Wednesday, March 07, 2007

Week One Cuba Libre

Week One Cuba Libre

In the first week of Cuba libre the best thing the Cuban government in transition can do is get out of the way. Humanitarian aide will begin to flood in bringing desperately needed medicine, doctors and other vital supplies. Now is the time to reverse 48 years of bungled central planning but it will not be accomplished overnight. However, it will not take forever either.

The NUMBER ONE CONSIDERATION will be the poor Cuban people and meeting their immediate needs. Medical and critical dietary necessities will be initially filled by the exiles and relief agencies (NGO’s). The next most pressing need is housing. I have already proposed that Cubans be given title immediately to the property which they occupy for their residence. From the very beginning of this fresh start for Cuba we must implement a sensible tax policy that will cause investment to flood into Cuba. Therefore I advocate the single tax – a tax on land location value. The most expensive properties will be in central Havana. When corporations realize that they will pay no income tax, capital gains, corporate tax, import or export tax or any tax other than a simple location tax based on the value of the property they wish to occupy for their operations in Cuba they will fall over one another rushing in to set up shop. They will bid against one another to buy up Havana property from the new Cuban owners. I recommend that the purchase price for a given property be the highest offered along with modular housing units to serve as temporary housing. Each Cuban citizen will ink his own deal with these corporations. But the main idea is the corporation does not take possession of the downtown location until it has shipping in replacement housing for the former Cuban owners or built a new residence for them a bit farther out from the business center of Havana in areas deemed appropriate as well as arranged to pay any additional money owed to the Cuban family. The necessary electric, water, sewer and other infrastructure should be provided by private entities who would buy this right from the Cuban government to service a particular area or Cubans could set up their own coops to provide these things within a homeowner’s association setup.

Next we should return seized business property to the former business owners who wish to return to restart their business operations in Cuba. These businesses should be given a land tax break commensurate with their loss under the Castro regime which will satisfy any claim against the Cuban people legally.

Property that is owned solely by the Cuban government should be sold to private interests with the proceeds being poured into rebuilding roads and other vital public infrastructure. In addition, to raise more revenue the government should sell off all state owned industries to the highest bidder or turn them over to the former employees to operate for profit. Other rights should also be auctioned off such as broadcast frequencies for TV and radio, cable and satellite, telephone land lines and cell providers, oil drilling rights and mining complete with a resource depletion tax for whatever they extract and the list could go on for quite awhile but you get the idea. Millions will flow into the Cuban treasury overnight.

Former Cuban farmers and ranchers who wish to return to this life should be given their property back so production of food will meet the needs of the Cuban people without having to resort to any imports in the future. Cuba will very rapidly become a food exporter again. But you have people like me who are old and have no desire to become a rancher or farmer. We should still be compensated. For our situation just being given a piece of appropriate land with which to build a retirement home would suffice nicely. Cuban exiles that lost residences should be given government land appropriate for development as compensation for this new housing. In these cases we should also receive some relief from initially paying our land tax as compensation for our family’s losses under Castro.

What all of the above will also cause is an enormous building boom and that requires workers. Initially, Cubans will fill these jobs as well as providing the services for the corporations flooding into Cuba. Initially, I recommend doing everything in dollars. But within a few years the dollar will not be able to compete with the Cuban peso’s value which will be superior under this economic policy. There will be no income tax so every dollar a Cuban earns he keeps and the corporations will have no withholding duties or other such paper requirements cutting their overhead costs.

In short, under this economic plan the rest of the world will not be able to compete with the Cuban model and will eventually be forced to adopt it or fall farther behind Cuba. Better than even full employment, Cuba will very soon have a shortage of workers in relation to the number of jobs needed to be filled. This will constantly drive up wages and benefits as employers compete with one another for limited workers. Finally, Cuban money should be stabilized by tying its value to commodities like gold so in the future it will not be legal to inflate the peso. That will guarantee the solvency of the currency and keep Cuba’s economy forever on sound footing. All we have to do now is be rid of the tyrant Raul. He will be the only loser under this plan.

Tomás Estrada-Palma

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