Observations on Cuba
A college-student acquaintance is spending a semester in Cuba as part of his film program. He writes this:
You may have heard that it is a socialist country – this is true. What that means, however, is very complicated. I was coming home at two AM one night from filming a show in the city and I stopped to get some chicken at a small stand. The man working there was very friendly and explained to me what Socialism meant for him. “You want to know what socialism is? I have a degree in engineering and I’m selling fried chicken at two AM, that’s what socialism is.”
I’ve heard similarly frustrated sentiments from many different Cubans who complain that even if you can make money there is not very much you can do with it because its very difficult to get permission to use it for anything as expensive as a car or a house.
The way to make money, it seems, is to work for and around tourists, because the dual economy gives all the power to the CUC dollar which is what tourists can most easily buy and spend, and is worth 24 times that of the Cuban dollar. To put it in perspective a cab ride in a fancy tourist taxi will cost about 5 CUC, and the Cuban average income is about 10 to 20 CUC a month. If you can get a job related to tourism you basically have it made. More on this later.
There is virtually no violence here; Havana is the safest city I’ve ever visited or heard of. This means that there are police around almost every block, but Cubans have a much different relationship with the police than we do. They’re not thrilled about their presence, but many of the police officers and security guards were assigned their jobs as part of the year of military service required of all men. Everyone has an uncle or brother who is or was a police officer so people don’t think of cops as any different than firemen or teachers or any of the other jobs that are government assigned and regulated.
There are also virtually no homeless, a very low illiteracy rate, and a tolerance towards homosexuality and womens rights that parallels the US’s. (Which is totally absurd when compared similar countries in Latin America and the rest of the world.)
But at the end of the day you do here a lot of complaining along the lines of – why should I work when I have no motivation to do better? Why can’t I control my own business? etc. Not to mention this country is plagued by somewhat absurdly over the top propaganda, cameras and censorship that makes the island feel like a chapter out of 1984.
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Paul
Hence the joke about a woman talking to her friend about her boyfriend:
“He told me he was a hotel porter but it turned out he was only a neurosurgeon.”
Jim
Unfortunately, the comparison normally made between Cuba and other poor countries is hopelessly inadequate. Plenty in Cuba (and those horrible westerners sympathetic to it) make some points, all true:
-Cuba has more doctors than Africa
-Cuba ranks as highly on the UN’s education index (which contributes to HDI) as France or Luxembourg
-Cuba has free medical care (for foreigners, too) and highly subsidised drugs, and
-Cuba has relative gender equality.
The problem with the `poor county’ argument—ie. `Cuba is the only poor country with x, y, and z’—is that it is because of these things that the country should not be poor.
There is a famous 1992 paper by Mankiw, Romer, and Weil, where they show that the savings rate, the population growth rate, depreciation rate, technological growth and the number of years of education alone explain over 70% of the difference between poor country’s GDP/Capita.
Cuba’s problem is that when you feed its numbers into the model, the model tells you that Cuba should be much better off than it really is. [The US's output per person is almost perfectly in line with what the model predicts].
The gap between what this model tells us and what we observe in reality is what we could think of as an `institutional drag’. But in a country where a sizable proportion of foreign currency earned is due to prostitution (which your correspondent left out), that’s not really much of a surprise.
Also, don’t believe the figures on Cuba. A big Cohiba in La Habana costs $18CUC. A village cigar costs $1CUP. That means one Cohiba=432 regular cigars. National accounting for international comparison becomes pretty difficult when the only products priced in internationally-convertible currency are also far more expensive.
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