Handcuffed Capitalism in Cuba

The New York Times today ran a well-written vignette on the state of glasnost in Cuba.

I’ve been hearing for some time from bullish businessmen and eager Cubans that the slow economic reforms pioneered by Raul Castro are the opening salvo in a looming societal change. In this heady tale, Cubans, who have always been true capitalists despite one of the world’s most micromanaging and paranoid planned economies, will soon rise up and show the regime their talents and investment will pour in.

I’m skeptical of this argument for two reasons. First, the main barrier, which this article covers briefly, is that the Castro government and its myriad of bureaucrats and hangers-on, have lived and died from a planned economy as the lynchpin of a perpetual struggle against illegitimate, demonic capitalism in the U.S.

At the same time, they’ve had to fund themselves meaning that the island has gone from benefactor (sugar daddy if you will – it is Cuba after all) to benefactor. Castro’s government accepted handouts first from the USSR, then from Spanish and Canadian developers looking to make a buck on beach hotels and other shiny objects, and ultimately the throngs of foreign tourists that have brought most of the foreign currency to the island since 1991. And this is to make no mention of the U.S.’s role as prime benefactor for many years leading up to the 1959 coup.

Could it be that this new economic reckoning is just a way for the government to collect the tax revenue that they no longer can squeeze out of sympathetic foreigners? I suspect this is the case, and will make a true economic opening impossible unless the government breaks the cycle of opening up only insofar as it funds their lock on power.

Second, and perhaps more importantly, are most Cubans ready for this? With no offense meant to Cubans, whose accomplishments during the Castro government have been remarkable given the adverse conditions, getting a nation to move to capitalism overnight after fifty years of isolationism and Communism is no easy task. Beyond this, how likely is it that most Cubans are even ready to do business, given the island’s crumbled infrastructure, lack of raw goods and capital, and absence of a truly functional market economy?

It may take as long as it took to wrestle Cuba from American capitalism to get it integrated into the world economy again, and it certainly is not going to be the product of any Castro government program.

Evolution, not revolution.

UPDATE: The New York Times today (Dec 9), in a marvelous feat of placing two big Cuba pieces in just one week, dished a sober dose of reality on the success of government programs to stimulate the private economy. Surprise! It’s difficult.

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