Foreign Policy

Cuba: What Is and What Can Be

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A Canadian perspective on Cuba's past and possible future, via Mark Milke of the Calgary Herald:

Cuba in 1958 had a per capita GDP of $3,170 according to the OECD. (Canada's was $8,947.). But Cuba outranked all other Latin American countries except four: Argentina, Chile, Uruguay and Venezuela.

Tellingly, in 1958, the island nation's per person wealth was higher than any East Asian country or colony, save Japan, which barely beat Cuba at only $3,290. Hong Kong had a per capita GDP of $2,924, Singapore's was $2,294, the Philippines' was $1,447, Taiwan's per person GDP stood at $1,387 and South Korea's was $1,112.

Thus in 1958, Cuba was almost as rich as Japan, one and half times as wealthy as Singapore, richer than Hong Kong, and three times as prosperous as South Korea.

Fifty years later, Cuba is one of the poorest countries in Latin America.

Meanwhile, jurisdictions such as Hong Kong, Singapore, South Korea and Taiwan (the latter two also had dictators and problems similar to Cuba in the 1950s) have long eclipsed Cuba. They've done so not only in per capita wealth, but in measurements Castro's defenders point to when they assert the Marxist revolution "worked," such as in health care and education.

Milke doesn't have any faith in Castro Junior doing what's right. His preferred solution is for the U.S. to lift its stupid and ineffective embargo and "wash the Communists out to sea on a tidal wave of U.S. dollars from investment, trade and tourism."

Whole thing here.

Hat Tip: Alan Vanneman.

reason.tv hosts Rep. Jeff Flake (R-Ariz.) talking down the embargo here.

reason on Cuba over the years.

NEXT: Obama and the Pastor

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  1. One of the legitimate sticking points in US policy is the question of return of or compensation for nationalized assets. The Euro and Canuck investors who have gone in have ignored this issue.

    However since there is a precedent for handling this in Eastern Europe I can see no reason that it can’t be handled in post-Castro Cuba.

  2. I would like to see the Communists washed out in a sea of blood, but that’s just me. I fear that Castro may get to die in his sleep instead of at the end of a rope and that sucks.

  3. I imagine Hong Kong would have slightly less impressive growth statistics if it was under an economic embargo from China.

    The Cubans have been getting it from both ends for half a century. Terrible.

  4. three fine examples of hypocrisy re: Cuba:

    1. US government officials blaming Castro for the poverty of Cubans, when really it’s the US embargo causing a substantial portion of the misery

    2. the US government enforcing an embargo on Cuba while permitting trade with China (with most favored nation status, at least at one point)

    3. Cuban immigrants to the US who insist on maintaining the embargo while sending money home to their relatives

  5. joe, maybe a comparison between Taiwan – China and the U.S. – Cuba would be more analogous.

  6. joe, the embartgo has little affect on Cuba’s performance. It has access to investment from both Europe and Canada. So far the have limited themselves to the tourism industry. They are as leery as any prudent investor of pouring money into a Communist pit.

    The only real affect the embargo has is that Fidel has been able to use it for domestic propaganda purpose.

    I also think it is highly unklikely that the US would have imposed an embargo on Cuba if they had been pursuing a sensible economic policy so I’m not sure your Hong Kong analogy works. The Chicoms always found Hong Kong a useful source of foreign exchange and intelligence. There was no way they were going to sacfrifice that.

  7. wash the Communists out to sea on a tidal wave of U.S. dollars from investment, trade and tourism

    Or, you could just enrich and entrench the Communists, as has happened in China.

    Not saying it wouldn’t be better for Cuba generally, just saying that there is little reason to believe that it would actually result in the removal of the Communist regime.

  8. Sure, CN. But it’s in the ballpark.

    Issac, that’s just ridiculous. The United States is 1/4 of the world’s economy, we’re the only economic superpower in the same hemisphere as Cuba, and a shutoff from our markets and resources is going to have a negligible effect on their economy? That doesn’t begin to pass the laugh test.

    Aren’t you the same person who’s always talking about protectionism starving people in China and Africa?

  9. I daresay the political and economic systems in Cuba have a lot more to do with Cuban economic woes than the embargo does.

  10. Since this isn’t a lab experiment where we can isolate variables, any opinion about their relative degrees of influence is speculation.

    It’s a floor was and a dessert topping. Beyond that, you’re skylarking.

  11. Yes, because other systems that have renounced market economies in practice have done so well. China’s boycotting Taiwan–which is an apt comparison–and Taiwan seems to be doing okay.

  12. None of those “other systems” have been under a total economic embargo from the world’s largest economic superpower, which had been their largest trading partner for decades prior to the embargo.

    Taiwan had the United States and Japan trading with it.

  13. So joe, the whole communist thing has nothing to do with Cuba’s plight?

  14. Issac, that’s just ridiculous. The United States is 1/4 of the world’s economy, we’re the only economic superpower in the same hemisphere as Cuba, and a shutoff from our markets and resources is going to have a negligible effect on their economy? That doesn’t begin to pass the laugh test.

    Aren’t you the same person who’s always talking about protectionism starving people in China and Africa?

    I’m not sure Isaac is that far off. Although the sanctions on Cuba were counter productive, I’m not sure repealing them would have done much good. Cuba still had a state-run economy. Other Latin American countries had no sanctions and improved very little.

    For a counter example you have South Africa who was cutoff from everyone for decades but managed to produce a growing ecomomy while dealing with massive civil unrest.

    The Cuban government’s policies are the major culprits for it’s poverty. The sanctions just made things a little worse.

  15. joe writes:

    The Cubans have been getting it from both ends for half a century. Terrible.

    and

    Since this isn’t a lab experiment where we can isolate variables, any opinion about their relative degrees of influence is speculation.

    It’s a floor was and a dessert topping

    to which Episiarch asks,

    So joe, the whole communist thing has nothing to do with Cuba’s plight?

    Come on, Episiarch, you can do this! What do you THINK my answer to that question is going to be?

  16. Pain,

    All that is true, but it’s also notable that countries like Poland also put up better economic growth than Cuba, even with their state-run economies.

  17. Cuba has the whole rest of the world trading with it, Europe and Canada in fairly large amounts. And Taiwan has that close superpower neighbor and everything. No, I think it’s abundantly clear that Cuba’s 90% responsible for where it is today. We’ve certainly not helped, but we’re not the big problem. Though one could argue that being the Great Satan for Castro’s speeches helped prop him up longer. Who knows?

  18. Come on, Episiarch, you can do this! What do you THINK my answer to that question is going to be?

    An evasion, just like the quoted sentence?

  19. Either the article is very awkwardly written or the author doesn’t understand that wealth and per capita GDP and completely different measurements.

  20. Same ole story. Communists destroy their nation and economy and blame the capitalists. Been reading that for almost a century now. It’s laughable that H&R’s token Castro apologist somehow avoids the rest of the world when blaming America for Cuba’s plight. Typical lefty myopia.

  21. And the first poster to blame the US was. . . . joe

  22. Cuba has the whole rest of the world trading with it, Europe and Canada in fairly large amounts.

    From Wikipedia

    The 1963 U.S. embargo was reinforced in October 1992 by the Cuban Democracy Act (the “Torricelli Law”) and in 1996 by the Cuban Liberty and Democracy Solidarity Act (known as the Helms-Burton Act) which penalises foreign companies that do business in Cuba by preventing them from doing business in the US.

  23. Cuba has the whole rest of the world trading with it, Europe and Canada in fairly large amounts.

    Sure, but Canada is a relatively small economy, and Europe is on the other side of the Atlantic. That’s really not an adequate substitute for the quarter of the world’s economy that’s 90 miles away.

    And Taiwan has that close superpower neighbor and everything

    Taiwan was able to trade with Japan, a much larger economy than Canada, and was given special attention by the US. Remember, when Cuba was getting the same kind of special attention from the USSR, it was going better economically.

    Obviously (well, obvious to everyone but Episiarch), I’m not saying that the embargo explains the entirety of Cuba’s economic woes, but it we weren’t talking about a communist country, it would be screamingly obvious that being unable to trade with the United States does massive harm to a Latin American country, or any country.

  24. “H&R’s token Castro apologist” seems to understand the effects of international trade a hell of lot better than you do.

  25. Apparently, only people with a fondness for communism understand that international trade generates wealth.

    Or so I’ve been told by the capitalists in the Reason comments threads.

  26. If the tidal wave of investment from the US is going to wipe out the communists and help Cubans, why hasn’t the tidel wave of investment from Canada and Europe done it? The US is one of the few countries who won’t trade with Cuba. Most countries will and most countries’ tourists are free to travel there. Yet, Cuba is still a hell hole. The US could life the embargo tommorow and the Cuban Communists would piss away and steal every dime that was sent to the island and life for the average Cuban wouldn’t change one bit.

  27. Or, you could just enrich and entrench the Communists, as has happened in China.

    Not our problem. If it is a problem, let the Cubans deal with it accordingly.

    Embargoes hurt everyone excpet who they are supposed to. Which is about what I would expect from a guvmint program.

  28. If the tidal wave of investment from the US is going to wipe out the communists and help Cubans, why hasn’t the tidel wave of investment from Canada and Europe done it?

    Because that’s not a tidal wave, it’s a stream.

    I don’t know if the author is right, and lots of trade with free countries could bring about change in Cuba, but I do know that Canada and countries 4000 miles away aren’t going to produce the same amount of trade as the end of the embargo would.

  29. Cuba’s 2007 life expectancy is higher than that of many of its neighbors, including the four
    (Argentina, Chile, Uruguay and Venezuela) that the article mentions :

    Cuba 77.08
    Chile 76.96
    Argentina 76.32
    Uruguay 75.93
    Mexico 75.63
    Panama 75.19
    Venezuela 73.28
    Jamaica 73.12
    Dominican Republic 73.07
    Barbados 73.00
    Haiti 57.03
    source :

    https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html

  30. True, Canada and Europe won’t produce the same trade the US will. But, they certainly can and do produce some trade. Cuba actually has a pretty decent tourism industry. But, the industry consists of hotels and areas that ordinary Cubans are not allowed to visit and all of the hard currency and wealth generated by it goes directly to the government to support the life style of the Castro clan. I love trade as much as the next guy but it can only do so much good. The US trades with Haiti doesn’t it? Until the government of Cuba changes no amount of liberalizing trade is going to help.

  31. international trade generates wealth

    Indeed. Trade with communist and authoritarian dictators
    and their personal wealth increases dramatically.

  32. Please explain to me E why achieving that great life expectancy entails living in a prison Island where anyone who tries to leave is either shot or sent to prison for decades? Is there something about oppression that creates longer lifespans? Further, if George Bush gave you universal healthcare and a longer lifespan, would you think it was okay if in doing so he repealed the 1st Amendment and made it a crime to attempt to leave the country?

  33. Did Helms-Burton have its intended effect? Has any company been penalized under Helms-Burton? I seem to recall then-president Clinton granting a lot of waivers.

    Serious question there, not a trap.

  34. Much more significant than the US embargo on Cuba’s economy was the subsidies from the USSR. When the Soviet union fell, the Cuban GDP dropped 35%. Making themselves useful for countries that want to tweak off the US was and looks likely to remain a major part of the Cuban economy, with the Castros having found a new, if less extravagant, sugardaddy in Chavez.

  35. Indeed. Trade with communist and authoritarian dictators
    and their personal wealth increases dramatically.

    And this is an argument against free trade? That sometimes bad guys get rich too?

    Should we just forget about the whole road thing if some kid gets hit by a car?

  36. I’m sticking with my 90-10 ratio, but I agree that the embargo is ungood and a contributing, if relatively minor, factor. For the record, I oppose it, and I do think that open trade with Cuba would’ve probably ended this mess (and Castro) long ago. We’re just too close and too hugely influential (at least in the free trade scenario) for that not to have happened. China is different, before anyone reminds me.

    By the way, let’s get something clear. I don’t trust the Cuban government’s statistics on anything, and I question even some of their valid good points. Let’s not forget that the U.S.S.R. poured billions into the Cuban coffers, and not all of it went to nude dancing girls for Fidel.

  37. Pro–That’s because they have the best doctors in the world!

    I saw that in a movie, so it must be true.

  38. Pro,

    Cuba was the pearl of the Carribean. Before Castro Havana was one of the most beautiful cities on earth. Let me use this analogy. Castro is like a punk kid who stole a classic sports car and ran the shit out of it, never changed the oil, got drunk and pissed on the seats and threw up all over the carpets, and let the body rust out after not fixing the damage from any number of fender benders. His defenders now point at the car and say “but look it is a Jaguar and everyone else in the carribean is driving a VW Bug, Castro has done so much good.”

  39. Cuba’s 2007 life expectancy is higher than that of many of its neighbors

    According to who?

  40. Please explain to me E why achieving that great life expectancy entails living in a prison Island where anyone who tries to leave is either shot or sent to prison for decades?

    John, my theory is that Castro is so extremely evil, he is actually keeping people alive longer so he can torture them longer! How creepy is that?

    Same deal with with
    infant mortality
    .

  41. We could combine 2 problems: we could eliminate Florida’s delegates and let them have no say in the presidential elections or primaries.

    Not only would this save us tons of headaches every damn election season, but it would eliminate the Cuban expat vote, making it politically feasible for politicians to vote for ending the embargo.

  42. Issac, that’s just ridiculous. The United States is 1/4 of the world’s economy, we’re the only economic superpower in the same hemisphere as Cuba, and a shutoff from our markets and resources is going to have a negligible effect on their economy? That doesn’t begin to pass the laugh test.

    Don’t worry joe. It’s all better now. Hugo Chavez is Castro’s butt buddy, awash in petro-dollars and will bring the Bolivar revolution to the downtrodden proletariat in Cuba. Chavez does socialism the right way. The Cuban people can start rejoicing any day now. Any day.

    Of course I’m against the embargo. It is ~10% responsible for Cuba’s economic woes. Any guesses on who/what is responsible for the other 90%?

  43. Sure, but Canada is a relatively small economy, and Europe is on the other side of the Atlantic. [my emphasis} That’s really not an adequate substitute for the quarter of the world’s economy that’s 90 miles away.

    Oh yes the Atlantic is such a barrier to trde. Let’s talk about the worlds klargest body of water, seperatin the United States freom the “asian tigers”. Look at your globe joe. Shouldn’t that big blue expanse have crippled Japan, Taiwan and S. Korea’s ability to trade with North America more than the Atlantic puddle (west coast sailor’s reference)?

    IOW, I call bullshit on Cuba being cut off from the world’s economy.

  44. All that is true, but it’s also notable that countries like Poland also put up better economic growth than Cuba, even with their state-run economies.

    Eastern European countries allowed more market-like incentives (e.g., private plots for farmers) than Cuba did.

    Also, I’ll go along with PL’s 90/10 split.

  45. The embargo probably helped Castro more than it hurt him, because whenever anything went wrong in Cuba he could blame it all on us. Dictators love scapegoats, and it was so-very-thoughtful of us to conveniently provide Castro with one.

  46. 90/10 it is! PhD candidates in economics and political science may now cite this figure authoritatively!

    Jennifer,

    Absolutely. To me, it’s the biggest argument against the embargo. Without a powerful, unbeatable enemy to blame as the cause for Cuba’s ills, Castro would’ve lost control thirty years ago.

  47. because whenever anything went wrong in Cuba he could blame it all on us

    But only the gullible and naive believe him.
    The great irony here is that free trade is a cornerstone of capitalism, the very politico-economic system Castro destroyed. (One may also rightly argue that a government has no right telling its citizens who they can freely and voluntarily trade with.)

  48. Castro would’ve lost control thirty years ago

    To whom?

  49. 90/10 it is! PhD candidates in economics and political science may now cite this figure authoritatively!

    I used approximately(~) 10%. It could be as low as 9 or as high as 11. joe’s gonna quibble, and I want the record straight. 😉

  50. some guy,

    Well, I guess the proper response is why was Castro able to stay in power so long? But for the U.S. bogeyman, I think the answer is that he wouldn’t have.

  51. J sub D,

    I took liberties, it’s true.

  52. Aren’t you the same person who’s always talking about protectionism starving people in China and Africa?

    Actually, no, I don’t think I am. Though I agree that European and US subsidies hurt African farmers’ competitive positions in the world market. Note that this is virtually the entire developed world escluding African farm products. Big difference.

    Cuba would still be a basket case embargo or not.

    The only difference is sans embargo the Castros would have had one less card to play in the propaganda game.

    Just in case you missed it, I am against the embargo. I am against it on economic and humanitarian grounds. But mostly I am just plain opposed to restrictions on people travelling and trading and associating wherever and withever the hell they want to

  53. PhD candidates in economics and political science

    Ahem… I already have my PhD in Political Science from Associated Learning Online University…

    Seriously, though – what were they supposed to be trading with us all this time? What goods did they have such a massive surplus in that rotted in warehouses because of our embargo?

    Also, wasn’t autarky a big part of the communist ideal? When did they drop that?

  54. ERROR!!!ERROR!!!

    First para above is a quotation from joe.

  55. BP,

    Sugar, rum, cigars, tourism, maybe some other agricultural products, and maybe some cheaply manufactured goods. Possibly gambling and sex.

  56. Note that this is virtually the entire developed world escluding African farm products.

    Typed that way so as to be read in Ricky Ricardo voice in keeping with the thread topic.

  57. Also, wasn’t autarky a big part of the communist ideal?

    Why, yes, yes it is.

    But, naturally, you can’t ever be truly self-sufficient without the help of the evil capitalists in the United States of America.

  58. Here’s a question: How much do the economic powerhouses of the world carry systems that are more socialistic? That is, does European socialism function in a world without American capitalism?

  59. PL – thanks, my (poorly phrased) question was rhetorical, to this point – all of the products you mentioned are quite easily sold on world markets. The one exception would be tourism/sex prior to the advent of inexpensive air travel.

    Certainly, it would have been more efficient to trade with Cuba for all those years. But it’s hardly as if their entire economy was geared to the production of catalytic converters for Ford Festivas when the embargo started.

    it was so-very-thoughtful of us to conveniently provide Castro with one…

    It also works the other way, too. Had we ended the blockade, a couple years later they would have been stating the reason they failed to meet their five year plan was the exploitation by the greedy US capitalists. For more on this, see Chavez, Hugo.

  60. BP,

    There’s no magic bullet. If there were, it would’ve been fired at Castro long ago.

    Cuba could kill on tourism alone if the infrastructure to support full tourism were in place. Of course, we Floridians oppose that ?

  61. PL

    While European countries have extensive welfare states none (or, at least, hardly any of them) can be characterized as actually socialist.

    But to the extent that their welfare states work they do so because of the private sector that furnishes the tax revenue for them.

    And that was pretty much the whole point of the “third way” of which Bill Clinton and Tony Blair were the principal practitioners.

  62. Socialistic is what I meant, not old-school socialist. What’s interesting to me is how much the world depends on American consumption as opposed to American production.

  63. PL – so you’re thinking about our trade deficit being a big part of the crutch holding up Euro bloat?

  64. BP,

    Nothing specific. I just wonder how much of our relatively free system allows the rest of the world to do things differently. It may be totally mistaken to muse this way. We sure buy a lot of stuff, though, and that consuming power must surely be tied directly to our relative economic freedom.

  65. Please let me know soon about Cuba’s future. I’m trying to decide whether I sell or expand my investment in hotels in Cancun.

  66. Also, while trade between the US and Cuba has been sharply limited, remittances from US residents are mostly legal and are estimated to be in the $400 to $1,000 million/yr range. They have probably been higher in the past since there were some additional restrictions added in 2004 restricting remittances to family members (previously they could go to any household except those of high-ranking officials). In contrast, Cuba’s current overall exports are around $3.231 billion.

    (Reference)

  67. If we’re into comparisons and U.S. hypocrisy, how about Kosovo vs Tibet & Taiwan? Why are we championing independence for the former, but not the latter two?

  68. For starters, we should’ve never ended our recognition of Taiwan or allowed them to have been booted out of the U.N. Screw China and their oppressor’s ways.

  69. Many of you here miss the fact the US, not only prohibited US citizens and companies from trading with Cuba, they also penalized foreign companies if they traded with Cuba.

  70. anon,

    I’ve always understood your latter point to be more honored in the breach.

  71. But only the gullible and naive believe him.

    There are a lot of people out there that are gullible and naive. Remember that a majority of Americans (in a society with comparatively free access to information) supported going into Iraq. Now project that on a society where those freedoms do not exist.

  72. wash the Communists out to sea on a tidal wave of U.S. dollars from investment, trade and tourism.

    Won’t happen. All you have to do is look at Mexico during the last half century, which is a hell of lot more open than Cuba, to understand that US investment isn’t going to run in the front door, so long as there is a very real risk that the investment will be nationalized as the investor is booted out the back door.

    I, of course, favor an end to the embargo and for the travel restrictions to be eased.

    I would like to see the Communists washed out in a sea of blood, but that’s just me. I fear that Castro may get to die in his sleep instead of at the end of a rope and that sucks.

    I love you Epi!

  73. Joe,

    It is not only the embargo that has maintained the level of poverty that Cuba suffers. Cuba has traded for years with Mexico, even having some investment by Mexican companies in that country, and yet the fact is that the gross interventionism and Mob-like behavior of the Castro regime concerning private investment has stifled any possibility of growth in that country. It is not only the non-access to the US market, but the lack of protection of private property rights, very low levels of savings, and stifling bureaucracy, is what is at the heart of Cuba’s economic disaster.

    I totally agree with you that the US embargo has not helped at all, even being a failed strategy if the intention was to harm Castro’s regime and bring in change in Cuba – quite the contrary, it cemented his rule. However, it is not the main reason Cuba is submerged in poverty.

  74. All you have to do is look at Mexico during the last half century, which is a hell of lot more open than Cuba, to understand that US investment isn’t going to run in the front door, so long as there is a very real risk that the investment will be nationalized as the investor is booted out the back door.

    That has not happened in the last 20 years. Also, only very few industries were nationalized (with disastrous results, I might add), like oil, electricity and others, but overall private foreign investment is protected… somewhat.

    At least, it is as well protected as in the US, considering the US has 75,000 pages of Federal regulations, and OSHA…

  75. wash the Communists out to sea on a tidal wave of U.S. dollars from investment, trade and tourism.

    Huh?

    Why hasn’t the tidal wave of Euros and Lunies washed out all the commies?

    I agree that the embargo should end…but I expect little from such a change.

    Anyone who thinks the reason why Cuba is poor because of the US embargo is an idiot.

  76. Baked Penguin,

    What goods did they have such a massive surplus in that rotted in warehouses because of our embargo?

    That’s not the way it works. Potential export industries either never developed or withered because of a lack of markets. There weren’t still cranking out product for no market. What would Cuba have exported? Well, there are the items mentioned above, and then there are the industries that never developed because of a lack of demand.

    J sub D,

    The difference between “impossible to trade” and “a barrier to trade” is really not a difficult one to grasp if you make a fair effort. Yes, Virginia, adding the cost of a trans-oceanic shipment to what you buy and sell really is an impediment to trade.

  77. but overall private foreign investment is protected… somewhat.

    At least, it is as well protected as in the US…..

    Although Mexico has made great strides toward a more market oriented economy, I don’t agree that foreign investment in the US is as risky as foreign investment in Mexico.

    Secondarily, part of the very real problem is the actual risk AND the perceived risk. Mexico has a rather checkered history of being unfriendly to foreign investment. Takes a while to live that down.

  78. Meant to add, and Mexico is light years ahead of Cuba, which was my point. If foreign investors are cautious about investments in Mexico why would they flock to a place like Cuba?

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