Goodbye Cuba – Hello Trump!

This blog is being posted on Tuesday, March 1st (Super Tuesday). Eleven states (and American Samoa) will select about 25% of the delegates that will choose the two party’s nominees to be elected President of the United States in November. About 10 days ago (February 20th), Steven Rattner wrote an op-ed in the NYT about an educational trip he took with his kids to Cuba. His goal was to show them how not to run a country, while asking whether the emerging capitalism in Cuba will also lead to democracy.

I am ready to stop writing about Cuba, so this blog will help me transition into the American Presidential election. As with previous elections, I will try to find examples where climate change is part of the discussion (or shouting match), as well as pointing out when it starts disappearing into the background noise.

From the start, this blog has focused on global issues. Cuba is a small Caribbean island; its direct global impact can be traced largely to its proximity and interactions with the US. (Especially when it comes to the nuclear missiles that have accumulated on both sides of the narrow stretch of water that separates it from the US).

I think that Steven Rattner represents the views of a significant portion of the US population. Rattner is an American financier; he served as lead adviser to President Obama’s Auto Industry Task Force in 2009. He is a contributing writer for the New York Times and is the Chairman of Willett Advisers, which manages Michael Bloomberg’s personal and philanthropic assets. I frequently read his NYT entries and often agree with his writing. I have no idea about his political party affiliation, but his writing seems to make him a centrist liberal.

I will start with a few selections from the op-ed describing his education goals for his kids:

For my part, I wanted them to understand the key role that capitalism, which has brought more people out of poverty than any economic system in history, can play in that important effort. So I took them to Cuba, ranked along with North Korea as the least free economy in the world and one that is described as a “basket case.”

We marveled at stunning unrestored old buildings (legacies of Cuba’s past prosperity) and droves of colorful American cars from the 1950s that were almost as beautiful. We also saw a country whose per capita gross domestic product is roughly equal to that of Sri Lanka and Swaziland.

For the average Cuban, access to Western goods is almost nonexistent, as my kids saw when I took them to a shabby “department store” that accepted only pesos, the local currency. Only low-quality, Cuban made merchandise was on offer. I wanted my children to see firsthand the ineffectiveness of socialism at creating prosperity. And I was eager for them to appreciate that the country’s salvation could be the very system that Fidel Castro decried.

My first advice to his kids would be to fact check their father’s claims. This has become a very popular (and necessary) practice within the context of the endless debates between American presidential candidates. It would, however, have been a bit difficult (if not impossible) to do such research in Cuba – one of the minor consequences of the embargo.

So I did my own fact checking here:

The op-ed refers to Cuba as a “basket case” in terms of two parameters: poverty and free economy. Rattner then compares them to more internationally recognizable examples of “basket cases.” In terms of poverty measured and GDP/capita his data are clearly off:

GDP/capita World Bank Data 2013  (Current US$)

Cuba – 6,790

China – 6,992

Swaziland – 3,648

Sri-Lanka – 3,628

I added China to the list for a reason: an important element that was missing in Rattner’s original educational package was a reference point. Since this is an American family, my thinking was that the intended reference was the US, but the American GDP/capita under the same conditions is more than $50,000 – not exactly in the same ballpark. Rattner’s central message was that Cuba’s problems stem from its socialist centralized government. Now that free enterprise is becoming more acceptable and Cuba is starting to allow private business and tourists from all over the world, he posits, perhaps democracy will follow.

Well, for this lesson to sink in, maybe the US is not the most apt example. China might be a much better one. China’s numbers on all the parameters mentioned in the op-ed are much closer to Cuba’s. Vacationing in China before traveling to Cuba (like we did, July 28 – September 15, 2015) might have not only been productive but resulted in a different conclusion.

The other parameter he mentioned was free economy. Here are the data:

Index of Economic Freedom (2015)

North Korea (178) – 1

Cuba (177) – 28.7

China (137) – 52.5

US (12) – 76.2

In this case, the facts check out: only North Korea comes behind Cuba. These data came from the Heritage Foundation, a very conservative American foundation, which likely shares the same biases against Cuba that many of us have. As I have shown in previous posts, you can “manufacture” these kinds of results by adjusting the components that you put in the index.

Compare those results to the Democracy Index compiled by the Economist – an outlet that is generally viewed as a more objective source than the Heritage Foundation. Here are the data:

Country (Democratic Index Rank) – Overall Score

North Korea (167) – 1.08

Cuba (129) – 3.59

US (20) – 8.05

China (136) – 3.14

These data paint a very different picture – Cuba’s numbers are still not great, but it is no longer at the bottom and, in fact, ranks above China.

In spite of the fact that China’s GDP/capita is about the same as Cuba’s and its democracy index is a bit lower than that of Cuba, a stay as a tourist (with some money in one’s pocket) in Beijing, Shanghai, Xian, or any other megacity will give you a different impression of the effectiveness of centralized governments.

Now back to the US: we are obviously a rich, democratic country. We ranked last in the Economist’s category of “full democracies.” Apart from Uruguay and Mauritius, that list of 20 mostly includes rich, developed countries, meaning that money likely has a lot to do with the placing. The message here seems to be that if you are a fully developed country you can afford full democracy.

The Merriam Webster Dictionary defines democracy thus:

Full Definition of democracy

plural de·moc·ra·cies

1 a :  government by the people; especially :  rule of the majority
b :  a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections

2 :  a political unit that has a democratic government

3 :  capitalized :  the principles and policies of the Democratic party in the United States <from emancipation Republicanism to New Deal Democracy — C. M. Roberts>

4 :  the common people especially when constituting the source of political authority

5 :  the absence of hereditary or arbitrary class distinctions or privileges

Elections in the US are the longest and most expensive in the world.

In 2008, $5.3 billion were spent on the federal elections – $2.4 billion on the presidential elections alone. In 2012 super-PACs (Political Action Committees) were created to spend more than $350 million on political campaigns; 60% of that money came from a mere 100 donors. These committees were created as a product of two judicial decisions that essentially defended campaign contributions as free speech protected by the first amendment of the constitution. The Supreme Court approved the divisive Citizens United case in a 5:4 decision. As a result, super-PACs are forbidden from being directly connected with or giving money to a specific candidate. They can, however, spend unlimited money on advertising issues that play to a chosen candidate’s strengths. It turns out gaming the system is not a very demanding sport (even within a “full democracy”).

To be continued.