Thursday, August 03, 2006

Cuba Online

No one knows if Fidel Castro is dead or alive. Maybe he's in Venezuela conferring with Hugo Chavez. Or perhaps he's in Iran with Ahmadinejad.

But where ever he is, Art Laffer has a plan to move capitalism into the new Cuba. First, dollarize the currency. Second, go to a Slovakian- or Baltic-type flat tax system. Third, open up free trade. Fourth, make a deal on private property rights with those whose property was expropriated by the state.

If it can be done in Eastern Europe, it can be done in Cuba. And remember there's a lot of big Cuban money in Miami and elsewhere in the U.S. that will supply private investment to rebuild the new Cuba. This could even turn into a China situation where democracy may be lacking, but free market capitalism is permitted to evolve progressively.

Apparently the Bush administration doesn't want to do business with Raul. But Mary O'Grady of the WSJ believes that Raul is ready to do business with the U.S., along with the Cuban military that is heavily involved in tourism and other business. So it strikes me that opening up trade relations with Raul would make a lot of sense.

This thought goes back to Tom Barnett's idea of economic connectivity. Trade and investment relations are a great way to bring Cuba online and move them towards reforms.