworkers.Ofhaving

    createdasocialproblemwherenoneexistedbeforeinsteadofsilencingtheinequalitiesand

    socialinjustices,Ihaveuncoveredthemsothatweallcouldknowwhereevilwasandwecould

    findthemoreconvenientmedicines....Theprevioustacticconsistedinfakingasocialwelfare

    withtheexclusiveaimofnotdisturbingthegooddigestionofthegoldenBourgeoisie.May1st

    1945.

    Anothercharacteristicofhisspeechesisthecontinuousattempttoreassuresupportersthathehasa

    coherentviewoftheworld.Examplestakeplaceinseveralspeeches,buttheoneonMay24th,1950is

    centeredonexplainingPeronstheories.Hebeginsbyreactingtoaccusationsthathisisnotacoherent

    economicplanstating,

    IthasbeensaidthattheJusticialistamovementlacksaneconomictheory.Nothingmore

    untrue.Wehaveaperfecteconomictheory.Whathappensisthatwehavenotyetspelleditout

    becausewedidnotwantthattheoligarchs,orthecapitalistconsortiathatexploitedthecountry

    throughconsciencelessandavariciousbosses,could,knowingourplan,stopouractionWhen

    wehavebeenabletodominatetheseinternationalmonopoliesortheforcesoftheanti

    motherland,thenwewillexplainourtheorytotheworld.May24th,1950.

    Andheexplains(inthesamespeech)somedetails

    oldeconomictheorywasbasedonaprinciplecalledhedonic.whatdoesitrepresent?

    ThecapitalistsaysmycapitalisthebasisoftheeconomybecauseIamtheonewhopromotes,

    paysandmakes.AsaconsequenceIproduce10,anddontproducelessormoreasinboth

    casesIlose.Butme,thesociologist,Itellhim:Yessir,youproduce10,butherethismanhas

    toeatandhetellsmethat10isnotenough,heneeds20.ThenthecapitalistrepliestomeAh,

    lethimexplode,lethimeatwith10becauseifIproducemoreofthatIlosemoney.Thatiswhenthehedonicprinciplestopsbeingsonaturallyrational,leastofallfromthepointofview

    ofwelfare,whichisthebasisofallorganizedcommunities. wedonotwantaneconomy

    subordinatedtocapital,wewantcapitalsubordinatedtotheeconomyIf,afterthat,the

    capitalistisabletofillitscofferwithgold,lethimdoit;wedontcare;evenbetterifhedoes.

    Butwecantdothatuntilthepeopleissatisfiedandhappyandhasthepurchasingpower

    neededtoachieveaminimumofhappiness,withoutwhichlifeisnotworthliving.May24th,

    1950.

    TypesofBusinesspeople

    TheconspiracythatPeroncomestouncoverisrelevanttoworkersbecauseitidentifiesan

    influenceontheirincome.Thisrepresentationrequiresthatcapitalists,atleastuntilPerons

    arrival,wereunkind(inconsiderateorwhomadetheirmoneythroughcorruptmeans). The

    speechesincludeconstantreferencestosuchbadtypesamongstbusinesspeople.

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    Peoplehavebeenfacedwiththeideathatafatefullodgeofdemagogueswastherulingclassof

    thecountry,itselite,andassuchwasmadeupbywise,richandkindpeople.Ithastobe

    pointedoutthatthewisehaverarelybeenrichandtherichhaverarelybeenkind.October15th,

    1944.

    Inotherwords,thoseprivilegedbythecapitalistregimearefinished;thosethathadeverything,thattookthecowintheshipwhentheywenttoEuropetohavecoffeewithmilk.No,letshave

    themhavecoffeewithmilk,butwithpowdermilk.Itisnotthatbadforthem.May12th,1950.

    Itusedtobeeasyforcapitalists:whentherewasastrikeworkerswereputinjail,theywere

    processedandtheydidntriseagain. RememberVasena.Workersconfrontedthesituation

    buttheresultwasseveralthousandmendead.Theoligarchswereallhomedoingthefiveo

    clocktea. Itusedtohappenthatacapitalistwhowasalmostbankruptwasmadetoearn,

    withjustasignature,twoorthreemillionpesoswithouthimhavingtheneedtodomorethan

    wakeupinthemorningandaskoverthephoneifthematterwasready.Inthiswayfavorswere

    beinggranteduponsomeonewhoperhapswasashamelessone. August9th,1950.

    Othersdetermineourincome

    Withbadtypesamongstthecapitalists,itwaseasierforPerontopressforwardwiththeideathat

    theprocesswhereincomewasgeneratedwasundertheirinfluence.Thismatcheswellwiththe

    widespreadbeliefthatArgentinaisarichcountryandonehastofindanexplanationforwhythere

    iswantamidstplenty(foradiscussionofbeliefformationwhennaturalresourcesareimportant,see

    DiTella,DubraandMacCulloch,2010).Indeed,onepartofhisspeechescanbereducedto

    argumentsinsupportoftheideathatinsteadofindividualeffort(internaltotheindividual)orluck(externalbutwithoutintention),therelevantinfluenceonincomeisanexternalforcewithhuman

    intention.ItisotherswhoareactivelytakingactionswhichlowerArgentiniansincome.Itisnota

    questionofmakingabiggereffortattheindividuallevel;noraquestionoftakingacollectivestand

    toreducetheinfluenceofnaturalelements(throughinsuranceorabetterselectionofactivitiesand

    crops).ItisaquestionofactivelyopposingotheractorsthattrytoexploitArgentines(ontheroleof

    corruptionperceptionsinexplainingtheappealofcapitalism,seeDiTellaandMacCulloch,2009).

    Therearenumerousexamplesofthisconceptionoftheincomegeneratingprocess,andthesupport

    oftheStateinenforcingit,inPeronsspeeches.Oneexampleis

    Theeconomicdestinyofworkerswasexclusivelyinthehandsofthebosses...andifworkersorganizedaprotestmovementoradoptedanattitudedefensiveoftheirrights,theywereleft

    outofthelawandexposedtothebossesresponseandthepolicerepression. Agroupof

    capitalists,characterizedthemostbyitscontinued,bloodyoppositiontoworkersvindications,

    hasplottedanunthinkablemaneuvertoneutralizethestepsthathadbeenadopted tostopthe

    riseinthecostoflivingandcounteracttheeffectsofinflation.May1st1945

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    weneedarms,brains,capital.Butcapitalthatishumanizedinitsfunction,whichputsthe

    publicswelfarebeforeagreedyinterestinindividualprofit.Iexpressmystrongestrejectionto

    theGodofunproductiveandstaticgold,tothecoldandcalculatingsupercapitalismthatharbors

    initsmetallicguttersShylocksinfamoussentiments.May1st,1947.

    Intheyear1943oureconomywasinthehandsofforeigncapitalistconsortiabecause,until1943,thoseconsortiawerethosethatpaidavilepricetoproducers,gathered,exported,

    transportedandsoldtoforeignconsumerstheproduceofArgentinework.Itcannotbedoubted

    thatinsuchintermediationwentmostoftheprofits.March5th,1950

    Theremightremainsomeformerexploiterofhumanlabor,whocannotconceiveanArgentine

    nationsociallyfair, orsomeoldlawyerofforeigncompanieswhomightyearnforthetimesof

    theBembergs,whentreasonwasalsoprofitableMay1st,1950.

    300families,inourcountryforexample,puttogethertheircapitalandenslaved17million

    Argentines. August9th,1950.

    Weareinfavorthatamanmightenrichhimselfworking,butweopposethathemightdoso

    defraudingortakingadvantageofotherpeoplesweaknesses.Wewant()thateachArgentine

    hasprosperityandgoodfortunewithinreach,butwedonotacceptthatinordertoobtainthem

    hewouldcommitcrimesagainstotherArgentinesoragainstthecommunitythatweallarea

    partof. March5th,1952.

    Onsomeoccasions,asinthereferencetoBembergabove,Peronnamesspecificmembersofthe

    elite,althoughlessthanonemightimagineifhewasstirringuphatredagainsttherich.Inonecase

    theyaredescribedasguiltyofexploitingcapitaliststhemselves.Oneexampleis

    Themonopoly,beitcalledBungeyBorn,Dreyfus,etc.wastheonedoingthegathering

    thepoorproducerreceivedsixpesosandthisintermediaryoctopusreceivedthirtyorfortyfor

    whatsomebodyelsehadproducedWhenthisisorganizedproperly,thesmallfarmerwill

    produce,transport,gather,sell;andtheproductwillgoexclusivelytohimandnotforthe

    smartone,whoconstituteatumorthatwasplacedinthemiddle.August9th,1950

    Yetinsomeofthesesamespeecheshedistinguishesbetweenlocalandforeigncapitalistsand

    justifiesthebehavioroftheformer.Thisisoftenmentionedinthecontextofspeecheswithastrong

    nationalistcomponent.

    WhenIhavesaidthattherewasexcessiveexploitation,Ihavenotblamedourbosses,becauseIknowfullwellthatourbosseswerethemselvesexploitedfromtheotherside()Thatiswhywe

    haveboughttherailroadsandeverythingelseconcerningpublicservices() May12th,1950

    AppropriateGovernmentPolicy

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    ThesedescriptionsofthestateofaffairsinArgentinaatthetimenaturallyleadtothejustificationof

    asetofinterventionistpoliciesadoptedtoaddressthemainproblems.Interestingly,inthese

    portionsofhisspeeches,theannouncedpoliciesarenotonlylinkedtothesolutionofthesetof

    economicproblemsuncovered,butalsotothetypeofpeopleArgentines(whoimplementthese

    policies)are.Thereisaconnectiontoidentityinthatthereare(apparentlydiscreet)categoriesof

    peoplethattakecertainactions,sothatwhentheseactionschange,identityalsochanges,which

    appearsinherentlydesirable(foramodelofidentity,seeAkerlofandKranton,2003).Itisasif

    peoplewhoareabletodefytheirexploitersandstandupfortheirrightsandcannotbefooledinto

    acceptingcompromisesolutionsaretrueArgentines.

    Thespeechesprovideseveralexamplesoftheinterventionistpoliciesthatmatchtheneedscreated

    byPeronsdescriptionofthemainproblemsfacedbyArgentina.Theseinclude,

    Weimplement,inaloyalandsincerefashion,asocialpolicydesignedtogiveworkersahuman

    placeinsociety,wetreathimasabrotherandasanArgentine.October15th,1944.

    Nomanshouldearnlessthanwhatheneedstolive.Wesaidthatthereisalineforlife

    determinedbytheminimumessentialwage,andthosebelowthatlinewerethesubmerged;

    andthatinourcountrytherecouldnotbesubmerged;everyonehadtobeemerged.

    October21st,1946.

    Ifwehaveintervenedinsome(enterprises)ithasbeenbecausewehadtosomehow(avoid)the

    constantoutflowofnationalwealth.()notonlywerespectprivateactivity,butwealsohelp

    andprotectit.Theonlythingwedontwantisareturntotheoldageofmonopolisticconsortia

    ofexploitation.Wewantthatmenwork()astheyseefitbutwedonotwantthatittakes

    placeattheexpenseoftheconsumerortheproducer.Wewantthathewhoproduceswealth

    mayplaceitwithoutpressureorexploitationofanytype.February7th

    ,1950.

    TheEstatutodelPen,mightnotbetothelikingofsomeexploiterswithoutconscience,()

    whohavebeenupsetatthepossibilitythatImightdefendwithmoreenthusiasmtheperfecting

    ofthehumanracethanthatofArgentinebullsordogs.March5th,1950.

    Oneofthebarrierstonationalunitywasundoubtedlytheinjusticescommittedbythecapitalist

    oligarchyexploitingworkerswiththecomplicityoftheauthoritiesinchargeofdistributive

    justice....Apeoplewithanimmensemajorityofslavescannotbefree,justasafreepeoplecan

    neverbesubjugated. IamnotexaggeratingwhenIsaythatin1943therewereslavesinthe

    ArgentineRepublic.May1st,1950.

    Today,May1st,theLaPrensanewspaperwillbehandedovertotheworkersThis

    newspaper,whichexploiteditsworkersandthepoorduringyears,whichwasrefined

    instrumentofallforeignandnationalexploitation,whichrepresentedthecrudestformof

    treasontothemotherland,willhavetopurgeitssinsservingtheworkingpeople.May1st,1951.

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    Thegovernmentiscommittedtoenforcingpricecontrols,evenifthatmeanshangingthemall.

    Theyhavearighttoearn,buttheydonthavearighttosteal.May1st,1952.

    ThissimpleoverviewofPeronsspeechessuggeststousthatakeycomponentofPeronistbeliefsisthe

    ideathatwelfarecanbeaffectedbyothers.Thissuggeststwochangestothestandardformulationin

    economics,whereagentsareassumedtoderiveincomefromindividualeffortorfromluck(whichis

    beyondanyonescontrol).Thefirstisthatotherplayerscanaffectanindividualsincome(localelites,

    foreigncountries).Thesecondisthatlaborrelationshaveanonmonetarydimension,whichwe

    interpretasaninfluenceoffairnessinpeopleswelfare(andnotjustincome).Giventhesebeliefs,there

    isaroleforgovernmentinensuringthatworkersaretreatedwithdignity(humanizecapital),which

    weinterpretassomereassurancethatfirmsarebehavingwithsomereasonableamountofconcernfor

    workerswellbeing.

    IV. PeronismandtheAmericanDemocrats:DifferencesinSurveydataonBeliefsandValuesGivenPeronscontinuedinfluenceonpoliticalandeconomiceventsevenafterthe1955coup,itisof

    interesttoprovideatleastsomeevidenceonthelaterevolutionofPeronistbeliefsandvaluesandto

    placethemincomparativeperspective(forexample,bycomparingthemtoAmericanbeliefsasa

    benchmark).TheapproachwefollowistofocusinasnapshotofthepublicsinterpretationofPeronism

    atalaterdate.Unfortunately,continuedsurveydatafromdifferentperiodsisunavailable.However,we

    havedataonbeliefsandvotingpertainingtothe1990sfromacomparativesurveythatcontainsdata

    fortheUSandArgentina(andothercountries).Ofcourse,the1990swasaperiodwhereboththeUS

    andArgentinaareruledbytwopoliticians,MenemandClinton,thatareelectedonaplatformthatisontheleftofthepoliticalspectrumbutwhoendupimplementingreformsthataremoreconsistentwith

    centrist/conservativevalues.InthecaseoftheUSthishappensonlyaftertherearemidtermelectoral

    lossesandmainlyinvolvewelfarereformsandthedroppingofsomeofthelesspopularinitiativessuch

    ashealthcarereform,whereasinthecaseofMenemtheywerelargerandmadefromthestartofthe

    term,andtheyinvolvedacomplexrelationshipwiththelabourmovementwhichwasanimportant

    supporter(seeMurillo,2001,Levitsky,2003andEtchemendyandPalermo,1998,fordiscussions;on

    policyreversalsinLatinAmericaduringthisperiod,seeStokes,2001).

    OurinterestincomparisonswiththeUScomesfromahypothesisexplainingPeronism,namelythatit

    istheArgentineversionoftheAmericanDemocrats(giventhattheyaresupportedbysimilar

    demographicandsocioeconomicgroups).AsimilarpointisalsomadewithrespecttoPeronisms

    associationwiththeBritishLabourParty.Crosscountrysurveydataonpeoplesopinionaboutelements

    ofcapitalismisavailablefromtheWorldValuesSurvey.CoordinatedbyRonaldInglehart,the199597

    waveasksadults(olderthan18)inover50countriesseveralquestionsofinterest.IntheUS,thedatais

    obtainedfromarepresentativesampleofindividualsage18andolderthroughfacetofaceinterviews.

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    InArgentina,samplingwaslimitedtotheurbanizedcentralportionofthecountry,whereabout70per

    centofthepopulationisconcentrated.10

    Importantlyforourpurposes,thesurveycontainsdataon(selfreported)voting,allowingustoderive

    measuresofvoteintention,oratleastsympathy,towardsthemainpartiesinthecountry,including

    Peronists.Thus,wefirstdividethesampleinArgentinaintwogroups:betweenthosethatdeclaretovoteforPeronistsandthosethatdeclaretowanttovoteforothergroups.Theprecisequestionasked

    is:Iftherewereanationalelectiontomorrow,forwhichpartyonthislistwouldyouvote?Justcallout

    thenumberonthiscard.Thenacardwith1.PartidoJusticialista,2.UnionCivicaRadical,3.Frepaso,4.

    Modinand7.Blankballotisshown.Peronistsarethoseanswering 1,whileNonPeronistsarethose

    answering2,3and4.IntheUS,asimilarprocedureallowsustodeterminetwosubsamples:

    RepublicansandDemocrats.

    Wethenusedameasureofincometodividethesampleintotwocategories(richandpoor).The

    questionaskedwasHereisascaleofincomes.Wewouldliketoknowinwhatgroupyourhousehold

    is,countingallwages,salaries,pensionsandotherincomesthatcomein.Justgivetheletterofthe

    groupyourhouseholdfallsinto,beforetaxesandotherdeductions.Thenascalewith10groups,

    correspondingtotheincomedecilesinthecountryisshown(thisscaleisdifferentineachcountry).We

    classifyaspoorthoseinthelowest5categories.TableIshowsthat69percentofPeronists,whereas59

    percentonNonPeronists,reportincomesthatareinthelowest5categories.IntheUS,withinthose

    admittingapreferenceforvotingaparticulargroup,wenotethatwithinthosethatpreferthe

    Democrats,42percentdeclaretobeinthelowest5decileswhileonly29percentorRepublicans.This

    broadlycorrespondstotheideathatPeronistsandDemocratsshareasimilarbaseofsupport(atleastin

    thelimitedsensethattheyhavemoresupportamongstthepoorthantheopposition).TableI,also

    showsresultsusingeducationalattainmentandreachesasimilarconclusion.11Theseresultsechothe

    conclusionofaPeronistpoliticianwhodeclareduponlookingatanelectoralmap,progresscomplicatesus,educationkillsus.Inauxiliarytests(notreported)wetriedselfreportedsocialclassandreached

    similarresults:PeronistsandDemocratsseemtorepresentsimilargroupsintheirsocieties(thepoor

    andthosewithloweducationalattainment).12

    10Withinthisregion,200samplingpointswereselected,withapproximatelyfiveindividualsbeinginterviewedin

    eachsamplingpointthroughmultistageprobabilitysampling.Regionsincludethenationscapital,thegreater

    BuenosAiresarea,Cordoba,Rosario,MendozaandTucuman.

    11ThequestionasksWhat isthehighesteducational levelthatyouhaveattained?and itprovidesaspossible

    answersthe(functionalequivalentforeachsociety)of1.Noformaleducation,2.Incompleteprimaryschool,3.Complete primary school, 4. Incomplete secondary school: technical/vocational type, 5. Complete secondaryschool: technical/vocational type,6. Incompletesecondary:universitypreparatory type,7.Completesecondary:universitypreparatorytype,8.Someuniversityleveleducation,withoutdegree,9.Universityleveleducation,withdegree.12ThequestionusedreadsPeoplesometimesdescribethemselvesasbelongingtotheworkingclass,themiddle

    class,ortheupperorlowerclass.Wouldyoudescribeyourselfasbelongingtothe:1.Upperclass,2.Uppermiddleclass,3.Lowermiddleclass,4.Workingclass,5.Lowerclass

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    Givenourinterestintheroleofbeliefs,itisofinteresttoseeifthesesimilaritiesextendtobeliefsabout

    theroleofluckandothereconomicissues.Theclassicbeliefconcernstheroleofluck(versuseffort)in

    thegenerationofincome.ThequestionusuallyusedtocapturethisbeliefisWhy,inyouropinion,are

    therepeopleinthiscountrywholiveinneed?Herearetwoopinions:Whichcomesclosesttoyour

    view?1.Theyarepoorbecauseoflazinessandlackofwillpower,2.Theyarepoorbecausesociety

    treatsthemunfairly.TheresultsaresummarizedinTableII.Themainpatternisthatthewhole

    electorateinArgentinaseemstobeontheleftofthepoliticalspectrum,asmostpeopleseemtobelieve

    thatpovertyistheresultofluck(orthatsocietytreatsthemunfairly)ratherthanlaziness.However,in

    relativetermsthePeronistsseemtoexhibitapatternclosertotheoneoftheRepublicansinsteadofthe

    Democrats.Indeed,thebiggestproportionofbelieversinlazinessasasourceofpovertytakesplace

    amongstPeronistsandtheRepublicans.ThePeronistratioofbelieversinLaziness(39%)tobelieversin

    anunfairsociety(61%)is0.64,whereasamongstNonPeronistsitis20%to80%,foraratioof0.25.On

    theotherhandthepercentageofbelieversinlaziness(unfairsociety)amongsttheDemocratsis49%

    (51%),whereasamongsttheRepublicansismuchhigher75%to25%.Focusingontheratiosoflaziness

    tounfairness,theDemocratshavearatioof0.96,whereasthatfortheRepublicansis3.

    Asanotherillustration,TableIIconsidersthequestionGenerallyspeaking,wouldyousaythatthis

    countryisrunbyafewbiginterestslookingoutforthemselves,orthatitisrunforthebenefitofallthe

    people?withanswers1.Runbyafewbiginterests,and2.Runforallthepeople.Againwefindthat

    thetwogroupsinArgentina(PeronistsandNonPeronists)tendtogivetheanswerthatispresumablyon

    theleftofthepoliticalspectrum(RunbyafewbigInterests),buttherelativepositionofPeronistsin

    ArgentinaismoreliketherelativepositionofRepublicansthanofDemocrats.

    TableIIIconsidersseveralbeliefsthatarerelevanttounderstandingPeronistsbeliefsandvalues.They

    allpointoutinasimilardirectioninrelativeterms:thePeronists(relativetotheopposition)tendtolook

    liketherepublicans(relativetotheDemocrats).InallcasestheratioinArgentinaandintheUSareonthesamesideof1.Takeforexampletheideathatworkersshouldfollowinstructionsatwork.Wesplit

    answersintotwogroups,thoseansweringtheyshouldontheonehandandthosethatanswereither

    itdependsortheyshouldbeconvincedfirst.Themajorityofrepublicanvoters(77%ofthem,orina

    proportion3.35to1),perhapsnotsurprisingly,tendtoanswerthatworkersshouldfollowinstructions.

    Democratshaveasimilarpositionbutlessintense(theproportionisunder1.4to1).So,inrelative

    terms,Republicansaresomewhatmorelikelytoagreewiththisstatement.InArgentinawehavethe

    oppositeabsolutetendency:mostpeopledisagreewiththisstatement,asreflectedbybothPeronists

    andNonPeronistshavingratiosthatarelowerthanone.However,theratioforPeronistsissomewhat

    higherthanthatforNonPeronists,suggestingthatinrelativeterms,Peronistsaremorelikelytoagree

    withtheideathatworkersshouldfollowordersthanNonPeronists,whichissomewhatsurprisinggiven

    Peronistsaffinitywithlaborcauses,atleastasdetectedinPeronsspeeches.

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    TherestofTableIIIinvestigatesanumberofotherbeliefsandvaluesappearinginPeronsspeeches.For

    example,hediscussescompetitiononhisspeechofMarch5,1952Progressandindividualprosperity

    cannotbebasedrationallyintheharmingofothersbecausethatunleashesanegoistandmerciless

    struggle,whichcancelsallcooperation,destroyssolidarityandendsindissociation.Thebeliefscovered

    intheTableincludethoserelatedtotheroleofluckversuseffortinthedeterminationofincomeand

    theroleofothersinaffectingindividualfates(alreadydiscussed),aswellasthoserelatedtofeminism

    (JobsforMen),authoritarianviews(RespectforAuthority),materialism(LessEmphasisonMoney),

    honesty(AcceptabletoCheat),competition(CompetitionisHarmful)andeconomicorganization

    (OwnershipofBusiness).Inallcases,theanswersgivenbyPeronistvoters(relativetothosegivenbythe

    opposition)aresimilartotheanswersgivenbyRepublicans(relativetotheDemocrats).

    Inbrief,theevidencefromthe1990ssuggeststhattheoppositiontoPeronismisontheideologicalleft,

    eventhoughtheyareonhigherincomeandeducationalachievementthanthePeronists.Ifitistruethat

    theoppositiontoPeroncamefromtheconservatives,thenitisplausibletoconcludethatPeronismhas

    experiencedlessideologicalchangethantherestofthecountry.

    V. AModelofLaborMarketExploitationbasedonAltruisticPreferencesTheprevioussectionshighlighttheroleofseveralelementsthatarenonstandardineconomicmodels.

    Twothatareofparticularinteresttousaretheideathatthereissomethingmoretomarket

    transactionsinthelabormarketthanjusttheexchangeofworkformoney.Thereisalsothepossibility

    ofexploitation,connectedtofirmsownerswhodonotcareaboutthewelfareoftheirworkers.The

    speechofAugust9,1950istypical.NotethatthepartwherePeronstatesWorkersconfrontedthe

    situationbuttheresultwasseveralthousandmendead.Theoligarchswereallhomedoingthefiveo

    clocktea.hesaysfiveoclockteainEnglish,whichservestostressthecontrastthefateofworkers

    whoselifeisindangerwhiletheemployersareoblivioustotheirpredicamentandmorepreoccupied

    withengaginginasocialpracticethatisthenorminEngland.Accordingly,themodelwedevelopisone

    wherethereisthepossibilityofworkerexploitationbyunkindelites,andPeronspunishmentofthese

    elitesprovidesincreasesinworkertotalutilitythroughanemotional(nonmaterial)channel.

    ThemodelinthissectionisanadaptationofthemodelinDiTellaandDubra(2009)tolabormarkets.It

    stressestheideathatapolicythatmaynotbeoptimalunderstandardmodels(thatignoreemotions),

    maybecomeoptimalifworkersexperienceangerwhentheyareexploited,andthegovernmentknows

    it.Inordertomakeourpoint,weintroduceemotionsintheformofworkerangeratperceptionsof

    insufficientfirmaltruism(asinLevine,1998andRotemberg,2008)inatextbookversionofSalop(1979).

    Therearenworkers,eachcharacterizedbyaparameterxinterpreted,aseithera

    1) "preferredvariety;preferredworkplace"thiscanrepresenta. Atasteforworkinginoneindustryoveranotherb. Acostofreconvertingtheworkershumancapitaltoanotherindustry.

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    2) locationparameter;howfarawaydoIlivefrommyworkplace".Foreachworker,hislocationisdrawnfromauniformdistributiononthecircleofcircumference1.

    Therearemevenlydistributedfirmsalongthecircle(therearemfirms,butweuseb=1/masthe

    relevantparametermeasuringconcentration);firmsareofoneoftwotypes,altruisticorselfish.

    Workerscansupplyeitheroneunitoflabor,or0;thisbinarychoiceisasimplification,whichisinline

    withtheindivisibilitiespostulatedinHansen(1985).Individualsgrossutilityofnotworkingiss;when

    theywork,iftheyhavetotraveladistancex(ortheyarexawayfromtheirpreferredjob)andthey

    receiveapayofw,theirnetsurplusiswtxs(i.e.theyhaveatransportcostoftperunitofdistance

    traveled).

    Inadditiontothesematerialcosts,theworkermaybecomeangrywiththefirmforwhichheworks.

    Thereareseveralreasonswhyincorporatingemotionsinthissetupmakessense.First,simple

    introspectiontellsusthatwedontalwaysdowhatisbestfromanarrowlydefinedeconomic

    perspective.Second,alargebodyofliteraturehasshowninthelaboratorythatindividualsdontalways

    maximizetheamountofmoneytheyreceive(evenwhenthechoicesdontinvolveeffort),andthat

    emotionsplayasignificantrole.Thisreactionhasbeenmodeledasapreferenceforfairoutcomes(see,

    forexample,FehrandSchmidt,1999),orintheabovecitedpapers byLevine(1998)andRotemberg

    (2008)whoshowhowtheintroductionofareciprocalaltruismtermintheutilityfunctioncanexplain

    quitewelltheseeminglyparadoxicalevidencefromultimatumgames.Finally,athirdmotivationto

    includeemotionsinourmodelofthelabormarketisthatPeronsspeechescontainseveraldirect

    referencestotheeffectofPeronistpoliciesonemotions.Forexample,hestates:

    Whatisthesocialeconomy? Itisachangeintheoldsystemofexploitation,notlikethe

    communistswant,butinagentlerform.Thecapitalistregimeisanabuseofproperty.The

    communistsolutionisthesuppressionofproperty.Webelievethesolutionisnotthe

    suppressionofpropertybutratherthesuppressionoftheabuseofproperty.Wearenot

    involvedinsocialorderingthatwilltakethecountryintoafightbutrathertocalmness.June

    24th,1948.

    Ifaworkerisangry,wemustsubtracttohisutility,aterm(+pw)wherepistheproductivityofthe

    workerinthefirmandistheprofitthefirmobtainsfromtheotherworkers.Thistermisjusta"spite"

    term:whenangry,theworkerdislikesthefirmsmakingaprofit,andheisangrierwhenhecontributes

    tothoseprofits.Whattriggersangeristhattheindividualrejectsthehypothesisthatthefirmis

    altruistic.

    Inthismarket,firmschoosewagelevels(i.e.itisnotacompetitivemarket)wandgetinexchangeaproductofpperworker,sowhentotalemploymentisEitsprofitsare(pw)E.Ifthefirmisnotaltruistic,

    thatisallthereisinthefirms'utility(utility=profits).Ifthefirmisaltruistic,itsutilityisprofitsplusa

    termthatdependsontheutilityoftheworker.Thealtruisticfirmhasacostof ifworkerutilityislower

    thanacertainlevel(thislevelisexogenousforthismodel,butcancomefromlearning,adaptation,

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    history,etc).Wecallthethreshold ;wewillsetittobetheutilitytheworkerwouldobtaininafairly

    competitivelabormarket(seebelow).

    Inwhatfollows,andwithoutlossofgenerality,wenormalizet=1andallotherparametersarejust

    normalizedbyt.Thisnormalizationiscompletelygeneral.Wealsoassume(withoutlossofgenerality)

    thatthenumberofworkersisn=1.

    EquilibriumWewillanalyzeasignalinggame,inwhichfirms,whenchoosingawagelevel,signaltheirtype.An

    equilibriuminthissettingisatriplet[e(w,x;),w();(w)]where:

    e( )isan"employment"decisionstrategy(thesameforallworkers;wearelookingatsymmetricequilibria)asafunctionofwage,tastesx(ordistance)andbeliefs(ofwhetherthefirmisaltruistic

    ornot)into{0,1},wherea=1means"work"anda=0means"don'twork";

    w( )isafunctionthatmapstypesintowages(onewageforeachtype;thesamefunctionforallfirms);

    ( )isafunctionthatmapswagesinto[0,1],suchthat(w)isanumberthatrepresentstheprobabilitythattheworkerassignstothefirmbeingaltruistic.

    eisoptimalgivenx,wand ;wisoptimalgivene(andotherfirmsplayingw); isconsistent(itisderivedfromBayes'rulewheneverpossible).

    WewillfocusonequilibriawherebeliefsareofthesortIrejectthefirmisaltruisticiffitswagewissuch

    thatww*(i.e.theworkercomesto

    believethefirmisselfishevenifitispayingawageabovethetargetwage;whichwouldbeofcourse

    unnatural);instandardsignalingmodels,beliefslikethesemaystillbepartofanequilibrium,becausein

    equilibriumonedoesnotobservewagesw>w*andsotheconsistencycondition(thatbeliefsbe

    derivedfromBayesrule)placesnoconstraintonbeliefs.

    OligopolyInthissectionwecharacterizethepoolingequilibriainanoligopoly.Ofcourse,theremaybeseparating

    equilibriatoo.Butwefocustheanalysisofpoolingequilibriaforfourreasons.

    1.Thefirstis"analytic":wewanttoknowwhetherthesetofparametersforwhichthereexistsapooling

    equilibriumshrinksasthenumberoffirmsdecreases;sincethereisnoangerinpoolingequilibria,this

    wouldestablishthatthe"chances"ofangerappearingarelargerwhenthereislesscompetition.

    2.Thesecondreasonforfocusingonpoolingequilibriaishistoric:inPeronsspeechesthereisa

    referencetothepossibilitythatcapitalismworkswellinsomecircumstances(forexample,thereisa

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    referencetothiscalmnessinthespeechofMay1st1945).Thisbenchmarkcase,formwhichthe

    localeliteshavedeparted,isrepresentedasapoolingequilibrium.

    3.Thethirdistoavoidmakingchoicesthatwouldneedtobemade,andthathoweverweresolved

    them,wouldleavesomereadersunsatisfied.Takeforexamplethefollowing.Inaseparating

    equilibrium,workersareangryatsomefirms;whentheyare,theoptimalwagebythefirmsishigher

    (thaniftheyarenot);thisleadstoalargermaterialutilityforworkers.Thisleavesuswiththe

    conundrumthatselfishfirmsaregivingtotheiremployeesahighermaterialutility,andyettheyare

    angry.Thisbegsthequestion:areworkers(inreality,notinthemodel)angrybecausethefirmisselfish,

    orbecausethefirmactsinwaysthatharmsitsemployees?Putdifferently,wouldyoubeangryat

    somebodyyouknowisnasty,butistemporarilypretendingtobenice(notbecauseheistryingto

    change,butjusttoavoidsomepunishment)?Psychologicalresearchhasnotansweredthisquestionina

    satisfactorymanneryet.

    4.Thefinalreasonistractability:inaseparatingequilibriumwhentherearemanyfirmsthepatternsof

    combinationsoffirmsbecomescomplicated(aselfishfirmsurroundedbytwoselfishfirms,orbyone

    selfishandonealtruistic,orbytwoaltruistic,etc;similarlyforanaltruisticfirmanditsneighbors).Inex

    anteterms,though,eachfirmdoesnotknowwhetheritsneighborswillbeofonekindortheother.

    PoolingEquilibriaOurfirststepistofindnecessaryconditionsunderwhichawagewoispartofapoolingequilibriumin

    whichworkersattaintheirtargetlevelofutility.Considerafirmwhomaximizesprofitsinadeviation

    fromapoolingequilibriumwithwagewo(wearenotincludingautilitycostofthedeviatingfirm,since

    weassumeforthetimebeingthattheequilibriumissuchthatworkersattaintheirtargetutilitylevel ).

    Ifthefirmincreasesitswage,workerswon'tbeangry.Inthatcase,laborsupplyisgivenbythesumofall

    (unit)suppliesofworkerswhoareclosertothedeviatingfirmthanthetwoworkers(onetoeachside)

    whoareindifferentbetweenworkingforthefirmweareanalyzingandworkingforitsneighbor:

    wsx=wos(bx) S=2x=b+w w

    o

    Profitsarethen

    (pw)(b+w wo).

    Whenthefirmmaximizesthisexpression,weobtainanoptimalwageof

    2

    bwpw

    o

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    21

    Forthefirmnottowanttodeviatefromwo,itmustbethecasethatthisoptimalwageislowerthanwo,

    orequivalentlyowbp (1)

    Inwords,iftheoligopolywageistoolow,thefirmsarebetteroffincreasingtheirwage,andworkerswill

    notpunishthem(bygettingangry).Ifthefirmlowersitswage,consumersbecomeangry,andlabor

    supplyisgivenbytheconditionthat

    oo wpwbSxbswwpxsw 1

    Inthatcase,profitsare

    (pw)(b+(1+)wp wo).

    Forthefirmnottowanttodeviateandoffertheoptimalwageinthisdeviation,

    1412

    212

    pwbpbww

    oo

    itmustbethecasethatprofitsintheequilibriumarelargerthanthesedeviationprofits.Formally,

    1221

    14

    2

    bpwpwb

    bwp oo

    o (2)

    Noticethatwhen =0(thestandardSalopcase),weobtain

    wo=p b

    Anadditionalrestrictionisthatforagiven ,aswedecreasethenumberoffirmsthewagemustalso

    increasetoachievethetargetutility.Workerutility(inapoolingequilibriumwithwagewo)isthe

    numberoffirms,1/b,timesthetotalutilityofworkershiredbyeachfirm(the2isbecauseeachfirms

    hiresworkerstobothsides):

    20 42

    b

    oo bswdxxswb

    Thisutilityislargerthan ifandonlyif

    44

    bsw

    bsw oo (3)

    Wenowpresentoneimportantresult:ascompetitiondecreases(enough),angerismorelikely.The

    followingpropositionshowsthatascompetitiondecreases,apoolingequilibriumislesslikely.Butsince

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    22

    poolingequilibriahavenoanger,andseparatingequilibriado(inexpectedtermstherewillbesome

    selfishfirms),whenpoolingequilibriadisappear,angerappears.

    Proposition1.Thereisacriticaln*suchthatforalln>n n*,thesetofpoolingwagesissmallerwhentherearenfirmsthanwhentherearen.Thatis,ascompetitiondecreases,angerismorelikely.

    Proof.Defineb*sothatequations(3)and(1)holdwithequalityandareequated:

    spbbpb

    s5

    4

    4

    **

    *

    Letn*=1/b*.Forb*>bthesetofequilibriumwagesisincreasinginb(decreasinginn)because:

    equation(3)isnotbinding;theslopeof(2)issmaller(inabsolutevalue),thantheslopeof(1).QED

    Theplotbelowillustratesthethreeconstraintsonwoimposedbyequations13.Thewagewomustlie

    betweenthetwolociwithnegativeslopes(theflatteroneisequation2andthesteeper,1)whicharise

    fromthefirmsincentivesnottodeviate.Thewagemustalsolieabovethepositivelyslopedconstraint

    (equation3thatarisesfromtheconditionthatfewerfirmsimplyhigherwagesifworkersaretoobtain

    theirtargetutilities).

    Nextwepresentanotherrelevantresult,connectingtheproductivityoffirms,theriseinanger,andthe

    possiblesubsequentregulation.Thisresultprovidesapotentialexplanationforwhypeopleinless

    developedcountriesdon'tlikecapitalism.IfproductivityislowerandmorevolatileinLDCs,thatwouldexplainwhycapitalistsandcapitalismarenotpopular.

    Proposition2.Whenproductivitydecreases,orwhenitbecomesmorevolatile,angerismorelikely.

    b

    Boundsonw

    AdmissibleRegion

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    23

    Proof.Whenproductivitydecreases,thetwolociofequations(2)and(1)movedownwardsbythe

    amountofthedecreaseinproductivity.Sinceequation(3)isunchanged,thesetofpoolingequilibrium

    wagesshrinks.

    Alargervolatilityinproductivitiesmakesitmorelikelythatalow(poolingbreaking)costwillhappen,

    andthentheselfishfirmswillrevealthemselvesassuchandangerwillarise.QED

    AninterestingpointtonoteisthathighervariabilityinproductivityinLDCscouldbetheconsequenceof

    higherregulationstobeginwith:firmsinsectorswithacomparativeadvantagecouldhavehigher

    workerproductivitieswhilefirmsinprotectedsectors,lowerproductivities(evenconsidering

    governmentregulationstoprotectthem).Inasense,then,Peronismbyintroducingdistortions

    generatesangertowardscapitalists,andperpetuatesthebeliefsthatPeronismfostered.

    Thenextresultillustratesanotherobviousfeatureoftheriseinanger:whenforsomeexogenousreason

    workersbecomecaptiveofoneparticularfirm,angerismorelikely.Themechanismisasonewould

    expect:whenworker'slaborelasticityofsupplydecreases,localmonopolieshaveanincentivetolower

    wages.Thetemptationmaybelargeenoughthatanangertriggeringwagedecreasemaybeprofitable.

    Incountrieswithconcentratedindustries,likeArgentina,andwithlittleinterindustrymobility,workers

    donothavemobilityandsoelasticityofsupplyislower.

    Wemodelthisincreaseincaptivitybychangingthecostofreconvertingtoanotherindustry,while

    keepingrival'swagesfixed.Thereasonforthisassumptionissimple:ifitissuddenlyharderforworkers

    employedinfirmitoworkinfirmi1ori+1,thosefirmswillkeeptheirwagesfixed:iftheydidn'twishto

    attractthemarginalworkerbeforethechangeinreconversioncosts,theydon'twanttoafter,sothere

    isnoincentivetoraisewages;iffirmi1didntwanttoloweritswagebeforethechangeincosts,they

    don'twanttodosoafter,sincetheincentivesofthemarginalworkerworkingforthemhaven't

    changed.Aswillbecometransparentintheproof,anequivalentwayofmodelingthisisassumingthat

    thetwoneighborsofthefirmbeinganalyzedmovefartheraway,asiftherehadbeenadecreaseinthe

    numberoffirms.

    Proposition3.Assumethatforagivenparameterconfiguration,thereisapoolingequilibriumwithawageofwo.Ifthecostofreconvertingtofirmsi1ori+1increasesfrom1tot>1,butthecosttofirmi

    remainsconstant,thefirmsincentivestodecreaseitswageincrease.Thereisathresholdt*suchthatif

    t t*firmilowersitswageandworkersbecomeangry.

    Proof.Whenthecostofconvertingtofirmsi1andi+1increasestot,thesupplyfacedbyfirmi(afteran

    angertriggeringdecreaseinwage)anditsprofits,are

    1

    21

    2

    t

    btpwwwwp

    t

    btpwwwS

    oo

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    andtheoptimalwageandprofitare

    112122

    2

    t

    btwpbtpwpw

    o

    Noticethatintheequationfortheoptimalwage,anincreaseintisequivalenttoanincreaseinb:afall

    inthenumberoffirms.Forlargeenought,theseprofitsexceedtheoligopolyprofit,andthefirmlowers

    itswageitsprice,causinganger.QED

    Intheabovepropositionwehaveassumedthatworkerscontinuetomakeinferencesbasedonthe

    equilibriumpriortotheshock.Althoughonecouldarguethatanewequilibrium(onewithfewerfirms,

    orwithhighert)shouldbethebenchmark,webelievethatkeepingtheoldequilibriumbeliefsisalso

    plausible.Inaddition,thecaseoffewerfirmsalsoleadstomoreanger,asestablishedbyProposition1.

    ThepreviouspropositionmaybeparticularlyrelevantfortheriseofPeronismandPeronistbeliefs.Inatimeofrisingspeedoftechnologicalchange,thecostofreconvertingtootherindustriesalsorises.

    Hence,wemayviewtheascentofPeronasaconsequenceoftheincreasingexploitationbyfirmsthat

    hadgainedmorepowerovertheirworkers.

    Anywagewointherangedeterminedbyequations(2)and(1)canbepartofapoolingequilibriumifwe

    choose or appropriately.Notethatifthefirmisaltruisticanditlowersitswageenough,therecould

    beautilitycostofprovidingworkerswithaverylowlevelofutility.Sincewefoundnecessary

    conditions,wefocusedonlyontheincentivesoftheselfishfirm.Whenwewanttobuildanequilibrium

    withawagewowithintherangewehavejustidentified,weneedtotakeintoaccountthisutilitycostfor

    thealtruisticfirm.Butchoosing or lowenough,anyoneofthesewagesispartofanequilibrium.Wedonotelaborate,becausetheconstructionissimple.

    Abriefdiscussionofpoliciesinthismodel.Inthismodeltherearethreechannelsthroughwhichregulation(settingminimumwagesandmakinga

    transfertothefirm)affectswelfare.First,thereisthestandardchannel:aminimumwagelargerthan

    marketwages,butstillbelowproductivityincreasestotalwelfarebyattractingworkerstothefirm(to

    producesomethingworthpatacostintermsoflostleisureandtransportationcostoflessthanp).A

    second,quitedirectandsimple,channelisthroughthereductioninanger:sinceanincreaseinwages

    lowersfirmsprofits,andtotalangerdependsonthesizeofprofits,ariseinwagesreducesangerandincreaseswelfare.Finally,anychannelthatreducesanger(whetheritincreaseswagesornot)induces

    workerstostartworking,andthatfurtherincreaseswelfare.Thesecondchanneldoesnotdependon

    individualschangingbehavior;thisthirdchannelarisesbecauseworkersreoptimize.Imaginefor

    exampleapolicythatkeepswagesattheirprepolicylevels,but"expropriates"theprofitsfromthefirm

    (throughafineforexample).Inthatcase,inthestandardmodel,welfarewouldbeunchanged.Inthe

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    currentmodelwelfareincreasesfortworeasons:first,eachworkerwhowasemployedishappier,but

    somewhowerenotworkingwillnowentertheworkforceandbecomeavailableatthefinedfirm.

    Intuitionandsomesimplecalculationsshowthatinthismodeltheappealoffinestothefirmsandother

    populistpoliciesincreasesrelativetotheirappealinasettingwhereangerplaysnorole(thatis=0).

    Toillustrate,imaginethatapolicywithwagewandtransferT>0tothefirmisslightlybetterintermsof

    totalwelfare(inastandardmodelwithnoanger)tothepolicy(w,T=0).Inthemodelwithanger,when

    consumersareangry,thesecondpolicythatbeatsonthefirmispreferred,sinceitreducesthe

    amountofanger.Thisisanexampleofapolicythatlooksbadinastandardmodel(abadpopulist

    policy),butthatispotentiallywelfareenhancingwhenemotionsaretakenintoaccount.Althoughwe

    dontclaimthatallofthebadArgentinepoliciesaredrivenbyattentiontoemotions,webelievethat

    thereisatleastsometruthtotheideathatpoliciesthatarebadforlongrunmaterialgrowthmaybe

    optimalwhenworkers(orconsumersmoregenerally)areangryatcertainbusinesssectors.

    VI. ConclusionsAcentralobservationinArgentinasrelativedeclineisthatitwasaccompaniedbyastrongreductionin

    private investment: from the formidable ratesofcapitalaccumulationpre1913 financedprimarilyby

    foreigners tothedismal laterperformance.DiazAlejandro (1970)andTaylor (1994)haveemphasized

    thelowsavingsrateandthehighrelativepriceofcapitalgoodspre1960.Inthisstudywehavefocused

    onthepossibilitythatthedeclineininvestmentisconnectedtothecountryspopulisttradition,which

    helped spread interventionist policies and fueled political instability. In particular, we have tried to

    identifythenatureofPeronistpoliciesandtheelementsthatmadethemsoattractive,evenwhenthere

    wasaclearassociatedmaterialcost.

    Argentinasrelativedeclinebecomesvisibleinthe1930sandappearstoaccelerateinthe1970s.These

    twoperiodscoincidewithpoliticalinstability:1930istheyearofthefirstofseveralmilitarycoupsand

    marks the beginning of the infamous decade that would set the stage for the first Peron

    administration;while the1970s ismarkedby thearmedconflict involving leftwingguerrillasandthe

    military (and paramilitary) forces which led to the military coup of 1976. Indeed, following Perons

    ascenttothelaborsecretaryin1943,Peronismhasbeenthepreeminentpoliticalforceinthecountry,

    leadingmanytoassumethatnogovernmentcouldsucceedwithoutitsexplicitsupport.Onereasonfor

    itsenduringlegacyisthatPeronsinterventionistpolicieswhereintunewiththetimes:afterthe1930s,

    the increased presence of the State the economy was the norm, both in Argentina and in other

    countries.But thereareother factors thathavemadePeronistpoliciesattractive tovoters forsucha

    longperiodoftime,eveniftheyhavecontributedtoitsrelativematerialdecline.Inthispaperwefocus

    on three elements that help us throw light on the nature of Peronist policies and their enduring

    significance.

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    First,westudysomebeliefsandvaluesabouttheeconomicsystempresentinPeronsspeechesduring

    theperiod194355.Weemphasize thatPeronappears tobe concernedwith the income generating

    process,andnotethathe insistsonthepossibilitythat it is influencedbyothersandoftherebeing

    exploitation.Indeed,whereaseconomistshaveemphasizedtheroleofluckversusindividualeffortin

    thedeterminationof incomeandhowbeliefsabout their relative impactcanaffecteconomicsystem

    (see for example, Piketty, 1995), it seems that Peron is focused on the influence of actors (elites,

    foreigners)andhow theycancorruptauthoritiesandchange the incomeofArgentines (as inDiTella

    and MacCulloch, 2009). This provides one possible explanation for why the process of learning in

    policymakingmightbelessrationalthantheonedescribedinBuera,etal(2010),inparticularbecauseit

    isaffectedbyattemptstounderstand/discovertheintentionsofdifferentpoliticalactors(whichbytheir

    verynaturearehardtoverify). InPeronsspeeches,therearealsoanumberofreferencestotheidea

    that laborrelationscanhavenonmonetarydimensionsand thespeechesconnectexploitationtothis

    nonmaterialdimension.This (trivially)explainswhymarketsthatare interpreted (andregulated) in

    thiswaymayperformpoorly(fromamaterialstandpoint).

    Second, we study survey data for the 1990s on the beliefs of Peronist and Non Peronist voters in

    Argentina and Democrat and Republican voters in the US. While Peronist have low income and

    educationrelativetotheopposition(sothatthey look liketheUSDemocrats),theirbeliefsandvalues

    suggest that Peronists are the Argentine equivalent of the Republicans. For example, whereas all

    respondentsinArgentinatendtobelievethatthepoorareunluckyratherthanlazy,Peronists(justlike

    RepublicansintheUS)aresomewhatmoreinclinedthantheopposition(e.g.,NonPeronists)tobelieve

    that thepoorareLazy. Inotherwords,while theopposition toPeronduring194355came from the

    conservatives,theoppositiontoPeronisminthe1990scomesfromtheleftoftheideologicalspectrum.

    It isworth reiteratingthat inbothperiods, thePeronistsseem tohave lower incomeandeducational

    achievementthantheopposition.Thissuggests,attheveryleast,thatthePeronistsarechanginglessin

    termsofpoliticalideologythantheopposition.

    Finally,giventhatthesebeliefsarenonstandard(foreconomists),wepresentamodelformalizingthe

    possibility that they are suboptimal from a narrow material perspective, but that they may be

    associated with improved wellbeing (for example, they reduce anger at aspects of economic

    organization). In particular, we present a formal model of exploitation in the labor market where

    agentsderivepleasure fromtreatingwell (badly)thosethathavebehavedwell (badly)towardsthem.

    Firmsareoftwotypes:oneisastandardfirmwhichmightexploittheworkerbypayinghim/herthe

    minimum possible wage, whereas the other type of firm cares for the worker. Even with few

    altruisticfirms,theequilibriummightinvolvenoexploitation,aslongasthereissufficientamountof

    competition. With monopsony power, the good equilibria break down and there is scope for

    regulation (of the kind proposed by Peron in his speeches) that generates first order welfare gains

    (beyondHarbergertriangles).Wenotethata firmmightbeexploitingworkerseven if it ispayingthe

    same wage than other firms, as long as workers believe this firm is doing it out of unkindness

    (formalizedasreciprocalaltruism).

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    Appendix1:PeronsSpeechesquotedinthetext

    CuidaremoselfactorbrazoyharemosunaArgentinadehombreslibres,15deoctubrede1944.BuenosAires,1944,SecretaradeTrabajoyPrevisin,DifusinyPropaganda.

    Lasreivindicacioneslogradasporlostrabajadoresargentinosnopodrnserdestruidas,1deMayode1945.BuenosAires,1945,sindatosdeimprenta.DiscursopronunciadoenelCongresodelaNacin,21deOctubrede1946,HablaPern,SubsecretaradeInformes,BuenosAires.

    DiscursopronunciadoenelCongresodelaNacin,aldeclararinauguradoelperododesesiones,1deMayode1947,LosMensajesdePern,SerieAzulyBlanca,MundoPeronistaEd.,BuenosAires,1952.ManifestacionesdelgeneralPernantelosrepresentantespatronalesdelaProduccin,IndustriayComerciodelaNacin,24deJuniode1948,HablaPern,SubsecretaradeInformes,BuenosAires.Pern,lealamigodelostrabajadoresdelcampo,5deMarzode1950,SubsecretaradeInformacionesdelaPresidenciadelaNacin.

    DiscursopronunciadoenelCongresodelaNacin,aldeclararinauguradoelperododesesiones,1deMayode1950,LosMensajesdePern,SerieAzulyBlanca,MundoPeronistaEd.,BuenosAires,1952.Economaysindicalismojusticialista,24deMayode1950,sindatosdefechadepublicacinnideimprenta.

    LaCGTescuchaaPern,9deAgostode1950,sindatosnidefechanideimprenta.Unaetapamsenlaejecucindeladoctrinaperonistaenelordeneconmico,7deFebrerode1950,SubsecretaradeinformesdelapresidenciadelaNacin.Pernhablasobrelaorganizacineconmicadelpas,12deMayode1950,sindatosnidefechanideimprenta.

    PernyEvahablanenelDadelosTrabajadores,1deMayode1951,PresidenciadelaNacin,SubsecretaradeInformaciones.

    Discursopronunciadoel5demarzode1952,sindatosdeimprentanidefecha.DiscursopronunciadoenelCongresodelaNacin,aldeclararinauguradoelperododesesiones,1deMayode1952,LosMensajesdePern,SerieAzulyBlanca,MundoPeronistaEd.,BuenosAires,1952.

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    Appendix2:DefinitionsofVariablesused(formtheWorldValuesSurvey)

    PoorareLazyreferstothequestion:Why,inyouropinion,aretherepeopleinthiscountrywholiveinneed?Herearetwoopinions:Whichcomesclosesttoyourview?1.Theyarepoorbecauseoflazinessandlackofwillpower,2.Theyarepoorbecausesocietytreatsthemunfairly.Group1isthatansweringoption1,whileGroup2isthatansweringoption2.

    RunbyafewbigInterestsreferstothequestion:Generallyspeaking,wouldyousaythatthiscountryisrunbyafewbig interests lookingoutforthemselves,orthat it isrunforthebenefitofallthepeople?1. Runbya few big interests,2.Run forall the people. Group1 is that answeringoption1,whileGroup2isthatansweringoption2.

    WorkersShouldFollowInstructionsreferstothequestion:Peoplehavedifferentideasaboutfollowinginstructionsatwork.Somesaythatoneshould followone'ssuperior's instructionsevenwhenone does not fully agree with them. Others say that one should follow one's superior'sinstructionsonlywhenoneisconvincedthattheyareright.Withwhichofthesetwoopinionsdoyouagree?1.Shouldfollowinstructions,2.Depends,3.Mustbeconvincedfirst.Group1isthatansweringoption1,whileGroup2isthatansweringoptions2and3.

    JobsforMenreferstothequestionDoyouagreeordisagreewiththefollowingstatements?Whenjobs

    are scarce, men should have more right to ajob than women. 1. Agree, Neither Agree norDisagree, 3. Disagree. Group 1 is that answering option 1, while Group 2 is that answeringoption3.

    MoreRespectforAuthorityreferstothequestion:I'mgoingtoreadoutalistofvariouschangesinourwayof life thatmight takeplace in thenear future.Please tellme foreachone, if itwere tohappen,whetheryouthink itwouldbeagoodthing,abadthing,ordon'tyoumind?Greaterrespectforauthority.1.Good,2.Dontmind,3.Bad.Group1isthatansweringoption1,whileGroup2isthatansweringoption3.

    LessEmphasisonMoneyreferstothequestion:I'mgoingtoreadoutalistofvariouschanges inourwayof life thatmight takeplace in thenear future.Please tellme foreachone, if itwere tohappen, whether you think it would be a good thing, a bad thing, or don't you mind? Less

    emphasisonmoney.1.Good,2.Dontmind,3.Bad.Group1isthatansweringoption1,whileGroup2isthatansweringoption3.AcceptabletoCheatreferstothequestion:Pleasetellmeforeachofthefollowingstatementswhether

    youthinkitcanalwaysbejustified,neverbejustified,orsomethinginbetween,usingthiscard.Cheatingon taxes ifyouhaveachance (scale1to10 isshownwithNeverJustifiablebelow1andAlwaysJustifiablebelow10).Group1 isthatansweringoptions1and2,whileGroup2isthoseansweringoptions3,4,5,6,7,8,910.

    CompetitionGoodreferstothequestion:NowI'dlikeyoutotellmeyourviewsonvariousissues.Howwouldyouplaceyourviewsonthisscale?1meansyouagreecompletelywiththestatementontheleft;10meansyouagreecompletelywiththestatementontheright;andifyourviewsfallsomewhereinbetween,youcanchooseanynumberinbetween.Ascaleisshownwitha1to10scalewiththewordsCompetitionisgood.Itstimulatespeopletoworkhardanddevelopnew

    ideasbelow1andCompetitionisharmful.Itbringsouttheworstinpeoplebelow10.

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    29

    TableI:TheEducationandIncomeofPeronistsandDemocrats

    PeronistsNon

    PeronistsDemocrats Republicans

    PercentageofgroupansweringFamilyincome isinLowest5of

    10categories69 59 42 29

    PercentageofgroupansweringeducationisinLowest6of9

    categories88 69 56 47

    Note:Peronist(NonPeronist)isthesubsampleofArgentinesthatdeclareanintentiontovoteforthePeronistParty(AnypartythatisnotthePeronistParty).Democrats(Republicans)isthesubsampleof

    Americansdeclaringan intentiontovote fortheDemocrat (Republican)Party.Family Income istherespondents answer to a question about total family income. Education is the respondentseducationalachievement.

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    30

    TableII:TheBeliefsofPeronistsandDemocrats:LuckvsEffort

    PeronistsNon

    Peronists

    Democrats Republicans

    Laziness 39 20 49 75

    UnfairSociety 61 80 51 25

    Ratio 0.64 0.25 0.96 3

    PeronistsNon

    PeronistsDemocrats Republicans

    RunbyafewbigInterests 71 95 76 68

    Runforall 29 5 24 32

    Ratio 2.4 19 3.2 2.1

    Note:(1)Peronist(NonPeronist) isthesubsampleofArgentinesthatdeclarean intentiontovoteforthePeronistParty(AnypartythatisnotthePeronistParty).Democrats(Republicans)isthe subsample of Americans declaring an intention to vote for the Democrat (Republican)Party. (2) Laziness is the fraction of these groups answering They are poor because oflazinessand lackofwillpowertothequestionWhy inyouropinionaretherepeople inthiscountrywho live inneed?,whereasUnfairSociety is thegroupansweringTheyarepoorbecausesocietytreatsthemunfairly.(3)Runbyafewbig interests isthegroupgivingthatanswertothequestionGenerallyspeaking,wouldyousaythatthiscountryisrunbyafewbiginterestslookingoutforthemselves,orthatitisrunforthebenefitofallthepeople?

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    31

    TableIII:BeliefsinArgentinaandtheUS:PeronistslooklikeRepublicans

    Argentina

    Ratio(Peronist/NonPeronist)

    UnitedStates

    Ratio(Republican/Democrat)

    PoorareLazy 2.6=0.64/0.250.64=39/61;0.25=20/80

    3.1=3/0.96

    3=75/25;0.96=49/51Workersshouldfollow

    instructions

    1.6=0.81/0.51;45/55;34/66

    2.4=3.35/1.4,77/23;58/42

    Runbyfewbiginterests 0.1=2.4/19;71/29;95/5

    0.7=2.1/3.2,68/32;76/24

    JobsforMeninsteadofwomen 2.1=0.59/0.28,34/58;20/71

    1.3=0.37/0.3,23/63;21/71

    Morerespectforauthority 4.4=15/3.4,75/5;54/16

    2.2=28/12,84/3;75/6

    Moreimportanceofmoney 0.5=3.3/6.5;66/20;72/11

    0.8=9.6/11,67/7;70/6

    Acceptabletocheat 1.9=4.9/2.6,83/17;72/28

    1.2=6.1/4.9,86/14;83/17

    Competitiongood 1.2

    =1.2/1,55/45;50/502.1

    =2.7/1.3,73/27;57/43Note:Note:(1)Peronist(NonPeronist) isthesubsampleofArgentinesthatdeclarean intentiontovote

    forthePeronistParty(AnypartythatisnotthePeronistParty).Democrats(Republicans)isthesubsample

    ofAmericansdeclaringanintentiontovotefortheDemocrat(Republican)Party.(2)Definitionsofbeliefsin

    theappendix.

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    32

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