Cuba in Forbes

Gregory Sullivan (
Thu, 19 Mar 1998 15:15:43 -0500 (EST)

Given the recent list discussion involving Cuba some may be interested in
a current short article in Forbes magazine. Of course, Forbes calls itself
the Capitalist Tool and so, no doubt, some readers will feel that the
objectivity of the magazine is compromised by an activist agenda. In any
case, the chart depicting changing per capita GDP is interesting and if it
is accurate it is rather pathetic.



The cost of Castro

By Peter Brimelow

begin excerpt

WHAT IS THE COST of Castro? Communist economies are notoriously tricky to
estimate, but it appears that Cuba's inflation-adjusted per capita income
has actually fallen since Fidel Castro's revolution in 1959. In dramatic
contrast, Florida, just 90 miles to the north, has boomed—as have other
Sunbelt states like Texas and Arizona. Their revolution was
air-conditioning. And it worked.

To estimate the cost of Castro, we assume that Cuba's current per capita
output should be about the same proportion of Florida's output as it was in
1959. This gives us a current figure ($4,169), more than three times higher
than Cuba's actual output ($1,300), modestly placed between that of Jamaica
($3,200) and of Mexico ($7,700).

In fact, Cuba would probably have done considerably better than this. A
1956 U.S. Department of Commerce guide for businessmen flatly said that
"Cuba is not an underdeveloped country in the sense usually associated with
that term," citing its infrastructure, industrial development and large
middle class. Its living standards were reported to be among the highest in
Latin America—then.

A hint of what might have been: Even troubled Mexico's per capita GDP has
closed in on the U.S. quite considerably over the last four decades—from
less than an eighth in 1959 to about a third recently. Still, our modest
estimate suggests that the shortfall in Cuban GDP as a result of Castro was
a hefty $31.5 billion in 1995.

In the language of takeover artists, Cuba is an underperforming asset. Not
all of this value could be realized immediately, of course—but enough to
suggest it would be well worthwhile to offer Fidel a very golden handshake
(say $5 billion) to retire to Spain.

Or maybe one of his middle managers may try an LRO—leveraged rubout?

end excerpt