June 13, 2007
One "benefit" of the trade embargo with Cuba?

The trade embargo with Cuba is a head-scratcher for free-market/free-trade economists. However, one "benefit" of an embargo is the lack of headlines like this one from the June 13, 1907 NYT:

SHORTAGE OF HAVANA CIGARS

Expected as a Result of the Crop Failure and a Strike in Havana

[place tongue firmly in cheek while you continue reading]

Yep, the trade embargo "insulates" us from these unforeseen supply shocks. Simply making Cuban cigars illegal and therefore generally unavailable relieves the casual consumer of concerns and anxiety concerning the Cuban tobacco crop. This is a little recognized benefit of the embargo and should be included in any cost-benefit analysis of the policy. Is this relief of worry enough to make the net benefits of the embargo positive? Well, that's an empirical issue.

Here's more from the article:

There is in sight a shortage of imported cigars, said to be as serous as this country experienced during the Spanish war. This situation comes from the fact that in addition to an almost total failure of the tobacco crop in Cuba a strike is in progress in Havana which involves the expert cigarmakers of practically every factory.

The trouble started in the factories owned by the Tobacco Trust, but spread to the independent factories...The striking cigarmakers chiefly want their wages paid in American instead of Spanish money.

Could they not have struck for an increase in Spanish-denominated wages?

Posted by Craig Depken at 02:42 PM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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