As the US government takes steps like government controls of major industries and attempting to hijack 1/5th of the economy via health care reform, another country is moving in quite the opposite direction during this global recession.

Cuba’s workplace cafeterias are closing, President Raúl Castro keeps saying the well-off shouldn’t get the same subsidies as the poor, and now there are rumblings that one of the stalwart vestiges of the revolution — the ration booklet — has outlived its usefulness.

As the Cuban government struggles through a deep recession, its leaders have begun picking away at socialism in order to save it. But experts say the latest buzz by the Cuban government is simply another desperate fix to stem the slide of a failed economy that buckled long ago.


Since he took office early last year, Raúl Castro has been saying that the country’s severely battered economy needs fixing. In a widely quoted August speech, Castro said Cuba was spending more than it made.

“Nobody, no individual nor country, can indefinitely spend more than she or he earns. Two plus two always adds up to four, never five,” he said. “Within the conditions of our imperfect socialism, due to our own shortcomings, two plus two often adds up to three.”

In the 18 months since he took office, Castro restructured the nation’s agricultural system to give idle land to farmers, hoping they would revive a deeply troubled state-run agricultural industry plagued by inefficiency. He also allowed taxi drivers to have private licenses; many were working illegally anyway.

How do you get farmers to do more farming?  Create an incentive to do so, like a profit motive, long reviled by liberals and one of the reasons they believe health insurance needs reform.  Socialism costs more than the benefits to society.

Hugo Chavez was, no doubt, convinced that the oil profits he absconded with would pay for his socialist paradise, but that very socialism chases away the people he soaks off of.  Combined with the global recession, food shortages continue in Venezuela’s “paradise”.

The profit motive gives people an incentive to put their own time & money at risk to provide a service to those who need it.  If not enough folks need it, it’s not subsidized by the government (or shouldn’t be); it folds.  If it is useful to enough people, it prospers, and, rightfully, so does the owner who bore the risk.  Wealth is created in this system, not simply “spread around”, as Obama infamously said to Joe the Plumber.

Wealth was spread around in Venezuela, Cuba, and even Sweden, and now the piper must be paid.  In the latter two, changes are being made in a more capitalist direction.  Let’s hope Venezuelans learn that lesson.

Heck, let’s hope American Democrats learn it.

Filed under: DougEconomics & TaxesVenezuela

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