South Florida and Cuba
Hillary Clinton, a Democratic contender in the Presidential race who stands a fair chance of being our next President, is speaking in Miami two days from now, and in that speech, is expected to call for a full lifting of the Cuban Embargo that has been in place since 1962.
As she did with the immigration issue, Ms. Clinton is going to try to go further than President Obama in this area, in order to demonstrate that she is more progressive than the man she wishes to replace in the Oval Office. President Obama lifted some restrictions on Cuban trade and travel, reestablished diplomatic ties, and increased remittance amounts, among other things, in an effort to start normalizing relations with Cuba. Ms. Clinton wants to go further, and wipe out the embargo altogether.
Regardless of the political machinations behind what she’s proposing, and whether you think it’s the right thing to do or just a terrible thing to do, what would be the economic effect in South Florida if the embargo just, poof, went away?
The consensus seems to be: Not much, at least for a while.
Economists say that Cuba, and Cubans, are still broke. They can buy a little more as a result of increased remittances and more U.S. tourist revenue, but those two things are not going to move the economic needle that much. Cuba has had tourism from other countries for years, and we’re talking small numbers when we’re discussing remittances.
Lifting of the embargo is not going to be like turning on a fire hose.
Cuba still has onerous, stifling regulations around business activity and business ownership of almost every kind, and the Cuban government hasn’t shown much eagerness in modifying their legacy Communist Central Government machinery.
Until the basic structure of the economy changes from 99% state-controlled to something else that is not as restrictive, it’s going to be tough for Cuba to start digging its way out of the global poorhouse.
The open question is what their “evolved” economy will evolve to – will it look like China’s, an economic superpower that is still controlled by Communist bosses? Will it look like Russia’s or Venezuela’s, a sort-of capitalist/socialist country basically run by a strongman? Or, will it look like a highly socialistic European country? Or, will it be a free-wheeling capitalist economy?
And how long will the transformation take? Five years? Twenty years? Fifty years? Will political upheaval or chaos accompany this transition, or will it be gradual, measured, and peaceful?
No one knows at this point.
Whatever happens, and whenever it happens, South Florida is going to be involved. South Florida and Cuba are yoked together by history, the huge Cuban expatriate community and by geography. This area will benefit from an increased level of economic activity in Cuba, and an increased level of economic interaction with the rest of the U.S. It’s just that the crystal ball is little bit fuzzy in these early days.