An Ironic Collaboration

Ever since the demise of the Soviet Union and the subsequent demise of Cuba’s sugar industry, it has been apparent that the island has had a hard time being competitive in world markets. Beyond nickel and some remnants of sugar, it has had little in the way of goods to export. And its tourism has stabilized in the range of 2-3 million visitors a year. To pay for its imports, the country has had to go to the people export business. First it was medical professionals by the thousands. But now the country is willing to let go of most anyone willing to go most anywhere. Each person leaving represents foreign exchange income to the country, whether via contracts for services or via family remittances. The latter are estimated by the Havana Consulting group to have been over $2.7 billion in 2013. By way of comparison, Cuba’s total merchandise exports were just over $6 billion in 2011. Oddly, Cuba and the United States have come together in their policies toward promoting this people exporting strategy. On the one hand, Cuba has eliminated the requirement of travel permits so that most of its citizens are free to travel abroad. On the other hand, the United States has maintained the unique privilege for Cubans to take permanent residence upon arrival in the country. As could be expected, immigration by Cubans has soared, with more than 40,000 availing themselves of the privilege last year. Assuming that these new immigrants send home $100 per month, Cuba will receive over $50 million in new foreign earnings from these new immigrants in the United States. Cuba’s entire liquor industry exported $92 million in 2011. Two years of immigration to the United States will produce better economic results than all the Cuban rum in the rest of the world. Of course, exporting people is not the same as exporting rum. Once it is consumed, the rum is gone. People are more like capital goods that keep producing income, thus the phrase of “human capital” often used by economists. Cuba is draining itself of this capital, which took a great deal of effort and treasure to form. But the government tacitly accepts that this human capital is much more productive in other countries than it is at home. So much so that even if a small percentage of its earnings abroad is sent home, the country as a whole is better off in the present. There is logic in this madness. As long as the United States keeps cooperating with it.