Toothbrush Solutions for Cuba

Julio De La Yncera

Photo: cubadebate.cu

HAVANA TIMES, Dec 30 — A few days ago I read an article in Cubadebate that caught my attention. The article deals with the production of toothbrushes in what is apparently the only factory that produces them in Cuba – and which is, of course, state-run.

The article informs us of the low demand for the factory’s product. It also noted that the price of a toothbrush is high for consumers. A Cuban must pay 16 pesos, which is equivalent to more than a half day of work.

The article ends by explaining that the Cuban population is not in the habit of changing toothbrushes regularly and that they don’t brush their teeth four times a day. They add that the high price explains the low demand. The piece then concludes saying that this situation causes major expenses in dental services.

I was reviewing comments on the article and many people complained about the quality of toothbrushes. Supposedly the bristles detach easily, thereby posing a danger. Some people complained about the high price while others explained that the toothbrushes are actually inexpensive, pointing to low wages as the problem.

This article reminded me of the wise English expression, “Never put all your eggs in one basket,” which translated into our context would be written as “Don’t make all your toothbrushes in a single factory.”

In this case, the fundamental problem is not the consumers. The explanation for the low demand is certainly the product’s poor quality and its high price for ordinary Cubans.

One wonders how the price of a toothbrush produced in a Cuban socialist company is determined, and how do they ensure that the products produced have the quality necessary to avoid creating greater problems.

I think the problem occurs for several reasons.

The management of the company, like all socialist enterprises, has nothing personal invested in the company’s success. If what occurs is like what happens in the worst cases, they will be transferred to manage (or rather de-manage) another company.

This is an example of why a state monopoly is terrible from any perspective one looks at it.

Let’s say that instead of one company, there were at least two companies producing toothbrushes. And let’s say that these two companies were owned by individuals. It would be in the best interest of these individuals to make the company work properly.

This means they would produce quality and affordable products, the opposite of what happens at the socialist enterprise in question.

In addition, these companies would probably pay for television and radio commercials for their products, explaining and educating the public about why oral hygiene is necessary and how their product is better than that of the competition.

From the competition between the two companies, the price would be optimized to the maximum that consumers were willing to pay and the companies would price the product at the minimum necessary to trigger the sale and movement of these so as not to cause them losses.

These individuals would pay taxes to the government on their profits, and another part of the proceeds could be devoted to research for better toothbrushes or other methods of cleaning the teeth that are less costly and more effective.

Meanwhile, with a state monopoly we have a group of workers who might lose their jobs, and rightly so, because they don’t do them well.

 


27 thoughts on “Toothbrush Solutions for Cuba

  • January 4, 2012 at 8:08 pm
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    Well, it is evident that, no matter how many times I tell you that I reject state monopoly socialism, you will continue to hammer me with declarations that it cannot and does not work.

    No matter how many times I assure you that state monopoly socialism is not state monopoly capitalism, you will continue to insist that it is.

    Conclusion: Let’s stop beating the old proverbial dead horse.

    Like you, I believe in free enterprise. Like you, I am against monopoly, and in favor of democracy.

    Unlike you, I know that the capitalism we know in the world is not free enterprise, that it is monopoly and that it is destroying the world environment and thereby the futures of our children and grandchildren.

  • January 4, 2012 at 4:21 pm
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    Sorry guys for the delay

    Grady let me address this

    “This of course speaks to an issue that you do not deal with, that life and our consciousness under capitalism is forced to focus on products and consumerism. All the spiritual and communal joy we ought to be enjoying, that ought to make our lives seem worth living, recedes into the background and is often lost.”

    Yes, you are right some people do get affected with consumerism but it does not happen to every one. My point is always that this should be a choice each individual must make. There should never be a State making that decision for all of us. There are decisions that should be made by a state. This is not one of them. The same goes for economic system. The state should not be responsible for this. The state should not tell us that we should all work for the state (State monopoly) or that we should all work for our own cooperative. But should let ourselves decide what we like. If you like to work for the state and government you do, if you like to work on your own you do. If you like to work for a cooperative you do. It becomes your own personal choice. This is exactly what we have. I see no problem with that. You mentioned that there are some Mondragon style projects in the US. I see no problem with that. I think the decision to integrate oneself in any of these projects is an individual decision and it should not be a dictatorial decision coming from above, from an elite or a party.
    When I speak of socialism I speak about the kind of socialism I know. The one from Russia and Cuba and Eastern Europe, I know you have mentioned that this is not socialism. I think I have proof that what they call socialism is in fact state monopoly capitalism. I already advice you not to use socialism for your system because it confuses people, you can called for example cooperativism or something else but do not call it socialism. Now with regards to cooperativism, again I asked some questions you have not answered me.

    I already predicted bad consequence from the economical point of view. If I recall correctly what I said before.
    A system where a group of people get to share more or less equally the profit will conduce to hyperinflation.
    My example in particular was Apple. If Apple was a cooperative each of their employees will get millions of dollars. The issue with it is that if you have too many rich people the price for everything goes up. Because there is more money but the actual things we want food, services and anything else is still the same. That produces inflation. The Mondragon system may work at small scale because at small scale is no different from a capitalist enterprise. But this does not scale well when you take it to the whole society as a system.
    The other big issue I believe your system presents is that it will be extremely difficult for start ups to small enterprises to compete with the great cooperative conglomerates.
    I have to tell you that socialism in Cuba the communal thing have disappear and right now is more like the “dog eat dog” that Luis mentioned with regards to capitalism. It has become very individualistic where people are in survival mode with some of them literally starving. For example I used to work in a school in Cuba and the principal will eat lunch that was different and better than ours. Now I work for a fortune 500 corporation and the owner have lunch in the same place and the same food we eat. Do you see? And this has been my experience here. Free capitalism may appear selfish but people that live in free capitalism are not. Socialism appears as unselfish but people do become more selfish. Interesting right? I think sociologist should investigate why this is. I think is got a lot to do with scarcity. Socialism there is a lot of it. While in free capitalism there is abundance of everything that is my guess.

    I have already said this but here it goes again. I believe there is a future that is near where many of the problems that we see today will just disappear. All of them thru technology and some human will. There will be real big changes in the next 20 years. From robots to machines that can talk and answer questions and be smart maybe as smart as humans or more. Those are huge changes with really big implications. The question as to what system should we use may not be a valid question anymore. We will have a new set of questions then. About what means to be human, it will be a new universe to think about.

    It was not me but Luis who said you are Marx bashing but let me tell you what I think.
    I do not believe that Marx intentionally did what you said. I think he came up with a solution that he thought will work. As it happens, in theory it looks good but in practice it does not work. What surprises me is why we humans take so long to realize this. There are many still out there that believe that Marxism (State monopoly capitalism) will work. It Is like this people can not draw conclusions from history. They can not learn from past mistakes. Again I like you to note that the capitalism that Marx witness is not the same we have today. Maybe if he was alive today he will be perfectly ok with it specially when compare to “socialism”.

    Look in my article the prediction was that some workers will loose their job and the truth is that really is not all their fault. I will place the real fault on the system. State monopoly does not incentivize people to work. It does not matter how many times Raul or any other leader asks them to produce more or to produce more with quality it will not happen. Words have no practical value to people, real money does. I am not sure if you guys are aware that Cuba has two currencies, the Cuban peso that is worthless and the CUC that is almost equivalent to the dollar. The Cuban workers are paid in Cuban pesos and the majority of the things they purchase they have to acquired it using CUC. This is a very exploitative system where the government not only pays them next to nothing for their labor but also gets them with an extra tax when they convert from one currency to the other before purchase. I do not think is an exaggeration when I have called the current regime a mafia in power.

    Zeus

    “No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat.”

    I do not agree with this. I think is important how you get there. Let me explain. Suppose workers did not get pay anything and that we just each work and when we go to the stores just get what we need. That sound beautiful right?
    Well here is what will happen in practice.
    People will not work and people will just look like they work but do nothing. Nothing will be produce in the country and there will be not enough to satisfy all the people’s needs. Then the president will have to ask of us to please work or to do our job better or to be careful with the quality. Because nothing is assigned a value we loose sense of what it means to eat a lobster versus an egg or anything else. This is almost what happens in Cuba. In some sense this is almost like going back to slavery! So do you really think that the white cat is the same as the black cat?

    I think there have to be some restrictions on free capitalism too. Specially that one about monopoly I totally agree with you about the concentration of Power/Money in a small group of people is very dangerous. Is a monopoly of the will. This is what has happen to Cuba.
    The socialist economy thinks they can plan the economy and that they can do better. This is not so. They plan nothing. Everything does not work according to plans and many of the plans are totally wrong. Capitalism is self regulating just like the centrifugal governor on the Watt’s engine to control the speed of the engine. Here in the US we pretend to control capitalism thru monetary policies. Interest rates and so on. We control the economy setting low or high interest rates. The rates at what companies can request loans. The short term interest rates and the long term and from there banks take guidance and set their own interest rates. So in a sort of way there is direction setting at grand scale by the government. Some how I visualize the US economy like a big mothership (the US government) surrounded by a huge army of small little ships. Each of those little ships are the big businesses in this country. The fortune 500 companies and then each of this surrounded again by even smaller ships and so on until we get to each of us. We are the sailors. When any of the big ships is sinking the big mothership could decide to save it or let it sink. For example the car companies where sinking a few years past and our government decided to save them. I think they did the right thing but this point to another problem. When a company is too big that it can not fail, It is in practice a monopoly of sorts. We should not let that happen.

    I really enjoy having this conversation.

  • January 4, 2012 at 7:52 am
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    Grady and Zeus I do not have time right now to answer will do later but here is a quick pun

    “Capitalism it great! There are so many different brands of razor blades with which to cut your own throat!”

    “Socialism is terrible! There are no razor blades with which to cut even your own throat!” 🙂

    Hope you like it.

    Free capitalism you have the choice to do things, socialism force you to do things. I want to do things because I want to not because someone orders me to. I think is really hard to make you guys understand the differences because you have not lived in such a system. I will answer later with more detail.

  • January 3, 2012 at 8:04 pm
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    No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat. That is what should guide economic and government policy – not dogma. In any system, there will be ideas (e.g., products/services) that justly threaten the status quo (e.g., entrenched monopolies). What makes one system better is its ability to minimize damage and make the transition as smooth as possible for all involved (e.g., labor and producers). One way the “market” helps the process is by allowing the consumer to gradually force the transition through price signals – with some restraints, not laizzes-faire winner take all price systems; even the U.S. Federal Reserve acknowledges price stability as one of its responsibilities. One way government helps in the process is that it can provide the additional services necessary to transition displaced workers (e.g., unemployment insurance). It is not one or the other, it is a mix of practical policies where the benefits to society are maximized – not concentrated with a few. I agree with Julio that concentration of power and/or wealth is the true evil that should be avoided, but I disagree that it need be through free market unrestrained capitalism – there is middle ground.

  • January 3, 2012 at 7:38 pm
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    Julio, there used to be a line circulating among the Left that responds somewhat to your affectionate view of capitalism. To paraphrase–because I can’t remember it precisely–a socialist once said: “Capitalism it great! There are so many different brands of razor blades with which to cut your own throat!”

    This of course speaks to an issue that you do not deal with, that life and our consciousness under capitalism is forced to focus on products and consumerism. All the spiritual and communal joy we ought to be enjoying, that ought to make our lives seem worth living, recedes into the background and is often lost.

    Your reasoning is pretty good, Julio, I must say. When you liken the socialist state to a capitalist, this is a valid observation. But here is what you miss: The formula for state monopoly socialism was injected into the socialist movement by Engels and Marx as an anti-dote to the original cooperative formula.

    And so, what you find so abhorrent about socialism, that it is by far the worst form of monopoly capitalism, is not real socialism, at all. It is the poisoned cake that was baked on a recipe brought into the socialist movement by provocateurs, in order to discredit it in the public eye, and destroy if from within.

    You somehow defend Engels and Marx and accuse me of “Marx-bashing.” Well, yes I do bash Marx, and it is because he and his capitalist buddy have destroyed the reputation and movement for workable socialism. Had it not been for these fake revolutionaries, we would have had a democratic and socialist world long ago.

    What I don’t really understand is why you cannot grasp the simple fact that “socialism,” as you define it and as it has manifested itself in Cuba and elsewhere, is not real socialism, at all. Real socialism is a democratic cooperative republic, not the bureaucratic, similar-to-state-capitalism socialism mistakenly implemented in Cuba. But who knows! Perhaps someday you will reach the same epiphany that socialists in general need to reach, and straighten out your understanding about the difference between capitalism and real socialism.

  • January 3, 2012 at 10:00 am
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    Listen.

    My ‘solution’ passes through much of what Grady thinks about socialism and cooperative work, but without the Marx-bashing he likes to do. For example, in this very site I dig what Pedro Campos says.

    There are marginals elements such as:

    1. The Zapatistas ‘caracoles’ in Mexico
    2. The occupied factories in Argentina
    3. The Mondragon cooperatives in Spain
    4. The free software movement
    5. The solidarity economy movement

    Those are solutions that are, at least (especially the #5) tangent to the capitalist logic, and represent, as I see it, steps forwards to a new mode of production and distribution of goods.

  • January 3, 2012 at 8:31 am
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    The type of socialism that Cuba have is the 20th century socialism. The one that crushes on freedom and human rights. They said they are updating the model but so far the changes are minimal. It seems socialism is doom to be authoritarian, despotic, totalitarian. Nobody wants to live in such systems.

    I you also believe in freedom I do not think we are diametrically oppose. Maybe we are orthogonal to each other views. We do not match on economics but we match on freedom.

    “1. Freedom in a consumerist society is only partial because you have the choice between two or more preconceived products.”
    If you see a problem and you can solve it you can create your own solution. The site I show above is an example of many people doing just that. I think my point is proven. You do not need authorization from the communist party to do such thing. Like I said you can identify a Problem, come up with a Solution and make Money. Anyone can do it.
    I will watch the movie link you send me after work. Thanks

    Tell me what is your socialism of the 21th century? Explain to me why will it be better than the one of the 20th century. I am listening.

    I explained above in some other comment than some services should be even in capitalist societies owned by the state such as police and defense.

    Luis, free capitalism goes thru crisis is a characteristic of the system. Socialism of the 20th century goes thru unrecoverable economic collapse. Maybe that is the best we humans can do.
    What is your solution?

  • January 3, 2012 at 7:34 am
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    Ooops I meant:

    3. Public services can be effective if done right. You accuse ME of using the Straw Man fallacy but you use it also by changing the subject.
    4. “This system is a system in crisis (…)”

  • January 3, 2012 at 7:16 am
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    Let me explain myself better:

    1. Freedom in a consumerist society is only partial because you have the choice between two or more preconceived products.
    2. You also did not prove myself wrong. So it’s a non-argument after all.
    3. Again, this system is a system in crisis. I suggest you to watch this – http://www.youtube.com/watch?v=fYFw3O–2R0

    Thanks for the insight, though.

    And yes, I believe socialism can work, if it transcends wage-labor, unlike the ‘real socialism’ of the 20th century.

  • January 3, 2012 at 6:47 am
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    Julio, maybe I was wrong with the word ‘fallacy’. What I really meant was ‘points’, so you go through all the way around to show me nothing.

    For example, when I was talking about the effectiveness of public vs private services, I really didn’t meant ‘real socialism’, but services like health and education. If I was to apply your logic here, I could mention:

    US – economic crisis
    UE – economic crisis

    And so on.

    You also change the subject – where did I say that industrial capitalism didn’t promote the evolution of the productive forces? Where did I deny the importance of freedom? I said to you before, the models of the 20th century were fit for the 20th century. I believe the whole world has to change.

    I’ve discussed with you before and I know your ideology. We’re diametrically opposed. So neither you or I will convince each other.

    ps: I saw the movie “The Wave”, very good indeed.

  • January 3, 2012 at 3:40 am
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    “the economy is good”

    Huh? Are you living in another planet, Julio?

  • January 3, 2012 at 12:44 am
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    Luis, I am glad you put some substance to your arguments let me address each of your points.

    First fallacy
    “There are several fallacies there”

    “inferring that, since it contains a fallacy, its conclusion must be false. It is also called argument to logic (argumentum ad logicam), fallacy fallacy”

    http://en.wikipedia.org/wiki/Argument_from_fallacy

    Second fallacy
    Let me begin with “your concept of ‘economic democracy’ is flawed because in a capitalist economy democracy stops at the factories doors”.

    Question. Who make products successful or fail ? who have the last word unto what phones we buy or toothbrush? Is it you or the factory? I think is you. You choose the things you like. You are the ultimate decision maker when it comes to all your personal things right? Do you buy a phone because a factory tells you to buy it? No, You buy it because that’s the one that you like. Because it has features you like and that you can afford. Noticed the type of fallacy you fall into here is call Straw man fallacy.
    I did not say that democratic economy is decided at the factory but when we purchase things
    I specifically said “We vote every time we buy.” You are changing what I said into something I did not say.

    http://en.wikipedia.org/wiki/Straw_man

    Third fallacy

    “Second, the ‘buy cheaper’ mentality you talk about also applies to the capitalist enterprise – minimize costs, maximize profits.”
    In any place did I said free capitalist enterprises do not do this? This is again Straw man fallacy.
    The difference is that in Cuba those who do the purchasing do not really care if what they purchase will not even work in a week or even the same day. If you can read Spanish read the comments in the article on Cubadabate. Let Cubans inside Cuba tell you how that works.

    Fourths
    “Third, your statement of “A state is too impersonal and too slow to do such things [problem solving]” is pure neoliberal ideology.”
    I did not hide from anyone that I am a liberal. Read my comments above. Grady asked me and I replied.
    Your paragraph is an affirmation but it does not refute in any way my statement. In fact I can proof my statement easily. Cuba does not produce cell phones, Cuba does not produce iPhones, and Cubans do not have a real need for an iPhone tripod holder. So you see? This is a problem they do not need to solve.
    Now notice the difference between systems? Here anybody sees a problem and can solve it. There only the party, the vanguard of the revolution, the leadership, the ELITE can solve problems because they have to appear as the saviors of the masses. Marxism is a religion. Do you get it?

    “There’s no proof whatsoever that a private service will always be more efficient than a public one.”
    Yes there is evidence right in front of your nose but you do not want to see it.
    Here it is
    Soviet Union –economy collapse
    Whole eastern Block – economy collapse.
    Cuba Economy collapse
    All of them socialist (Public ones) do you need any more proof?
    “Think globally, just for a second, and you’ll realize that dog-eat-dog capitalism is not worth exporting.”
    This is the leftist portrait of free capitalism. There is many good things with capitalism you forget.
    Mostly all the great technological inventions we enjoy including the computer you use to type your messages, the internet the networks come from this “dog eat dog capitalism” you mentioned. Most of the advances in medicine come also from it, the vaccines against multiple deceases and the cure for many others. Socialism unfortunately only manifest itself thru dictatorship and autocracy something really terrible for us human. You probably have no idea what I am talking about. I advice you to see a German movie called “the Wave” it will give you a good idea what is like to live in such systems.
    “You live in the richest and the most powerful country in the world. You know, the one whose 5% of the world’s population consume 25% of the world’s energy. So you are in the top of the global pyramid. The US model cannot be generalized.”

    Can the socialist model work? It is one where the elite gets to pick what they want and with their absolute power they purchase control of the whole society. They will try to control what music you listen to, what movies you see, what books you read, what you eat, what you wear and what person you marry. Do you think that’s not too much to ask? Don’t you think that is not going too far?
    There you have it Luis. That is the system I lived thru 26 years and that’s the one many of my compatriots have to suffer thru while you enjoy the extraordinary freedom that our system gives you.
    Appreciate what you have. You have no idea how valuable freedom is.

  • January 2, 2012 at 6:49 pm
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    There are several fallacies there, Julio. First of all, your concept of ‘economic democracy’ is flawed because in a capitalist economy democracy stops at the factories doors. At the workplace, there reigns the ‘top-down’ logic.

    Second, the ‘buy cheaper’ mentality you talk about also applies to the capitalist enterprise – minimize costs, maximize profits.

    Third, your statement of “A state is too impersonal and too slow to do such things [problem solving]” is pure neoliberal ideology. You have no idea of how harmful this principle did to Latin American countries in the 80’s and the 90’s. There’s no proof whatsoever that a private service will always be more efficient than a public one.

    You live in the richest and the most powerful country in the world. You know, the one whose 5% of the world’s population consume 25% of the world’s energy. So you are in the top of the global pyramid. The US model cannot be generalized.

    Think globally, just for a second, and you’ll realize that dog-eat-dog capitalism is not worth exporting.

  • January 2, 2012 at 5:21 pm
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    Luis here is the thing. For example let us assume you have an iPhone. Let us asume you like to take pictures or movies with an iPhone. Let us assume you like to get better quality than hand holding. It will be nice to have a holder that will allow to place the iphone in a tripod, Right?
    Well here is capitalism.

    Problem — Solution — Money

    http://www.kickstarter.com/projects/danprovost/glif-iphone-4-tripod-mount-and-stand

    In essence the nature of capitalism is problem solving. Each enterprise in one way or another is solving problems we all have. Some solve multiple problems some do a niche market, like this iPhone holder.
    When you get a state to solve all the problems . Is impossible. A state is too impersonal and too slow to do such things.
    Incidentally the site I have place a link is a sort of democratic capitalism investment!
    Or capitalism for the masses. Browse thru a few of the projects so you can see how some are successful and others fail. The ultimate success or failure comes from our voting dollars. We the people make companies fail or succeed. Economic democracy!

  • January 2, 2012 at 5:03 pm
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    Luis, the main difference between the two types is that in one an individual or a group of individuals get part of the profits and in the other the state gets all the profit. I believe the one the state control by an elite is worst. Because we have no chance to change them. If they make the wrong choices for all we have to live with them. In Cuba they always end up buying the cheap things. The cheaper factory the cheaper product and many times the cheaper does not really do the job.
    Did you hear about the issues they have with the internet cable from venezuela to Cuba?
    Is because of the buy cheaper mentality.

    I have live in both types of capitalism and this one wins in every aspect.
    I have the freedom to speak what I want. I can see you all have the freedom to not even like it and complain about it. I bet that none of you is afraid to say so. Because there is freedom guarantied by the constitution. Even if the economy was not good we still had the freedom. But as it is it turns out that the economy is good and we also have the freedom.

  • January 2, 2012 at 3:34 pm
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    I am amazed at your faith in capitalism, Julio, and I agree with Zeus – too much capitalism is bad, too much socialism is bad, and if you think they are the same, it’s your problem.

  • January 2, 2012 at 1:24 pm
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    I do believe socialism is a synonym for capitalism. I have explained this before but here it goes.
    Workers in Cuba when they produced a product they create a sizable profit. I really do not know how many workers are involve in the production of these toothbrushes and at what prices the factory sells them to the stores. But I am sure a profit is realized. This profit goes to the state. The state in this case is the capitalist. I think as long as there is appropriation of profit there is capitalism. I believe pretty much any system in existence today is capitalist. Even North Korea. The difference between them is how much ownership an elite group controls the profit thru state ownership. The more state ownership the worst it is because it becomes a monopoly.

    It is ok for the state to perform some functions and I think there are functions for state to perform that should only be done by a state. Like defense and police, others like education and health can be mix, part state part private. The state should also give guidance and set principles on communication and transportation or other tasks that will be too costly and that are necessary for a country. This is pretty much what occurs in the US.

    I also like you to notice that since dental coverage in Cuba does not come out directly of the individuals pocket they have no idea of the costs associated with bad oral hygiene. There is not cost benefit analysis for them.
    Notice I am not saying they do not pay for it because in the end they all pay for it.
    How much does it really cost to treat a dental problem in Cuba? We do not know. They may not even know themselves. How much could they save in dental problems if the toothbrushes where free? How much is the actual cost for one of this toothbrushes? There have to be an optimal price for the toothbrush. where people will be able to buy it (affordable) and that it will produce less cost of dental services. Maybe the savings to the state will be huge by doing so. I have too little information from this article this is what in math is call a lineal optimization problem.But I am sure they have many qualified people that can figure this things out.
    The question is why don’t they do it?

  • January 1, 2012 at 11:19 pm
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    Grady, what I meant to say is that state monopoly socialism becomes nothing more than state monopoly capitalism with power and access as a currency. As an anecdote I’ll mention what Fredrick Mishkin said during his departure speech at the Federal Reserve Board in 2008 – he said one of the reasons he enjoyed New York more than Washington D.C was that in New York he understood what people wanted, he could count it, and it was quantifiable. However, this was not the case in Washington D.C., where people vie for power, position, and access – things that cannot be easily counted.

    With respect to “capitalism” and “socialism” ideals is that they are just that. I would never categorically reject one or the other. However, what life and experience has shown me is that the more a nation tends toward one extreme or the other, the unhappier the people seem to become. Avoid dogma, be practical, and consume all things in moderation.

  • January 1, 2012 at 5:07 pm
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    Grady, I do not think the US have monopoly and in fact there are laws against monopoly in this country.

    I am not a Troskyist either. In any case I am a lover of freedom. So I am a liberal. Believe in free and fair elections and human rights and capitalism. But not the sick kind of capitalism that socialism is.

    I think what I said is clear. monopoly is bad for everyone even for the left. Did you noticed that this workers of the story in cuba may anyway end up lossing their jobs? All thanks to monopoly.

  • January 1, 2012 at 3:58 pm
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    Thanks, Julio, for an interesting series of exchanges.

    May I point out that both you and Zeus de Crete characterize Cuba as state monopoly capitalist, not state monopoly socialism. (In doing so, you also agree with all the Trotskyists and all the ultra-Lefts around the world.)

    Unfortunately, neither you nor he emphasize the point that the US is state monopoly capitalist. This strikes me as odd.

    If you say, Julio, that both Cuba and the US are state monopoly capitalist, then why do you say that the first doesn’t work and the second one does? If they are both the same mode of production, wouldn’t they both work–or not work–in the same way?

  • December 31, 2011 at 4:33 pm
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    Zeus, I agree with what you mentioned above. Note for example that on its own laissez-faire capitalism tents towards monopoly if no rules are placed against it. One company become usually dominant from the economical point of view in a market. We can witness this specially on the Mega Corporations that can act just like the totalitarian governments. Dictating prices, they can purchase labor or fix the prices for their merchandise.
    This is why we should place rules to not allow this. Monopoly leads to the same problems Cuba have now. Competition needs to be healthy.

    I believe this tendency towards monopoly is produced by normal human greed, the primordial impulse that guides capitalists. For free capitalism to be successful companies need competition. No one company should be dominant in any market. Giving us as a result optimal prices and better products and increasing salaries.
    What is not to like about this arrangement? The ultimate economical democratic decision is always in our hands. We vote every time we buy.

    With regards to the Cuban ruling elite. I believe the current ruling elite exchange their money for power. They have concentrated absolute power to rule. This is also their downfall. In an age of communication and specially of internet. They can not survive. Since absolute power can only be exchange to distributed power(democracy). Civil society in Cuba is waking up. If you can understand Spanish see for example the wonderful programs from “Estado de Sats ” or the many excellent blog analysis made by many Cubans inside and outside of Cuba.

    http://www.estadodesats.com/

  • December 31, 2011 at 12:31 pm
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    I agree Julio, absolute socialism is nothing more than state-monopoly capitalism, where the currency traded becomes power. However, unrestrained capitalism can also lead to undesirable outcomes – especially for small island nations where global markets can exert immense pressures. As an investor, I have become keenly aware that a market can stay irrational longer than one can stay solvent. In the case of entire countries, the fate of a people cannot just be put up to the highest bidder through laissez-faire economics. There has to be a balance between the economic security of individuals and market efficiency.

  • December 31, 2011 at 8:47 am
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    Great comments !

    Let me address some of the points raised.

    John, as you know countries can and do protect the industries they like to protect by placing tariff on foreign products why must a toothbrush produced in Cuba be more expensive than China? Cuban labor is paid less than China’s labor and one of the major factors in cost is labor cost.
    I disagree that the choice for Cuba is either to look like Haiti or to be full of prostitution and be run by a foreign power. I think Cuba can be like some other successful countries in Asia and Europe. I do have the strong believe that it will happen. Independent of the oil found or not. The greatest potential for Cuba is Cubans. I think Fidel Castro already realized that when he exchange Cuban labor for Venezuelan oil.

    Grady thank you for your comments. I only disagree in your comment about the US company producing a variety of toothbrushes as oppose to just one brush. I think if you look at it again like an eco system products do evolve. Natural selection occurs etc. I think variety is good. Each provides a different benefit. For example I use Oral-B that have bristles to massage my gum and in the back of the toothbrush have special surface to clean your tongue. I considered it an excellent toothbrush. Notice that the cheap Chinese toothbrush will never get my money since is too simple. It does only one function. While with my other toothbrush I can satisfy other related needs too! I think that is brilliant design!

    Zeus, multiple times I have ask for a definition of socialism. The closest thing I got is to a state that owns pretty much everything in a country (state monopoly). I have argue before that socialism is nothing else than state monopoly capitalism. So to me socialism is a sick form of capitalism a extreme. The cure for such system is free capitalism.

    Happy new Year to all of you

  • December 30, 2011 at 8:11 pm
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    I am a lifelong student of economics and I found this article incredibly interesting. As for John, socialism already works – in limited quantities. The problem with “socialism” and “capitalism” is that we attach dualistic definitions to the ideas. There is no country in the world that is absolutely “socialist” or “capitalists,” and any country that has tried to take one or the other to an extreme, has failed or had to change – peacefully or not. If Cuba is found to have oil, it may come at a high price if the leadership is not careful and simply attempts to maintain the status quo and secure positions for their children. The Norwegians have provided an interesting solution to the blessing and curse of oil: http://www.npr.org/blogs/money/2011/09/06/140110346/how-to-avoid-the-oil-curse

    As for the production of toothbrushes, there is no simple solution. Competition is not the cure-all, but in a supplier market that has been protected for as long as Cuba’s has, it may provide some significant productivity and quality gains. In addition, I think it would be healthy to allow some LIMITED imports with tariffs to help displaced workers while they retrain into other areas. Imports provide choice to consumers and also a source of fresh ideas for domestic producers to replicate – China has mastered this and could provide much guidance. As with everything in life, moderation is the key.

  • December 30, 2011 at 5:18 pm
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    Good article, Julio. You explain the theoretical working of competitive market toothbrush manufacture well. There is no doubt that state monopoly production, whether with toothbrushes or any other commodity, is inherently dysfunctional, and for the reasons you mention.

    When the people producing any product do not have something at stake regard quality and cost effectiveness, the whole productive chain is degraded over time. Historical experience backs this up conclusively. I would however like to add a few words of wisdom.

    Under monopoly capitalist state power, as in the US, the market for toothbrushes is satisfied by unbridled, unconditioned competition for corporate profits to absentee investors. This has led to ridiculous quantities of fancy new toothbrushes that are expensive and don’t do any better job at cleaning teeth that the older, plainer models. Vast amounts of money are spent to constantly redesign and to advertise these toothbrushes, and most of this is waste. This sort of gigantic waste is evident in virtually industrial sector, while mass poverty, pollution, unemployment and homelessness exists side by side with vast wealth being spent by the rich.

    It is not necessary however to have toothbrushes made under either monopoly capitalist competition or state monopoly socialist non-competition. Under cooperative co-ownership socialism, which would rely on both market conditioning and cooperative entrepreneurialism, the benefits of guided competition could be brought to the project of socialist construction. That is, there is a third way to run production, and it is based on the democratic ownership of industry and commerce.

  • December 30, 2011 at 3:37 pm
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    Of course for Cuba to have two privately-owned toothbrush factories it would have to be a capitalist economy: with free international trade. The result would be that within months all the toothbrushes sold in Cuba would be coming in from abroad: China probably. Yes, they would be cheap and better quality than the ones you describe. But, the unfortunates working in the current toothbrush factory: no doubt with antiquated technology and lack of raw materials would all be unemployed. In fact once you go down that slipery road, then Cuba would end up like Haiti at worst, or perhaps if the Americans exploit you for sugar, bananas and prostitution, then Cuba might end up like Mexico, if you are lucky.

    Don’t despair, Cuba is a shining beacon for all the world’s downtrodden: it’s true, you are! You give hope to all those that live like dogs around the world.

    Soon, in a few weeks, oil exploration will start off-shore, once the first barrel of oil is found the transformation of Cuba’s economy will be immediate: new lines of credit will be opened up: new factories and technology will be imported. Don’t give up on socialism, it is the only hope for mankind: that is why the American billionaires blockaded Cuba, it is because they know socialism, if given half a chance will work.

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