Does Trickle-Down Work in Totalitarianism?

November 23, 2010


In yesterday's ABC "This Week," billionaire investor Warren Buffet argued:

"The rich are always going to say that, you know, just give us more money and we'll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on."

Trickle-down effect is one of the most hotly debated economic theories of the late 20th century -- and obviously the early 21st century, as well.

While proponents and detractors can argue about its effectiveness, they all agree on one thing:

For trickle-down to succeed at any level, it requires the free movement of capital.

Thus, while it is arguable whether trickle-down works in a free market, capitalist society -- it is inarguable, that it does not work in a closed, totalitarian society, i.e., Cuba.

But that hasn't stopped advocates of normalizing trade and tourism with the Castro regime, who like to argue about its potential trickle-down effects. (Ironically, most advocates of trickle-down in Castro's Cuba are critics of the same theory in the U.S.)

As one pro-normalization advocate told The New York Times (about tourism travel to Cuba) this summer:

"Of course it benefits the regime, but it benefits the people more. There is a very clear trickle down, especially in the tourism industry."

So where does all the tourism and other hard currency that enters Cuba end up?

Not with the Cuban people, or even with U.S. farmers (as the Farm Bureau would like for you to believe).

It ends up at the top -- and with its security forces.