The Heritage Foundation and Wall Street Journal recently released the 2016 Index of Economic Freedom. Despite modest gains in economic freedom worldwide, Americans have, for the eighth time in a decade, lost economic freedom. The global average score is 60.7, “the highest recorded in the 22-year history of the Index” with more than thirty countries including Burma, Vietnam, Poland, and others, received “their highest-ever Index scores.” 74 countries’ ranks declined, but they improved for 97.
The least free countries included North Korea with an abysmal score of 2.3, Cuba (29.8), Venezuela (33.7), and Zimbabwe (38.2).
Although Cuba offers few opportunities for private enterprise — outside of its sprawling black market, that is — the number of self-employed workers has slowly grown in recent years. Seven years after Raul Castro took over, 20% of the economy is now private. (more…)
Now that the U.S. has re-established diplomatic relations with Pearl of the Antilles, interest in Cuba is rising. While there are no crystal balls about Cuba’s future, here are a few things we do know about the island-nation’s economy, thanks to Pew Research.
1. Cuba was doing business with the U.S. even before the embargo was lifted. A partial repeal of the embargo allowed for this, and Cuba really needed food, medical supplies and medicine.
2. Cuba’s economic growth has slowed dramatically in the past few years.
The CIA estimates that Cuba’s GDP grew just 1.3% last year in real (inflation-adjusted) terms – 177th out of 222 countries ranked. One big reason: With global oil prices still well below their pre-recession highs, the heavily discounted oil that Venezuela sends Cuba – some of which Cuba re-exports – is less valuable.
Remember when you bought that first thing – a car, maybe – with your own first income? Remember the feeling of pride it gave you? You’d scrubbed pots and pans in the diner kitchen all summer. Or maybe you were the “go-to” babysitter for everyone in your church. You earned that money, and you bought yourself something.
Now imagine living in a world where that could never happen. You are told by the government that they will care for your every need, no need to pay for anything. Everyone will get the same things, and all will be well. We call this place “Cuba,” and that system has not worked. (See also, Soviet Russia, Bay-area communes and Shakers.)
With the U.S. sanctions against the island nations now lifted, Cuba is beginning to see economic life again. The Communist government also recently changed laws about self-employment.
Joan Perez-Garcia has always had a job – the government guaranteed him one – but he’s never made much money. That is changing. (more…)
At RealClearReligion, Rev. Robert A. Sirico offers an analysis of President Obama’s move to thaw relations with Cuba, a diplomatic opening that was supported by the Vatican. Citing Pope Francis’ appeals for “an economy of inclusion,” Rev. Sirico asks: “What, indeed, could be more inclusive than trade and travel?” More:
Free trade is not the solution to all economic, social and political problems. Nor does anyone expect it to be. That said, on my visits to Cuba and China, I have yet to meet anyone who thought restricting trade or travel helped, all of which will have to be negotiated once relations are normalized. Mutatis mutandis, those unfortunate to have to live under oppressive regimes are among the first to long for U.S. companies to setting up shop in their countries, gain new markets for their own products and will increase contact and opportunity for themselves. To have more exchanges with Americans at every level, whether it is through tourism, educational, trade or technological exchange, is what many Cubans want.
The open question is to see whether the Castro regime — which, after all, remains ideologically Marxist and viciously persecutes anyone who steps out of line — will use this thawing as a way of moving Cuba away from 50 years of one party rule and a top-down approach to the economy, and towards wider freedoms. Their track-record, to date, would not inspire confidence.
Yesterday, President Obama announced that, “the United States of America is changing its relationship with the people of Cuba.” He instructed Secretary Kerry to immediately begin discussions with Cuba to reestablish diplomatic relations that have been severed since 1961. High-ranking officials will visit Cuba and the U.S. will reestablish an embassy in Havana. He also instructed Secretary Kerry to review Cuba’s designation as a State Sponsor of Terrorism.
The President also says the U.S. will take steps to increase travel, commerce, and the flow of information to and from Cuba. Americans who travel to Cuba will be able to use American credit and debit cards on the island. U.S. financial institutions will be allowed to open accounts at Cuban financial institutions and exporters will be able to sell goods to the country.
Can the President do all that?
Sort of. The president controls the State Department, but the Congress controls the money. Senator Rubio (R-FL) has said that he’ll do everything he can to block funding for a Cuban embassy and prevent an ambassador from being selected.
The trade embargo between the U.S. and Cuba also cannot be lifted without congressional approval. The executive branch has the authority under current law merely to issue licenses that permit US citizens and corporations to do business with Cuba, travel there, and send money to family members there.
The eyes of many in the world have turned to Cuba over the last day or so. A great deal has been made of the historic changes in the relationship between the US and Cuba and whether such changes fundamentally alter the situation of the political leaders and the elites in the island nation.
More interesting to me, however, are the personal stories of suffering and loss during the years of the Castro regime and the hope that dawns, however slight it may be, with the normalization of relations. Perhaps the changes will simply serve to prop up a tyrannical regime, but there is real possibility that the day-to-day existence for millions of people will improve with greater travel, access to markets, and communication.
One of the great tragedies of the Castro regime was its suppression of non-approved cultural artifacts and forms, including traditional Cuban music. The Buena Vista Social Club’s closure was representative of a larger tradition of cultural pluralism and civil society in Cuba that had no place in the communist regime.
The guitarist Ry Cooder visited Cuba in the 1990s, and was able to reunite many of the original members of the club. Cooder put together an international tour for these wonderful musicians, including a trip to Carnegie Hall in New York City. That created an album and later a documentary. Here’s a scene from the documentary where a couple of Cuban musicians are visiting New York City for the first time:
The audio cuts out a couple minutes in, but you can see the wonder and appreciation that is apparent in their reactions. They see immediately and instinctively that the vitality and vigor of the city, with its commerce, exchange, culture, and liberty, are a marked contrast to their experiences in Cuba. “Activity! Activity! Activity!” one of them celebrates.
“This is the life!” concludes the other. Let’s hope that increased liberalization of engagement between the US and Cuba can help unleash more of this kind of vibrant dynamism among a people that stand in so desperate need of it.