THOUGHTS ON FUNCTIONS AND COSTS OF GOVERNMENT IN THE RECONSTRUCTION OF CUBA

Ricardo E. Calvo MD. Ph.D.
August 2001

In our way to the post Marxist future of Cuba we must ask ourselves what will be or should be the role of the new government. How many functions are we going to allow government to have?. How are going to draw the line between what government should and should not do?. What economic burden will represent the support of its functions?

The more functions the government attempts to perform the more intrusive it will be into the individual freedoms and the more it will cost to each citizen in the forms of taxes, tariffs etc., thus resulting in less for him as a fruit of his labor.

Through several millenniums of recorded history people have gone through many contortions attempting to discover the structure of government without defining its proper role. History is one of long record of revolts against certain rulers and authority. Many of these revolts have been called revolutions. Looks like we continue going around but we never break out the circle. In Cuba we had an independence war against Spain and revolts against abuses and dictators in 1933 and in 1959 – but we still have in our land a government that has become all too powerful and oppressive.

In the past, societies have replaced kings, aristocrats, tyrants, dictators, etc but we are still in the search for the optimum structure of government forgetting all the time that it is much more important to define the role of government. Government does have a legitimate role: to protect the individual against force and fraud – but government is the agency for legalized physical force. It is the way in which government uses this legalized force and its disposal that distinguishes a free society from a dictatorship.

Government in a free society must not initiate the use of force. If it does is to retaliate against those who violate individual rights and law while in a dictatorship the State initiates the use of force against those citizens who have not violated any laws, contract or has impinged upon the rights of others.

We must not confuse the concerns of government. The proper duty of government is to insure the existence of liberty – to maintain a political and economic climate of freedom in which each citizen enjoys individual initiative and decides for himself the extent to which he wishes to serve the interests of others

Compassion is not the proper concern of government. Let us uphold first the principles of freedom before we give any thought to assign to government any compassionate duty. Government compassion will eventually set group against group. Political action tends to increase antagonisms.

To make government responsive we could argue that making it as representative as is possible may be solution. But, then we have to ask the question: will the majority be right because it is majority?. In many instances in history the majority has been far from the truth and we have experienced it in our own land in several instances.

Government under the control of different parties may come and go but the emphasis of political action will be usually in the direction of higher and higher levels of government activity. The ballot does not necessarily will permit us to oppose the concept of political controls.

Democracy is a type of government structure and functioning but not necessarily a synonym of freedom. De-romanticizing democracy is frown upon today. Democracy may be the most appropriate means of selecting government officials but that does not imply that democracy equals freedom. Nowadays democracy is endlessly promoted but rarely analyzed. In this matter the order of the goals can and does alter the resulting type of government which will prevail. To achieve a respectable political architecture one must do things in the appropriate order.

Not because we are democratic we are going to be free but rather if we own freedom we shall be democratic. Not because we are democratic we are going to be prosperous but if we are independent owners of our resources we shall be democratic. The existence of parties, the capability of voting and even the establishment of a constitution do not imply necessarily that we shall enjoy freedom. We need to consider the pillars over which we build freedom and then concomitantly control the organization most likely will put our freedom at risk: the State and its powers during the transformation period and for the rest of our future history. It is not a matter of being against or in favor of democracy but rather knowing how to procure it and more important how to make durable and see it functioning properly. How many countries in the world are called democratic and have ended as a private club governed by a selected group of politicians, military, senior government officials and university professors? How many countries are called democracies and have had a single party control their destinies for several decades? How many countries are called democracies and have had several group of national and international monetary organizations control their Central Banks as if they were their own private bank?

And even further, how many of the former soviet countries of Europe are not ruled by the " nomenklature"? Order and prosperity do not depend on reverence for political authority. A look at history suggests that as people rely on the State to solve their problems some institutions, such as the family, gradually do decay. Perhaps political authority does not hold society together and the healthiest societies have been those with the least reverence for political dominance.

Citizens quite often cooperate with asphyxiating bureaucracy not out of respect for the law but to show compliance with the so called “selfless” state interventionists who invoke patriotism and “social responsibility” to no other advantage but their own.

It is always proper to ask which are the few functions of society that can not be performed in a superior way by privately initiated means. Be aware that the cost of supporting the government falls fully on the shoulders of each citizen and businesses do pass to everyone their share of the burden imposed by the State. Government can give to some only what it has taken first from others.

In a relatively recent article entitled “ The Scope of Government and the Wealth of Nations” (The Cato Journal vol. 18 No 2 Jan 1999: www.cato.org/pubs/journal/cj18n2.html) the authors Gwartney, et al. have shown that in the last few decades the government expenditures as a share of the Gross Domestic Product (GDP) have been raising resulting in more resource allocation through government. If we look at the growth of government in country members of the Organization of Economic Cooperation and Development (OECD) it shows that for its 23 members the average government expenditure measured as a % of their GDP have grown by 21% between the years 1960 and 1996.

Economic theory supports the belief that certain government activities enhance economic growth such as protection of human rights, provision of the legal structure for the protection of private property and the settling of disputes. These activities reflect the protective core functions of government.

The message from the data for developed economies for different years indicates that the above mentioned core functions of government, even including state-funded education, can be financed with expenditures close to 15 % of the GDP and the expansion of government beyond these activities do exert a substantial negative impact on the economy of the nation.

The above mentioned study examined evidence showing that there is a persistent negative relationship between the level of government expenses and the growth of the GDP. As a matter of fact, each 10% increase in government expenditures as a share of GDP results in approximately 1 % point reduction in GDP growth rate.

The authors also looked at the data from 1980 to 1995 for an expanded base comprising up to 60 countries including less developed and more diverse politically than those of the OECD and came to the same conclusion with an additional strong correlation between the security of private ownership versus growth.

This relationship highlights the importance of several factors such as the legal structure that protects private property, helps with the enforcement of contracts and provides a fair mechanism for the settlement of disputes among parties.

Government is not a benign instrument and we all have our vast experiences in Cuba. We must be prepared to keep the State to manageable proportions and have a Constitution that would curtail the uncontrollable expansion of the State.

It is not the efficient manipulator of macro policy and what is viewed very often as a "free enterprise failure" is nothing more than bad government policy. Government does not constitute “national purpose”, “brotherhood” or “compassion”. Government has no rights – only limited delegated authority granted by each citizen.

But a most important caution to be noted is that even imperfect democracies have far more to be said in their favor than non-democracies. Democracies honor individual sovereignty as a goal worth attempting. Let us be clear. We must prefer living in a flawed democracy than residing in any dictatorship.

Let us hope at this junction that the millions of people who have lived and still live in Cuba under communism these past forty-two years will share our enthusiasm for a free individual initiative society leading to the realization of a pluralistic democratic system.

We need to have leaders for the post Marxist Cuba who can credibly tell the people that there will be clear limits on how much of their productive efforts will be taken from them and in doing so we all shall be in a position to encourage better investments than any government will be capable of.

We must have faith that strong and sincere believes in these ideas and principles will ensure a more rational transformation to a peaceful and productive climate for the future of Cuba.

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