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Correa Is Not Ecuador’s Problem, Socialism Is

By: Oswaldo Toscano - @otoscano_ec - Jun 24, 2015, 3:41 pm
Massive protests against the Correa administration went on for days throughout Ecuador. (<a href="http://realidaddigital.com.gt/index.php/internacional" target="_blank">Realidad Digital</a>)
Massive protests against the Correa administration went on for days throughout Ecuador. (Realidad Digital)

Español Two bills that intended to increase the tax burden in Ecuador triggered this month’s protests. The truth is that most of these protests have targeted President Rafael Correa, similar to when the Venezuelan opposition rallied against President Nicolás Maduro. But this leaning has diverted attention from the underlying problem: the collectivist social model, where the idea of the “public good” leads to an increase of the arbitrary coercion of the state over the individual.

21st-century socialism is the intellectual heir of the Sao Paulo Forum, an organization founded in 1990 by former Cuban leader Fidel Castro and Lula da Silvia’s Workers’ Party in Brazil to rescue the communist ideas after the fall of the Berlin Wall. Resorting to democratic means, the members of the forum took power in several countries across Latin America. The first one to reach the presidency was Hugo Chávez, who from his position supported other members of the Forum to win elections in their countries.

This regional strategy can’t be ignored. It can’t also be ignored that the process underway in Latin America finds its origins in the public-school systems, labor movements, intellectuals, and “academic” associations. This helps us to understand why Marxist ideas such as the redistribution of wealth, as highlighted in The Communist Manifesto, have gained acceptance in the region.

The government as an entity to seize and redistribute wealth has become a widely held notion in Latin America. Measures taken in this line are all too often applauded by many people who see in them as justice, without considering the stories of hard work, savings, and investments behind the wealth that can be seen.

Socialist governments have proposed these kinds of measures, believing that their actions are protected under an aura of moral superiority, which allows them to force a person to give up the fruits of his labor. Behind the rationale of redistributing wealth, income and assets are expropriated through an arbitrary enforcement of fiscal policy. The reality is that this is not only unfair, it is absolutely immoral.

The argument of equalizing incomes and wealth can only function with the violation of private property and increased control and power over the citizens. The government decides arbitrarily to increase the fiscal burden or create new taxes, attacking assets, the fruits of the labor of individuals and families.

Legal processes to restrain the creation of new taxes were even included in the Magna Carta (1215), the cornerstone of constitutional checks and balances to power. The ruler was subjected to a council, senate, congress, parliament, or assembly.

No tax should be created without the consent of the people, and the congress that represents them should advocate for a non-confiscatory tax system. This restriction, however, only works when there is a separation of powers, balances to limit the arbitrary measures by the government to decide over other people’s private property.

This separation of powers doesn’t exist under 21st-century socialism.

Taxes must not be designed to confiscate people’s wealth, and should only be allocated to finance public spending of a limited government that supplies security, justice, and some public works. The remaining tasks that have been taken over amount to an increased governmental appetite for the citizen’s income, even to the point of being a wealth allocator.

Far from the Marxist view on class struggle, the challenge for government is not to impoverish the rich to create an egalitarian society. Rather, it is to create the conditions that allow the needy to improve their situation: free markets, no legal privileges for cronies, lower and fewer taxes, an institutional framework that facilitates trade. All these are measures that have allowed many countries to prosper and reduce what is the real problem: absolute poverty.

Furthermore, contrary to the official discourse, it is not true that taxes only affect the wealthiest: the economic impact of a tax can’t be set by law. In the case of the inheritance tax, for example, the temporal preference of the individual is distorted, savings are discouraged, making investment and capitalization rates fall, which results in lower wages throughout the economy.

It is often said that these measures are justified because many have become rich through theft and corruption. This is also a violation of property rights, and if it’s proved the spurious origin of that wealth the only alternative is to apply the law, protecting those rights. Treating everyone who has managed to accumulate wealth as if he were a criminal makes no sense.

According to the doctrine of 21st-century socialism, the government must redistribute wealth. This in turn necessitates constitutional reforms to concentrate power, a socialist tool for domination across the continent. State officials, under these conditions, believe they can organize resources in a better way than individuals can with their everyday choices.

Austro-British economist Friedrich Hayek warned in The Road to Serfdom about the anti-democratic essence of central planning. In order to implement such a plan, the planner needs the means to achieve his objectives; he must impose his value system. This leaves the society in the hands of the top leaders of the revolution and the bureaucrats, who preside over the private property of the individuals.

Protests in Ecuador, or in any other country, could progress to the next step if participants were to acknowledge the basic problem: how socialism — defined as any form of institutional aggression against individual freedom — violates individual rights and turns citizens into slaves of the system.

At this point of history, it is worthwhile to recall the words of the great Argentinean thinker Juan Bautista Alberdi: “after being machines for the Spanish treasury, we have become machines for the national treasury — lo and behold the difference.”

Translated by Adam Dubove.

Oswaldo Toscano Oswaldo Toscano

Oswaldo Toscano is an Ecuadorian professor, businessman, and columnist for outlets in Ecuador, Colombia, and Spain. A History PhD candidate at Francisco Marroquín University in Guatemala, he also studies at SMC University for a master's degree in political economy. Follow him: @otoscano_ec.