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The Evils of Economic Sanctions [long]


Americans are undoubtedly sleeping soundly in the knowledge that U.S. Customs agents in the last year tripled the number of Cuban cigars seized before they could be brought into the country. The Customs Service says that it grabbed nearly 90,000 cigars, thwarting 1,285 acts of smuggling. The cigars were valued at more than $1 million.

That may sound impressive, but according to USA Today , 5 million other Cuban cigars, worth $75 million, made it into the United States. The government’s antismuggling efforts are no more efficient than its other efforts. And why are government agents preventing Americans from bringing the coveted Havana cigar home with them when they travel? Because since 1962, the United States has had economic sanctions against the nearby island nation ruled by the Marxist dictator, Fidel Castro.

There is something surreal about the situation: You can walk into tobacco shops in countries all over the world — except one — and find Cuban cigars. The exception is the United States of America, land of the free. If you get caught bringing even one such cigar into the country with you, it will be confiscated. You also can be criminally punished, though imprisonment is unusual. If you possess commercial quantities, you can be charged with violating the Trading with the Enemy Act, jailed up to 10 years in prison, and fined $250,000.

There are exceptions to the policy. If you take a State Department-approved trip to Cuba, you may bring back up to 100 cigars for your own use. But if you are just a regular tourist, forget it.

Here is an interesting illustration of the theory of the ruling class. The cigar smokers in the diplomatic corps have no trouble getting Havanas. Nor do their friends and associates. Cigar Aficionado magazine last year published an article by a former State Department official and journalist who had a constant supply of those cigars, thanks to his contacts.

The Cuban embargo began with an act of ruling-class arrogance. According to Pierre Salinger, President John F. Kennedy’s press secretary, on the night before the embargo was announced, Kennedy asked him to buy up 1,000 Cuban cigars from Washington tobacconists. Kennedy knew that the embargo would limit the supply and raise prices. He wanted to secure his stash before he announced the embargo. Kennedy’s offense was not possession of the cigars (the ones imported before the embargo were not contraband); his offense, rather, was his use of his office to gain advantage over the citizenry.

The United States has used economic sanctions many times since World War II. The record of achievement, according to the government’s own goals, is not good. It is noteworthy, for example, that the last two unrepentant communist economies in the world, Cuba and North Korea, have been under sanctions for decades. The Soviet Union, which was able to trade with Americans, has disappeared. China, which is not under general sanctions, has introduced market reforms (although political reform has yet to be permitted). Donald L. Losman, a professor at the Industrial College of the Armed Forces, wrote in the Washington Post recently:

“American policy makers have become addicted to the opiate of economic sanctions as a way to punish other nations. We have increasingly resorted to this tool over the past several decades, far more than any other nation. Sanctions seem to make us feel better, while simultaneously blinding us to the harm they do both to ourselves and to others.”

It should be obvious that sanctions violate the rights of Americans. But before we get to that matter, let’s look at some other effects. A more egregious harm is to the citizens of the target country. The rulers are usually able to cope. They have ways of continuing to live in the manner to which they have become accustomed. The people do not. Yasmine Bahrani, whose family lives in Iraq, reports that the people of that country have had difficulty getting medicines since the U.S.-led United Nations imposed sanctions after the invasion of Kuwait. Here’s the irony: medicines are not embargoed. But the sanctions have so reduced incomes that people cannot afford them. The impoverishment of the Iraqi society has led to bad sanitary conditions and malnutrition. So much for the humanitarian exceptions to the embargo.

Is Saddam Hussein having trouble getting food, clean water, and medicine? Not likely. That Saddam still rules Iraq answers one of the claims made for sanctions, namely, that they can help drive a tyrant from power. The theory is that the people will get so upset about the hardship their government has called down on them that they will overthrow the offending rulers and install more enlightened leaders.

Where has that strategy worked? It hasn’t worked in Iraq and Cuba. There’s an excellent reason for that. Rulers like Saddam and Castro use propaganda to justify their power. There is no better grist for the propaganda mill than an embargo imposed by the big, bad United States. When a dictator’s socialist policies produce the inevitable havoc and hardship, what more persuasive explanation is there than “it’s capitalist America’s fault”? Castro has been saying that for years, because it deflects people’s attention from his domestic policies.

Imagine if Americans could freely trade with Cuba. Castro would not have an easy explanation for the economy’s failings. Moreover, the contact that everyday Cubans would have with Americans would be a subtle lesson in the advantages of capitalism over socialism. Radical free traders have long known that voluntary exchange transmits ideas about liberty while it moves goods. It is no stretch of the imagination to believe that without the embargo, Cuba would have given up communism long ago. If U.S. sanctions didn’t exist, Castro might have had to bribe someone to get them.

Thus, sanctions almost seem designed to cause the target population to rally around its government, at least for the duration of the emergency. The suffering and resentment they engender can also prompt citizens of the target nation to seek revenge against the perceived aggressor. The result might be terrorism against innocent civilians.

In at least two cases, war resulted. Toward the end of World War I, the Allies imposed a starvation blockade on Germany that lasted several months beyond the surrender. Thousands of people died or suffered malnutrition, exactly the climate in which a movement such as Nazism could be expected to arise. Losman acknowledges that U.S. economic warfare against Japan undoubtedly prompted the attack on Pearl Harbor.

In various ways, sanctions hurt the people and businesses of the nation that imposes them. Imagine the effect on long-term business plans. Even the remote possibility of future sanctions could discourage firms from making otherwise profitable investments. Even sanctions of short duration can be damaging if foreign buyers turn to more reliable suppliers.

The most fundamental objection to sanctions, however, is that they are based on an intolerable notion of the relationship between the citizen and the state. When sanctions are imposed, Americans are told that they may not trade with the people of another nation. The government acts like a stern parent dictating with whom they can deal.

Defenders of sanctions might respond that economic restrictions are imposed for serious reasons and thus are not an unreasonable limitation on the activities of Americans. But such a claim ignores how policy is made in the real world. We know from the work of the public-choice school of economics that actual policymaking is not based on the so-called public-interest model found in the civics textbooks. The personal political and financial concerns of the policymakers are often at stake. For example, there has been serious opposition to the Cuban embargo for many years. But the main reason that no president or candidate has been willing to seriously consider ending the embargo is that the Cuban-American vote in Florida is significant and no presidential candidate wants to give that state away to his opponent.

The very existence of sanctions in the government’s policy arsenal announces to the American people that their economic lives are subject to drastic alteration without notice. It thus undermines the very foundation of a free economy. But sanctions must not be challenged in a vacuum. As long as people think an interventionist foreign policy is appropriate, they will support sanctions as one necessary, if unfortunate, weapon. The case against sanctions must be part of the larger argument against the American government’s role as policeman of the world. As long as the United States plays that role, no American’s life and property are safe.

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    Sheldon Richman is former vice president and editor at The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.