Why the U.S. Should Drop the Embargo and Prop Up Cuban Homeowners Posted by Tim Padgett Saturday, November 5, 2011 at 11:26 am 32 Comments • Related Topics: Latin America , Cuba, economic reform, Hernando de Soto, property ownership, Raul Castro, The Mystery of Capital, U.S. trade embargo  Nilda Bouzo, right, speaks with her husband Ives Lopez next to a sign that reads in Spanish " Exchange Apartment Two for One" in their home balcony in Havana, Cuba, Thursday, Nov. 3, 2011. (Franklin Reyes / AP) It wasn't too surprising when Cuba announced on Thursday, Nov. 3, that people on the communist island may now buy and sell private homes. IN CUBA, SINCE 1959, IT WAS POSSIBLE TO OWN HOMES. IN FACT, THE URBAN REFORM FOR THE FIRST TIME MADE EVERY RENTER OF A HOME OR APARTMENT - ITS OWNER. GRANTED, PEOPLE COULD NOT SELL THE HOME OR APARTMENT THAT THEY BEGAN TO OWN. They can buy two, in fact – one in the city and one in the country, perhaps for those weekends when you just need to get away from your neighborhood's Committee for the Defense of the Revolution. THE CUBAN URBAN REFORM LAW ALLOWED EACH PERSON TO HAVE UP TO TWO HOMES, ONE AS THE RESIDENCE AND ANOTHER ONE AS A SUMMER OR DESCANSO HOME. THIS IS NOT NEW. President Raúl Castro, who has to liberalize his moribund economy to keep it afloat, had already said Cubans could own cars and businesses; purchasing real estate wasn't that big a leap. IT IS TRUE THAT CUBANS COULD NOT OWN, SELL OR BUY A CAR. BUT THAT MEANS A CAR THAT IS ALREADY ON THE ROAD. IT DOES NOT REFER TO NEW IMPORTED CARS. BY THE WAY, CUBANS COULD PURCHASE TRUCKS AND BUSES IN THE RURAL AREAS IN ORDER TO PROVIDE TRANSPORTATION SERVICE. THAT HAS BEEN THE CASE SINCE 1963. And yet, it is. That's because more than any of Castro's previous reforms, it opens the door to something Cuba hasn't experienced much of since the 1959 revolution: real economic development. AS USUAL TIME MAGAZINE ASSUMES THAT CUBA'S ECONOMIC PROBLEMS HAVE NOTHING TO DO WITH THE UNITED STATES BLOCKADE. RATHER, WE READERS ARE TO ASSUME THAT THE "REFORMS" [WHICH ARE NOT SPECIFIED] WILL PRODUCE "REAL WECONOMIC DEVELOPMENT." ONE HAS TO WONDER WHETHER THESE WRITERS EVERY PAY ATTENTION TO HISTORICAL CONTEXT OR EXTERNAL CONDITIONS? TO THEM, CUBA COULD HAVE ECONOMIC DEVELOPMENT ANY TIME IT'S JUST A MATTER OF ALLOWING THE BUYING AND SELLING OF THINGS... PERHAPS PEOPLE IN FLINT MICHIGAN OUGHT TO PAY ATTENTION. And that stands to make Washington's 49-year-old trade embargo against Cuba look all the more futile. 49-YEAR OLD TRADE *EMBARGO*.  IMAGINE IT IS MERELY A ***TRADE*** EMBARGO. DO THIS PEOPLE EVER READ THEIR OWN CONGRESSIONAL RESEARCH SERVICE REPORTS ON CUBA AND THE UNITED STATES OR, FOR THAT MATTER, THE COLLECTIVE DOCUMENTS ISSUED BY THE GENERAL ASSEMBLY ON THE LIMITATIONS IMPOSED ON CUBA BY UNITED STATES POLICY???? Thursday's home-ownership decree ratchets up the debate about whether Castro's reforms are a nod to China's communism-cum-capitalism model, or whether, as Castro keeps insisting, they're simply a means of preserving Cuban socialism. The answer: Whatever. It's all just an ideological semantics game at this point, because what matters is that Cubans will now have one of the most valuable tickets to the formal economy: legal title to salable property. IT IS JUST IDEOLOGICAL SEMANTICS OR WHATEVER. IMAGINE, WHATEVER. IS THIS WRITTEN BY A 14TH YEAR OLD AIRHEAD? IMAGINE NOW PEOPLE WILL HAVE "LEGAL TITLE TO PROPERTY". YES, JUST LIKE MORTGAGES IN THE UNITED STATES. THINK ABOUT IT! JUST AS AMERICANS UNDER CAPITALISM ARE LOSING THEIR HOMES, THE CUBANS UNDER - WELL, WHATEVER IT IS CALLED.... GAIN THE RIGHT TO SELL THEIR HOMES, WHICH THEY HAVE OWNED SINCE 1960.... Cubans, despite their universal health and education, have for the past half century been scraping by in the underground informal economy – what they call resolver, or solving the hard quotidian shortages of communist life as shrewdly (sometimes illicitly) as they can. In that regard, brain surgeons in Havana are largely in the same boat as slum squatters from Caracas to Calcutta: they've had no legal title to assets like houses that they could use either for profitable trading or for loan collateral. DESPITE (!!!!) THEIR UNIVERSAL HEALTH AND EDUCATION.... CAN YOU BELIEVE THAT "DESPITE"!? AH THE SHORTAGES OF COMMUNIST LIFE.... AS OPPOSED TO THE ABUNDANCE OF CAPITALISM... IS THIS GUY SERIOUS? IMAGINE BRAIN SURGEONS IN HAVANA.... IN THE SAME BOAT.... AS SLUM SQUATTERS WORLDWIDE. AND THE TIME "REPORTER" SAYS THAT THE HOMES COULD NOT BE USED AS COLATERAL... FOR A LOAN. WELL, HE OUGHT TO READ THE LAW. NOPE. NO COLLATERAL. But as the Peruvian economist Hernando de Soto points out in his 2000 book The Mystery of Capital – still one of the best treatises on how to unlock development – formalizing property ownership can start an economic chain reaction, galvanizing more robust and widespread commerce and tax collection. “Money,” De Soto wrote, “presupposes property.” HERE WE DISCOVER DE QUE PATA COJEA EL GATYO - HE IDENTIFIES AS AUTHORITY THE WORSE RIGHTWING IDEOLOGUE OUT OF PERU - HERNANDO DE SOTO [WHAT A NAME, QUE NO? STRAIGHT OF SPANISH COLONIAL HISTORY...] It's safe to suppose more money will pour into Cuba now. In the past couple years, Cubans have received some $2 billion in remittances from relatives abroad, and that may well rise now that there's house-buying to be done – enough house-buying, in fact, to make a Florida real estate broker weepy nostalgic. TWO BILLION.... REALLY? EVIDENCE? ALL THOSE WEALTHY CUBANOS IN MIAMI NOW INVESTING IN REAL ESTATE IN CUBA AND NOT IN KEY WEST - DARNED CLOSET COMMUNISTS....  Financing those home purchases must be done via Cuba's central bank; still, depending on new banking regulations that Castro is expected to spell out, homeowners may be able to secure credit and capital outside the central bank to improve their houses or, more important, to start or expand the private businesses that Castro hopes will absorb the up to 1 million state workers he needs to lay off. Foreign bankers and NGOs will be eager to funnel loans to a market of 11 million well educated, entrepreneurial people who live just 90 miles from Florida and remind the world of the Chinese a generation ago. THIS GUY SEES SOUTH FLORIDA AS THE SPANISH-SPEAKING HONG KONG. MAYBE HAVANA WILL CLAIM DADE COUNTY AS A PROVINCE AS WELL? THE REST, OF COURSE, IS PREDICTION. THIS IS THE EXERCISE OF CUBA-WATCHERS IN NORTH AMERICA. THE RULE IS SIMPLE; PAY NO ATTENTION TO DETAIL, MAKE SOME GENERALIZATIONS ON WHAT YOU THINK IT IS GOING ON OR OUGHT TO BE GOING ON - AND THEN FORECAST AND PREDICT. If Castro allows that – and he can't successfully wean a million Cubans off the dilapidated state economy if he doesn't make sure their enterprises are sufficiently bankrolled – the island could begin to see genuine economic opportunity emerge. Politically that can make a populace either restless or relaxed. But either way, the embargo hardliners in the U.S. can't just keep screaming that money that goes into Cuba simply props up the Castro regime and its human-rights abuses. Like it or not, we're beyond that – just as we've been beyond it in communist China for a generation now. Property ownership promises to jumpstart the kind of economic heartbeat that an embargo, especially an ineffective unilateral trade blockade like Washington's, can't really stop. So the only question now is whether the U.S. loosens, or better yet gets rid of, the embargo so that Washington can let the kind of yanqui investment into Cuba that props up families and entrepreneurs – so that when political change does come to Cuba after the Castro regime fades away we'll have sown some goodwill and influence there – or whether it turns its back on them so it can keep indulging the regime-overthrow delusions of the embargo lobby simply because the Beltway still fears that Cuban-American votes can swing elections in Florida. One of De Soto's more salient points is that the economy-generating effects of legal property ownership – the “institutional framework to produce wealth” – was one of the key factors in making U.S. capitalism so successful over the past two centuries. It may not lead to a Caribbean Spring in Cuba – but then, neither has five wasted decades of embargo. The bottom line is that Washington needs to conjure the common sense to engage alternatives when Castro himself provides them. DOES THE AUTHOR REMEMBER WHEN HE HOPED FOR A FREE TRADE LATIN AMERICA WITH "FREE MARKET DEMOCRACIES". THOSE WERE THE DAYS WHEN HE HAD ARTICLES WITH HEADLINES SUCH AS: ""YANQUIS, COME HERE" [Nov 15, 1993] and "Castro getting lonelier every day" [October 14, 1991]. Read more: http://globalspin.blogs.time.com/2011/11/05/why-the-u-s-should-drop-the-embargo-and-prop-up-cuban-homeowners/#ixzz1cxmpm4Wi