The Cuban swing

If there is ever a sharp turn of events in a country's internal policy, the recent Cuban government action taken to save the country from bankruptcy should stick out from the crowd. It is a typical example of a government over expansion proving to be a disaster. It is the first time when an acting communist system abruptly gave up its major principle of command economy managed by the doctrine of so called proletarian dictatorship. What happened in this case is the system reaching its final stage where it literally fails because the state nationalized every sector of business where the total working population depended on a government salary coupled with the ever crippling subsidies and benefits widely delivered equitably. The reason is evident; it is about giving away more than one takes and making the cycle not only monotonous but also damaging in nature. A state without an efficient taxing system will definitely have its budget compromised. There needs to be a vibrant middle class that can enhance growth as the back bone of the economy. 

The new development must create a growing curiosity in most of us tempting to question what this means to the globalization of the world economy. It seems Cuba has learned the hard way, mainly from the Chinese transformation, that it is possible to contain, manage and even create accelerated growth of privately owned businesses under a command economy with a communist leadership at the top. Apparently, emerging world  economies have come to understand this fact in a dramatic speed while it is still hard to predict the future prospect of this venture.

The USA has been criticized for being too harsh on Cuba citing the expansion of trade relations with China, a country that is no less communist in structure than Cuba. It may be that the impending soul search by Cuba may bring about the expected improvement in the dire relations of the two closely watched neighbors. This is a good time to utterly say Cuba has been the best laboratory to test and prove the unavoidable failure of a controlled system. However, this development will not sway the focus from the internal politics that is becoming ever controversial in the US, namely, the role of the government in running the country's business environment. It is widely debated the problems a big government can cause are bound to be damaging in terms of spending. At the same time, we don't hear much about what a large sized corporate world can do to its own people. As good as entrepreneurship sounds like a daunting solution to bring about a successful economic growth, the devil is in the details of doing it. A reasonably sized government can be a shelter not only for those who need protection but also to smoothly integrate the business world to function in a way the rule of law prevails. But who is to say what size is the best? As the world moves to the center, no one should be left behind.

Updated 10/28/10 from the Editor's desk

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