USA and Argentina – Alan Beattie’s Response

In Response to Eugenio Diaz-Bonilla’s post USA, Argentina and Alan Beattie: Wrong Starting Point.

Nice to spark a debate, but I don’t find this critique of my book very convincing. It is based on two fallacies : 1. wrongly implying that I was focusing on Argentina’s absolute rather than per capita GDP, and 2. assuming that immigration is exogenous.

1. Your focus on absolute levels of GDP I just don’t understand, which is why – with one exception about Argentina being one of top ten or so largest economies in the world in the 1930s – I report per capita levels in the book. The US is physically bigger than Argentina. No kidding. So what? The absolute cultivatable area of Argentina is bigger than that of Canada, but that hasn’t stopped the latter outperforming Argentina. Would you consider China’s economy to be more successful than Singapore’s because it is bigger in absolute terms? I think this is a bit silly.

2. You assume that immigration is determined by factors other than the policy decisions taken in Argentina. To begin with, contrary to what you suggest I do in fact recognise that Argentina started off with a smaller population/land ratio when it settled the frontier (“…the country had to push forward its frontier with a skeleton staff”). But the point is that subsequent permanent immigration was discouraged by the unavailability to new immigrants first of land and then of well-paid manufacturing jobs. That was substantially because the Argentine elite first snaffled the land and used it for low-productivity farming, and then because they had little interest in industrialisation. They chose not to distribute land more equally; they chose not to save; they chose to hedge the economy round with restrictions that prevented industrialisation. It was more a demand-side than a supply-side issue. As the cost of shipping dropped rapidly through the nineteenth century, the extra cost of going to south rather than north America shrank rapidly. As I note in the book, a lot of the labour that did come, like the seasonal Italian and Spanish farm workers (golondrinas), didn’t stay and become Argentine citizens because the returns did not justify it. The initial lower population/land ratio in Argentina should have meant higher relative returns to labour and hence much more rapid immigration to Argentina than to the US for the remainder of the nineteenth century, but it did not.

Alan Beattie

World Trade Editor

Financial Times

“False Economy: A Surprising Economic History of the World”, by Alan Beattie, published by Penguin.

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