Free Enterprise Without Freedom / Orlando Luis Pardo Lazo

19 02 2014


Orlando Luis Pardo Lazo

“Invest in Castro, it does not matter: Castroism will condemn you. . .”

Cuban exile mogul, Alfonso Fanjul, has traveled to Cuba several times between 2012 and 2013.  Recently, he has declared that there’s a “soft spot in his heart” and that he has an “open mind” towards the prospect of investing his fortune in the Island. Given the “right circumstances”, and “legal grounds”, and on the basis of an “appropriate framework.”

That’s only one example, of course, but it is far from being the only one among millionaires in the Cuban exile. And it wasn’t long before this caused a media outrage, including at the highest levels of American politics. Republican Senator from Florida, Marco Rubio, said he was “surprised and disappointed” with Fanjul’s change in perspectives, a person who for decades supported many initiatives that were forthrightly anti-Castro.

The key question at the current historical juncture would be the following: Do human rights violations in Cuba even remotely concern the economic interests (whether foreigners or Cuban exiles) that loom over the island?  First of all, Havana’s government doesn’t even allow Cubans living on the island to invest or associate peacefully in their own country. According to foreign interests, it seems we don’t even deserve it. We’ve already waited half of century a despotism, we might as well wait out one hundred years of impunity.

European politicians take advantage of the circumstance to start asking for the same. Let’s give our support to Castro, and let Castro deal with the Cubans.

And just like that, they aim to place themselves on the best possible terms with the dictatorship, with the idea of eventually “democratizing” it through gradual blows of solvency.  They bet on the miserliness of the Chinese model based upon Raúl Castro’s stagnant reforms, supposedly with the idea of not upsetting the Moribunds-in-Chief, and avoiding radical tendencies that could end up turning the Island into a Caribbean North Korea.  Ha!

But this is a false argument, the demagoguery of the Castro lobby complicated with donations to the presidential campaign every four years. In practice, Cuba has already shown the voracity of the markets of Beijing, as well as the criminal despotism of Pyongyang. Perhaps through this justification these tycoons expiate their totalitarian guilt of ending up talking about profits with former Castro supporters and former Castro enemies, indistinguishable from each other in the face of post-Castroism.

What’s surprising is that the international entrepreneurs insist on not acknowledging that  in Cuba their investments will be more than insecure. Unless they’re all moles of State Security since the beginning of the Revolution, or they had been lured/blackmailed by it (like the Catholic Cardinal). In fact, more than a few investors have ended up being accused of corruption and had all their assets confiscated. In the best case, they were deported to their country of origin without indemnity rights. In the worst, they’re still in prison (without trial), or dead just like the mafia that was left behind by the thug Max Marambio in his stampede-like get-away.

Amassing wealth through the humiliation of others is a feudal formula. Above and beyond the rule of law, decency is the source of all legitimacy.

John Stuart Mill’s phrase is well-known: “One’s own freedom ends where the freedom of the others begin”. In the case of the foreign business dealings with the Castro regime, that quote can very well be re-inscribed as followed: “One’s own freedom ends right where the freedom of others is ended.”

 Translated by W. Cosme

10 February 2014




One response

19 02 2014
Omar Fundora

I read on these blogs a great deal of discussion about Freedom or insinuation that the country issues are due to lack of it, but, I wonder if what we assume Freedom is…is what it means to everyone visiting or blogging here…here are some accepted descriptions of Freedom and how to measure them:

Economic freedom or economic liberty or right to economic liberty denotes the ability of members of a society to undertake economic direction and actions. This is a term used in economic and policy debates as well as a politicoeconomic philosophy. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom. One major approach to economic freedom comes from classical liberal and libertarian traditions emphasizing free markets, free trade and private property under free enterprise, while another extends the welfare economics study of individual choice, with greater economic freedom coming from a “larger” (in some technical sense) set of possible choices. Other conceptions of economic freedom include freedom from want and the freedom to engage in collective bargaining.

The free market viewpoint defines economic liberty as the freedom to produce, trade and consume any goods and services acquired without the use of force, fraud or theft. This is embodied in the rule of law, property rights and freedom of contract, and characterized by external and internal openness of the markets, the protection of property rights and freedom of economic initiative. There are several indices of economic freedom that attempt to measure free market economic freedom. Empirical studies based on these rankings have found higher living standards, economic growth, income equality, less corruption and less political violence to be correlated with higher scores on the country rankings

Rule of law

Free market advocates argue both that the rule of law requires economic freedom, and that economic freedom requires the rule of law. Friedrich Hayek argued that the certainty of law contributed to the prosperity of the West more than any other single factor. Other important principles of the rule of law are the generality and equality of the law, which require that all legal rules apply equally to everybody. These principles can be seen as safeguards against severe restrictions on liberty, because they require that all laws equally apply to those with political and coercive power as well as those who are governed. Principles of the generality and equality of the law exclude special privileges and arbitrary application of law, that is laws favoring one group at the expense of other citizens. According to Friedrich Hayek, equality before the law is incompatible with any activity of the government aiming to achieve the material equality of different people. He asserts that a state’s attempt to place people in the same (or similar) material position leads to an unequal treatment of individuals and to a compulsory redistribution of income. A problem in “Free Societies” (I write it in quotes (“”) because there is no such thing in the World as a Free Society. Calling a society free is equivalent to spirituality in the context of religion) is that over time the laws of the land are skewed in favor of privilege leading to inequality, oppression, discrimination and exploitation.

According to the free market view, a secure system of private property rights is an essential part of economic freedom. Such systems include two main rights: the right to control and benefit from property and the right to transfer property by voluntary means. These rights offer people the possibility of autonomy and self-determination according to their personal values and goals. Economist Milton Friedman sees property rights as “the most basic of human rights and an essential foundation for other human rights.”With property rights protected, people are free to choose the use of their property, earn on it, and transfer it to anyone else, as long as they do it on a voluntary basis and do not resort to force, fraud or theft. In such conditions most people can achieve much greater personal freedom and development than under a regime of government coercion. A secure system of property rights also reduces uncertainty and encourages investments, creating favorable conditions for an economy to be successful. Empirical evidence suggests that countries with strong property rights systems have economic growth rates almost twice as high as those of countries with weak property rights systems, and that a market system with significant private property rights is an essential condition for democracy. According to Hernando de Soto, much of the poverty in the Third World countries is caused by the lack of Western systems of laws and well-defined and universally recognized property rights. De Soto argues that because of the legal barriers poor people in those countries can not utilize their assets to produce more wealth.

Pierre Proudhon, a socialist and anarchist thinker, argued that property is both theft and freedom. Many leftists dispute that private property means “economic freedom” and believe in a system where people can lay claim to things based on personal use

Indices of economic freedom

The annual surveys Economic Freedom of the World (EFW) and Index of Economic Freedom (IEF) are two indices which attempt to measure the degree of economic freedom in the world’s nations. The EFW index, originally developed by Gwartney, Lawson and Block at the Fraser Institute was likely the most used in empirical studies as of 2000.

According to the creators of the indices, these rankings correlate strongly with higher average income per person, higher income of the poorest 10%, higher life expectancy, higher literacy, lower infant mortality, higher access to water sources and less corruption. The people living in the top one-fifth of countries enjoy an average income of $23,450 and a growth rate in the 1990s of 2.56 percent per year; in contrast, the bottom one-fifth in the rankings had an average income of just $2,556 and a -0.85 percent growth rate in the 1990s. The poorest 10 percent of the population have an average income of just $728 in the lowest ranked countries compared with over $7,000 in the highest ranked countries. The life expectancy of people living in the highest ranked nations is 20 years longer than for people in the lowest ranked countries.

Erik Gartzke of the Fraser Institute estimates that countries with a high EFW are significantly less likely to be involved in wars, while his measure of democracy had little or no impact.

The Economic Freedom of the World score for the entire world has grown considerably in recent decades. The average score has increased from 5.17 in 1985 to 6.4 in 2005. Of the nations in 1985, 95 nations increased their score, seven saw a decline, and six were unchanged. Using the 2008 Index of Economic Freedom methodology world economic freedom has increased 2.6 points since 1995.

Members of the World Bank Group also use Index of Economic Freedom as the indicator of investment climate, because it covers more aspects relevant to the private sector in wide number of countries.

The nature of economic freedom is often in dispute. Robert Lawson, the co-author of EFW, even acknowledges the potential shortcomings of freedom indices: “The purpose of the EFW index is to measure, no doubt imprecisely, the degree of economic freedom that exists.” He likens the recent attempts of economists to measure economic freedom to the initial attempts of economists to measure GDP: “They [macroeconomists] were scientists who sat down to design, as best they could with the tools at hand, a measure of the current economic activity of the nation. Economic activity exists and their job was to measure it. Likewise economic freedom exists. It is a thing. We can define and measure it.” Thus, it follows that some economists, socialists and anarchists contend that the existing indicators of economic freedom are too narrowly defined and should take into account a broader conception of economic freedoms.

Critics of the indices (e.g. Thom Hartmann) also oppose the inclusion of business-related measures like corporate charters and intellectual property protection. John Miller in Dollars & Sense has stated that the indices are “a poor barometer of either freedom more broadly construed or of prosperity.” He argues that the high correlation between living standards and economic freedom as measured by IEF is the result of choices made in the construction of the index that guarantee this result. For example, the treatment of a large informal sector (common in poor countries) as an indicator of restrictive government policy, and the use of the change in the ratio of government spending to national income, rather than the level of this ratio. Hartmann argues that these choices cause the social democratic European countries to rank higher than countries where the government share of the economy is small but growing.

President Franklin D. Roosevelt, a President of the United States who was the only President elected (4) times in U.S. history and one of the men I admired most as a leader said that there are (4) Freedoms that everyone in the World ought to enjoy. He articulated these goals during the State of the Union address in 1941:

1.Freedom of speech
2.Freedom of worship
3.Freedom from want
4.Freedom from fear

The concept of the Four Freedoms became part of the personal mission undertaken by First Lady Eleanor Roosevelt regarding her inspiration behind the United Nations Declaration of Human Rights, General Assembly Resolution 217A. Indeed, these Four Freedoms were explicitly incorporated into the preamble to the Universal Declaration of Human Rights which reads, “Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, and the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want has been proclaimed the highest aspiration of the common people,….”

The toughest Freedom to achieve, in my opinion, is Freedom from Want…in a World of Scarcity and unsustainable Global Economic System we have almost half of the 7 Billion people in the World living in Poverty with an income of less than $2.50/day and no “light at the end of the tunnel” to resolve this problem. Inequality in the World is bad even in the Richest countries and over the next 25 years, Global Warming will make food more scarce then it is now for everyone. We need a more inclusive World to improve the chances that everyone get to enjoy the 4 Freedoms. Countries by themselves cannot hope to solve internal Freedom issues because we are all affected by the Zero Sum Principle equally.

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