Cuba's Communism vs Haiti's Capitalism
From a letter to the Editor of The Dayton, TN Herald-News, published in March, 1994
To the Editor:
A pure communist system "From each according to his ability; to each according to his need," does not lead to economic prosperity. When no person receives higher wages than any other, there is no extra incentive to develop one's talents to the fullest. When wages paid are unrelated to value produced, there is no reason to become more productive. As productivity goes down, fewer goods and services are available for purchase. Rationing of basic goods becomes necessary. Finally, even the government lacks the resources to provide the "free" services it promised.
Cuba is an example. People have wages but there is less and less to buy. The result is an ever decreasing standard of living. Health care is free, but the government lacks the ability to provide many of the basic services that we take for granted.
An unbridled free market system is no better. Unrestrained by social values, businesses engage in cutthroat practices that concentrate more and more wealth in the hands of fewer people. With no government safety net, workers are forced to accept any wage offered in their desperate attempt to feed their families. As more and more workers end up with less money to spend, production is cut, which leads to ever increasing levels of unemployment.
Haiti is an example. Less than 2% of the people control almost all the wealth, 90% of the people live in shacks without electricity or running water. Unemployment is around 40%.
The premise in a recent letter that countries with the freest markets are the most prosperous is false. A completely free market leads to poverty for all but the few. The lack of a minimum wage in Haiti did not save these people their jobs, it ultimately led to their loss. And the idea that the moneyed few, those who exploited these people in the first place, would turn around and provide enough charity to help meet their needs is far fetched at best. In any case, these people don't want charity, they want jobs that pay decent wages.
In contrast, the world's most prosperous economies avoid these two extremes. They insure that business is conducted in a way that is consistent with community values. They provide a social safety net for their citizens. A lynch-pin of these systems is a minimum wage which provides the least skilled workers with an adequate living. Wages are higher for others based on skills and education. These good wages produce a large and prosperous middle class. The money they spend is good for business and leads to high levels of employment.
A main function of government then, is to maintain the optimum balance between free market forces which would hold down wages and leave more people in poverty, and social pressures which would compensate people in ways that are unrelated to productivity.
Stagnant middle class incomes tell us we are not at the optimum. Why?
Productivity is at an all time high, the best in the world, so we are not becoming more like Cuba. Instead, since the early eighties, we've had an ever widening gap in the incomes of the rich and the poor, driving more middle class people below the poverty level. We are becoming more like Haiti.
Now we have politicians promising more tax cuts for the rich and more cuts in social services to pay for them. They promise to finish what Reagan started. Good grief!
We need policies that increase the number of people in the middle class and their incomes, not the opposite. We've had about all the Reaganomics we can stand.
William J. Ware