Communist Cuba's Collapse (Really, Are You Surprised?)

Michel Kelly-Gagnon
President, Montreal Economic Institute (iedm.org). The views reflected
in this column are his own.

Communist Cuba's Collapse (Really, Are You Surprised?)
Posted: 04/12/2012 3:27 pm

The weeks surrounding spring break see floods of Canadian tourists
flocking to Cuba, one of our most popular vacation destinations. Each
year more than a million of us visit its beautiful beaches, more than
from any other country.

Sadly, few of those tourists ever leave their vacation compounds. If
they did, they would see a massive transformation taking place in this
island nation, which many once hailed as a budding socialist paradise.

Communist Cuba, beset with an oppressive bureaucracy, an anachronistic
cradle-to-grave welfare state, a hopelessly subpar economy, and
widespread poverty, is gradually shifting to private sector solutions.

Starting when Raul Castro "temporarily" took over power from his brother
Fidel six years ago and culminating with the Communist party's approval
of a major package of reforms last year, Cuba has taken a series of
increasingly bold steps to implement free market reforms.

These range from providing entrepreneurs with increased flexibility to
run small businesses, and use of state agricultural lands by individual
farmers, to the elimination of a variety of burdensome rules and
regulations.

Ironically, there is a lot that Canadians, who are constantly debating
their government's involvement in the economy on a variety of fronts --
ranging from health care and retirement savings plans, to the armed
forces' use of private sector trainers -- can learn from that shift.

As anyone who has spent any amount of time in Cuba outside the tourist
compounds can tell you, socialism, particularly the unsubsidized version
that we have seen since the fall of the Soviet empire, has been a disaster.

On paper, Cubans have access to free education, medical care, and
guaranteed jobs. The reality is far grimmer. Many of Cuba's supposed
accomplishments are in fact non-existent in real life. The hospitals
which supposedly offer free care only do so quickly and effectively to
the politically connected, friends and family of staff members, and to
those who pay the largest bribes, as explained by Sergio Díaz-Briquets
and Sergio, Jorge Pérez-López in their book, Corruption in Cuba.

Even for those with the money, advanced hospital equipment and
medication is almost non-existent, or outrageously expensive.

That "free" university education that many Cubans get in technical
fields is rarely worth much more than what students pay for it. There
are few books in the country's schools, and those that can be found are
years, if not decades old. The country's libraries are empty, with
illegal private libraries being the only place that one can find modern
works.

The guaranteed jobs that all Cubans have are fine, until you realize
that the average salary is in the range of $20 a month.

Worse, the food and other staple allotments that Cubans have long felt
entitled to, have shrunk over the years. Tourists often marvel at how
thin and healthy Cubans look. Sadly many of them are outright hungry.

The failure of Cuban communism can be seen both in the number of people
who want to leave the island, and in the government's systematic refusal
to issue exit visas (which are not needed in almost any other country)
for fear that its talented professionals would abandon the country en masse.

In short, the government has had no choice but to look for new ways to
get its economy going again. In the past, it has tried broad central
planning measures ranging from a focus on industrialization, to devoting
massive efforts towards its sugar industry. None of these worked well.

However in the early 1990s, following the end of Soviet subsidies, the
government opened the island to international tourism and investments by
major private sector hotel chains. That move has been a huge success.
The 2.7 million tourists who visited there in 2011 provided Cuba's
largest source of foreign currency. Ironically, another of the island's
largest source of income is also related to free markets: the
remittances that Cuban immigrants in the United States send their
families back home.

Similar efforts were made to open other areas of the economy to
companies like Canadian-based Sherritt which runs the Moa nickel mining
concession and other interests there.

Detractors say that Cuba's "descent" into market solutions may put some
of the island's very real accomplishments, notably those related to life
expectancy, child nutrition, literacy and other education milestones at
risk. But those accomplishments were likely greatly exaggerated to begin
with.

That's because governments of countries like Cuba that lack a free press
(Soviet bloc countries were a prime example) have tended to fudge, if
not outright falsify economic and societal achievement numbers.

Others might say that because Canada and Cuba are in such different
stages of economic development, we have little to learn from this poor
island nation. However, Canadians who bathe in the Cuban sun ought to
take a moment to actually visit the country they are in.

A brief reflection upon the disastrous job that government did there
would provide valuable insights as to whether governments should be
doing more (or less) here.

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