The tax mechanism is unique---industrial policy, expropriations, bureaucratic deadweight loss, or macroeconomic policy to capture private rents are all non-fiscal and are therefore not ‘fiscal redistribution.’

However, this unprecedented change did not happen in the context of democratization.27 The reforms towards lower “institutionalized” inequality were famously led by (mostly left-wing) populist “strongman” (e.g. Peron in Argentina, Vargas in Brazil, Cardenas in Mexico, Ibañez del Campo in Chile, among many others), hegemonic parties (e.g., the Institutional Revolutionary Party which controlled politics in Mexico since the 1930s or the Justicialist Party in Argentina),28 de facto revolutions such as in Cuba or Bolivia in the 1950s,29 and military regimes.30 Interestingly, the long list of “strongmen” that marked the 20th century in Latin America, besides their disregard for legitimate democratic processes and efforts to erode checks and balances, all have in common a focus on improving the condition of poorer households through economic interventions (namely regulatory, social and industrial policy), not fiscal redistribution.

These non-fiscal interventions include, besides industrial policy, expropriations, red tape, macroeconomic policy to capture private rents (e.g., price-fixing and multiple exchange rates), and many other non-fiscal measures to favour workers over an elite of commodity-exporters, e.g., see Sachs (1989), Kaufman and Stallings (1991) and Edwards (2010). In line with our thesis, it seems that tackling inequality via fiscal redistribution necessitates the formation of a fiscal and political contract (the credible commitments) which are unlikely to form under non-democratic conditions -and less so under populist leaders who build support by polarizing society. Therefore, despite their strong pro-state and anti-elite rhetoric, Latin American strongmen proved powerless in building fiscal capacity and tackling regressive fiscal systems benefiting the elite.