Blog Post #7: Opening Cuba, Not for Opportunity

Fidel Castro was not a friend of Captain America …… I mean United States. Cuba is known to be one of the more citizen-friendly communist country. But then again, the magnitude of citizen friendly can be measured with countries such as North Korea, so bar is set low. Castro family seems to keep Cuba from next-to-disaster condition to make sure revolution for democracy does not happen. Cuba is known to have the best health care structure in the world, and it is also home of best (illegal?) cigars and baseball players (Yasiel Puig, anyone?). New Castro seems to open things up. It started with baseball players (citation needed). With the gesture (?), it looks like U.S. is responding to open things up with a country not far away from Florida.

According to the William Mauldin and Jack Nicas of Wall Street Journal, President Obama decided to open things up for trade and travel (not by much, as indicated). What it looks like a start of a great opportunity for foreign affair, I may be a yellow signal for our economy. As of right now, in a limited view, there are not much U.S. Economy can gain besides agricultural sector.

First, We can start with the worst political issue down south, illegal entries. It maybe the case that Arizona, Texas, New Mexico, and California would not be our only concern. The geological proximity between Cuba and Florida will create another frontier for boarder petrol (or coast guard) to prevent the overflow.

The problem is not on political (illegal immigration) issue, which I am not willing to go through. The government spending on military, which takes a lot of space of never-will-end government deficit, will never go down. Those who have taken macroeconomics class would know, the only way to decrease government spending in marginal sense (given that there is interest rate with government borrowing money) is to lower government spending. The ever so necessarily high government spending will not go down, which further ensures that government surplus will never happen, starting since the birth of this country.

But the bigger question is, can we protect the private economic up front? Can loosening trade and travel line will help not damaging the economy of mainland? We know there is a trade demand for Americans, which will leave $’s in Cuba. But what can we gain? In sarcastic note, we will not sell iphone to Cubans.

On my previous blog post, I have exposed that agricultural industry is a hidden gem of U.S. export. Maybe, it is possible for our agricultural sector can expand its cliental.

Jessica Goff of The Advertiser noted what could be a opportunity for U.S. agriculture. She states that Cuba has been the largest importer of Louisiana grains. With the capacity that U.S. agriculture has, with the market control that agricultural sector has in terms of price, the restarting the export of U.S. to Cuba is a good idea. Goff also noted the cheaper import of cane sugar from Cuba instead of Europe, which drastically will decrease the importing cost. Also, with the lack of food supply in Cuba as a whole, U.S. can have its selling point of produces. Of course, this whole export argument should come after we know rather Cubans can/willing to pay to import U.S. goods.

In these limited sense, one dimensional understanding gets to understand that U.S. economy will not be benefited from opening things up. Unless something drastic happens (like discovering diamond castle in Cuba), I am not visioning a next big thing for our macroeconomy.

Leave a Reply