Socialistic ‘Reforms’

November 20, 1961

I recently received a letter from a prominent Mexican. “The propaganda in Latin America in favor of socialistic measures,” he wrote, “goes on and on. The astounding part is that those who make it are not Russians but Americans. Last week it was the turn of your Under Secretary of State, Chester Bowles. In a speech delivered on Oct. 19 before the Mexican-North American Cultural Institute, besides agrarian reform and ‘a more just distribution of wealth which already exists’ [underlined in the official text], he came out in favor of high progressive income taxes and exchange controls. . . .

“What can we do to awaken the American people and to make them realize that their present leaders are delivering them into the hands of their enemies? Except for the French aristocracy in the eighteenth century, I do not believe history offers a comparable example of a social class collaborating in its own disappearance and destruction. If the United States preaches socialism, there is very little that we [Mexicans] can do here. All your millions will not only be wasted; they will speed the present trend to socialism and the ultimate takeover by Communists.”

URGING ‘REVOLUTION’

Thinking that perhaps my Mexican correspondent was unduly alarmed, I sent for the full text of the Bowles speech. In addition to the remarks he quoted I found:

Allusion to the United States as a “privileged society” and part of “the well-fed and comfortable minority of mankind.” Constant advocacy of a “continuing revolution,” “revolutionary change,” “the right of revolution.” True, these references were sometimes preceded by the adjective “peaceful.” But Latin Americans are not apt to interpret “revolution” in this purely metaphorical way.

Bowles advocated high corporation taxes and a steeply progressive income tax: “Such tax systems are needed to soak up idle profits.” He held up the U.S. practice as a shining example: “The corporation tax on annual business earnings above $25,000 is now set at 52 percent. On top of that is a tax on personal income [his italics] that rises rapidly as incomes rise to a top level of 90 percent.” Bowles backed this up with a direct quotation from the Punta del Este Declaration which calls for “tax laws which demand more from those who have most, punishing tax evasion severely, and redistributing the national income in order to benefit those who are most in need.” (My italics).

EXPROPRIATING LAND

Bowles demanded “land reform,” and supported this by a direct quotation from the Punta del Este Declaration condemning “unjust structures and systems of land tenure and use.” How this is likely to be interpreted in Latin America was illustrated by President Goulart of Brazil, as reported in The New York Times of Nov. 5: “He urged constitutional changes to permit agrarian and other reforms. At present the Constitution forbids any take-over of lands without compensation.” In other words, he wants to seize lands without compensation.

“I do not see,” added Bowles, “why my government or any other capital contributor should be asked for loans or grants to replace runaway indigenous capital that could be kept at home by” exchange controls and similar “curbs.” The private capital that has “run away” from Latin America has done so in fear of further galloping inflation or of direct confiscation. Bowles urges that it not be allowed to escape.

Of course the “reforms” recommended by Bowles would frighten off domestic saving and investment, disrupt and demoralize production, move toward socialism, totalitarianism, or chaos—and of course enormously increase the foreign aid burden that the American taxpayer will be asked to assume.

The real reforms are the precise opposite. What the retarded countries need most is political stability, internal peace and order, security of life and property, due process of law, economy, balanced budgets, a halt to inflation, and the maintenance of free markets. The policies that would do most to attract private investment from abroad are precisely those that would encourage saving and investment at home.