Let’s get started with a quick recap:
Capitalism. Under this system an organisation can only survive in the market by looking after the customer. By delivering goods or services of the right quality at the right time at the right price. Otherwise they go bust.
Socialism. Under this system the state directs what goods and services will be delivered, what their quality will be and also the price. This cannot possibly exist in a market because competition would kill it, so monopolies are essential for it to function. Such organisations exist for the benefit of the state, not the customers. They cannot go bust because they can fix prices and rely on the state for subsidies of taxpayers money.
Now let’s look at what assets and strengths Cuba has to enrich their people with:
- Its people. 11 million very well educated people. Their literacy and numeracy rate is better than Britain’s. Number 5 in the UN Education index.
- Incredibly verdant and productive agriculture. Rich soil and a tropical climate combine to allow several crops per year.
- Nickel and Cobalt. There are 5.5 million tons of Nickel waiting to be mined, 7% of the world total.
- Oil. Cuba is an oil producer and known reserves of 20 billion barrels, one of the top 20 reserves in the world.
- Tourism. Cuba is an idyllic tropical paradise with amazing beaches.
Contrast and compare with what Hong Kong has to offer:
- Seven million educated people. Number 87 in the UN Education index.
- A great harbour.
- Nothing else.
As you can see Cuba has Hong Kong well beaten.
- 80% of the landmass was under cultivation or used for grazing. Cuba was second only to Brazil in exporting agricultural products to USA.
- Cubaâ€™s real per capita income was $378, fourth in Latin America. Spain ($324) and Portugal ($212), were both lower.
- The share of national income paid to workers was 65 percent, only Great Britain, the United States, and Canada. were higher.
Now lets look how Hong Kong was doing (the then colony deliberately didn’t gather data and statistics!):
- After WW2 HK had a population of just 600,000, during the 1950s there was a immense influx of refugees from China. 100,000 a month came till the population exceeded 3 million. Many lived in shanty towns.
- With nothing for all these people to do the British colonial masters started manufacturing projects to make simple, low cost items like buttons, plastic items, umbrellas, artificial flowers etc.
Once again you can see Cuba has Hong Kong well beaten.
From this basis the two economies took different courses. Socialist Cuba couldn’t produce sugar competitively against world prices. They were rescued by the Soviet Union who bought the entire sugar crop at subsidised prices so as to keep Cuba afloat. When the Soviet Union imploded this stopped and 100,000 sugar workers lost their jobs. Visit Cuba today and great swathes of fertile farmland lie unused. Much else in the economy was also trashed as huge socialist inefficiencies stopped anything working properly. There was very little investment in buildings or infrastructure. Cuba now is mostly frozen in a 1959 timewarp, but in a state of decay and disrepair.
In 1961 a Britain, John James Cowperthwaite, became financial secretary of Hong Kong, which was still a very poor. He invented and implemented â€œpositive non interventionismâ€ a highly libertarian management of the economy. This worked like magic and between 1961 and 1997 Hong Kongâ€™s gross domestic product grew to be 180 times bigger. Everyone who lived in Hong Kong was free to do anything they wanted. There was minimum tax and minimum government. Enterprise, investment, risk taking, entrepreneurship were everywhere. Success was rewarded. Hong Kong became the most dynamic economy in the world.
So how are things today in Hong Kong:
- Economic freedom score is 90.1, making it the top-rated economy in the Index for the 20th consecutive year.
- This small country has the world’s 8th largest trading economy.
- World Bank GDP/capita (PPP) $Â 53,203 rating the country 9th in the world.
- 124,000 millionaires (calculated Â excluding primary residence). Number growing at 27% per annum, the highest rate in the world.
- Number 15 on the world corruption index with a score of 75 (UK 76).
- Basic income tax rate of 2%. Top rate 17% on income over HK$ 120,000.
And in Cuba:
- Economic freedom score is 28.7, making its economy one of the worldâ€™s least free.
- World Bank GDP/capita (PPP) $ 18,796Â rating the country 60th in the world.
- The main millionaire on Cuba is Fidel Castro with a fortune of $900 million stolen from the people.
- Number 63 on the world corruption index with a score of 46.
So there you have the irrefutable facts. Socialism is utterly disgusting and immoral, it damages the lives of everyone it touches except those at the very top who become enormously rich. Capitalism, unfettered. delivers incredible results. It enable anyone to become very rich who wants to. All they have to do is provide customers with what they want. This is by far the most moral form of human organisation.
Critics say that Hong Kong is small and that such measures cannot be applied to a big economy. They are wrong. China looked at what Hong Kong was doing and it was copied there byÂ Deng Xiaoping in the 1980s. We have all seen the meteoric growth in the Chinese economy since then.
Other critics say that Cuba’s economy was held back by being embargoed by its regional superpower, the USA. They forget that Hong Kong was alsoÂ embargoed by its regional superpower, China.
The system of having minimum government is called a Night Watchman State, economist advocates call itÂ minarchism. It allows maximum human freedom, people can build their lives undisturbed by government extortion, they take responsibility for themselves. It also ensure the maximum competition when you spend your money as a customer. So you get better goods and services at better prices. Everyone in society wins.
Given the evidence it is amazing that every country has not done this. It is also utterly beyond belief that anyone can be stupid enough to vote for a socialist government. Socialism is our enemy.
To conclude. One country, embargoed by its superpower neighbour embraced capitalism and libertarianism and so went from being one of the poorest nations on earth to being one of the richest. Another country, also embargoed by its superpower neighbour, with bountiful natural resources, was blighted by state control of everything in a socialist dystopia, so went from being relatively rich to being very poor indeed.
Remember. Capitalism pays for all the other -isms!