Remarks to American and Brazilian Businessmen in Sao Paulo, Brazil

December 2, 1982

Governor Marin, obrigado. Thank you very much. I've looked forward to this day. It's an honor to speak to men and women of enterprise here in Sao Paulo. This city was built by innovation and hard work in a spirit of confidence and hope.

I bear heartfelt wishes of friendship from your neighbors to the north who, like you, are Americans, citizens of this New World. Like you, they yearn deeply for peace, share your love for democracy and your commitment to build a future of progress and opportunity. On their behalf, to all of you, I say estamos com o Brazil e nao mudamos. We are with you, Brazil; we will not waver.

We look to Brazil with the admiration and respect that is due a great nation. One of your renowned writers, Monteiro Lobato, lived in our country in the 1920's and the 1930's. And while there he wrote a book called ``America,'' in which he said, ``The Brazilian considers his country the marvel of marvels, but with one single defect, that it is not known well abroad.'' Well, if he were writing today, he could still say Brazil is the marvel of marvels, but he would have to admit that your reputation has caught up with your achievements.

We hear it said, in a world wracked by political tensions, recession, poverty, energy shocks, debt, high interest rates, and inflation, that there is little hope for a new era of lasting growth and prosperity. I would never minimize the problems we face or the urgent need to deal effectively with them. I'll talk about them in a minute.

But, you know, I just have to say I've been around for quite a few years now -- I keep being reminded of that. I've lived through world wars and economic depression, and what's impressed me even more than those terrible crises is mankind's unending courage to bounce back, to struggle, to find new cures and novel solutions. To all those doom-criers -- and they're worldwide -- we have a message: The hope of the world lives here in the New World, where tomorrow is being built today by brave pioneers like yourselves, people who believe in each other and who will never lose their faith in the future.

In that remarkable speech that President Figueiredo gave to the United Nations, he expressed his confidence in the world community's capacity for renewal. He said of Brazil, ``We have made considerable efforts toward economic development, with promising results which fill with hope not only the people of Brazil but also all peoples yearning to attain standards of living compatible with human dignity and modern development.''

I share his confidence. May I also share with you today a dream that I've long had: a dream of strengthening our relations with Brazil and with all our neighbors here in the Western Hemisphere.

On this shrinking planet, the drive for renewal, economic progress, and the leadership for world peace must increasingly come from the New World. Here we are blessed with great abundance: resources, technology, and most important, the spirit of freedom -- a spirit that harnesses our energies to pursue a greater good.

There is, in the world today, a counterfeit revolution, a revolution of territorial conquest, a revolution of coercion and thought control, where states rule behind the barrel of a gun and erect barbwire walls, not to keep enemies out, but to keep their own people in.

The real revolution lives in principles that took root here in the New World. The first principle says that mankind will not be ruled, in Thomas Jefferson's words, ``by a favored few.'' The second is a pledge to every man, woman, and child: No matter what your background, no matter how low your station in life, there must be no limit on your ability to reach for the stars, to go as far as your God-given talents will take you.

Trust the people; believe every human being is capable of greatness, capable of self-government. This is the soul of our revolution, the soul of democracy and freedom. It's the New World's gift to the Old. Only when people are free to worship, create, and build, only when they're given a personal stake in deciding their destiny, and benefiting from their own risks -- only then do societies become dynamic, prosperous, progressive, and free.

In terms of geography, Brazil is of the south and the United States the north. But in terms of historical ties and fundamental values, we are nations of the west and the New World. And we're among the few nations which exercise worldwide influence and responsibility.

As Americans from the north or south, whether we're leaders in government or private industry, we must work harder to break down barriers to opportunity for our people. We must marshal every possible asset for growth. We must insist on sound economic policies at home and more open trading and financial systems around the world.

The great republics of South and North America and the Caribbean have virtually unlimited potential for economic development and human fulfillment. We have a combined population of more than 600 million people. Our continents and islands boast vast reservoirs of food and raw materials. The markets of the Americas have produced high standards of living. We offer hope to oppressed and impoverished people. We're nations of immigrants. Our resources have made the New World a magnet for migration from all continents. But it has been the vision, the enterprise, the skill, and the hard work of our people that has created our wealth and well-being.

The developing countries of this hemisphere have achieved a record of soaring growth over the last generation -- growth in savings, investment, work, and resources; growth from open world markets for trade and finance; growth from private initiative, risk, and reward -- the cornerstones of both economic and political freedom.

When we in the States look at Brazil, we see the success of an economy that grew fourfold in 20 years, more than doubling per capita income; the promise of tomorrow in Brazil's youth -- with one-half your population under 21, and becoming better educated every year; a confident response to the challenge of the eighties -- diversifying your economy and exports with new markets and technologies; leadership and vision in daring projects like Itaipu, which will be the largest hydroelectric dam in the world; and a strong energy substitution drive, including the alcohol fuel program which is to power more than half your automobiles by 1985. We also see Brazil's modern pioneers exploring a frontier as challenging as the Amazon -- space.

Well, today, I'd like to propose an idea to you -- to have a Brazilian astronaut train with ours so that Brazil and the United States can one day participate in a shuttle launch together as partners in space.

Last night, I told President Figueiredo that the United States has confidence that Brazil will overcome its difficulties just as the United States will overcome its own. But we face serious problems. Your economy has been in recession, and so has ours. In the next decade, we must both provide millions of jobs for our people. By taking the necessary steps now, our countries can lead the world toward a new era of growth, but this time, growth without the albatross of runaway inflation and interest rates.

Three things are essential for full world recovery and development. We must each move to correct our domestic, economic, and financial problems. We must protect the integrity of the world's trading and financial systems. And we must work together to help the international system evolve and better assure our mutual prosperity.

The first, most important contribution that any country can make is to get its own economic and financial house in order. Many countries, including our own, did not do so. Somewhere along the way, the leaders of the United States forgot how the American growth miracle was created. We substituted government spending for investment to spur productivity, a bulging bureaucracy for private innovation and job creation, transfers of wealth for the creation of wealth by rewards for risk-taking and hard work, and government subsidies and over-regulation for discipline and competition from the magic of the marketplace.

For the United States, the way back has been hard. When my administration took over, we faced record interest rates and inflation and the highest peacetime tax burden in our history. Our recovery program is designed to help us make a long overdue transition to an investment-powered, noninflationary economy that will put the United States back on the cutting edge of growth.

We have cut the growth of Federal spending by nearly two-thirds, and soon we will have reduced personal income tax rates by 25 percent -- well more than that, total tax rates. We have cut the top rate of tax on interest and dividend income, introduced strong, new incentives for savings, encouraged capital formation by permitting more rapid depreciation of plant and equipment, and aggressively pursued deregulation of markets in energy, transportation, and finance.

Many of these reforms have been in place for barely a year. Much more remains to be done. You can't wipe away decades of sin with one year of penance. But confidence is returning to the United States. We believe recovery is in sight.

Inflation and interest rates have been brought down dramatically. Real wages are increasing for the first time in 3 years. Productivity is up sharply. Venture capital in small business -- the best source of job creation and technological innovation -- is near a record. The personal savings rate is at a 6-year high. Our equity markets have made an historic advance on record-breaking volume. And our bedrock industry, housing, has begun to rebound. We are also seeing signs of strength in auto sales.

We believe the door is now opening to a lasting, broadbased economic expansion over the next several years. As the world's largest single market, a prosperous, growing United States economy will mean increased trading opportunities for our friends in the developing world. Brazil is preparing to take advantage of these opportunities. Your country has been making the difficult reforms needed to renew expansion.

And this brings me to my second point. All of us are trying to work our way free from this tenacious recession. But we can always make a bad situation worse by damaging those powerful engines of growth -- the world's trading and financial systems.

Over the last 20 years, Brazil has exported an expanding range of industrial and agricultural products, while developing its own raw material resources. Your role in the international trading system is now indispensable. Your potential is enormous.

There are some in the industrial world who view your success with apprehension. They fear being overwhelmed by your competition. They fear that one sector after another will be deindustrialized and redeployed to the developing world. Likewise, there are some in the developing world who attribute persistent poverty to industrial powers, whom they accuse of exploitation.

Well, I can't accept either argument. One need only look at the United States exports to the developing countries of this hemisphere -- which have increased sixfold in a decade, the same as imports -- to see that new competition brings new opportunities.

With so many out of work -- in my country, yours, and others -- protectionism has become an ugly specter stalking the world. One danger is protection against imports, erecting barriers to shut out the competitive goods and services of others in one's own markets. Another danger is protection of exports, using artificial supports to gain competitive advantage for one's own goods and services in the markets of others. The aim of these actions may be to protect jobs, but the practical result, as we know from historical experience, is the destruction of jobs. Protectionism induces more protectionism, and this leads only to economic contraction and, eventually, dangerous instability.

This brings me to my third point. Our crisis today is not between north and south, but between universal aspirations for growth and the longest worldwide recession in postwar history. But let us also acknowledge another fundamental fact of economic life: This recession has had a particularly painful impact on developing countries. They have suffered declining demand in world markets and falling access to financial markets. This greatly complicates our collective recovery.

So, if it's inevitable that borrowers must move to restrict their deficits, it's equally important that countries, like Brazil, that adopt effective stabilization plans be assured of continued financing. Lenders and borrowers must remember that each has an enormous stake in the other's success.

I concur with your President that we need solidarity and understanding. Last February I spoke before the Organization of American States in Washington. I pledged that our administration would seek a new relationship with the nations of the Caribbean and Central and South America. I said that we would approach our neighbors not as someone with still another plan, but as a friend, pure and simple -- one who seeks their ideas and suggestions on how we could become better neighbors. And this is what we've done in Brasilia. We discussed our problems, compared notes, and sought solutions.

Let me repeat: We want to go forward with you to help the international system evolve in ways that better assure our mutual prosperity -- and we will go forward.

To handle the liquidity crisis, we have agreed that the International Monetary Fund resources should be increased. We have also proposed a special borrowing arrangement to make sure that the IMF will have adequate funds to carry out its function.

The leading developing nations should all enter the world trading system as full partners. Then they can share more fairly in the gains from trade and, at the same time, assure more fully the obligations of the trading system. All we ask is that we examine together the mutual trading gains that can be achieved through reciprocal action.

I have enormous confidence in the methods that have brought unprecedented benefits in the past. We must improve the mechanisms for the settlement of trade disputes to take economic quarrels out of the political arena and base resolution of conflicts on criteria we all respect.

We must complete unfinished business -- trade in agriculture, which has resisted liberalization in the postwar years, and agreed rules on safeguards in the event of injury that provide for transparency and equity.

And we must look forward to the emerging challenges of the 1980's, such as trade in high technology products and processes -- processes, then, to devise rules will ensure we do not impede the growth potential of the technological revolution.

Finally, let us remember that just as progress is impossible without peace, economic growth is a crucial pillar of peace, beckoning with brighter horizons all who dream of a better life.

To deter aggression the United States must and will remain militarily strong. When I met with His Holiness Pope John Paul II, I gave him the pledge of the American people to do everything possible for peace and arms reduction. For the sake of the children of the world, we're working to reduce the number and destructive potential of nuclear weapons. We're working to end the deadlock between Israel and her Arab neighbors, and we're working, as you are, to preserve the peace in this hemisphere.

When Pope John Paul visited here in 1980, he said to young Brazilians, ``Only love can build.'' Well, from the moment we arrived in this land of spectacular beauty and unbounded energy, we have been touched by the special warmth of the Brazilian people.

We've come to know the heart of Brazil. We will say goodby knowing her heart is strong, her heart is true, her heart is good. Brazil will build. You will grow. And by your side will be the United States -- your partner in the New World, a partner for progress, a partner for peace. Estamos com o Brasil e nao mudamos.

Thank you very much.

Note: The President spoke at 4:20 p.m. in the auditorium of the Palacio dos Bandeirantes. Prior to his remarks, he met with Governor Jose Maria Marin of Sao Paulo.

Following his remarks, the President attended a reception for the businessmen and then left Sao Paulo for the return trip to Brasilia. He remained overnight at the Palacio da Alvorada. On the following morning, he left Brasilia and traveled to Bogota, Colombia.