URUGUAY: Problems in Paradise

On the broad, busy streets of Montevideo last week it was hard to detect any signs of malaise. Montevideans looked well-fed, as usual, and stores were crowded with customers. Perhaps in no other Latin American capital were sidewalks so conspicuously free of beggars and ragamuffins. The faces in the crowd, as big-city crowds go, showed a high average of cheer.

Spring was on the march in Uruguay, rainbowing roadsides and vacant lots with vivid wild flowers. Cafe owners set out sidewalk tables. At coastal resort hotels, workmen began taking down shutters and painting woodwork in preparation for summer throngs, perennial in a leisure-minded, seashore-loving country that celebrates a national holiday (Dec. 8) called the Day of the Beaches.

Throne of Skulls. Montevideans’ cheerfulness reflected not only the coming of spring but their confident, year-round belief that democratic, Nebraska-sized Uruguay is the earth’s closest imitation of paradise. Beneath the remaining layer of fat stored up during Uruguay’s Korean war wool boom, the economy is ailing, but most Uruguayans remain complacently sure that the country is somehow bound to muddle through. That is why there are some thoughtful citizens who seriously believe that what Uruguay needs is a wakeup, shake-up type of crisis.

The nation lived through crises aplenty in its turbulent, trigger-happy youth. Writing of the 19th century Uruguay that he knew as a boy, William Henry (The Purple Land) Hudson called the presidential chair a “throne of human skulls.” But in modern Uruguay, Latin America’s most solicitous welfare state, the office of President no longer exists; its power has been diffused in a nine-man federal council on the Swiss model. Public-school children wear an egalitarian uniform of white smock and blue Windsor tie. The state pensions citizens off at 60. Even the rich get a break: Uruguay, an anomaly among welfare states, manages to get along without a personal income tax.

The omnipresent state handles most of the nation’s banking and insurance, monopolizes coal imports, operates the railroads, the power plants, the telephone system, a huge slaughterhouse, liquor distilleries, oil refineries, fisheries, cement plants, a repertory theater, an ambulance service and a string of low-cost restaurants. This statist structure is costly in both obvious and insidious ways. Uruguay suffers from Latin America’s severest case of bureaucratic bloat, with 150,000 civil servants out of a labor force of 1,000,000. Government deficits pile up year after year. And under the state’s blanket benevolence, incentive is withering. Summer afternoons off to laze on the beach are a national custom. The young retired man has become the national image of success.

Tangled Web. Underpinning the welfare state are well-watered grasslands that, by the latest count, feed 22,954,230 sheep and 7,305,462 cattle—roughly ten animals for every man, woman and child in the country.* Wool, meat and hides, making up some 75% of Uruguay’s exports, keep a country that is notably poor in mineral endowment near the top of Latin America’s per-capita-income list. To subsidize the urban welfare state, the Montevideo-dominated national government takes a cut on every pound of wool, overtaxes the ranchers, forces them to sell beef cheap for city consumption.

But the fat land is beginning to tire. Since most ranch owners add no fertilizer to their soil and provide no feed for herds and flocks to supplement pasturage, the per-animal yield of meat or wool is less than it should be. Uruguay’s basic economic need is a double agrarian reform: 1) an education program to teach ranchers how to conserve their soil and get a richer return from it, and 2) a shift of welfare-state burdens from the countryside to the cities. Instead, the politicos in Montevideo, hoping that forced-draft industrialization will eventually rescue the economy, have spun an increasingly tangled web of stopgaps, subsidies and controls.

Red Newsreels. After decades of benevolent but bumbling overgovernment, Uruguay is troubled with chronic inflation, swelling government debt, softening currency, and a tendency to break out in strikes as workers restively try to keep up with the cost of living. As a result, Communism has made some surface gains. About 100,000 Montevideo workers belong to unions that are dominated or influenced by Reds. Keeping up a strenuous cultural-penetration drive, the Soviet Union donates film shorts to the government, free newsreels to movie houses. Red propaganda has convinced an apparent majority of Montevideans that increased trade with the Communist bloc could be a short cut to prosperity.

On the brighter side, an awareness seems to be growing that Uruguay’s economic troubles are mainly homemade. Citizens complain about the ineffectuality of the nine-man governing council, sign petitions for a return to the presidential system. Disappointment at the red-ink record of the government in business is widespread. Says Juan Antonio Acuna, head of Uruguay’s No. 1 non-Communist labor federation: “We are terrified when the state considers nationalizing another industry.”

These notes of disenchantment are hopeful, for Uruguay’s greatest enemy is smug optimism. But last week, with the south winds of winter dying away, optimism came easy. If spring marches in, can the Day of the Beaches be far behind?

* Uruguay counts its sheep more carefully than its people, has taken no census since 1908. Estimated population: 3,000,000, with overgrown Montevideo accounting for one-third of the total.