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Effective control of the non-Communist East was in the hands of General Douglas MacArthur, who happened to be a distributist. He worked out a plan of reform for Korea, Japan, and Taiwan. Here we deal just with the reforms in Taiwan. The basis of the plan is that the farmers who actually worked the land would come into possession. The landowners were forced to sell the land to their tenants at a price equal to 2.5 times the average crop. The farmers paid for the land over 10 years. Under this “land to the tiller” program, 432,000 families came into possession of their own land. Where previously they had been paying 50% forever, now they would pay 25% for 10 years.
The results were dramatic. Since farmers got the full rewards of their labor, they were more willing to invest more money and give more labor. Farm production increased as farmers used more fertilizer, went to multiple cropping with as many as four crops/year and diversified production to higher value but more labor intensive crops. Production increased at an annual rate of 5.6% from 1953 thru 1970. The farmers suddenly had something they never had before: relatively large amounts of disposable income. Now they needed some place to spend it. Providing products to buy would require an expansion of industry on the island, if the country was not to be dependent on imports.
Most of the payments to the landowners was not in the form of cash, but in bonds. These bonds were negotiable industrial bonds which the former landlords could invest in any light industry they chose.5 Indeed, there was nothing else they could do with the bonds; it was a case of “invest or die.” The strategy was twofold: get capital, in the form of land, into the hands of farmers; get capital, in the form of industrial investment, in the hands of entrepreneurs. Note that the strategy provided both goods to buy and purchasers to buy them; it was a binary strategy, giving equal weight to production and consumption. A tremendous number of capitalists were created overnight; the former landowners, who previously had no interest in manufacturing, were converted into instant urban capitalists and had to find places to invest the proceeds from the lands sales; the landless peasants became proprietors. By this method, the government provided support to Taiwan’s fledgling industrial base. But the fact that the actual companies to invest in were picked by the former landowners meant better investment decisions than if the government had tried to pick the winners itself. Industrial production expanded, giving the newly empowered peasants some place to spend the money buying locally produced goods.
We can see the Taiwanese experiment for the conjuring trick it was: the government sold land it didn’t own, bought with money it didn’t have and financed industries that didn’t exist; the government managed to both expand the consumer market and to provide the industrial production necessary to serve that market and serve it from local resources. There was no inflation because the money supply expanded at the same rate as production by a sort of automatic method. Redistribution allowed for expansion of the consumer base which allowed for expansion of the industrial base. It is not often in business and economics that one gets to see solutions which are elegant and beautiful, but certainly the land to the tiller program qualifies.
The results have been impressive, both in economic and social terms. Starting with crude products made in small workshops, Taiwan followed the industrial value-added food chain right shipbuilding, electronics, and every sort of industry. Taiwan has managed 50 years of high growth rates, increased equality, and low tax rates (comparatively). Unemployment was low to non-existent through most of Taiwan’s post war history. Before 2000, it rarely exceeded 3% and usually was less than 2%. Since 2000, the rate has risen as high as the low 5’s before dropping back to the 4% range as Taiwan struggles to adjust to outsourcing to mainland China. By human measures, Taiwan’s growth was also a great success. For example, the literacy rate increased from 45% in 1946 to 93% in 1989; life expectancy went from 59 years in 1952 to 74 years in 1989 while the per capita caloric intake went from 2,078 calories to 3,070 in the same period. Living space per person went 4.6 square meters to 23.8.6 Further, Taiwan and the other “Asian Tigers” were able to achieve these successes despite having population densities among the highest in the world, a fact which contradicts the prevailing dogma that population density is an impediment to growth.
Originally posted by eldard
Still not working in Philippines or Zimbabwe.
Since 2000 the Zimbabwean government has taken most of the farmland previously used by commercial farmers (mostly white) and reallocated it. Most of this happened in a corrupt way and land went to politicians from ZANU-PF, military leaders or leaders in the police forces. These persons were usually inexperienced or uninterested in farming, and could not maintain the intensive, industrialized farming of the previous owners. Short term gains were often made by selling the farms equipment. The loss of agricultural expertise also triggered a loss of agricultural financing and market confidence which made recovery almost impossible.
Philippines: During the Macapagal Administration in the early 1960s, a limited land reform program was initiated in Central Luzon covering rice fields. During the martial law era of the Marcos Administration, Presidential Decree 27 instituted a land reform program covering rice and corn farms. Rice and corn production under this land reform program was heavily supported by the Marcos Administration with land distribution and financing program known as the Masagana 99 and other production loans that led to increased rice and corn production. The country produced enough rice for local consumption and became a rice exporter during that period. The Aquino Administration in the mid 1980s instituted a very controversial land reform known as CARP which covered all agricultural lands. The program led to rice shortages in the succeeding years and lasted for 20 years without accomplishing the goal of land distribution. The program caused entrepreneurs to stay away from agriculture and a number of productive farmers left the farming sector. The CARP was a monumental failure in terms of cost to the government and the landowners whose lands were subjective legal landgrabbing by the government. CARP expired at the end of December 2008.
South Korea: In 1945–1950, United States and South Korean authorities carried out a land reform that retained the institution of private property. They confiscated and redistributed all land held by the Japanese colonial government, Japanese companies, and individual Japanese colonists. The Korean government carried out a reform whereby Koreans with large landholdings were obliged to divest most of their land. A new class of independent, family proprietors was created.
To support these political changes, the Americans instituted reforms to make economic power in Japan more "democratic." In prewar Japan, two-thirds of the agricultural land was rented, not owned, by the farmers who farmed it. The farmers, who made up over 50 percent of the labor force, often rented the land from landlords who lived in distant cities and paid them as much as half of the crops they grew. Since the average "farm" was little more than an acre, many farm families lived in poverty. The land reform took land away from big landlords and redistributed it to the farmers, so that farm families could own the land they worked. Because farm families became more independent economically, they could participate more freely in the new democracy.
The Americans also tried to make workers in the industrial sector more independent by changing the laws to allow free trade unions. Before the war there were only a few small unions; by 1949, about half of all industrial workers belonged to a union.
To democratize economic power further and create competition, the Occupation intended to break up the giant business corporations, the zaibatsu, but this reform was not implemented, in part because it would have made Japan's economic recovery more difficult.
Originally posted by eldard
Still not working in Philippines or Zimbabwe.