Cars and Cuba’s New Economics

Henry G. Delforn (*)

The Tata Nano, made in India, go for around US $2,500 new. Photo: wikipedia.org

HAVANA TIMES, Jan 24 – If you wish well for the Cuban people, especially the middle class, you have no choice but to like Castro’s new economics.

In the first year of the largest economic reform program of the last 54 years now well underway, Cuba’s GDP is expected to grow by 3.4% in 2012 despite the 53-year-old U.S. embargo.

The size of Cuba’s economy is about half the size of Google and about a quarter of Exxon.  But unlike shareholder-only benefits, growth in Cuba’s GDP is expected to bring benefit directly to the middle class citizen.

Indication of this benefit comes from the automobile sector which is one component of President Raul Castro’s revolutionary reform plan, “Proyecto de Lineamientos de la Política Económica y Social“.

Since the 4th quarter of 2011 and in line with the reform plan Cubans have been able to legally buy and sell automobiles. This change is step one in a multi-step process to battle transportation problems and boost the economy.

However, the cost of a typical used car in Cuba is very expensive. For example, a Russian made mid-1980 Lada can cost over 10,000 cuc (11,000 usd) and not even U.S.-funded relatives can afford it. Hence, car prices must come down if this component of the reforms is to succeed. But how will prices come down?

Here are two possible answers to this question. One, a new law could prohibit these high prices. But such law is not likely since it would discourage sellers and would not encourage trade or boost the economy.

A more likely scenario is the flooding of new cheap cars into the market to thereby lower prices and increase GDP with sales of new inexpensive cars. For example, the Indian made Tata Nano which sells new for about 2,500 usd is a likely candidate.

Today, one can buy a new Cuban made Minerva electric motorcycle for about 1,500 cuc, and hence, one can also expect that when this motorcycle market is exhausted, step two in the process will be taken to import new cars.
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(*) Henry G. Delforn is an electrical engineer (Cuban-born U.S.citizen) who lives in the U.S. and often travels to Cuba.

 

11 thoughts on “Cars and Cuba’s New Economics”

  • Tatas are little more than golf-carts with a cute name, as Elizabeth suggests. But it is appalling to see so many comments made from a perspective that is centered in a world view exclusively anchored in the experiences of the wealthier part of the world, as if life was only comprehensible from that perspective and living standards defined by it (“pride of vehicle ownership”???…)…

  • The issue with this car is that uses the British system where the driver seats on the right hand seat. Not sure if they produce an american version of driver seating on the left.

  • This is a city car. The trunk is only accessible from inside the car, as the rear hatch does not open; has only one windscreen wiper instead of the usual pair; has no power steering, unnecessary due to its light weight; has three lug nuts on the wheels instead of the usual four; has only one wing mirror; a radio or CD player can be fitted as accessories only; has no airbags in any model; has a rear engine with only 2 cylinders; and no air conditioning in the base model. It’s the near perfect back-to-basics city car and a great addition to the Island.

  • Elizabeth, it’s a theory and a belief, based on 1) the negative results of sovereign experimentation over nine decades where private property rights were abolished by Marxian state monopoly; and 2) the positive economic experiments in many countries over the past two centuries, including: 1) the worker-owneed Chinese Gung Ho coops (1938-59), 2) the Indian Faridabad City of Hope (1949-52), 3) the massive Italian cooperatives over two centuries, inc. today in esp. Amelia Romagna, and 4) the spectacularly successful worker-owned industrial and commercial coops that began in Mondragon, Spain in 1956.

    I’m totally with you in appreciating the common property cultures of Native Americans, and of many native cultures worldwide. These, and the Hutterite communities of western Canada, which have a 400-year history of communal property, give us reason and the hope that a classless, common property society is lying in the future of humanity. It is in this society that we believe the true flowing of human culture will take place.

    The socialist strategic–or, maximum–program of social transformation in post-capitalism however is not that far-in-the-future, hoped-for classless society. It is a several-generations bridge to that society over which individual nations–and ultimately the network of socialist nations–will be able to cross.

    The theoretical question we socialists are considering is whether private productive property rights should be abolished immediately by nationalization when state power is achieved by a vanguard party? Or, should it be retained and utilized for construction of the socialist bridge project, democratizing private property rather than abolishing it?

    I appreciate all your comments in HT thus far, including of course in this present exchange.

  • Also, your assumption that private property rights are a basic need to ensure the success of a society is simply that: An assumption.

    John Alexander Williams described in his book, “West Virginia: A History for Beginners”:

    “The Indians had no concept of “private property,” as applied to the land. Only among the Delawares was it customary for families, during certain times of the year, to be assigned specific hunting territories. Apparently this was an unusual practice, not found among other Indians. Certainly, the idea of an individual having exclusive use of a particular piece of land was completely strange to Native Americans.

    The Indians practiced communal land ownership. That is, the entire community owned the land upon which it lived. . . .”

  • Ron Paul would not have the power to lift the embargo. In addition, Ron Paul is a sociopath.

  • If Ron Paul won the Presidency of the U.S.A. the embargo would be lifted and you would not be a poor country.Pride of vehicle ownership is one of the greatest aspirations on the planet.I know,I love my truck and I am not happy when she is broke.

  • I don’t think you quite understand the nature of cooperation, Elizabeth. It does not mean state or social ownership of things, but with as-needed use by citizens. This sort of misunderstanding of socialist society is what has caused so much dysfunction in revolutionary experiments for the last nine decades.

    Cooperation, which is the basis of “real” socialism, must have the institution of private property rights intact. Otherwise, it’s Stalinist/Marxist statism all over again.

  • Those are cute cars. But no one should own them. They should be kept in common areas and driven by anyone who needs to go from one place to another and then left in a common place. How does that sound for cooperation?

  • I hope i see these tata soon in Cuba and at a low price.

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