How to create a black market

Neither would be flattered to be in each other’s company, but the presidents of Cuba and the United States have something in common: an ability to create black markets in activities that are innocuous and beneficial, and should be legal.

In the case of President Bush, his 2004 regulations that tightened limits on the contents of gift parcels sent to Cuba have created a black market in package delivery services, since only food, medicine, medical supplies and equipment, receive-only radios, and batteries for radios – and now cell phones – are allowed to be sent from Cuban Americans to their relatives in Cuba, only once per month, and with a $400 limit on the content’s value. Apart from the black-market package delivery services, there are black-market remittance carriers, and there’s the flow of Cuban Americans who evade U.S. controls by traveling through third countries to visit loved ones.

As the Herald reports, the companies that have U.S. Treasury Department licenses to send packages legally to Cuba are under pressure, and business is suffering; “On every corner there’s a pirate company,” says the operator of one of those businesses.

Competition from the U.S. Postal Service is also hurting the licensed private companies, and one implies that the post office gains a competitive advantage because it doesn’t check contents of packages, with the result that “many people are taking advantage of the situation and are sending clothes.” (Clothes are not on the list of items the U.S. government permits in gift parcels.)

My impression is that for Cuban Americans, restrictions on travel and remittances are more important than the gift parcel regulations. As candidate, Senator Obama promised to end travel and remittance restrictions, and was silent on the gift parcel issue, but an easing of those regulations would fit with the desire he has expressed to allow Cuban Americans to help their relatives on the island and decrease their dependence on their government.