Sunday, August 13, 2006

U.S. and Cuba win if Bush Wall falls

Tallahassee Democrat

Originally published August 13, 2006

By Tim Lynch
MY VIEW

Three years ago, Mikhail Gorbachev looked down at the assembled businessmen, congressional leaders, academics and press attending the U.S.-Cuba Trade & Economic Council Cuba Summit conference and called out: “Mr. Bush, tear down your wall!”

He was referring to the Bush-maintained last vestige of the Cold War Iron Curtain, which prohibits free trade between Cuba and the U.S. He was also throwing the gauntlet at an American president as it had been thrown at him when then-President Reagan, referring to the Berlin Wall, challenged him from a podium in West Berlin by saying: “Mr. Gorbachev, tear down this wall!” As history shows, he did, without a shot being fired.

Communist threats have melted with the growth in global trade, with consumer goods replacing ICBMs aimed at each other's cities. This is a marked improvement in quality of life and wealth for all.

The congressional consensus that we should drop the antiquated no-trade policy reflects the common view of most U.S. businesses, many governors and state lawmakers (who have traveled there seeking trade), most of the U.S. population, and all but a few of even the Cuban-American community.

In five decades, Fidel Castro has learned (though considerably slower than his former Russian benefactors) the reality of modern human culture: “If you want a better quality of life for yourself and your people - greater wealth, more food, more and better jobs and access to the wide-ranging richness of other parts of the world - your economy must be based on free markets."

This is how the Berlin Wall and the entire Iron Curtain melted. All of Eastern Europe, and ultimately Russia and China as well, emerged into the global economy, with China's 25 percent of humanity growing wealth at an annual 10-percent rate since 1978 alone. This emergence is not seamless and without its problems, but it was accomplished without a single shot. They eventually got it.

The Germans finally understood after World War II that, if you shoot a Frenchman, you are destroying your own economy by killing a most valuable commodity - your customer/trading partner.

Like China's Chairman Mao decades earlier, Castro has finally learned that even slightly releasing the stranglehold on his nation's economy is a win-win situation for his and all other nations.

Various sectors of the Cuban economy have experienced differing levels of freedom and international co-operation and profitability. Competition among international businesses from Canada, Europe, South America and Asia has intensified and represents a large and growing share of the expanding Cuban economy. U.S. businesses are noticeably absent.

Foreign partnerships are mining for natural resources, exploring for oil in rich regions of the Cuban Gulf and building Cuban transportation and other infrastructure. They are competing to partner with the Cuban government to sell and service computers, cell phones and other electronics, tractors, manufacturing machinery and all other forms of commercial and retail supplies to this nation's very large and growing tourism and retail sales and commercial markets.

Even with severe restrictions on U.S. imports (essentially only food and medicine are legally traded), the handcuffed U.S. is one of the top valued importers to Cuba. I forecast we could exceed all other nations' imports combined if the cuffs were off.

A year after Gorbachev challenged Bush, those conference organizers invited me to examine and explain the economic impacts this policy shift would bring to the U.S. economy. When a major barrier is removed (the end of a war, a road through the mountains, the fall of a Berlin Wall or opening of a China or Cuba), the sound of trade returning is like that of unleashing of a mighty river - an instant expansion of markets and higher tides of wealth bringing higher levels of well-being for almost everyone involved. It's a pretty easy concept to understand.

Our research and that of many others across the country indicate expanding trade with Cuba would be good for both nations.

Free trade with Cuba would increase U.S. productivity by $253 billion over a 20-year period, with average annual exports to Cuba exceeding $29 billion over that time. This would translate into almost 850,000 new U.S. jobs, with annual job gains ranging up to 42,000.

Florida would gain the most because of its proximity to a new market with a population equivalent to Georgia and Alabama combined. With the removal of the travel ban to Cuba alone, Florida tourism gains would be $2.1 billion, with associated creation of 30,000 jobs over a 30-year period.

Even after the Bush Wall inevitably tumbles, a larger policy issues lingers: Though we have won the Cold War, will our foreign policy allow us to win the peace?

Will this transition from a mixed to fully free and open economy (followed by freer civil society) be allowed to transition in a peaceful way with appropriate reparations and restoration of civil liberties? Or will it degenerate into an armed conflict and chaos across the island?

The choice of tearing down the wall and building a bridge to our 12 million neighbors in Cuba or continuing to stumble and struggle with the ideological and cumbersome rubble of the past is one that President Bush, the Congress and ultimately the American people must make. The path and choices are clear. An expanded quality of life for all, or a path to increased conflict, destruction, waste and loss. I hope our nation responds well to the wise Gorbachev challenge - as he did to President Reagan's - and we all gain by peacefully welcoming another nation into full membership in the global economy.

Tim Lynch recently retired as director of Florida State University's Center for Economic Forecasting and Analysis. Contact him at t2lynch@yahoo.com.

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