Discovering personal independence

Cuba: Discovering personal independence
By Ronald R. Cooke
web posted October 12, 2009

For an economist, Cuba has been a perfect laboratory experiment. Fidel
Castro was a charismatic leader, Cuba enjoyed economic and political
support from Russia, it had a closed economy, and the revolution gave
the government absolute control over the people. The government
confiscated millions of acres of land and established collective farms
under centralized planning. It all came together to create the perfect
experiment in socialism.

And for awhile, it seemed to work. American liberals gushed with
euphoric descriptions of the people's paradise. If anything went wrong,
it was obviously America's fault.

But something was missing. Personal independence and the economic
opportunity that comes with the freedom to work for yourself. The chance
to create personal wealth. The pride that comes with being able to own
the results of your labor.

An article on the BBC web site by Michael Voss, BBC News, Camaguey Cuba,
entitled "Seeds of change in Cuban farming" describes a new Cuban
revolution. In a bid to boost food production and reduce costly imports,
Communist Cuba is leasing state-owned farmland to individual farmers and
co-ops. Approximately 4.2 million acres will eventually be available. So
far about 86,000 applications for land have been approved, with tens of
thousands more Cubans hoping to participate.

Socialist state-run collective farms have allowed as much as half of the
land they manage to become overrun with weeds. Although these farms
control roughly two-thirds of Cuba's farm land, they produce only one
third of the food. Collective farm productivity is so bad, Cuba has been
forced to import over $2 billion a year in agricultural products. Much
of that food could be grown locally.

Fidel Castro was devoted to socialist ideology. But socialism always
fails to create economic wealth for a nation's workers, and it severely
limits the wealth of the middle class. Backed by the police power of the
State, oppressive and inept bureaucracies force their will on the
people. This leads to frustration with the "system" and indolent
behavior. (See
http://tceconomist.blogspot.com/2009/02/is-this-end-of-wealth-creation.html)

Fidel's brother, Raul Castro, appears to be more pragmatic. As
President, he has been willing to introduce reforms that give Cubans a
chance to work for personal gain. Incentives, like the profit motive and
productivity-related pay, are reappearing after half a century of an
idealistic experiment in egalitarian socialism.

It is back-breaking work to make long neglected land productive. Much of
the available land is covered in a thick, impenetrable, tall bramble
called "marabu". It has to be hacked, burned, and uprooted before the
fertile land can be used to grow fruits, vegetables, and cattle feed.
Private farmers form co-ops to share capital intensive farm equipment.
The Cuban government has decided it is now legal for them to hire farm
workers, increasing the available pool of farm labor.

These farmers are a living experiment in free market capitalism. They
earn more money because they sell more food. According to Voss, average
earnings have risen to around $200 a month, roughly 10 times the
national average.

If Cuba continues to introduce free market reforms, the door will be
open for the Cuban people to achieve greater personal prosperity. If
Raul wants an economic model to follow, he should spend some time with
Luiz Inacio Lula da Silva, the President of Brazil. Lula, as he is
known, is working to blend capitalism with populism in a regulated
economy. ESR

Ronald R. Cooke is the proprietor of The Cultural Economist. This is his
first contribution to Enter Stage Right.
ESR | October 12, 2009 | Cuba: Discovering personal independence (12
October 2009)
http://www.enterstageright.com/archive/articles/1009/1009cubapersind.htm