Government, taxation, coercion, and ideology: A comment on Yeager

At the very origin of Latin America's institutional structure is the Spanish American encomienda. For economists interested in issues of growth divergence and path dependence, therefore, a clear undertanding of that institution's nature, evolution, and effects is imperative. Tim Yeager's analysis of it in a recent issue of this JOURNAL is a welcome, provocative, and interesting contribution but has conceptual and empirical weaknesses that call its conclusions into question.] I can refer here to the most salient only. The first section considers whether the encomienda was a "coerced labor system" that the Crown "chose" to "satisfy an ideological bias against slavery" and to collect "rents." The second section is devoted to the view that the Crown restricted the encomienda's inheritance "to secure its rule." The third section discusses whether the encomienda's adoption was "paradoxical' because its restrictions implied incentives "to destroy more quickly the human capital" of indigenous people than did slavery. The fourth section analyzes whether the encomienda was a "centralist" Castilian institution.