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Trump Turns Back the Clock With Cold War Cuba U-Turn – Article by Ron Paul

Trump Turns Back the Clock With Cold War Cuba U-Turn – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
June 24, 2017
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Nostalgia seems to be very popular in Washington. While the neocons and Democratic Party hard-liners have succeeded in bringing back the Cold War with Russia, it looks like President Trump is determined to take us back to a replay of the Bay of Pigs!

In Miami on Friday, June 16, the president announced that he was slamming the door on one of President Obama’s few foreign-policy successes: easing 50 years of US sanctions on Cuba. The nostalgia was so strong at Trump’s Friday speech that he even announced participants in the CIA’s disastrous 1961 Bay of Pigs invasion of Cuba in the audience!

President Trump said Friday that his new policy would be nothing short of “regime change” for Cuba. No easing of US sanctions on Cuba, he said, “until all political prisoners are freed, freedoms of assembly and expression are respected, all political parties are legalized, and free and internationally supervised elections are scheduled.”

Yes, this is the same Donald Trump who declared as president-elect in December that his incoming Administration would “pursue a new foreign policy that finally learns from the mistakes of the past. We will stop looking to topple regimes and overthrow governments.” Now, in another flip-flop toward the neocons, President Trump is pursuing regime change in Cuba on the pretext of human rights violations.

While the Cuban government may not have a spotless record when it comes to human rights, this is the same President Trump who just weeks ago heaped praise on perhaps the world’s worst human rights abuser, Saudi Arabia. There, he even participated in a bizarre ceremony to open a global anti-extremism center in the home of state-sponsored extremism!

While President Trump is not overturning all of President Obama’s Cuba policy reforms – the US Embassy will remain open – he will roll back the liberalization of travel restrictions and make it very difficult for American firms to do business in Cuba. Certainly foreign competitors of US construction and travel companies are thrilled by this new policy, as it keeps American businesses out of the market. How many Americans will be put out of work by this foolish political stunt?

There is a very big irony here. President Trump says that Cuba’s bad human-rights record justifies a return to Cuba sanctions and travel prohibitions. But the US government preventing Americans from traveling and spending their own money wherever they wish is itself a violation of basic human rights. Historically it has been only the most totalitarian of regimes that prevent their citizens from traveling abroad. Think of East Germany, the Soviet Union, and North Korea. The US is not at war with Cuba. There is no reason to keep Americans from going where they please.

President Trump’s shift back to the bad old days on Cuba will not have the desired effect of liberalizing that country’s political environment. If it did not work for fifty years why does Trump think it will suddenly work today? If anything, a hardening of US policy on Cuba will prevent reforms and empower those who warned that the US could not be trusted as an honest partner. The neocons increasingly have President Trump’s ear, even though he was elected on promises to ignore their constant calls for war and conflict. How many more flip-flops before his supporters no longer recognize him?

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

How Embargoes Destroy Freedom – Article by Ryan W. McMaken

How Embargoes Destroy Freedom – Article by Ryan W. McMaken

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The New Renaissance Hat
Ryan W. McMaken
February 12, 2015
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In the wake of the Obama administration’s partial normalization of relations with Cuba, proponents of the embargo condemned the move, with National Review publishing an unsigned editorial claiming that allowing Americans to trade freely with the island nation amounts to giving comfort to murderous dictators. NR’s editors concluded with:

The Cuban government is not legitimate, and never has been. It is a one-party dictatorship with a gulag, an archipelago of prisons into which democrats and dissidents are thrown. We hope that the new American policy — Obama’s policy — does not benefit the Cuban dictatorship and harm Cuban democrats. We fear that yesterday was a good day for the Castros and a bad day for the Cuban people, and for American foreign policy.

This is all very interesting from an international relations perspective, and there is no doubt that the Cuban regime is a brutal regime. On the other hand, why does the brutality of the Cuban regime make it alright for the US regime to jail and persecute private American citizens who attempt to trade with people in Cuba?

That is, after all, the position of those who favor the embargo. Embargoes are not something where a magic fairy waves her wand and Cuba suddenly becomes invisible to Americans.

No, supporting an embargo means supporting the government when it fines, prosecutes, and jails peaceful citizens who attempt to engage in truly free trade. Support for an embargo also requires support for a customs bureaucracy that spies on merchants and consumers, and the whole panoply of enforcement programs necessary to punish those who run afoul of the government’s arbitrary pronouncements on what kind of trade is acceptable, and what kind is verboten. Naturally, this is all paid for by the taxpayers.

How the American Federal Government Punishes Trade

To get a taste of the reality of embargoes, one need only consult the Treasury Department’s summary of the Cuban embargo as administered by the “Office of Foreign Assets Control.”

For those who think the embargo has something to do with freedom, they might wish to consult the section on punishments for trading with people in Cuba:

Criminal penalties for violating the Regulations range up to 10 years in prison, $1,000,000 in corporate fines, and $250,000 in individual fines. Civil penalties up to $65,000 per violation may also be imposed. The Regulations require those dealing with Cuba (including traveling to Cuba) to maintain records for five years and, upon request from OFAC, to furnish information regarding such dealings.

Nothing says “freedom” like $250,000 fines and mandatory presentation of five years of private records upon demand from the federal government.

Private companies, of course, regard such potentially draconian sanctions as no joke, and companies must spend time and resources training employees and business associates to be sure that they do not find themselves in violation of federal law. This manual from Snap-on Tools is one example of how private companies must stay up to date on details such as this:

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) maintains strict embargoes banning, and lesser sanctions limiting U.S companies and their foreign subsidiaries from entering into commercial transactions with specified foreign countries, persons and business entities. Congress recently quintupled the maximum civil fines per violation of many of these sanctions from $11,000 to $50,000 (each unlawful shipment constitutes a violation), and doubled maximum potential criminal penalties assessed willful violations from 10 years to 20 years in prison. Moreover, enforcement is being given a much higher priority…

It’s easy to see why those who favor greater government intervention in the economy would have no problem with such a program, but it’s alleged defenders of free markets like the editors at National Review who appear to be most insistent that the US government keep all its agents armed and ready, and a prison cell open for anyone who violates their federal programs of choice.

Embargoes as Mercantilist Prohibition

At their heart, embargoes are nothing but a specific type of prohibition. Sometimes, the government imposes prohibitions on transactions involving certain goods, such as cannabis. Other times, the prohibition extends to all transactions with people in a certain place. The fundamentals are the same, however, in that they prohibit peaceful exchange, with heavy penalties for violators.

Moreover, embargoes are a throwback to the mercantilism of the days of yore when economic policy was viewed as a tool of international affairs, and should be designed, at least in part, to benefit the regime of the home country.

Historically, the mercantilist regimes of old tightly controlled trade opportunities which were debated as part of armistice agreements, such as the Peace of Utrech (1713) when the British were able to force the Spanish to allow exactly one ship of merchandise annually into Spanish colonies. At home, during the same era, the British state forbade its own citizens with valuable engineering knowledge from leaving the country, lest they emigrate to a foreign land and share their knowledge with foreigners. The economic needs of the state superceded those of the individual.

This is the type of economic policy that precipitated the American Revolution, when Americans in the colonies were allowed to trade with only specified nation-states and territories in such a way that was seen as advantageous to the British Crown. The freedom fighters in that conflict engaged in rampant smuggling throughout eastern North America to avoid taxes and to trade with the French and the Spanish who were hardly paragons of democratic liberalism.

Unfortunately, the Americans did not learn their lesson in the revolution, and got to work erecting their own trade restrictions by the late eighteenth century. The greatest crime of the era, however, was Thomas Jefferson’s embargo against the British which crippled the shipping and shipbuilding industries in the United States. Naturally, it was pointed out at the time that the Constitution did not permit any such action on the part of the federal government. No such quaint considerations restrain the American state or its pro-embargo allies today.

Cuba is not the only country subject to embargoes handed out by the American state, and North Korea, Iran, and Syria are in similar positions. The question is often asked as to whether or not these sanctions work. I would certainly claim that they do not work in accomplishing their stated purposes, but whether or not they work is really beside the point. Those who advocate for such embargoes need to back up a step and first prove that it is moral and legitimate for nation-states to dictate to the people who pay the bills (i.e., the taxpayers) with whom they are allowed to trade. A society that actually respects private property rights, of course, will accept no such proposition and will respect the right of private citizens to dispose of their property as they see fit. On the other hand, those who believe that it’s the prerogative of governments to micromanage private property and throw violators in prison are encouraged to move somewhere that the government can take a robust and active role in such things. Cuba, for instance.

Ryan W. McMaken is the editor of Mises Daily and The Free Market. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre. 
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This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.
Economies are Not Destroyed in a Day – Article by Nicolás Cachanosky

Economies are Not Destroyed in a Day – Article by Nicolás Cachanosky

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The New Renaissance Hat
Nicolás Cachanosky
October 26, 2013
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Earlier this month, Argentina’s leading conservative paper, La Nación published an unsigned editorial comparing the economies of Argentina and Venezuela. The editorial concluded that as economic freedom declines in Argentina, and as Argentina adopts more of what Chavez called “twenty-first century socialism,” it is becoming increasingly similar to Venezuela. Is this true? Will Argentina suffer the same fate as Venezuela where poverty is increasing and toilet paper can be a luxury?

The similarities of regulations and economic problems facing both countries are indeed striking in spite of obvious differences in the two countries. Yet, when people are confronted with the similarities, it is common to hear replies like “but Argentina is not Venezuela, we have more infrastructure and resources.”

Institutional changes, however, define the long-run destiny of a country, not its short-run prosperity.

Imagine that Cuba and North Korea became, overnight, the two most free-market, limited-government countries in the world. The two countries would have immediately gained civil liberties and economic freedom, but they would still have to accumulate wealth and to develop their economies. The institutional change affects the political situation immediately, but a new economy requires time to take shape. For example, as China opened parts of its economy to international markets, the country started to grow, and we are now seeing the effects of decades of relative economic liberalization. It is true that many areas in China continue to lack significant freedoms, but it would be a much different China today had it refused to change its institutions decades ago.

The same occurs if one of the wealthiest and developed countries in the world were to adopt Cuban or North Korean institutions overnight. The wealth and capital does not vanish in 24 hours. The country would shift from capital accumulation to capital consumption and it might take years or even decades to drain the coffers of previous accumulated wealth. In the meantime, the government has the resources to play the game of Bolivarian (i.e., Venezuelan) populist socialism and enjoy the wealth, highways, electrical infrastructure, and communication networks that were the result of the more free-market institutional realities of the past.

Eventually, though, highways start to deteriorate from the lack of maintenance (or trains crash in the station killing dozens of passengers), the energy sector starts to waver, energy imports become unavoidable, and the communication network becomes obsolete. In other words, economic populism is financed with resources accumulated by non-populist institutions.

According to the Fraser Institute’s Economic Freedom of the World project, Argentina ranked 34th-best in the year 2000. By 2011, however, Argentina fell to 137, next to countries like Ecuador, Mali, China, Nepal, Gabon, and Mozambique. There is no doubt that Argentina enjoys a higher rate of development and wealth than those other countries. But, can we still be sure that this will be the situation 20 or 30 years from now? The Argentinean president is known for having said that she would like Argentina to be a country like Germany, but the path to becoming like Switzerland or Germany involves adopting Swiss and German-type institutions, which Argentina is not doing.

The adoption of Venezuelan institutions in Argentina, came along with high growth rates. These growth rates, however, are misleading:

First, economic growth, properly speaking, is not an increase in “production,” but an increase in “production capacity.” The growth in observed GDP after a big crisis is economic recovery, not economic growth properly understood.

Second, you can increase your production capacity by investing in the wrong economic activities. Heavy price regulation, as takes place in Argentina (now accompanied by high rates of inflation), misdirects resource allocation by affecting relative prices. We might be able to see and even touch the new investment, but such capital is the result of a monetary illusion. The economic concept of capital does not depend on the tangibility or size of the investment (i.e, on its physical properties), but on its economic value. When the time comes for relative prices to adjust to reflect real consumer preferences, and the market value of capital goods drops, capital is consumed or destroyed in economic terms even if the physical qualities of capital goods remains unchanged.

Third, production can increase not because investment increases, but because people are consuming invested capital, as is the case when there is an increase in the rate that machinery and infrastructure wear out.

I’m not saying that there is no genuine growth in Argentina, but it remains a fact that a nontrivial share of the Argentinean GDP growth can be explained by: (1) recovery, (2) misdirection of investment, and (3) capital consumption. If that weren’t the case, employment creation wouldn’t have stagnated and the country’s infrastructure should be shining rather than falling into pieces.

Most economists and policy analysts seem to have a superficial reading of economic variables. If an economy is healthy, then economic variables look good, GDP grows, and inflation is low. But the fact that we observe good economic indicators does not imply that the economy is healthy. There’s a reason why a doctor asks for tests from a patient that appears well. Feeling well doesn’t mean there might not be a disease that shows no obvious symptoms at the moment. The economist who refuses to have a closer look and see why GDP grows is like a doctor who refuses to have a closer look at his patient. The Argentinian patient has caught the Bolivarian disease, but the most painful symptoms have yet to surface.

NOTE: This is a translated and expanded version of an original piece published in Economía Para Todos (Economics for Everyone).

Nicolás Cachanosky is Assistant Professor of Economics at Metropolitan State University of Denver. See Nicolás Cachanosky’s article archives.

You can subscribe to future articles by Nicolás Cachanosky via this RSS feed.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Why Can’t We All Travel To Cuba? – Article by Ron Paul

Why Can’t We All Travel To Cuba? – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
April 24, 2013
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Earlier this month, entertainers Jay-Z and Beyoncé were given a license by the US government to travel to Cuba. Because it is not otherwise legal for Americans to travel to Cuba, this trip was only permitted as a “cultural exchange” by the US Treasury Department. Many suspect that the permission was granted at least partly due to the fame, wealth, and political connections of the couple.

Some Members of Congress who continue to support the failed Cuba embargo, demanded that the Administration explain why these two celebrities were allowed to visit Cuba. The trip looked suspiciously like tourism, they argued in a letter to the White House, and American tourism is still not allowed in Cuba. They were photographed eating at the best restaurants, dancing, and meeting with average Cubans, which these Members of Congress frowned on.

Perhaps it is true that this couple used their celebrity status and ties to the White House to secure permission to travel, but the real question is, why can’t the rest of us go?

The Obama administration has lifted some of the most onerous restrictions on travel to Cuba imposed under the previous Bush administration, but for the average American, travel to the island is still difficult if not impossible.

However, even those who are permitted to go to Cuba are not allowed to simply engage in tourist activities — to spend their money as they wish or relax on a beach.

The US government demands that the few Americans it allows to travel to Cuba only engage in what it deems “purposeful travel,” to “support civil society in Cuba; enhance the free flow of information to, from, and among the Cuban people; and help promote their independence from Cuban authorities.”
They must prove that they maintain a full-time schedule of educational activities, according to Treasury guidelines for “people-to-people” travel.

Leave it to the federal government to make the prospect of visiting that sunny Caribbean island sound so miserable.

The reason the US so severely restricts and scripts the activities of the few Americans allowed to travel to Cuba is that it believes travel must promote the goal of taking “important steps in reaching the widely shared goal of a Cuba that respects the basic rights of all its citizens.”

Although I have no illusions about the Cuban government – or any government for that matter — it is ironic that the US chose to locate a prison at Guantanamo Bay, Cuba because the indefinite detention and torture that took place there would have been illegal on US soil. Further, the US government continues to hold more than 100 prisoners there indefinitely even though they have not been found guilty of a crime and in fact dozens are “cleared for release” but not allowed to leave.

Does the administration really believe that the rest of the world is not annoyed by its “do as we say, not as we do” attitude?

We are told by supporters of the Cuba embargo and travel ban that we must take such measures to fight the communists in charge of that country. Americans must be prohibited from traveling to Cuba, they argue, because tourist dollars would only be used to prop up the unelected Castro regime. Ironically, our restrictive travel policies toward Cuba actually mirror the travel policies of the communist countries past and present. Under communist rule in the former Soviet Union and elsewhere it was only the well-connected elites who were allowed to travel overseas – people like Jay-Z and Beyoncé. The average citizen was not permitted the right.

Although the current administration’s slight loosening of the restrictions is a small step in the right direction, it makes no sense to continue this nearly half-century old failed policy. Freedom to travel is a fundamental right. Restricting this fundamental right in the name of human rights is foolish and hypocritical.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission.