On October 4, 1957 the Soviets launched Sputnik I, the first man-made satellite to orbit the earth. The “space race” to the moon had begun and due to an embarrassingly large number of launch failures the United States was decidedly behind the Soviets in space technology. In those days the Soviet Union stood as a formidable economic and scientific adversary to the United States. There was an active and legitimate debate in academic and social circles about whether centrally planned, socialist economies could outperform free-market capitalism. There was, in effect, a “proxy war” between the economic system of the Soviet Union (socialism) and that of the United States (capitalism).
Soviet Premier Nakita Khrushchev had thrown down the gauntlet for this economic proxy war in an address to the general assembly of United Nations on October 11, 1960 when he took a shoe and pounded the podium declaring to the United States, “Whether you like it or not, history is on our side. We will bury you.” Less than a year later an event would take place in Germany that would expose the soft underbelly of Socialism.
On August 12, 1961 Walter Ulbricht, the leader of East Germany signed the papers to close the border between East and West Berlin. The streets, underground subway, and surface railways uniting the city were torn up as armed guards spread barbed wire through the center of Berlin. Over time a 66-mile, 12-foot high concrete wall was constructed to keep residents of East Berlin from fleeing to the west. The wall continued to enslave a large portion of the German population for 28 years until it’s demise in 1989.
As a young man of 22 years, I visited the Berlin Wall in the summer of 1971. I was a fresh out of college with a major in Economics. For me, the cities on both sides of that wall were evidence of an indisputable conclusion to the Socialism/Capitalism debate. West Berlin looked like any prosperous American city, with fancy automobiles, spotless buildings, wide streets, and shops bulging with merchandise. Travel agents advertised flights to Paris, Chicago, and Los Angeles. As I walked through “checkpoint Charlie” into East Berlin, it was like entering the pits of hell. Bleak, boarded-up buildings and abandoned streets led to the central part of the city where the Soviets had attempted to construct a ruse of prosperity. The problem was, no one had any money. The people were poor. It was the exact opposite of the life in West Berlin. This was not a place where anyone would want to live.
Ironically, the Berlin wall served as a perfectly designed social experiment because the residents on both sides of the wall were the same people. They were the same race with the same history and traditions. The only difference between East and West Berliners was their economic system. On the west side of the wall people were free to use their creativity to pursue their own interests, with minimal government intervention. On the east side of the wall the state owned and controlled the factories and businesses, stifling the initiative and freedom of its citizens. The economic situation was so bad that the Soviets had to wall-in the residents of East Germany to keep them from escaping to the better conditions in the west.
Ironically, on the east side of the wall there was a sign that read, “Frei Welt fur Dich” (Free world for you). A young East Berliner, about my age, explained to me that in school he had been taught that the purpose of the wall wasn’t to keep him in, but to keep the capitalist imperialists out. He didn’t really believe that. Later in our conversation, with tears in his eyes, he asked me how he could possibly get out of East Berlin. I couldn’t help him. He would have to wait another 18 years before the wall would come down. Unfortunately by then he would be in his early forties, with his youth sacrificed on the altar of socialism. A 22-year-old Don Salyards learned a valuable lesson that day; capitalism wins. Capitalism wins because of the economic prosperity it generates and because it is compatible with political freedom. Socialism creates poverty and enslavement.
Despite the obvious superiority of capitalism over socialism, we fought a costly war in Vietnam, supposedly to keep communism from spreading. After our departure, the Vietnamese economy struggled for a while as their communist leaders stubbornly followed socialist economic policies. Later the leaders of Vietnam virtually abandoned socialism and established capitalistic, free-market practices. The results are predictable; the country has prospered and the Vietnamese people are enjoying more political freedom than ever before. American firms are flocking to Vietnam to establish business there. Communism was defeated in Vietnam; not by our occupation of that country, but by the Vietnamese realization that it doesn’t work. The Chinese have also learned the wise lessons of capitalism as their economy and people have prospered as never before. Bullets aren’t needed to defeat communism; communism eventually collapses from within, as citizens get weary of living like dogs.
Now in Latin America four countries and their leaders have declared their allegiance to state socialism. The unfortunate residents of Venezuela (Hugo Chavez), Nicaragua (Daniel Ortega), Bolivia (Evo Morales), and Ecuador (Rafael Correa) are now subjected to a declared resurgence of state-run socialism. This new, Castro-style, socialist alliance is unlikely to spread beyond the four countries mentioned. It is largely fueled by a hatred for the United State on the part of the four leaders. As I write this article Mahmoud Ahmadinejad, the President of Iran, is currently visiting these same four Latin American countries. No doubt these leaders will pump themselves up with anti-US rhetoric in the next few days, much like Nakita Khrushchev pounded his shoe on the podium 47 years ago. It won’t make any difference. If they continue to ignore the lessons of economics, their socialistic economies will decline even further and their citizens will become even more miserable than they already are. Chavez recently said that Venezuela shall have “Socialism or Death”. He has obviously doesn’t understand that socialism is death!
The US would be best served not to interfere with the governments of these poorly led Latin American countries. Like the Russians and Vietnamese they will eventually figure out they’ve made a mistake. Chavez has some oil revenue to sustain his socialist dream, but as the years go by even that revenue will be squandered by the wasteful and inefficient economy he creates. His regime and economy will crumble. It’s not a good time to live in Venezuela, Bolivia, Nicaragua or Ecuador.