Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Rebirth of a Nation

Politics / Social Issues Aug 13, 2016 - 12:39 PM GMT

By: Jeff_Thomas

Politics

Regular readers of this publication will be familiar with my frequent comments that all countries have a shelf-life – that they experience a slow rise, typified by a strong work ethic and a free-market philosophy, which results in a highly productive country. That productivity later results in a high level of sympathy for the disadvantaged, which political leaders turn into a justification for government largesse. That, in turn, results in a population that grows complacent and, eventually apathetic, culminating in a decline into totalitarianism.


This pattern has existed for thousands of years. Sometimes, the process is a slow one, as in ancient Rome; sometimes, it can take place over mere decades.

In commenting on the EU, US, Canada, etc., I’ve often described my view that these jurisdictions are in the latter stages, just prior to totalitarianism. In making this comment, I offer the reminder that, at any time in history, there are countries at every stage of development. For those who think internationally, the goal is to exit from a country if it’s in the death throes of complacency/apathy and to seek another home that’s in its ascendancy.

On rare occasion, we witness a country that’s right at the birth stage, or possibly the rebirth stage. At present, we have an excellent example in Cuba, a country that’s been famously in the totalitarian stage for over half a century, due to a collectivist political regime.

Of course, collectivism always ends at some point, as it destroys initiative. Eventually, initiative reaches such a low point that the lack of productivity is insufficient to sustain the system itself. The system literally goes broke and the country is ready for a reset.

Economic collapse in Cuba began over 25 years ago, when the USSR folded and Cuba no longer received three times the value of their sugar from the Russians. Since then, a feeble attempt has been made to promote tourism, but, as everything was owned by the collectivist government, the country was rife with inefficiency and physical decay, making it unattractive to tourists. Finally, the government realised it had reached the end – they could no longer guarantee jobs to all their citizens, so they allowed some of them to create their own businesses. The first were the paladares – home restaurants. This came as a result of an existing proliferation of black-market restaurants that the Cuban people created themselves. Since they contributed heavily to the economy and the government was failing to prevent them in any case, they were legalized in 1995. (They pay a monthly fee to the government.)

Paladares were pretty tatty affairs initially. They were in dilapidated buildings, with no menus and poor food. But, in 2010, government relaxed its restrictions further. The paladares then took off. Today, Cubans operate everything from hamburger stands to chi-chi theme restaurants with interesting menus, good service and excellent food. (English is now spoken in most paladares.)

The government still runs most of its own restaurants, but they’re losing popularity, as the staff are unmotivated, the premises in poor repair and the food is uninspired. It’s only a question of time before they’re offered to the cuentapropistas, who are running paladares successfully.

Next came the casas particulares (privately run apartments for daily rental), in 1997. (The owner pays an annual fee per room to the government.) Like the paladares, at first they were shabby, but in the spirit of free enterprise, the owners continually reinvested their profits into the apartments and many are now an odd mix of modernity and Cuban kitsch.

Then it became legal to own transportation-for-hire. Although recent prosperity has allowed the  government to import fleets of Hyundai sedans, painted uniformly in yellow with black checks, tourists prefer to ride in almendrones - 1950’s cars that are now taxis. For decades, these relics have been deteriorating, but, their use continued as long as they could be kept operable.

However, with the opportunity for private operation of a taxi service, Cubans have revitalized the old cars as taxis, reinvesting their profits into their vehicles, restoring them with fancy new paint jobs, replacement interiors and even re-chroming the bumpers. Many tourists today will only travel in almendrones.

The government has done its best to limit these developments, whilst endorsing them, as they are a clear affront to the official policy of collectivism. Periodically, they threaten to punish those who make too much money, creating economic inequality. As recently as 2005, Fidel Castro spoke fervently that the rise of free-market entrepreneurs was counter to his revolution and that, “The abuses will end… In this battle against vice, nobody will be spared. Either we will defeat all these deviations and make our revolution strong, or we die.”

Trouble is, the writing is on the wall. Collectivism left the Cuban people in dire poverty and only free enterprise has made improvements possible. The Castros therefore have had a terrible dilemma: how to continue to support the concept of collectivism, whilst living off the reality of the free market. (Taxes and fees levied on entrepreneurs are now filling government coffers as never before, making major civic improvements possible for the first time.)

A decade or more ago, the government began to restore the buildings on the more historical plazas, like those in the image above, in la Plaza Vieja. (After decades of neglect, all of historic Havana was in bad repair.) But, soon, they realized that, any section of Habana Vieja that they restored would attract more cuentapropistas and the government would soon receive more income as a result. Soon, the government was trying to play catch-up, restoring as many blocks as possible.

In past years, a street might be torn up for repairs and take months to be repaired. Today, the old broken tarmac in a street is removed, the plumbing lines refitted, the old cobblestones reinstated and the street is even swept – sometimes all within a week. Everywhere in Habana Vieja, there are blocks being restored. Every restored block means more tourism revenue for the entrepreneurs, who in turn are providing the government with the greatest income they’ve had in decades.

And, of course, tourists, who might have come as a curiosity in previous decades, are flocking to Havana, as the amenities are now at a more acceptable level. Most are English speaking – Britons, Canadians and Americans (with or without government permission.)

To accommodate the influx of tourists, the government has built a second, more modern airport terminal, complete with tourist shops and cafes. Also new: credit cards, even American ones, are now taken.

Officially, some 1.1 million Cubans are employed in private enterprise, either full- or part-time, but the real number is certainly larger than that. At this point, there’s no turning back. They’ve gotten their teeth into the free market and are creating new businesses daily. For its part, government is receiving ever-increasing revenue from businesses and cannot return, even if they wished to.

Most importantly, the rebirth of Cuba is bottom-up. The free market is driving the economy. Like any country with an ineffectual, inefficient government, regulatory laws are few and most are not followed, allowing the people of Cuba more freedom to run their businesses and lives as they see fit, unlike their neighbours to the north, where regulation stifles free enterprise and ambition.

US president Obama has recently paid a visit to Cuba – the first by an American president in some 90 years. He made speeches to the Cuban people that he’s prepared to let up on the punishment the US has doled out over the last half-century, by easing the US embargo. In doing so, he stated that he intends to make it possible for Cubans to enjoy a better life. For Cubans who have heard his proclamations, it’s too little, too late. Cuba is already on a roll and won’t be turning back. Both the population and the government are headed for a free-market future.

To be sure, the retired Fidel Castro is not pleased, trying to describe the new freedoms as a revised form of communism, rather than admit that communism is a “dead duck walking.” But, for most everyone else, Cuba is in essence emerging as a new country.

For fifty years, Cubans feared that, when the Castros were gone, the Miami Cubans would return, taking over the country and returning it to the dreaded Batista days. This is now far less likely. Certainly, Cubans have no individual wealth and own little in the way of property, but what they do have is the determination of a new nation. The wealth will come.

Presently, the government still owns the utility companies, the large hotels, etc. These will be the last to open up to private enterprise, but it will come in time, as will increased investment from overseas. Hopefully, these will be partnerships with the Cuban people, assuring that the people will be along for the ride and not sidelined by large overseas corporations.

We’re witnessing the birth of a new Cuba. In future years, it will be both an investment opportunity and a home for those who choose to increase their opportunities through internationalization.

Jeff Thomas

www.SWPcayman.com

jeff.thomas1066@gmail.com

By Jeff Thomas, Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

© 2016 Copyright Jeff Thomas - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules