Goizueta generated more income than the entire Cuban economy

IT IS A telling commentary on the Cuban economy that the late Roberto Goizueta, who had fled Fidel Castro's Cuba in 1961 and was Coca-Cola's chief executive officer when he died last October, generated enough wealth to more than double the average living standard of every Cuban on the island.

Coca-Cola's market value increased by $141 billion (to $145 billion from $4 billion) between 1981 and 1997, when Goizueta led the company. Suppose that you invested $141 billion in a U.S. stock market. What yearly return, on average, might you expect? Based on the S&P 500 Index, the average return would be 10.7 percent, for a yearly income of $15 billion. The CIA reports that Cuba's national income is $14.7 billion. In other words, earning only an average return on the U.S. stock market, the increased wealth amassed for Coca-Cola under Goizueta generates more income than the entire Cuban economy under Castro!

Admittedly, Goizueta wasn't solely responsible for the more-than-36-fold increase in Coca-Cola shareholder value. He had help from Coca-Cola's 32,000 employees, the opening of world markets, and a booming U.S. stock market. Nevertheless, Goizueta was at the helm when the wealth-increasing decisions were made. The buck stopped at his desk.

Regardless of how one divides up the $141 billion, Goizueta garnered but a small fraction of the increase. Most went to other shareholders. At his death, he was reported to be holding $1 billion of Coca-Cola stock. This is less than 1 percent of the rise in the value of Coca-Cola stock. Moreover, the increase in the stock value understates the wealth created under the Goizueta regime. Additional value, not captured in the stock price, accrued to Coca-Cola employees, suppliers, distributors, and consumers.

Creating wealth entails expanding the network of voluntary exchanges in the marketplace. Goizueta never forced anyone to drink a Coke, never expropriated anyone's assets, and never forcibly drafted anyone into Coca-Cola's service. Rather, he was a talented creator of wealth who shared that wealth with many.

Then there's Fidel.

Castro is another Cuban who talks a lot about sharing wealth. Castro's methods, however, differ radically from Goizueta's. Confiscation of property, forced labor, and jail sentences for opponents have been the hallmark of Castro's regime. Is it any wonder that Goizueta and 32,000 Coca-Cola employees can outdo Castro and his 11 million ``slaves''?

Some might interpret all this as a justification for Castro and his government to prohibit emigration. That way, goes the argument, Goizueta would have produced wealth for Cuba instead of Coca-Cola. This completely misses the point.

Even if Castro had been prescient enough to recognize Goizueta's entrepreneurial potential in 1961 and had prevented his departure, it is safe to say that Goizueta's talents would have languished in a communist quicksand of perverse incentives. Cuba's current living standards would be little changed.

In the end, societies that stifle voluntary exchange waste their people's talents and resources. That's why Castro will never match Goizueta when it comes to sharing wealth. You can't share what you don't have.