The economic dichotomy of the Castro brothers and Obama

It was just days ago when a little heralded story by McClatchy hit the news with a stunning headline – “Fidel Castro says Cuba’s economy is broken”. The offhand statement was made to The Atlantic Magazine’s correspondent, Jeffrey Goldberg… who then failed to press the former Cuban dictator more in depth.

According to Goldberg’s blog, Castro replied, “The Cuban model doesn’t even work for us anymore.”

Goldberg didn’t pry into Castro’s surprising statement, but said he believes it was clear what the aging leader meant.

“He said it in an off-hand way, but not jokingly,” Goldberg wrote The Miami Herald in an e-mail Wednesday. “I think this was an honest recognition on his part that his brother must re-order Cuban’s economic system in order to keep the country afloat.”

Perhaps, had Goldberg done a better job of reporting, we wouldn’t find Castro, furiously backpedaling on his comment, saying:

“I expressed it to him without bitterness or worry. It’s funny to me now how he interpreted it, word for word, and how he consulted with Julia Sweig, who accompanied him and gave a theory,” Castro told those assembled. “The reality is, my answer meant the opposite of what both American journalists interpreted about the Cuban model.”

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“My idea, as the whole world knows, is that the capitalist system no long works — neither for the United States nor the world, which it steers from crisis to crisis, which are ever more serious, global and repetitive, and from which there is no escape,” Castro said. “How could such a system work for a socialist country like Cuba?”

While Castro’s intent, and construed condemnation of communism, may or may not have been a misstatement, one can’t deny that brother and current Cuban President, Raul Castro, prefaced Fidel’s statement with a promise to ease State control in the economy early August. At the time, the younger Castro promised there would not be massive layoffs in the public sector…. nor was it an overt move toward the island embracing capitalism.

The Cuban President, under pressure to pull the island nation out of deep depression, made it quite clear that the nation’s workers were going to have to “work harder” and expect less from the government; saying “”We have to end forever the notion that Cuba is the only country in the world where you can live without working”.

I dunno… that sniffs suspiciously of a more capitalist approach by a nation who’s been an apt poster child for the failures of communism.

But the promise of massive sacking of public sectors was another promise that couldn’t be kept as today, as the dictator announced he’d be laying off one million public employees. That’s approximately or 1 in 5 of the workers on the government payroll. Out of the Cuban workforce, about 85% are government employees. Also on the agenda? A relaxing of strict rules and easier licensing to be come self-employed.

“Our state cannot and should not continue maintaining companies, productive entities, services and budgeted sectors with bloated payrolls and losses that hurt the economy,” the labour federation said in a statement.

“Job options will be increased and broadened with new forms of non-state employment, among them leasing land, co-operatives, and self-employment, absorbing hundreds of thousands of workers in the coming years,” the statement added.

What becomes a baffling shock to some of we more senior American citizens is the dichotomy of watching Cuban dictators, grapple with the fiscal reality of their socialist economy and communist regimes, while simultaneously watching a left of progressive American POTUS steer the US economy in the opposite direction. With an already bloated US government about to really pile on the federal fat with countless new agencies – created as a result of both Obama’care and financial reform – I think it’s safe to say that our current POTUS is ignoring hard earned lessons by Cuba. Since Obama has taken office, federal government has grown by 1.3% as of September of last year just due to stimulus… not including legislatively mandated new agencies.

And, as reports have previously noted, salaries for those paid by taxpayers has outrun the private sector as well. But, since a picture is worth 1000 words, Mike Mandel has a nifty graph, inflation adjusted, that shows the widening gap that, coincidently, happens to begin right about the same time the Democrats seized supermajority control of Congress.

It doesn’t take a rocket scientist to figure out that declining private sector jobs and revenue, combined with increasing public sector jobs and their higher paid salaries, is simply bad mathematical juju. If it wasn’t obvious enough, it’s a road already traveled by many a nation in history, and our POTUS seems determined to wear blinders to the obvious reverse of economic fortunes taking place before his very eyes. Even Venezuela’s attempt to recuperate during the Chavez regime has benefitted from an overwhelming increase in private sector jobs vs public,.

But then, we apparently have someone where even basic non-rocket science is far above his paygrade. So it is, indeed, a bizarre parallel universe to see China and Cuba move to more capitalistic operation, while Obama drives our US economy the opposite way, and off the economic cliff.