Land grab in El Salvador.

SHORTLY AFTER the Kissinger Commission issued its report on Central America, Representative Jack Kemp (R., N.Y.) put out a statement noting its "significant recommendations." One of these ran as follows:

[There should be] a renewed effort in the region to protect the property rights of all citizens. While it is recommended that, where appropriate, land-reform programs should be initiated, the commission is firm in its conviction that prior owners should be fully compensated in a manner which enables them to transfer their rightful share of national wealth into new enterprises. Just as firm was the conviction of the commission that new landowners should be provided immediately with a full and transferable property right to their new land.

The "transferable property right" perhaps sounds as if it is a minor detail. (And it is true you won't find any reference to it in Samuelson's famous textbook, any more than you will find "property rights" in the index.) Nevertheless, we are dealing with what may be the most important idea in economics. Countries that do not have transferable property rights do not really have economies at all. They have military command structures that attempt to pervade all areas of life (as in the Soviet Union). Countries that have enjoyed suchrights but abolish them inevitably experience economic collapse.

This has happened in El Salvador, as a result of the "land reform" program that was adopted in 1980, at the United States' behest.

The socialist idea continues to have so much appeal for American intellectuals that the U.S. today is a net exporter of socialism. Our domestic political system is sensitive enough to ensure that its incremental victory at home is extremely difficult--a hard-fought battle, with (today) inches won and lost on the fifty-yard line. But leftist programs encounter little such opposition abroad. The "land reform" program in El Salvador, put into place during the Carter Administration, is as pure an instance of exported socialism as it would be possible to find. Unfortunately, the Reagan Administration continues to support it, although President Reagan himself, it is believed, may have been kept in the dark about its most noxious feature.

Phase one of the program consisted of the government seizure of all estates of more than 1,235 acres. Thereupon, "cooperatives" of peasants who had been working on this land were allegedly "given" it. But in fact they have not been given it at all. The title to the land, transferred from the old owners at the moment of seizure, has been retained by the government.

Individual members of the new cooperatives do not have the right to sell their share of the land to anyone else. That is, their property right is not real because it is not transferable. People who do not have the right to realize the value of what they own by selling it cannot be said to own it at all. Their status is closer to that of renters. But when property is privately owned and rented, the owners can be expected to keep an eye on their property to ensure that it doesn't deteriorate. Governments, on the other hand, are unable to keep an eye on widely dispersed state property because the task is too complex for a centralized authority. Thus, when property is transferred from individual to state hands, an economy collapses. This has happened in the twentieth century in the Soviet Union, in China, Cuba, and Vietnam, and now in El Salvador, Under U.S. auspices.

This problem is so poorly understood among conservatives here that last October the Wall Street Journal editorial page ran an article on land reform by Roy Prosterman, the chief architect of the Salvadoran program. He is a socialist "development specialist" from the University of Washington. His article made no mention of the fact, or the problem, of non-transferability.

If the Federal Government decreed that you could not sell your house, would you really feel that you owned it? You might also reasonably worry about the further dictatorial powers that such a government might assume tomorrow. And what incentive would you have to keep your house in good repair, so that it would be attractive to a buyer? The housing stock would soon decline following such a decree. In the same way, the Salvadoran economy has declined by 30 per cent since 1979.

Worthless Bonds

CONSIDER briefly the former owners. They have been "paid" with worthless bonds, mere pieces of paper, which do not pay interest and are not redeemable. These people have had everything they worked for seized from them without recompense. They have no stake in the future of their country. "Death squads" should be considered in this light. In some instances the cooperatives have begged the government to permit them to transfer the property back to its former owner. The elected assembly should not only comply with this request. It should pay no further attention to American "development" experts who regard El Salvador as a convenient laboratory for their leftist blueprints.

It is scandalous that this country should have promoted such as program abroad, and that so little attention should have been paid to its socialist features. congressman Kemp deserves our thanks for bringing it to the notice of the commission. He is at present the only U.S. politician of national stature to have grasped its importance.