The Embargo of Cuba: Time to Go- Becker

The US embargo of Cuba began in 1960, a year after Fidel Castro turned this island toward communism. It was extended to food and medicines in 1962, the same year as the showdown with Russia over the installation of missiles there. The embargo has prevented American companies from doing business with Cuba, and discouraged tourism to Cuba. The American government also tried with quite limited success to prevent other countries from trading with Cuba.

In general economic embargoes are undesirable because they interfere with free trade among countries. Yet a case could be made for an embargo against Cuba. Castro not only allowed Russian missiles to be installed in Cuba, just 90 miles from Florida, but was also actively trying to interfere in other countries by sending troops and so-called advisers. The aim of the embargo was to impose economic hardship on Cuba that would force Castro to drop these international actions, and possibly even lead to the toppling of his government and the end of communism in Cuba. Castro did stop his international adventurism, but he and communism remained firmly entrenched for decades.

The Cuban economy has done badly, and has fallen behind the economies of many comparable countries. For example, in 1959, Cuban per capita income was above that of Taiwan, another island close by a hostile super power. Cuba’s two main exports were sugar and tobacco, while Taiwan’s were sugar and rice. At that time, Taiwan began its transition toward a private market system and globally oriented economy, whereas Cuba abolished private property and the government took charge of the economy with central planning and central organization. Since then Cuba’s economy has fallen far behind Taiwan’s as Taiwan has taken advantage of world markets to grow at a remarkable rate while Cuba has chugged along with very slow growth. Cuba’s per capital income is a fifth or less of that of Taiwan. Sugar and tobacco remain important exports of Cuba, while Taiwan has shifted toward complex electronic and industrial goods. Fidel Castro was a charismatic leader who mesmerized audiences with his oratory, but he utterly failed to deliver the goods to the Cuban people.

 Cuba’s weak economic performance is in small part due to the embargo since the US would be a natural important trading partner for Cuba, as it is for other nearby Caribbean countries, and for Mexico and other Central American countries. Yet communism itself is the main cause of its poor economic performance. One can say this with complete confidence since communism has utterly failed as an economic system in every country where it has been tried.

One only need look at the difference between the economies of South and North Korea for a clear natural experiment on the disadvantages of an economic system with no private property and central direction of the economy. Prior to the Korean War, the backward part of the Korean economy was in the south and the advanced industrial part was in the north. The roles are now radically reversed since the South and its private enterprise system is far ahead economically (and in other dimensions as well) of the North.

In the last decade, with Fidel Castro ailing and his brother Raul taking over leadership, the Cuban government has begun to realize what the Cuban people long ago learned, that communism is responsible for the vast majority of its economic weakness. Despite the opposition of hardliners, Cuba is allowing very small-scale private firms in retailing and other sectors, and houses can be bought and sold to a limited extent. These are only baby steps away from communism, but they put Cuba on a slippery slope toward a more market-based economy that will be hard to reverse.

Free trade is a principle that the United States should follow except in extraordinary circumstances. Cuba under Fidel, especially in his early days, may have provided enough of these circumstances to justify the embargo. Since Cuba no longer provides any significant threat to American interests, there is no sense in continuing to punish the Cuban people with an embargo on trade, nor to provide excuses to its leaders for the poor performance of the Cuban economy.

It is time to end the embargo on the export and import of goods and services between the United States and Cuba The Cuban people will benefit almost immediately. This may just be the time when such a move puts added pressure on the Cuban government to end its failed experiment with communism.

 

 

Comments

[jim kirby]

Wrong.

We could justify opening trade with Cuba if and only ir we were to compensate those whose lives, health, opportunity and wealth were stolen by the Cuban Commies.

The Cuban people would gain immensely by open trade, and Amerikans would gain as well. The Cuban people are way too poor to offer restitution, but Amerikans are not. The path to peace and prosperity is for Amerikans to give restitution to those wounded by Castro and to then open the borders. There's nobody who'd object to this, save haters of the Cuban people.

[Pointsnfigures]

I disagree with your comparison of China/Taiwan and US/Cuba. The Chinese are an oppressive communist power and Taiwan is a capitalist society. It's the reverse with the US and Cuba. If Cuba wasn't a communist state, it wouldn't be in the shape its in. The US embargo has nothing to do with their lack of prosperity.

If the embargo was ended, would Cuba be in statistically significantly better shape? Or would the surplus from added trade go into the pockets of the dictator and his friends?

I agree, the embargo at this point is a stalemate. It's more political than anything else. But ending the stalemate won't bring economic efficiency in Cuba, and it won't raise standards of living there.

[Terry Bennett]

Hindsight is 20/20. The Cuban missile crisis was a perfectly valid justification, and we should have razed Cuba and occupied it - not Bay of Pigs style, but Iraq 1991 style. (What were the Russians going to do - try to fight a war on the other side of the world against a superpower in our own back yard, without an ally or staging base within 5000 miles? Nonsense.) Instead we've been dignified / cowardly and we've put up with the antics of this odious, annoying little man for my whole lifetime.

If there is any remote justification at all for Jim's assertion that I owe the Cubans money, it might be in the fact that we could have stopped Castro from inflicting the ensuing misery on the people of Cuba. However, by that standard, we owe a lot of money to a lot of people. I don't buy it, this consensus appointment as world policeman. In fact, we were extremely generous to any Cuban able to make the 90 miles to Key West, not only taking them in but giving them a share in our own sovereignty.

In raw numbers, Castro had a clear majority at first, especially after the upper class left. Wealth disparity, the wendigo of this site, can drive discontent in the unproductive class, and lead to forcible theft from the productive. Obama proved you can promise to take from the rich and give to the poor and get more than 50% of even U.S. voters to back you. That doesn't make it moral. I would thus argue that the Cuban people in effect voted for Castro, however foolishly, and they can get their reparations from where the sun don't shine. I'm not an insurer of their bad decisions. Plenty of leaders rise popularly into power and then decide they don't want to leave, from Ferdinand Marcos to Charles Taylor. Not my problem.

As for the embargo, I don't think it matters a hill of beans either way. I suppose some Americans would like access to the cigars, but we have a wider policy that when leaders of small ineffectual countries treat their people badly, we stand up and call them on it, and the embargo remains consistent with that pretense.

[Jack]

Terry?? Kinda like China/Walmart?

And "raze?" that poor island? To what end? Have you been hanging with "Shooter Cheney", Rumsfeld and the "new" McCain who seems to have forgotten the human costs of warmongering?

[Jack]

Jim: The history of Brit/US/Spanish enslavement and oppression of Cuba and other sugar and tobacco growing islands is ugly, but if the raw political expediency prevents even the lifting of the embargo that should have been lifted soon after Jesse Helms (R/bigot/tobacco state) left us, what chance for even a token restitution?

http://www.afrocubaweb.com/history/history.htm

"embargo not matter?" Those working with accepted economic principles would note that both nations suffer from the lack of trade and open travel.

Cuba, of course, suffers hugely from being denied the access to the largest consumer market on earth, perhaps most obviously be missing out on a 20 year resurgence of cigar demand, but also by not having our tourist biz. Cuba once produced a third of US sugar consumption; a good biz for them and hey! cane is eight times better for fueling our gashogs than is eth from our corn lobby. Since the implosion of the USSR the Cuban sugar biz has all but shut down.

Naturally the harm to our 17 Trillion economy from Cuba's 60 billion GDP would be difficult to measure. While Cuba takes a far bigger hit for the loss of our nearby market, still its GDP has doubled since 2000, and curiously? despite communism, has a growth rate outpacing that of Puerto Rica.

Cuba also suffers from a lack of our imports in many ways from not benefiting from our cheap ag products to their heroic efforts to keep a fleet of our pre-1960 "Detroit iron" running.

Puzzling, eh? that "the story" since Nixon "opened up China" and since has been that of trade and wealth generation first and human decency, well, later? maybe? while in Cuba we fruitlessly try to starve out Castro even as Canada and many of the rest of our allies are investing and have no issue with free travel.

If we did "open" and resume trade, we should work closely with Cuba that our modern day WS thieves and the likes of Trump, don't get a foothold and start the whole nasty cycle of exploitation and corruption, and revolution over again.

Ha! perhaps with the improving demographics of the swing states, President Obama or candidate Hillary won't have to be so concerned about aging Cuban expats?

[Neilehat]

Terry, Why all this paranoia about Castro and the July Revolution? Fidel has been forced into retirement by age related medical conditions, Che died in a muddy ditch in Bolivia and Raul is simply trying to carry on. Had it not been for the U.S.'s irrational response to the July Revolution that overthrew Batista, his cronies and the Mafia and put the Socio-economic resources back into the hands of the Country; Cuba would have never been driven into the arms of the Soviets...

Don't blame the Cuban people for our ignorance and mistakes.

[Yang Yang]

China is a communist country too.can you say china made bad performance economy?the communist party don't want to share their power with other party doesn't means they will make economy worse.the communist party still could choosing private property economy system---but still so-called"market system".These years many Chinese went to Cuba trying to do the business.Because them understand the situation.They been through of these.Cuba is just like the 1990 in China.all main industry under control in central government.many goods is shortage due to the market system.but once government start to change,even just a "babe step"--allow a few private firms to do the business.they will understand the power of free market.supply and demand will allocate themselves till find the equilibrium.the economy system will far more efficiency than the present.
the embargo just small reason that Cuba had bad economy.the bottom line is,they have to realize free market system is the right choice

[Eric Rasmusen]

Here's what may be a novel argument for ending the embargo: the targeted country has adjusted. In the short run, trade sanctions are quite disruptive, so they can be a potent tool. In the long run, the target adjusts, selling its goods in other markets, finding ways to evade the sanctions, and reallocating resources so it doesn't export or import as much. So in general if sanctions don't work soon, they might as well be ended.

The other argument for that, which I think is well known, is that if sanctions don't work, they're pointless, since the punishing country is hurt as well as the punished one. It's like sending your soldiers to be killed in a war, but not sending enough to win the war.

[Nahom]

The US embargo on Cuba back in the 1960's was a must, due to the betrayal of Cuba. The secretive operations by Cuba and Russia to install nuclear missiles in Cuba was deceitful of both nations. With that being said the embargo on Cuba was a good decision. Cuba's economy being hindered by a communism ruler is not the real reason why they've chugged along with a slow economic growth, however the fact that they are a communist run nation does factor into the reason why they're behind. Cuba has the ability to trade with other surrounding nations besides the US to increase their economic growth. The author of this article does a good job demonstrating the difference between a communist run nation and a non-communist nation by using North and South Korea. It also doesn't help that Cuba's main export is sugar and tobacco.

[Mattnotda]

God Speed, Gary Becker. You will be missed.

The world would be a much better place if more people applied your analytical approach to potentially emotional issues.

You may be gone, but I thank God above for the time he lent you to us.

[Lex]

Say Hi to Milt when you see him.

: )

[Neilehat]

The Time too cross over and rest in the shade of the trees has come. All questions can now be answered. May you rest in peace...

[Gustavo De Carvalho Reis]

Thank you Gary for all your hard work. You helped us understand a little bit more our life and our society. We´ll miss you. Rest in peace.

[Gordon Longhouse]

The following appeared in this week's The Economist "Free Exchange" column.
http://www.economist.com/news/finance-and-economics/21601841-economists-everywhere-should-mourn-passing-gary-becker-great-trailblazer

[Jack]

Whew...... it saddens me greatly to stop by after being away several months and note the passing of Gary Becker. As with others here, he'll be greatly missed.

Good though that his last essay here was on target. For starters, if a policy dating back to when it was penned by JFK hasn't accomplished the hoped-for goals in half a century is doing more of the same likely to result in any benefit?

As others have noted embargoes are a generally a clumsy and inefficient means of affecting policy, even in oil kingdoms where we'd be dealing in one high value commodity. In Cuba, Canada and many other nations are investing and freely trading to their mutual benefit.

We've long traded with China, a nation not only communist, but with policies we consider barbaric such as what is often committed under their "one child" mandate. But, we're told that it's better to open up China and place our hopes on their upward movement from poverty to having a much larger middle class that will demand movements toward democracy and a better economic shake for themselves.

The same case should be made for Cuba. With our large markets nearby their exports of raw sugar might change to providing higher value sugar products. For example today we see premium colas and other products made with cane sugar bringing a higher price than those made with corn based HFC's. For us? But for our corn lobby, Cuba could produce some of our mandated ethanol from cane far more efficiently and at lower costs than that of corn based ethanol that gobbles as many btu's in the making as is produced.

And, cars themselves! How long can even the most creative Cubans keep cars produced before the embargo running? Well, not long, and there are other nations that can supply their automotive needs. Were the embargo lifted Cuba's population of 11 million would be a good market for our trucks, vans and heavy equipment as well as our high gas mileage small cars, hybrids and electrics.

The list doesn't stop with manufactured goods. Things we don't often think about like music come to mind. Many US musicians duck around our travel embargo to go to Cuba. You might recall Ry Cooder having gone to Cuba and making the "Buena Vista Social Club" film and CD featuring "long forgotten" jazz musicians who later did a concert at Carnegie. Ry was "busted" on a subsequent trip.

With the high number of Cuban exiles and their offspring here it would seem that finding trade niches for each nation to benefit from would move even more rapidly.

Don't we come again to the best tool for democracy and a working economy being that of the US being free and teaching by example? As compared to the recent failures of military force and embargoes?