May 14, 2008

Baseball diplomacy?

You don't hear his name mentioned much anymore, but it just occurred to me that George W. Bush is still President of the United States. In fact, he will be president for another eight months and a week.

What's he been up to lately? Is he still trying to start a war with Iran over Iraq, despite both countries being on the same side, backing Maliki? Well, who knows ...

Yet, if he was looking for something to do, I've got an idea for him. Obviously, he can't do anything domestically with Congress in the hands of the Democrats. So, that leaves foreign policy. But he doesn't have any more troops to play with, so it would be hard for him to start any more major wars.

I see in the news today that Cuba's forward-looking elderly Sibling-in-Chief Raul Castro is trying to bring the Worker's Paradise up into the later 1970s:

Cuba's Communist government has allowed microwave ovens to go on sale to the general public for the first time ever.

Anxious Cubans gathered at an electronics store in Havana to purchase a microwave.

And a week or two ago, Raul allowed the first PCs to be sold in Cuba! It can't be long now until Betamax VCRs are in all the Havana shops.

Few in Cuba can afford to buy a PC or microwave, however, because Cuba is poor. The CIA World Factbook says the Purchasing Power Parity per capita income is $4,500. In cash terms, Cubans are much, much poorer than even that -- the State Dept. says the average monthly salary is $16! (The majority, however, get some hard currency from relatives in America.)

Therefore, how about Bush trying to bring a little peace and prosperity, Nixon goes to China-style, by trying to negotiate an end to America's half-century conflict with Cuba?

There's a lot of money to be made by both Americans and Cubans if Bush could work out an end to the American embargo in return for opening up the Cuban economy.

Let's just use Cuba's per capita GDP PPP number of $4,500. The Cuban per capita income is less than half of the Dominican Republic's $9,200. (For comparison, Cuba is about an order of magnitude below the U.S. GDP per capita).

Back before the Castro Bros., Cuba was wealthier than the Dominican Republic.

So, it's reasonable to imagine that Cuba, which is a fairly well-educated country, could catch up to the Dominican Republic in not that many years if Cuba now followed the Chinese path and de-Communized. It has a population of 11.5 million, which means that a lot of money could be made bringing the place up to the 21st Century.

It's easy to catch up economically if you haven't been allowed to buy any new technology for the last few decades. Think how much of productivity gains you can get just from microwave ovens. And in March, Raul announced that ordinary Cubans would be allowed to buy cell phones for the first time. Typically, cell phones do more economically for Third World countries than any other piece of technology.

Cuba has three times as much coastline ( 3,735 km, or about 2100 miles) as the Dominican Republic. It's a long skinny country with a lot of beaches. And it's closer to the U.S., barely half as far from the big airline hub in Atlanta as the DR. I imagine American hotel companies have contingency plans locked away for turning Cuba into a tourist paradise. And cruise ship companies would love to make the Miami-Havana run.

If Cuba caught up economically to the Dominican Republic, which is about 10-15% smaller in population, it could buy a fair amount of stuff from the U.S. The D.R. buys 46% of its $13 billion in total imports from the U.S. each year. That's not big money, but it adds up over the years.

How could Bush get started? The first public hint of the Nixon-Kissinger-Chou opening was the "ping-pong diplomacy" of 1971. What would be more natural than for Bush, a former baseball team co-owner, to start Baseball Diplomacy with Cuba, a font of baseball talent not allowed to play in America?

There are currently 88 Dominicans in the major leagues (plus far more in the minors). The average major league salary is approaching $3 million, so that's a quarter of a billion dollars paid annually to Dominican major leaguers.

Cuba only has $3.2 billion in annual exports at present, so if Cuban big leaguers could make, say, $200 million per year in salary, that alone could boost national exports by 6%. So, if Bush offered to broker a deal with his old baseball owner colleagues, I suspect Raul would be very tempted.

From there, a more general settlement that would let American businesses into Cuba might be negotiable.

A baseball player deal could set a useful precedent for a sticky problem. The Communists presumably don't want all their talented people, such as their doctors, racing off to America for big salaries as soon as totalitarianism is lifted, but before the economy starts to get into gear. The Cuban government's view will be that they paid to train the baseball players and doctors, so they are entitled to a cut. And America doesn't need a new huge immigrant influx into Florida. (The special "Ollie Ollie Home Free" treatment of Cuban immigrants as refuges would have to be changed once Cuba opens up.)

This is similar to the Japanese baseball league's view that they don't want all their players dashing off to higher pay in America without them getting a cut. So, Major League Baseball has agreed to a "posting system" with a Japanese league where an American team pays the Japanese team to let a player out of his contract so he can come to America. For example, the Boston Red Sox paid $51 million to the Japanese team that held Daisuke Matsuzaka's contract. The Red Sox also had to negotiate his salary with the pitcher himself, with him getting a six year contract totaling $52 million (plus incentives). So, the star and his Japanese team basically split his value on the American market 50-50.

So, it might make sense for the U.S. to recognize the Cuban government as having legal employment contracts for some number of years into the future with skilled Cubans. Thus, the U.S. firms would have to pay Cuba for hiring its doctors and other skilled workers. This would reduce the rush to the exits that could otherwise leave Cuba even more economically prostrate than it is now.

The bottom line is that the current situation in Cuba is ridiculous. Somebody is eventually going to make a lot of money fixing it, and Americans might as well get in on the action.

My published articles are archived at iSteve.com -- Steve Sailer

16 comments:

Big Bill said...

No! Cuba should stay as it is: a worker's paradise.

Russia was wonderful in the 1970's before Glasnost. A couple bars of Lux soap and some cheap pantyhose, maybe some antihistamines, could get you screwed, blued and tattooed. And now you want to deny us the only remaining country (and in our hemisphere!) where the common workingman and tourist can get the same deals on communist sex. No and no!

simon newman said...

Wouldn't ending the cold war with Cuba go against the Bush-Cheney White House's "We're just plain evil, we want the worse for everyone" policy?

Anonymous said...

this is the most incoherant post ever put on this site.

bbartlog said...

You don't get it. Our Cuba trade policy is driven by the domestic corn and sugar lobbies, who don't want the competition from cheap Cuban sugar (corn syrup is cheaper than our expensive domestic sugar, but would be much less competitive against Cuban sugar). The Cuban exiles are just a useful smokescreen for the lobbyist payoffs - do you really think that a few hundred thousand people in Florida have enough pull to move all of Congress?
At any rate, the time might still be right to normalize relations - not for the reasons you mention, but because the demand for sugar and corn is currently at such high levels that ADM et. al. might let down their guard and allow it.

RobertHume said...

I'm not sure where you're going with this, Steve, but here's something related:

http://www.thewashingtonnote.com
/archives/2008/05/brent_scowcroft_1/

Brent Scowcroft: US-Cuba Embargo Makes No Sense
Tuesday, May 13 2008, The Washington Note

Born Again Democrat said...

Just what we need, another free-trade and immigration deal with a close neighbor! BTW, the fact that Cuban doctors would be tempted to practice in America illustrates one of the neglected downsides of third world immigration: it generally hurts the majority of poor people left behind in the poor countries from which the immigrants come. Bleeding heart liberals should be especially attuned to this side of the equation.

poolside said...

That type of arrangement is very common in soccer.

Players aren't traded one for another; they are "transferred" to another team via a lump sum paid to the club that holds their contract.

The acquiring club then negotiates a separate deal with the player.

The club receiving the cash infusion can then use that money to obtain new talent.

testing99 said...

Steve, this whole post is just way out there.

Iran is trying to bully the US out of the Gulf (strategic US objective since 1945) by making war on us as much as possible. This includes killing our guys in Iraq with Iranian troops, or confrontations with the US Navy. Acts of war that weak GWB has reacted to by flopping over like a wet noodle.

Iran needs oil at $300 a barrel, to keep afloat Ahmadinejad's huge welfare state that keeps rural areas from starving. Which means control of the Gulf through either intimidation of the US (aided by Carter-Bush weakness) or outright war with nuclear umbrellas (Iran likely already has nukes, it's why they are so aggressive).

We probably need tit-for-tat (sponsoring terrorists right back at Iran) but lack the will.

The flipside is Cuba. It's a hereditary fiefdom run by the Castro family. That problem is not going away any time soon. The Exile community doesn't like their relatives in chains. Cuba's bad economy is the result of being run as the personal estate of Fidel and Raul. Not the embargo (there is plenty of trade with the EU and Canada).

We ought to plan for intervention in Cuba when the hereditary fiefdom collapses, so we don't have half of Cuba floating over to Miami. That's one of the reasons we have a military. There's no Soviet nuclear umbrella over the Castros any more, we should have gotten rid of them years ago.

Baseball diplomacy is useless since it just sticks a band-aid over the Mugabe-like problems of Cuba. Traced to one family -- the Castros.

Dutch Boy said...

More Latin American baseball players? Phooey! The national pastime is starting to look like a maquiladora already!

keypusher said...

Bush already said that Raul's changes amounted to nothing and that he would keep the embargo in place. So that little opportunity has been nipped in the bud.

http://www.reuters.com/article/politicsNews/idUSN2856539220080308

Anonymous said...

Is testing99/evilNeocon off his meds again today?

TGGP said...

The Miami exile community will never allow opening up relations with Cuba.

testing99/evilNeocon, give me the name of ONE U.S soldier killed during Bush's administration by an Iranian. Just ONE.

beowulf said...

Evil99 is making my head hurt--

you realize that President = Commander in Chief under the US Constitution but not, curiously enough, in either high school student councils or the Islamic Republic of Iran?

Whether Ahmadinejad is crazier than you are is irrelevant, he has no military troops under his command. He's subordinate to the Ayatollah Ali Khamenei, Commander in Chief of the Iranian armed forces.

When Khamenei puts an army into Mexico and bases a fleet in Cuba and then publicly threatens to overthrow our government or to annihilate us, that's when we know the Iranians are being aggressive. In truth, the Iranians restraint is rather impressive. They know if they can turn the other cheek until next January, its likely the next US president won't be a crazy person.

Then again, Iran's use of the Iraqi National Congress to manipulate neocons into launching a war against its mortal enemy Iraq was, perhaps, the most stunning intelligence triumph since the end of World War II. They so owned us on that, they can afford to be magnanimous.

Anonymous said...

The situation in Cuba is indeed ridiculous, but that is entirely the doing of the Castro regime. Cuba is free to trade with every country in the world except the U.S. It chooses autarkic socialism because opening up its economy would threaten the ruling group.

Simon Oliver Lockwood said...

A posting system wouldn't work in a free Cuba, any more than it could work in Venezuela or the Dominican Republic. Japan is both big enough and rich enough that it can support a professional baseball league that pays its top players enough so that they're not tempted to circumvent the rules given the adjustment cost of playing in a foreign country.

Neutrino Cannon said...

You have a remarkably good idea there Mr. Sailer. Your comment about cell phones and developing nations is particularly true, although in African stupid regimes have managed to blunt many of the benefits.

I could see a semi-nontotalitarian Cuba being a popular tourist destination for the Liberal elite (you know, more than it is already), since it's lack of development has kept the environment pristine, and it's got free education and socialized healthcare and all those other things that make them swoon. Just make the Stuff White People Like blog mandatory reading for anyone putting up a tourist-oriented hotel in Cuba, and you'll make money hand over fist!