Re: Re: Re: Thanks Brad, was The legacy of Juan Perón

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

At 07:53 PM 9/14/00 -0700, you wrote:
> Since you have read Amsden, you know that the policies that she recommends
> are the complete opposite of those that Peron pursued. Amsden believes in
> subsidizing exports. Peron taxed them.

These are different situations, referring to different kinds of products.
It makes sense for an agricultural country -- like one producing beef -- to
tax imports if the elasticity of demand is very low. If you think that
building up manufacturing (as opposed to agriculture for export) is the way
to develop a country, then it makes sense to subsidize exports of
manufactures and tax those of agricultural commodities. It encourages
agriculture to refocus on the domestic market (Food First!) while building
up infant industries.

> ... In my view, there is a lot of truth in Amsden's "getting prices wrong"
> position. But as you know, her judgment of Peronist policies is much, much
> harsher and much, much more negative than mine.

The "getting prices right" position assumes that international prices
reflect all of the external costs and benefits of production (both
technical and pecuniary). Is this assumption true in all cases? should we
rely on Adam Smith's Invisible Hand to give us the answer on all questions?
do we ignore the large economics literature on market failure?

Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine