We may need Cuba’s Old Cars



Published in: on April 24, 2009 at 12:36 pm  Comments (1)  
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One more step in the right direction: Cuba

Even though it was a Democrat (Kennedy) who put in the Cuban Embargo Act, it has been a Republican supported issue. The embargo is not gone but President Obama has taken a step into the right direction. He has lifted restrictions of travel. This from the Financial Times:

“President Barack Obama on Monday took a big step towards relaxing sanctions on Cuba, lifting all travel and remittance restrictions on Cuban-Americans and permitting US telecoms companies to offer services directly to the island.

The end of the restrictions, which Mr Obama promised during his campaign, means Cuban-Americans will be able to travel to the island state when they like, as opposed to once a year, and send as much money as they want to relatives, as opposed to $75 a month. Mr Obama also said he would permit Cuban-Americans to pay for US-provided telecoms services to relatives living in Cuba.

“Clearly, the Obama administration is re-examining US policy towards Cuba,” said Peter DeSchavo, analyst at the Centre for Strategic International Studies. “It would be an understatement to say that the embargo has not achieved what it was supposed to achieve.”

It is good that we are finally recognizing that it is free trade and not embargos that actually further freedom and liberty. Trade restrictions have done nothing but give Castro a reason to blame us for their economic woes. This blog hopes that even though Obama believes that Socialism is the best course for us that he will recognize trade is the best course for them (to become less socialist).

The rest is here.


Cuba’s Revolutionary Task

Today marked the 50th anniversary of Fidel Castro taking power and turning Cuba upside down. Since then the United States has had an embargo on Cuban goods. Some, like yours truely, argue that it has done nothing to bring down Castro. With the new administration, we can hope that there will be a change in policy towards the Cuban nation. This is so that we can put tourists and investment in this country, lifting people out of poverty and showing them what Capitalism is all about. Of course, many Cubans already know as many flee here all the time. This from the International Herald Tribune, which is a good story to sum up the last 50 years.

“Four months after they appeared in the waters between Havana and Miami, the four dead men remain nameless. At a morgue in the Florida Keys, they lie on stretchers stacked like bunk beds, their bodies chewed by sharks, their faces too putrified to be recognized.

The police suspect they were Cuban rafters. Nilda García thinks one of them might be her son – and the thought makes her weep. Fourteen years after she left Cuba on her own makeshift boat, she finds herself wondering once again: When will it end?

“How many mothers are going through this?” García said in an interview at her daughter’s apartment here as she awaited DNA results on the bodies. “How many more are crying for their losses? How many young people have drowned in this sea? How many?”

Fifty years ago on Thursday, many Cubans cheered when Fidel Castro seized power in Havana, and even now, the revolution attracts many fans – as evidenced by a Canadian tour agency advertising trips “to celebrate five decades of resilience.”

But the bodies speak to a different legacy. Here in South Florida, where roughly 850,000 Cubans have settled over the years, repeated waves of painful exile and family separation define the Castro era.”

We as Americans get too used to our living standard and government. These people fight and risk their lives for freedom, while we continue to elect those who move us closer and closer to socialism.


Published in: on January 1, 2009 at 11:38 pm  Leave a Comment  
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Marxist of the Week: Steven Soderbergh, Director of New Che Guevara

Most people have seen a teenager or college student wearing a t-shirt with the Cuban revolutionary Che Guevara. This blog recently put up a video on Reason.tv about this situation. I was ever more intrigued so I looked into the Che moving and found an interview with its director Steven Soderbergh on Politico. This is what I would like to direct your attention to:

Why make “Che”? What relevance does it have to 2008?

“We’re certainly seeing the result of what happens when you make profit the point of everything, where money that’s being earned doesn’t represent any particular product or labor on anybody’s part. That can’t sustain, because it’s magical thinking. It can’t go on indefinitely, because eventually it crashes. Che’s dream of a classless society, a society that isn’t built on the profit motive, is still relevant. The arguments still going on are about his methodology. “

This coming from a director who is trying to make money on this movie and has made lots of money on many other movies. The very next question is this:

What do you think the Obama administration will do about Cuba?

“What they ought to do is really obvious. Whether they’ll do it is one of these questions in which you have a lot of people with certain beliefs controlling the dialogue, and therefore the problem is not getting solved. How many years are you supposed to give a bad idea? Would you stay married for 45 years to someone you hated? It’s obvious what we’re doing isn’t working. The answer is: Lift the embargo, and flood that place with tourists, put the onus on them and call their bluff. The people of the U.S. are the best advertisement for its ideals. Not its government.”

Did he just say lift the embargo and flood that place with tourists? At the same time rails against making a profit off of everything? Profits are what companies need to be reinvested into their companies for research and development. The wages are what people make for their labor. Sure, some people find executive in companies wages outrageous but they make that much money because they earn lots of money for their investors. Investors as we can see with the financial sector investors are very important. Without these investors you can not expand because there is no one to fund their ideas. They attract investors by being good at things.

The profit motive in fact allows Mr. Soderbergh to idolize Communists in movies because there is a demand for these movies. This is the same irony that is built into the Che t-shirts. Mr. Soderbergh along with Che are against making everything a profit motive. It is the fact that there is a profit motive that people remember Che through t-shirts and the fact people will come watch this four and a half hour movie. Mr. Soderbergh suggesting that we should allow tourist to go to Cuba to further American ideas, is showing his faith in the free market and profit motive. He is making the correlation himself! So is he a bipolar communist? Or is the real answer to the first question “because I wanted to make money off of the t-shirt market that has blown up?”


Published in: on December 15, 2008 at 2:09 am  Leave a Comment  
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Free Trade Vs. Protectionism: Japan and Cuba

The debate of free trade vs. protectionism is something that will always be a part of history. Political forces will never allow free trade to reign. Politicians are re-elected so often that the long term industrial adjustment it takes would cause the people to vote the politician out. Instead, the benefits of free trade and the costs of protectionism only goes to those in the long term and they do not vote.

A good example here is Cuba vs. Japan. As most people know, we have relatively free trade with Japan and we have an embargo with Cuba. The purpose of the Cuban embargo is to force them to form a democracy. The purpose of free trade with Japan is that after World War II we rebuilt them and we enjoy the fruits of their labor. Which policy has produced the most democracy?

These two countries are somewhat hard to compare because of the World War II relations with Japan. Some could argue that they got a democracy when we took it over, but regardless, trade has ensured wealth that in turn has assured democracy. On the other hand, Communism has kept the Cubans poor and have assured that democracy will only be followed by economic freedom.

Republicans are pro-free trade and pro-Cuban embargo while the Democrats are anti-free trade and anti-Cuban embargo. Both parties are for democracy. This shows that Republicans do not understand the relations between trade and democracy, while the Democrats don’t understand the relation between trade and wealth.

So to the new President and the future of America, look at these examples over history. I have searched for numbers and cannot find them over time but the human and democracy indexes are much higher in Japan.


Published in: on November 23, 2008 at 10:04 pm  Comments (4)  
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Is there “Free Trade Imperialism?” Part II

This is the final part of a two part series asking the question, “Can free trade be used for Imperialism?” So far, I have said that the over arching thesis of the article discussed (information can be found on the previous post) is probably true. Britain at this time was still imperialistic. The authors define two types of Imperialism, formal and informal. Formal is exactly Imperialism and at this time is being cash in an anti-Imperialistic shadow. Informal is what we are now going to talk about. Do these countries that are agreeing to trade with Britain becoming economically dependent, thus becoming apart of an informal empire?

My argument here is no. Free trade is not imperialism. When countries become more dependent on each other it happens pretty evenly. Once the countries are engaged in trade, it will only hurt both of them to remove themselves from it. Therefore, one country even if more developed will not have any power over the underdeveloped country.

For example, if under developed country ‘A’ trades bananas to developed country ‘B’ which invests into building factories there they both are benefiting. This also plays into the idea of “Comparative Advantage.” If country ‘A’ feels like it is being taken over and losing it sovereignty to country ‘B,’ then they have three choices, tariff, embargo, or do nothing.

Since this post has “free trade” in it, we will assume they will not tariff as these can act like marginal embargoing. If you tariff incoming goods or tax foreign direct investment then the marginal business or investor will stop sending goods and money to this country.

If country ‘A’ chooses to embargo, then they lose all foreign direct investment (FDI) to build these new factories. This would cause job loss and physical capital would have been wasted. If country ‘A’ is wealthy enough it is possible that they could nationalize these factories and keep both the human and physical capital useful. Even though the country would be getting the factories at a discounted rate, it would still costs a lot to run. You would have to hire bureaucrats and government officials to keep it going. These people would have to be very skilled businessmen and more than likely would come with a high price tag.

Since country ‘A’ choose embargo, they also loose customers in their banana exporting. This would also cause a lost of jobs and domestic investment. Entrepreneurs would have seen that the market for bananas had opened up both with more customers and less tariffs. It could be easy to see how this would be a net loss for country ‘A.’ Country ‘B’ definitely loses here because they have lost all of their investments along with a stable and cheap importation of bananas.

Now if country ‘B’ wants to exert force upon country ‘A’ because they may be politically unstable. They could do the same three things, tariff, embargo, or do nothing. If country ‘B’ tariffs it would be the same as country ‘A’ by being a marginal embargo, so lets focus on that.

If country ‘B’ embargo’s country ‘A’ to try and gain political power then country ‘B’ must close down all the factories and stop buying bananas from country ‘A.’ If we assume that the investors of country ‘b’ were private, now country ‘b’ is going to have angry investors. Country ‘b’ has told them that they are no longer allowed to run their factories. Country ‘b’ citizens are not going to be very happy either because they are no longer provided bananas which could be a good and affordable food item. Country ‘A’ is losing here too. They have lost the factory jobs and the banana customers like in the previous example. In fact, country ‘B’ would feel more hostility towards country ‘A’ for doing this and would not cause them to beg country ‘B’ to come back. In fact, there would be more of a chance of war (Smoot-Hawley Tariff). The main reason why country ‘A’ could survive is because of the substitution effect. They could find foreign investors that would buy these factories and enter in the same agreement. Country ‘b’ would have to find a new substitute for bananas.

If country ‘a’ finds substitutes for their FDI then Britain did not gain any political power. In fact, one could imagine that they would lose much power. This is somewhat what we saw with Cuba and the United States. The United States has no more power than they had on Cuba before the embargo. If anything they have less and Fidel Castro has used the embargo as an excuse to his people to turn them against the United States. Japan on the other hand has had very open markets. Shouldn’t they be controlling the world?


Published in: on October 30, 2008 at 9:13 am  Leave a Comment  
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The Myth of Cuban Cigars

As most people know we have an embargo with trade with Cuba. What Cuba is naturally known for is cigars. I have personally love the hobby of smoking and collecting cigars. Cuban’s have always been considered the best of the best. This is because the soil and climate are perfect for growing cigars.

So what is the problem with cigars from Cuba if this is true? Well, the government of Cuba is Communist and that means the government owns the factories and production of these cigars. They also know the high demand for Cuban cigars and the envy that is around them. Often leading them to cut corners and not creating the best quality cigars.

They hardly pay their people because the profits are being eaten by bureaucrats and government’s friends. Because the profits are eaten by people who do not work the cigars and freedom is squashed, most of the best blenders and rollers have left to make cigars in other places.

The future of Cuban cigars looks both dim and bright. If tomorrow we released the embargo, which I support, the government would more than likely try to keep up with the demand and it would kill the little quality that is left. If they allowed the free market to take over production, then there would be a chance for better quality. Since they are moving to be more free in general aspects, it is possible that the production could become more free also.

So next time someone tells you Cuban cigars are the best, you know the truth.


Published in: on September 5, 2008 at 1:10 pm  Comments (4)  
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Free Cuba’s Car Market!

People often see pictures of Cuba pre-Castro and see a booming economy and a Las Vegas-like appeal. One of the reminders of this are the cars. The Economist states that Cubans have not been allowed to buy cars freely that were made after 1959 also known as the time of Castro’s revolt. This has nothing to do with the fact that Cubans like antique cars.

Raul has brought some reforms to Cuba, since his take over. Those being:

  • Cubans are allowed to stay in hotels that were once only for tourists.
  • Cubans can rent their own cell phones.
  • Cubans can buy microwaves, DVDs, and Computers.

The question remains will Raul change the car market? Cars that are brought in after 1959 are state property and usually are only given to workers and higher ups in the Communist party.

I believe that anyone that would read this would support a Cuban being allowed to own their own car after 1959. It is obvious that the Cubans want this themselves, as there is a black market for other cars. A 1980s Mercedes goes for $35,000 on the black market.

Sure, most Cubans are poor and will not be able to afford cars, computers, and cell phones but this should not stop the government from deregulating the industry. I can not think of any advantage other than political handouts for this rule to stay in place.

So Raul free the car market!


Published in: on June 17, 2008 at 2:19 am  Comments (2)  
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