Notes on Cuba’s Atypical Economy

By Circles Robinson

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.



6 thoughts on “Notes on Cuba’s Atypical Economy

  • Circles Robinson.

    I read with much interest your informative writings on the cuban economy.

    Financially speaking i cannot believe that the growth of a nation can be achieved by keeping its population poor. Cuba must make allowance in its agenda to let people grow, to find pride in their own achievements and to stand on their own feet. i do not say this to undermine in any way the notable social achievements of the Cuban government in certain areas. the first class medical prowess, amongst other things.

    Having been brought up in the Thatcher years in England (please note abstenance of use of Great Britain or United Kingdom. I believe neither term describes the Britain of today) and having lived my entire adult life, so far, in Madrid ,Spain, I find it fascinating to learn more about a country whose stand against world political morals has not wavered and has been documented extensively throughout my lifetime.

    From an early age I suspected that the general story western politicians would have us believe was marred somewhat by the usual political deceit those same politicans foisted upon us…those who really seek to control, but who lack the strength of character or passion to do so. Having said that, I resent the manipulation of the masses that is the backbone of all government, Cuban or otherwise.

    I do not hold a misguided or romantic view of things Cuban. I respect the Castros and their ideals, but that doesn’t mean to say i agree with them. I hope Raul brings about a change in the general standard of living, allowing personal growth to the populace, and obviously I hope that now that he clown has been removed from the show, the North American circus can demonstrate a less ominous and more neighbourly prescence. I think the rest of the world should applaud the middle states of North America for finally realizing how misguided they had been 4 and 8 years ago. It takes guts to admit wrongdoing.

    Cuba has a unique chance to bring about something special…a society devoid of the decadence that saps the general intelligence of ‘civilized’ society, devoid of the selfish and the misguided who prostitute themselves to vainglory or other such useless pursuits as ‘being famous’ (and i very much include politicians here).

    A governments creed should be to govern. to lead by example, with noble aspiration and fair dealing.

    Cuba had noble pretensions before. I feel it could light the way in modern times to show the rest of the world that Value is far more important, more real, than Price….Cuba can demonstrate to the world that it has a population that knows this important distinction. Sadly, the majority of gods children in the west just don’t have a clue.

    So I for one will be turning my attentions to your great country, and I’ll gear up my business interests to include Cuba in its dealings, albeit via Panama!

    Thank you and best regards to your readers.

    Felices fiestas.

    Martin Sampson.

    Reply
  • Thank you for this excellent summary of the realities of Cuba’s different approach to its economy and the resulting problems and achievements. As a frequent visitor to Cuba, I believe it effectively captures the essence of Cuba’s atypical economy.

    Reply
  • As with Brian above, I too just discovered your perceptive observations on Cuba’s economy, Circles. It deserves wider circulation on one of our sites, to counter much of the absurdly misinformed reports we receive (often due more to ignorance than malice, with reporters breezing through on a brief visit without having a clue as to what’s really happening in Cuba). Has it been posted to any other site up here, such as (my favorite) CounterPunch?

    Reply
  • As I understand it, Cuba is having trouble even getting idled land into production, never mind getting efficient production out of it from motivated farmers, etc. Haven’t they tried some system yet where, for instance, people from the cities who want to make some spare cash are transported out to farms at harvest- or planting-time, etc. — and paid fairly well to do a few days’ work bringing the crops in? That way you don’t have the problem of keeping people ‘on the land’ full-time — and then you also have the opportunity to plant more hectarage than any one farmer or collective would normally plant, if they were doing all the hard work themselves all the time.

    Everyone would win under this system, I would think. It would also build socialist solidarity IMO — even as it filled people’s pockets with convertible cash.

    Reply
  • I really appreciate the excellent and objective analysis of Circles, which reflect accurately the principles that have governed the Cuban economy for the past fifty years. Problems is, that explaining its limitations but without offering solutions that may produce the necessary socio-economical growth, full employment, limit the cancerous theft that is pervading the moral fiber of the Cuban people, must be challenged with fresh ideas, new direction, that are capable of satisfying society’s material need.

    Without altering the basic principles on which the Cuban system is based, there is no harm and rather a lot of good could come out of turning every capable citizen into a productive entity. Why and who benefit from hundreds of closed store fronts defacing the environment, instead of leasing it to family units to offer services to the population and visitors, that are non-existing or poorly available?

    Should we not tropicalize our country, by allowing thousands of young people out of school, out of work or poorly working, to be in control of small business dispensing tropical goods to the delight of nationals and visitors? Can anyone believe that these individuals would allow their good to be squandered or stolen?

    How are we expecting to elevate agricultural production, reduce shameful imports, if land plots are being distributed at a rate of a few acres a day, there is no agricultural supply stores to purchase seeds, equipment, implement, fertilizer, pesticides or clothing?

    Why not restore tens of thousands of trucks, jeeps and other country vehicles in junk yards, sell to those willing to pay for them, to allow farmers or others to bring produce into towns and cities, without the disastrous Acopio, that neither paid properly or collected produce in a timely fashion.

    Why continue to extract enormous financial resources from government treasury to fund important social institutions such as, schools, healthcare system, recreational area, roads, environmental clean-up, water resources, cultural development, all of which could be easily paid for, once the above suggestions would be placed in motion and taxed adequately.

    Why not encourage more private home rentals, paladares, taxi drivers and every other job creation sources, that will contribute to the financial support of all institutions?

    Finally, with tens of thousands of agricultural technitians and professionals that have been trained in the past 50 years, many holding unrelated jobs or retired prematurely, I can assure everyone, that just by giving them most of the things outlined above, in two years, tubercules, vegetables , beans and other staples would satisfy all national needs and create surplus for export or animal feed.

    Poultry, eggs, sheep/goat meat, rabbit, pork, fish could saturate market needs in two years, under the same principles. Beef and milk could satisfy national need between the next 5-10 years.

    Everyone knows of the horrendous and destructive effects the embargo have had on Cuba for the past 50 years. Most of the shortcoming and ways to improve them, has nothing to do with the embargo. It is contingent of our vision, critical analysis and implementation. Let’s Hope!!

    Reply
  • Perhaps, one would be wise to ask why there are no street children, beggars, etc on the streets of Cuba.

    However, in order to do this and do it fairly one must ask who are the parents. i for one am a AfroCuban (take pride in being one) whose close relatives fought with Castro in 59 and i know that what was taught in our homes was pride self respect and dignity.
    Respect for authority, pride in fam self and community so, to bring shame upon a family is a no no, to go to jail for theft robbery begging rape etc is a no no and to allow oneself to be dehumanized by anyone even those in authority meant that you were giving up your humanity.
    I live in a huge latin community on the east coast and as someone who is now semi retired , and who understands laws as good if not better than anyone, it is mindboggling to see what happens to some of my latin bredren/.sisters once they leave thier home country.

    Suffice, that people especially young people who are left without rules, were never taught the art of thier own humanity, have noone to point the way or to direct to the straight path will ultimately fall from the pat. and terrorize others.
    Case in point i have several buddies who are African americans from the south,and who like myself were raised partially by gandparents. When we discuss cultures we learn that when we teach the rules and the outcome of disobedience for the rules, or when we choose to not provide this for fear of being called old fashioned we then give uo the right to complain to the courts about why our children should not be punished. Coupled with this is the shame that families within the community are forced to bear.

    Personally, i am sick and tired of families of all cultures coddling thier children and making excuses for bad behaviour. For years adults have given up thier power and control in families and what turns out to be the end is often the real end..death.
    In Cuba the monthly salaries do not amount to what i make per hour even as a semi retired person however, i understand this as well. Lets just say that $$$ does not ..will not ..and cannot buy good home training..

    Back to why there are no beggars street or working children visible in Urban Cuba..Look at how they are raised.

    Que te vayas bien Gracais

    Reply

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