Why American business needs to follow Beyoncé to Cuba
By Chris Farrell
Controversy and Cuba are synonymous in the U.S. The latest blow-up involves a U.S. Treasury-sanctioned educational excursion to Cuba that included married entertainment superstars Jay-Z and Beyoncé. Senator Marco Rubio (R-Fla.) condemned the trip.
“U.S. law clearly bans tourism to Cuba by American citizens because it provides money to a cruel, repressive and murderous regime,” his statement began. He criticized the visit by the two celebrities, which, he says, “the regime seized on for propaganda purposes.”
Representative Ileana Ros-Lehtinen (R-Fla.) was also incensed. “If the tourist activities undertaken by Beyoncé and Jay-Z in Cuba are classified as an educational exchange trip, then it is clear that the Obama administration is not serious about denying the Castro regime an economic lifeline that U.S. tourism will extend to it,” she said.
The hip-hop artist Jay-Z quickly and defiantly responded to his critics with a song, Open Letter. Among the lyrics: “Politicians never did s--- for me except lie to me, distort history … They wanna give me jail time and a fine. Fine, let me commit a real crime.” Here’s another: “I’m in Cuba. I love Cubans. The communist talk so confusing.”
The back-and-forth is yet one more sign that it’s time to change American public policy toward Cuba. For more than a half-century the U.S. has imposed tough economic sanctions against Cuba. The economic embargo has failed miserably in its intent: toppling the Castro regime. The initial embargo was imposed in 1960, not long after Castro came to power. He stepped down as president in 2008, but the repressive regime he put in place still exists.
The U.S. government should take a 180-degree turn. Encourage more celebrities, chief executives, farmers, entrepreneurs, and ordinary tourists to do business with Cuba. For instance, in addition to being a successful hip-hop artist, Jay-Z is a remarkable entrepreneur with stakes in the music business, the Brooklyn Nets, an ad agency, an upscale sports bar chain, and so on. Why not encourage Jay-Z and Beyoncé to head back with a planeload of entrepreneurial friends and acquaintances eager to make a buck by striking trade deals and establishing business relationships. Tear down any barriers to American tourists visiting the island nation some 90 miles off the coast of Florida. American visitors can swap stories with Cubans over beer, share Twitter and Facebook addresses, and, yes, get some money into the local economy. Get rid of the sanctions, the embargoes, and the laws that prevent trade between the two neighbors.
To be clear, this shift in public policy stance isn’t a brief for the Castro regime. There’s no defense or apology for the Cuban government’s oppressions. Far from it. Instead, the core of the policy shift recommendation is practical. Tap into the revolutionary effect from unleashing the “animal spirits of capitalism,” in John Maynard Keynes’s famous phrase.
Trade among nations in agricultural goods, soda, machine tools, accounting services, and the like is much more than a moneymaking enterprise. No, along with trade come new ideas, new ways of organizing life, and new entrepreneurial opportunities. Commerce for the most part encourages an increasingly civilized conversation among different peoples and nations.
Better yet, the links of commerce and information flows across borders are hospitable to democracy and hostile to closed-minded bureaucracies. Just ask China’s beleaguered Communist Party leadership struggling to deal with a rising middle class, information on the Internet, and vocal outrage at corruption and environmental degradation.
The embargo has always been a deeply flawed policy anyway. The U.S. has stood alone in its sanctions, hardly an effective strategy in an increasingly global economy. (The sanctions against South Africa toward the end of the apartheid era were more effective since it was a multinational effort.) The past decade has also offered a hint of what open borders might mean. The U.S. embargo on Cuba is widespread, yet commercial ties between the two nations have grown. For example, the Trade Sanction Reform and Export Enhancement Act of 2000 created avenues of trade for agriculture and medicine. U.S. exports to Cuba, which totaled a mere $4.5 million in 1999, rose to a peak of $711.5 million in 2008. U.S. exports dropped during the global economic downturn and as Cuba erected its own trade barriers, falling to $465 million in 2012. That sum is still better than the essentially zero figure of a dozen years ago.
Let’s build on that tantalizing experience and go all in with open borders. If the goal is to bring greater freedom to Cuban citizens, forget embargoes, broad economic sanctions, and condemnations of Jay-Z and Beyoncé. Flood the country with investment and trade. Tap into the power of global markets. “America is strongest when it is most open and optimistic,” wrote journalist and author James Fallows in his book More Like Us. “This sounds like a platitude, but it has important practical effects.” Fallows’s observation rings true. A policy of open borders is no panacea. Yet tearing down barriers to trade with Cuba – and, in the process, embracing openness – hikes the odds that Cubans might enjoy higher living standards and greater freedoms.
Farrell is contributing economics editor for Bloomberg Businessweek
