Poverty in the world decreases, but in Cuba it grows
The socioeconomic situation in Cuba is so disastrous today that a majority on the island would be happy if, by an act of magic, Cuban society returned to the living standard of the 1950s.
Except for Venezuela -now devastated by the Castroist regime imposed by Hugo Chávez- Cuba is the only country in the Western Hemisphere that is now poorer than in the mid-20th century. Whoever doubts it can consult all international statistics.
On April 9, 2017, British magazine The Economist revealed that in 1981, 42% of the world population was extremely poor (per capita income less than $1.9 a day), but by 2015 that proportion had dropped to 10.7%, and the number of the non-poor had increased by about four billion.
Meanwhile, the World Bank (WB) reported that in those 34 years the number of people in extreme poverty fell from 1,958 million to 700 million. The World Bank also informed that in 1990, 56% of the population in sub-Saharan Africa lived below the poverty line, but in 2013 it was 41%. And the Brookings Institution in Washington estimates that in the world one person comes out of poverty every 1.2 seconds.
This shows that communism means a scam. After 60 years “building socialism,” in Cuba the average salary does not reach $1.9 a day, and although there are certain subsidized services and food items, people are getting poorer instead of less poor, especially now with the crisis in Venezuela, the patron of the Cuban tyranny.
According to the National Office of Statistics and Information (ONEI in Spanish initials), in 2017 the average monthly salary in Cuba was 767 Cuban pesos, equivalent to 30.68 dollars. But the basic basket costs no less than $75 (1,800 pesos), as reported by independent journalist Ignacio Isla on October 8, 2018.
In other words, the average salary of Cubans only covers 42.6% of the cost of the minimum basic basket, which is equivalent to a deep poverty status, capable of competing with those of Haiti or Africa, in a country whose per capita income in 1958 doubled that of Spain.
How does each Cuban manage to survive? We have to plunge into the black market, the “commodity swapping”, or the “living off the effort”, as the popular slang depicts the juggling of ordinary Cubans to survive on the margins of legality. The latest tremor in the Marxist-Leninist earthquake is that the average salary of Haitians, 59 dollars, currently doubles that of Cubans. Who could have imagined it six decades ago?
Photo by Pawel Gruszka
The bad life of the ‘populace’: an ideal mechanism to stay in power
Although it is hard to believe, the Castro military and civil hierarchy feel more secure if ordinary Cubans; that is, the “plebeians”, are poor and not rich like them, the patricians. They sleep more soundly if people just scratch a living, depend for almost everything on the State, and the day – and their neurons – is consumed imagining how to “solve” their pressing needs.
That is, poverty for the “populace” is a key to social and political control. This explains the record longevity of Castroism. Their main tool for social control is a ration card (“Supply Book” in their parlance).
More unemployment than in the poor countries of Africa
The most deceitful data ever reported by ONEI is the unemployment rate (less than 3%). But when Cuba was elected as a member of the ILO’s Administrative Council for the period 2017-20, Havana admitted that of 7.0 million people at working age, 4.9 million work and the other 2.1 million are unemployed. This shows an unemployment rate of 30%, one of the highest in the world, higher than that of African countries as poor as Gambia (29.8%), South Africa (27.3%), Ivory Coast (23%) or Gabon (18%)
There are in Cuba more than two million citizens of working age -mostly young people- without jobs, roaming the streets, “inventing” how to survive. That is the typical “New Man” of Cuban communism. Among unemployment, discrimination on ideological and even racial grounds, and migration, the most valuable asset a nation possesses -human capital- is being squandered.
From leaders of progress to end of the line
According to UN data, in 1958 Cuba was leading in Latin American standard of living, with a GDP per capita of $356, almost equal to that of Italy and similar to that of Chile ($360). It is not difficult to assume that without Castroism, Cuba could today be one of the most advanced nations in America, with its economy coupled with that of the United States, as are Canada and Mexico.
ECLAC and FAO statistics indicate that in the 1950s the island was not only self-sufficient in food but also exported a surplus. The consumption of beef per capita exceeded 50 kilograms, one of the highest in the world, and third in Latin America only below Uruguay and Argentina. It was self-sufficient in milk production, tropical fruits, coffee and tobacco, pork, chicken, tubers, vegetables and eggs. It was the first Latin American country in fish consumption and third in calories with 2,682 daily.
In 1958 the country had the eighth place in the world in average salary in the industrial sector at $6.00 per day, above Great Britain ($5.75), West Germany ($4.13) and France ($3.26). The list was headed by the US ($ 16.80) and Canada ($ 11.73). These are all figures registered by the ILO.
Statistics from the former Ministry of Finance indicate that Cuba exported more goods than it imported and had a surplus in its trade balance. It was the Latin American country with the lowest infant mortality rate and the one that dedicated a highest percentage of public spending to education, with 23% (Costa Rica, 20%; Argentina, 19.6%; and Mexico, 14.7%). In 1953, France, Great Britain, the Netherlands and Finland had proportionally fewer doctors and dentists than Cuba.
With one vehicle for every 40 inhabitants, the country ranked second in Latin America in number of cars. It was a leader in television, with 28 inhabitants per TV set (third place in the world); and had the largest length of railroads in Latin America, with one kilometer of track for every 8 square kilometers.
Neither a modern highway nor a national railway in 60 years
It wouldn’t be idle to remember that Cuba was the first country in Latin America to have a railroad, in 1837, 11 years before Spain. Today Cuba’s railways are in a dismal shape. The money that the Kremlin allocated in the 70s to build a 2-way railroad along the island, Fidel spent it on military interventions in Angola, Namibia, Ethiopia and guerrillas in Central and South America.
On top of all that, the only highway that goes from Pinar del Rio to Santiago de Cuba is the Central Highway (1,139 kilometers long), built 87 years ago under then President Gerardo Machado. The National Highway, started in 1973, has only 597 kilometers completed, less than half its expected length.
Photo by Pawel Gruszka
Balance of the ‘revolution’
The balance of the “revolution” is to have shattered everything that Cuba had achieved since independence. Castro converted to state ownership all industries, commerce, the media, banks, public transportation, and almost 80% of arable lands. The production of everything collapsed. The food shortages did not amount to a famine because Moscow began to subsidize the dictatorship due to its geopolitical importance in the Cold War.
Today, with double the population, Cuba produces half the milk that in 1958 (960 million liters). From almost seven million heads of cattle in 1958 (one cow per capita), there are now 3.6 million heads of cattle (three inhabitants per cow). Before, Cuba imported 29% of its food; now it imports 80%.
In the socioeconomic field, Cuba is in negative balance, several points below zero. First, the country will need to be rebuilt.
Literarily speaking, the island will make a “Journey back to the Source” (Viaje a la semilla) as narrated in the homonymous short story of Cuban writer Alejo Carpentier, which begins with the death of the protagonist and ends with his return to the womb. Cuba will have to be reborn.
From low intensity democracy to totalitarian dictatorship
It could reasonably be argued that even with the highest standards of living in Latin America, in 1958 Cuban society suffered inequalities -to a lesser degree than the other nations in the region, but an undeniable reality then- in access to the above-mentioned expanding well-being.
It could also be said that Cuban democratic institutions were not yet solid enough to contain the opportunism of corrupt politicians, greedy military leaders and citizens passionate about the revolutionary culture of violence as an expedited way to achieve change.
But the Castros’ leadership replaced a seven-year dictatorship to impose a regime of communist terror for six decades, without political and civil rights, with numbers of murdered, executed, tortured, imprisoned and exiled –exiled had not existed before- higher than those generated by the sum of the two previous dictatorships (Machado and Batista) that occasionally emerged during the Republican period in the previous 56 years.
Not even the Communist Party has the power
But the new type dictatorship that was to be implemented had a secretly private nature. In that regard, an elementary question is of the essence: If the Constitution proclaims that the Communist Party (PCC) is the highest expression of power, doesn’t it have the force to remove Raul Castro as First Secretary and undertake profound changes similar, say, to Vietnam’s “Doi Moi” (renewal)? What power forces a people to wait for the tyrant to die for it to happen?
The PCC has de jure that power, but not “de facto”. The highest authority in Cuba is not the PCC but a small group of officers who in fact make up a Military Junta. Led by Raúl Castro and his closest relatives and acolytes, that military ‘cream of the crop’ makes all the important decisions, despite the fact that it has no institutional corporality. It is “invisible” and operates above the law, the Constitution, the one-Party-State, the government, the Parliament, the worldly and the divine. The narrative about the triumph of a “socialist” revolution in Cuba is just a myth that veils the private essence of the dictatorial regime that was implanted after 1959.
Billions of dollars just to start
The initial task of the first post-Castro government will be to make an inventory of the national cataclysm.
The devastated national infrastructure will have to be rebuilt, expanded and modernized: highways, railroads, ports, airports, cruise terminals, telecommunications systems, sewage systems, bridges, roads, streets, post offices, hospitals, public buildings, electricity generation plants, fuel plants and public lighting.
Truly private companies will emerge that will contribute to the national welfare by providing dissimilar products and services: new media outlets, schools, universities, cinemas and theaters, gas stations, pharmacies, shopping centers, hotels, insurance companies, and social services networks of all kinds . The reconstruction and rehabilitation of the aqueducts will be crucial. The 2,194 kilometers of the battered water supply networks in Havana leak out up to 70% of all water pumped in, according to Granma daily.
At present, it is difficult to calculate the cost of such reconstruction; but it would be an impossible task under the existence of two currencies. Just to give an example with an idea of the magnitude of the investment: one million new homes will have to be built; assuming a minimum cost of $ 30,000 each we are talking about $30 billion in real estate alone. To that we must add the corresponding infrastructure that this urbanization entails: streets, water, electricity, parks, schools, shopping centers, and many other amenities.
Is a Cuban Renaissance possible?
That huge takeoff will not be state-run but private. In the 15th and 16th centuries, the avant-garde of the European Renaissance decided to reinvigorate the forgotten Greco-Roman civilization and culture (destroyed by the barbarian invasions), and take the world out of medieval backwardness to build modernity.
Likewise, Cuba will have its Renaissance. That will only happen with the liberation of productive forces under the rule of law. It was the European self-employed from the 16th to the 18th centuries who gave birth to the private sector and the free modern enterprise. And they brought Europe out of the 1,000-year long feudal-medieval night. Since free enterprise disappeared in Cuba, it will also have to be created again. But in this case, the investments of the micro entrepreneur will work in parallel with the medium and large capital investments.
There are no SMEs in Cuba
There are about 500,000 self-employed workers who absorb 12% of the national labor force, according to ONEI, but in primary services that are not professional, industrial or technological, because there are no so-called SMEs in Cuba (small businesses and medium-sized companies) that dynamize the economy around the world and generate more jobs than others.
More than 90% of companies worldwide are SMEs according to the UN International Council for Small Business. They generate between 60% and 70% of employment worldwide and 50% of the GDP of the entire Earth. And according to the International Monetary Fund (IMF) on October 14, 2018, the emerging countries, which have more SMEs, today generate 60% of the world GDP. That is, they produce more than the First World.
Photo by Pawel Gruszka
The self-employed Cubans will ‘reinvent’ the country
In Cuba, SMEs are prohibited, but the self-employed are their embryo. It will be the enterprising Cubans, today harassed by the dictatorship, who with the participation of international and national banks, and foreign and Cuban-American investors, will become entrepreneurs and lift Cuba from its ashes.
It will be the self-employed who will “reinvent” the largest of the Antilles because they have the minimum know how to do so. And this will be the vindication of their parents and grandparents, who were described by Fidel Castro as “lazy” on March 13, 1968, when he suppressed all 57,280 small businesses that still subsisted and prohibited self-employment.
In fact, the weight of Cuban entrepreneurs in the reconstruction of Cuba has already been demonstrated. The firm Havana Consulting Group revealed that in 2017, private entrepreneurs took out $2,390 million from Cuba to invest or spend in other countries. Had there been favorable conditions in the country, that capital would not have gone anywhere in search for better horizons.
Of course, many of the infrastructure works will be carried out by the new State in consultation with Cuban and foreign private investment capitals.
A priority will be housing, since there is a deficit of one million units and everything related to them. The houses and apartments require urbanization of new settlements with electricity, water, schools, pharmacies, streets, shopping and entertainment centers, public spaces and parks. Between new buildings and the necessary infrastructure we are talking about billions of dollars.
Human and social capitals: “remittances of knowledge”
The importance of human capital –an accumulation of knowledge, skills and experiences that allow creating and developing productive work- became evident in the case of the first Cuban exiles, who were confiscated all of their properties and bank accounts before their departure. They arrived -literally- without a penny in the host countries; but gradually recomposed their economic capital, based on a skilful combination of human and social capital which they already possessed on arrival.
In a future Cuba, human capital, all this treasure trove of relations, knowledge and experiences accumulated by the two million Cubans living outside the Island will be a fundamental component for the reconstruction of the country.
How much will the reconstruction of Cuba cost?
It is difficult to calculate it accurately. But two things are clear: 1) the longer time spent under Castroism, the harder and more expensive will be the reconstruction of Cuba; and 2) the protagonist of that rebirth and growth will not be the State, but the liberal “invisible hand” of Adam Smith.
At the end, the message comes up easily if we parody from Fuenteovejuna -recreated by Lope de Vega- the response of the Andalusian people to the judge when he asked who had killed the Commander: “Who will rebuild Cuba? The private sector will, sir. “
Author: Roberto Álvarez Quiñones
Photos by Pawel Gruszka