Just this past week President Obama announced that the American embassy would be re-opened, part of the Obama administration’s step-by-step policy to normalize American-Cuban relations. The general narrative assumes that these moves will lead to greater economic prosperity for Cuba and general economic benefit. Sorry, not so. Cuba is going to remain a poverty-stricken, miserable backwater.
Given the fraught history between America and Cuba, any news is going to generate plenty of verbal pyrotechnics. Generally, the left is thrilled and the right is annoyed. Some leftists do bemoan the prospect of a Cuba overrun by American capitalism. Of course those people don’t have to live in the grinding poverty that the Cuban people do.
Proponents of normal relations spin tales of new investment, trade and economic advance. Opponents decry any action that would reward the thuggish Castro regime. The curious thing is that both sides are wrong. Outside an initial burst of curiosity tourism, investment and trade will most likely be nominal, at best and the Castro regime will get little out of normalization.
Cuba’s standing as one of the last unapologetically communist regimes and the celebrity of Castro mask a simple fact: Cuba is an economic basket case. It is a true welfare state – that is it has spent the last 55 years dependent on foreign subsidies. The nation itself is woefully unprepared to compete in the world.
Cuba’s capital stock has decayed appreciably since Castro’s takeover. Old, highly polluting 1950s automobiles prowl the streets (for the few citizens who can afford them). The built environment is disintegrating.
Cuba has few industries of note. Some barely exploited oil deposits exist offshore. However, beyond agriculture, nickel mining, some cheap medical care and cigars, there is very little the country has to offer. Its populace is literate, but hardly trained for the work in the electronic age.
And Cuba’s long-term prospects are poor. Cuba is entering a steep demographic decline with a birth rate of 1.43, well below replacement. Its population began to decline about 10 years ago. The bottom line is that a country with poor infrastructure, few comparative economic advantages and an aging, shrinking population.
As if the physical and demographic state of Cuba weren’t bad enough, the government has shown little real interest in ditching its absurd Marxist religion. The state’s power is pervasive and capricious. Investors can hardly count on the law to protect their property rights.
And, even if Cuba were to entice private investment, Cuba’s neighbors will hardly sit still. Advanced tourist economies exist throughout the Caribbean and Mexico. Agricultural opportunities abound in Latin America. And, the world is awash in an oil glut. Once the novelty of travel to Cuba wears off, the country is most likely to slide deeper into an economic funk – for which only a wholesale economic change will be the solution.
Why would anyone want to invest in a place like that?
Cuba and Castro are relevant only as romantic symbols for the left – a romance the left enjoys at the expense of millions living in a poverty-stricken police state. The country is an anachronistic museum piece that nobody is willing to prop up any longer. Once the mainstream media tires of the story, nothing will be left but crumbling architecture and a bankrupt state.
The only attention Cuba deserves is on its abominable human rights record and the sociopathy of its leader emeritus, Fidel Castro.
Cuba will only become relevant once its police state inevitably collapses and millions seek to flee. And then we will see the real story: How a megalomaniac destroyed a nation.
