Notes on Cuba’s Atypical Economy
Cuba’s economy is not easy to understand, especially for those that have never lived under a similar system where government plays a lead role. To begin with, it doesn’t go by the usual market codes of supply and demand and corporate profit isn’t its driving force.
Coming from North America or Europe to a typical Cuban urban neighborhood, the visitor’s first impression might be one of poverty: crumbling or poorly maintained buildings, pot-holed streets, ancient cars, homes where there are few “extras” etc.
On the other hand, if you arrive from Latin America or another developing country, other aspects of Cuban life might get your attention: no street kids, no malnourished faces, no beggars and people walking the streets at night with almost no fear.
In fact, in the more than six years living in Havana, I have yet to see ONE working child, an astounding contrast to other Latin American countries where I witnessed the daily parade of hungry kids scrambling to shine shoes or hawk a host of products at markets and traffic lights, in parks and door-to-door. Many are glue snuffers before they become teenagers.
Simply speaking, that doesn’t happen in Cuba, and that difference alone should make anyone think twice before buying into the corporate media’s image of Cuba as a country of acutely deprived people.
Yet, technically speaking, the foreign news stories are correct when they talk about salaries in that are the equivalent of US $10-30 a month.
Rich in some ways, poor in others, Cuba has insisted in running its economy on a different model.
AN ECONOMY THAT DARED TO BE DIFFERENT
The biggest distinguishing factor of the Cuban economy over the last half century has been an unswerving commitment to feed, educate and protect its citizens.
This is no small feat for an under-developed country. Even more so when you consider that Washington’s relentless blockade keeps it from exporting to the US market where the neighboring Dominican Republic sends 75 percent of its exports.
It involves very careful central planning to provide a supply of foodstuffs, highly subsidized public transportation and utilities, universally free education at all levels and even a complicated surgery at no charge.
The government has continued to do this through good times and bad, and with obvious ups and downs, especially in the 90s with the collapse of support from the Soviet Union.
Today, the national budget receives revenue from diverse sources: profits from tourism, from the nickel mines, from agricultural exports such as sugar, tobacco, fish, citrus, and coffee. Another source is hard currency sales of products imported and sold by the State that absorb a good share of the family remittances from abroad that are also a factor in the Cuban economy.
The revenue is not indirect through taxation, but comes directly through public ownership. The earnings go into the national budget to finance productive investments and subsidize products, services and social security to the population.
Cuba has shown a knack for survival, in spite of a cumbersome bureaucracy that sometimes seems to run counter to the government’s objectives.
Nonetheless, in the post-Soviet years the purchasing power of salaries drastically decreased. While improving slightly, there are still severe limitations, creating many difficulties for Cuban families.
SOME THINGS CHEAP, OTHERS OUT OF REACH
In Cuba an average family of two working adults and one child, has a combined income of US $20 to $60.
Many special benefits help stretch this amount far more than it would ever go in another country. The parents get a hot lunch at work, paying $1 or less for the entire month. The child’s lunch at school costs $0.30 a month. Transportation costs are minor: 100 bus rides for the family (kids under 12 don’t pay) costs $1.65, and some workplaces have their own free transportation.
Cooking gas costs pennies, and the average family pays under $2 a month for electricity and under $1 for local telephone service. Most people live in apartments or homes that they or their relatives or spouses own. The small percentage paying rent by law pay no more than 10 percent of their salary.
While not enough to meet all needs, a supply of staple foods and a few other basic products is available to every Cuban citizen for around $1 a month. Available medicines are priced at pennies and all educational and health care services are free. .
Books, which are out of reach for the poor in developing countries are considered a basic need in Cuba and are heavily subsidized. A book that would cost US $10 to $25 in most countries costs between $0.30 and $0.80 in Cuba.
On the entertainment side, for the equivalent of $0.75 two people can go to the movies complete with popcorn, have an ice cream cone afterwards and pay their round trip bus fare.
Sounds great so far, but not all is roses.
The regular Cuban peso, in which people receive their salaries, exchanges at 20 to one US dollar and has little value outside the subsidized economy. The other money that circulates is called the Cuban Convertible Peso or CUC, (the country’s hard currency equal to about US $1.20) needed to buy imported products like cooking oil, powdered milk or higher grade detergents, soaps and shampoos.
Cubans without family remittances, bonuses, tourism-related employment, or some illegal scheme find themselves with a very limited purchasing power. Most have a tough time making ends meet with clothes and shoes. Even local food and produce sold in regular Cuban pesos can be too expensive if you don’t possess the CUCs to exchange.
THE CANCER OF WORKPLACE THEFT
Given this situation, it’s not surprising that many Cubans resort to illegal “scams” of one kind or another to get by. Many of these involve stealing from the workplace. Relatively unknown during the more prosperous 80s, the practice mushroomed in the 90s when the government could no longer provide workers with the variety or quantity of consumer goods they were used to. A sort of pragmatism about workplace stealing wormed its way into the national conscious. Doing what you have to get by even merited its own verb: “resolver.”
State-owned industries, business inventories, office supplies, restaurants and worker kitchens, construction sites etc., became fair game. A huge percentage of the population has been drawn into the practice —either by taking regularly from their own workplace or by purchasing things in both currencies they know are stolen or illegally sold. Some of the theft is extremely small scale and individual, while some is well organized and involves larger sums and a chain of people.
An astounding but highly representative example came in a widely watched speech by Fidel Castro back in 2005. He stunned his national audience by openly stating that an investigation had shown that around half of the country’s gasoline and diesel, all imported and sold by the State, was being detoured to the black market.
The big loser is the State, which means nobody or everybody depending on how you look at it.
Is it possible to educate a general population to favor the common good over the individual or family interest, especially in hard times?
With new openness, Cuba’s leaders have encouraged the local media to explore such topics, not long ago taboo. A letter to the editor in Granma daily newspaper on Friday, April 25 from a Havana resident described how the younger members of the family went to the new Isla de los Cocos amusement park and came home saying they had bought discounted tickets to go on the rides.
“It turns out that the tickets the "vendor" collects [for the rides] are not properly torn and he then resells them… at a good savings to the young students, who want to go on more and more of the rides,” noted L. E. Rodriguez Reyes, concluding: “How sad that our young people play the game of the dishonest without analyzing it!”
For parents like L. E. Rodriguez, who gave their best for a brighter future for all, such practices are painful and highly undesirable. But for the younger generations, workplace theft of one kind or another is a fact of life.
Widespread complicity has led to a general tolerance. Few citizens are willing to denounce such activity and risk being called a snitch over something “normal.”
The situation has produced a mutated economy and impacted the values of the Cuban population.
If five Cubans sat around a table to talk about the subject, the discussion could go on all night.
Some believe the problem is too big to tackle as long as salaries don’t meet basic needs. Others think that it’s never too late to begin to address the corrosive ill, as long as the right strategies and tactics are used.
SOCIALIST INCENTIVES AND THE FUTURE
Cubans are discussing their problems more openly than at any time since I have lived here. Listening to them, I find that most people want to maintain the benefits of their subsidized products and services, but also want to be able to purchase things their salary won’t permit.
The strategy of President Raul Castro to gradually increase salaries and make the peso go further promises greater pay for increased farm and industrial production; maintaining the concerted effort to conserve energy and other key resources, and a streamlining of the government bureaucracy.
Thus, the direction of the Cuban economy points to a system that provides equal opportunities but with greater incentives, asking for the contribution of “each according to their ability,” and rewarding “each according to their work.”
While the government and labor note that hard work is crucial to a rise in the living standard, the battle to return to the “poor, but honest” maxim is also seen as vital for the future of a revolution that takes pride in, and is admired around the world for its fairness, solidarity and ethics.