Cuba is no example to follow

22 May 2019
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Venezuela is proof of the miraculous impact of socialism. They took a prosperous nation and destroyed it almost overnight. That’s a problem for that other socialist paradise—Cuba.

Cuba relies on aid from Venezuela to put food on the shelves. Venezuela doesn’t have any surplus to give and has cut aid to their comrades. Now Cuba has to ration food because there isn’t enough. CBS reported:

The Cuban government announced Friday it is launching widespread rationing of chicken, eggs, rice, beans, soap and other basic products in the face of a grave economic crisis. Commerce Minister Betsy Díaz Velázquez told the state-run Cuban News Agency that various forms of rationing would be employed in order to deal with shortages of staple foods.

Cuba wants to blame the long existing U.S. trade embargo. But embargos don’t have a major impact. Lots of countries sell oil and many countries sell beef. If one country doesn’t want to sell a product, or doesn’t have it, it doesn’t mean others don’t have it or aren’t willing to trade. If an embargoed country really needs a product from one specific nation, they just find a third party to do the purchasing for them.

If the trade policies of the Trump administration means the U.S. won’t sell widgets to Cuba and they can only use American widgets, they will then buy them from a company in Brazil that buys them from the United States. Trade finds a way in spite of embargos. The only time trade can’t find a way is when there’s nothing to trade—that is where and why socialism becomes a problem.

The problem isn’t the embargo; the problem is Cuba is bankrupt and their currency worth almost nothing. Trade requires both parties to the transaction to have something of value to trade. Cuba can’t trade because Cuba is very bad at producing. Without hard currency they can’t buy the products they need. The embargo isn’t stopping them from buying, socialism is.

Cuba’s socialist planning results in low agricultural production. Cuba dedicates a lot of time to growing very little food and the result, according to CBS, is: 

Cuba imports roughly two-thirds of its food at an annual cost of more than $2 billion and brief shortages of individual products have been common for years. In recent months, a growing number of products have started to go missing for days or weeks at a time, and long lines have sprung up within minutes of the appearance of scarce products like chicken or flour.

Reuters notes:

Communist-run Cuba imports between 60 percent and 70 percent of the food it consumes at a cost of around $2 billion, mainly bulk cereals and grains such as rice, corn, soy and beans, as well as items such as powdered milk and chicken.

Domestic output in all those categories declined last year, according to the report.

Cuba, where 80% of the land is owned by government, no longer produces the food it needs and it can’t import food either as they can’t pay for it. To trade you have to produce and socialism doesn’t produce.

To buy food Cuba needed hard currency so it relied on Venezuela to bail them out with currency from oil exports. But socialism in Venezuela halved oil exports. Earlier this year Bloomberg reported: “Venezuela, once Latin America’s largest oil exporter, ended 2018 with a whimper as overseas sales dropped to the lowest in nearly three decades”. Under government ownership oil production in Venezuela “fell by more than half in the past five years”. 

Oil paid for food for Cuba, now it doesn’t. Cuba, once a food exporter, suffers from shortages under state-owned agriculture. Without the ability to produce food they relied on imports and to import they relied on Venezuela for cash. When socialism in Venezuela dramatically reduced oil exports, the country couldn’t prop up Cuba any more. So the failure of socialism in Venezuela exacerbated the failure of socialism in Cuba and food lines result.

Commerce Minister Betsy Díaz Velázquez admits there isn’t enough food but insists Cuba will not return to the misery of past socialist policies. She promises the rationing will, at the very least, “lead to equal distribution”. Now, that is something socialism is good at doing, spreading misery for everyone equally.

James Peron is the president of the Moorfield Storey Institute and author of several books including Exploding Population Myths and The Liberal Tide.

 

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