Here’s an idea: lift the embargo, but . . .

Last updated on: February 24, 2015 at 11:28 pm by Jane the Actuary

Here’s an idea: lift the embargo, but . . . 2015-02-24T23:28:10-06:00 Jane the Actuary

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Here’s an excerpt from an article in City Journal on the situation in Cuba:

Even employees inside the quasi-capitalist bubble don’t get paid more. The government contracts with Spanish companies such as Meliá International to manage Havana’s hotels. Before accepting its contract, Meliá said that it wanted to pay workers a decent wage. The Cuban government said fine, so the company pays $8–$10 an hour. But Meliá doesn’t pay its employees directly. Instead, the firm gives the compensation to the government, which then pays the workers—but only after pocketing most of the money. I asked several Cubans in my hotel if that arrangement is really true. All confirmed that it is. The workers don’t get $8–$10 an hour; they get 67 cents a day—a child’s allowance.

Which is shocking. Not so much that Castro cheats its citizens in this way — it’s rather reminiscent of the factories which “employed” Jewish workers in the ghettoes in Nazi-occupied Poland paid the SS, which in turn “paid” the Jews via ration cards which themselves didn’t even provide a survivable number of daily calories. But the fact that the managing companies would proceed with this arrangement when they know full well that this pay isn’t making its way to their workers, presumably because their corporate ethics codes or similar policies require that they notionally pay these wages, but they’re happy to check compliance boxes without regard for the actual facts.

(North Korea has a similar arrangement with South Korean companies setting up shop in a border area, where North Korea pockets the profit, and, to be honest, I can’t recall how the North Korean workers in these factories are treated; it was a while ago that I read this.)

So how about if we rewrite the embargo: any American company doing business in Cuba must pay its workers a “prevailing wage” — that is, a wage equivalent (in real, not PPP-adjusted terms) to wages paid to workers in similar occupations in nearby Carribean countries — and must pay them directly. Let’s also stipulate that the after-tax wage is what counts, so that if Cuba imposes a 90% tax, wages must reflect that. And let’s define “its workers” broadly to include other entities which might work together with any such American company. Let’s take this yet further: future tourists may only book hotels or resort stays where this stipulation also applies. We can even add a further exception: should Castro permit individuals to establish their own businesses, and those businesses are able to function without interference from the state, we’d let American businesses and tourists do business with them.

Would this make a difference? Maybe, maybe not. It’s better, anyway, then just uncritically doing business with Castro, Inc.

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