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Economic Crimes and Cuban Cigars

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Two years ago, a prominent New Yorker restaurant owner who had never been in trouble with the law was arrested and charged with a federal felony. What was the man’s crime? Selling cigars at his restaurants. Well, not just any cigars. Cuban cigars. You know, Cohibas and Montecristos. The good stuff!

Why is selling cigars a crime in the United States, you ask? Not for the reason you would think — trying to protect people from the hazards of tobacco.

By buying and selling Cuban cigars, the restaurant owners had violated the “Trading with the Enemy Act,” which creates a federal economic crime that punishes Americans who enter into economic exchanges with Cubans. The feds claim that since Cuba is an enemy of the United States, it is necessary to prohibit Americans from trading with Cubans because such economic activity constitutes giving aid to the enemy.

But what exactly is an “enemy”? A country whose government has refused to kowtow to the dictates of Washington? Or perhaps one that is communistic and has a socialist economic system? Everyone would agree that there is a logic behind a government’s prohibiting its citizens from trading with another nation when there is an actual declared state of war. But while there have been tensions and differences between the U.S. and Cuban governments ever since the Cuban revolution in 1959, that’s a long way from there being in an actual declared war between them.

The “Trading with the Enemy Act” is arbitrary, however, not simply in the determination of enemies but also in the application of the law. For not every American who “trades with the enemy” by purchasing Cuban cigars is guilty of a crime, but only those who have done so without the permission of a federal bureaucrat.

A couple of years ago, I visited Cuba to conduct an informal study of Cuba’s economic system. Since I was traveling there to do research, I was able to secure a license (yes, a license) from the Department of the Treasury to spend money there. When I returned to the Miami airport, the U.S. Customs official asked me whether I was bringing anything back from Cuba. I responded, “Yes, Cuban cigars.” He said, “Fine” and waved me through. Why was the restaurant owner charged with an economic crime, while I was not? The difference was that I had permission from a U.S. government bureaucrat to “trade with the enemy” and he didn’t. How much more arbitrary can you get than that?

Ironically, “trading with the enemy” is the type of arbitrary economic crime to which the Cuban people are subjected as part of their socialist economic system. For example, Cubans are not permitted to open their own businesses without a license (yes, a license), which is rarely given. Moreover, no one is permitted to change jobs without official permission, which also is difficult to secure.

If a Cuban commits these economic crimes, he is subject to severe criminal penalties, the same type of criminal penalties to which the New York restaurant owner was subjected for buying and selling Cuban cigars. (He faced 10 years in prison and a $500,000 fine but the feds were nice to him and let him plead guilty to two misdemeanors, pay a $5,000 fine, and serve the “community” for 200 hours, further reflecting the arbitrary application of the law.)

Do economic crimes have any legitimate place in the United States? Isn’t this the nation whose birth resulted from a declaration that liberty is an unalienable right of man that has been bestowed on him by the Creator? And doesn’t liberty entail the right to travel wherever you want and spend your own money the way you want? Doesn’t free enterprise mean the right to engage in economic enterprise freely, that is, without the threat of governmental harassment, prosecution, or punishment? And isn’t “the rule of law” supposed to protect Americans from the arbitrary dictates of governmental bureaucrats?

History has shown that the biggest threat to the freedom and well-being of a people lies not with some foreign enemy but rather with their own government. Our ancestors understood this principle, and the Cuban people have undoubtedly learned it as well. Perhaps the New York restaurant owner’s federal conviction for the economic crime of buying and selling Cuban cigars will help modern-day Americans appreciate it too.

A detailed account of Hornberger’s trip to Cuba is posted on the Foundation’s website: Part One, Part Two, and Part Three.

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    Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.