Where Trickle-Down Definitely Doesn't Work

Friday, December 28, 2012
Advocates of normalizing relations with the Castro regime argue that unilaterally lifting sanctions will somehow have a trickle-down effect toward the Cuban people.

They admit that lifting sanctions would greatly benefit the Castro regime, but believe the residual effect would be worth it.

This talking point has also been adopted -- or vice-versa -- by the Castro regime itself.

Yesterday, Cuba's Minister of Tourism Manuel Marrero jubilantly announced that a record 2.85 million tourists visited the island in 2012 -- consisting mostly of Canadians and Europeans.

(So much for tourists spreading democracy).

Marrero went out of his way to note that the regime owned 300 hotels with 60,000 rooms, but there were also 4,280 "private" rooms for rent.

(Of course, Marrero failed to note that these are in homes of regime loyalists, who are specially-licensed, heavily-regulated and overwhelmingly-taxed).

In other words, once the regime fills its coffers, money will also flow to its "private" contractors.

Even some in the Obama Administration believe(d) this.

In February 2011, during a Senate hearing, former Assistant Secretary of State Arturo Valenzuela testified:

"Let me just simply say this—that there may be some ancillary benefits [from the Administration's 2011 'people-to-people' trips] to the Cuban government, but it is our view that to be able to have direct contact with the Cuban people, that Americans have direct contact with the Cuban people, will provide them with a kind of space that will allow them to become much more independent of the regime."

Yet, all of the current "people-to-people" trips are pre-approved and hosted by the Castro regime, and frequent the regime's hotels, restaurants and nightclubs (worth thousands of dollars per traveler).

But hey, they might also buy a $2 trinket from an artisan in Old Havana.

Does an Administration that fundamentally disagrees with trickle-down economics, and is therefore looking to raise taxes on Americans that make more than $250,000, really believe this works?

As we've stated before, whether trickle-down economics works is debatable in open, democratic, capitalist societies, where hard-currency is freely and rapidly mobile and fungible.

But it's a laughable concept in totalitarian regimes with closed economies, where the dictator's funnel rules.