These impressions of contemporary Cuba were penned by Guyanese, Dr. David Pollard shortly after he visited the Caribbean island in December 2012. The document was sent as a letter to the Cuban national newspaper Granma but was never published.
My daughter and I spent last week in Cuba for the first time. Having arrived on Saturday we were eager, on Sunday, to do a short, walking tour of Habana Centro. We started where Prado meets the Malecón, went down to and around the Capitolo building and returned to the Malecón along Avenida de Italia. We were delighted then shocked, saddened and finally driven to write this letter.
Having returned from study abroad to work in Guyana in the 80s when it was in the terminal throes of its own imperfect and unsuccessful experiment with Caribbean socialist economics, I have had much time to ponder the Caribbean socialist experience. Only a few years before I had joined Forbes Burnham’s family through marriage which afforded at least some insight into the responses of Caribbean elites to the economic issues posed by socialism. So I was perturbed when at the end of our short tour my daughter turned to me as we sat on the sea-wall staring soberly at the bedraggled, sunset-lit city. “Thanks for taking me on that walk,” she said. “It is good for me to see what political failure looks like!” It is a challenging view but one worthy of a considered response.
It doesn’t take long, looking at the juxtaposition between the parts of Habana Vieja funded by the UN’s restoration programme and the dangerously neglected and dilapidated buildings in which the people live, to understand that Cuba’s political economy has failed. Cuba 1.0 is, today, a case study in dialectical materialism in microcosm. It is at the point at which the system’s internal contradictions have become overwhelming. ‘Political failure’ is not too strong a phrase to describe this state of affairs. It is time for reconstructed socialists the world over to help formulate a new evolution of this Caribbean icon of 20th century socialism that is fit for the new century. It’s time for Cuba 2.0.
So Cuba needs a reboot of its politics and economy. What, in broad-bush, macro terms, should the elements be?
1) The introduction of property rights for citizens in 2011 needs to be accompanied by a programme of privatization of state owned housing. The success, paradoxically, of housing privatization in Margaret Thatcher’s Britain in the 80s showed its effectiveness in building the people’s commitment to and pursuit of economic growth and in engendering economic transformation on a national scale. It gives the citizenry a stake in the economy. A man’s home is, it seems, not so much his castle as the embodiment of his stake in the national economy and he will work hard to build it. Funding the privatization of state housing will require the introduction of a system of new mortgage banks through which citizens can get loans to fund home ownership and development. The mix of mortgage banks should include state-owned, privately owned and co-operative ownership perhaps of the sort found in UK building societies.
2) Raúl Castro’s programme of reforms to redefine the boundaries of state enterprise and rethink the role of private and co-operative enterprises must be widened and deepened rapidly. Despite the evident need for rapid progress, careful thought should be given to the design of the new markets and other economic structures that will necessarily emerge from the reform process. For example the property law reforms in 2010 created, by default and without much thought it seems, a real estate market that anyone who cares to stroll the Prado can see in action. It is an ad hoc, chaotic business with little transparency (unless you happen to be there) and therefore little price consistency. Not the way to go if you are setting a policy framework for a new regulated market these days.There is much international, technical expertise in the design and regulation of markets of which Cuba can avail itself. (Clearly there are still many glaring problems in the functioning of markets as was so brutally exposed by the global financial crisis in 2008.) Surely, however, we can do better today than handwritten notices hanging from trees on the Prado if we have a blank slate with which to start.
3) The dichotomy of two separate, national currencies operating in the same economy must be rapidly resolved to leave a single, convertible currency. In other words the CUC must become the single Cuban currency. The reasons for this are economically fundamental and hinge on bringing clarity to the resource and asset allocation problem that underpins the efficiency of any economy. It is difficult enough for the state and citizenry to decide on what tasks their limited labour and resources should be expended without the added complication of having two metrics in which to measure the results! Economic clarity aids efficiency. In the context of Cuba today and in the future the non-convertible peso is a damaging, monetary distraction that hinders economic decision making and frustrates many.
4) The government must increase public sector salaries even as jobs are moved from the state sector to other economic entities like private corporate companies, co-operatives and the like. The old Cuban joke about pretending to work for the government because the government only pretends to pay must, in short order, become something more like “a real day’s work for a real day’s wage”. Public sector bureaucracies everywhere have come to learn that paying less than a living wage does not get you some pro-rated amount of your employee’s effort. It just gets you nothing or, even worse, a culture of casual corruption.
5) Further, the state should not underestimate how much training, guidance and support the new, reform driven, non-state sector will require if it is to become an effective additional source of economic production. Despite their likely enthusiasm it will not be a simple matter for many new entrepreneurs to switch seamlessly from paid state employment to profitable, private enterprise. The state should and must help their transition in the interests of national economic output. The whole playbook of business development tools should be considered; the establishment of business parks, entrepreneurial hubs, business management and skills training, business development banks, equity markets for fund raising and valuation, small business associations and networks …
6) Cuba should build relationships with the IMF/World Bank/IADB. These organisations are, these days, generally useful and knowledgeable about macroeconomic policy formation and implementation in developing economies. In Guyana in the 1990s, for example, they supported the transition to convertibility of the currency (a first in the Caribbean) and latterly have done much to enable the debt reduction programme that is helping re-build its international credit-worthiness. The technical skills, diminished ideological hubris and increasingly analytical, results based culture that is growing in these organisations are valuable and useful. Cuba 2.0 will of necessity be a more open macro-economic entity then Cuba 1.0 and this is an area in which the IMF/World Bank/IADB can provide worthwhile support.
7) Cuba 2.0 and its culture of economic liberalization will drive changes in the nature of democracy in Cuba. My advice would be to let those political changes occur first and most completely at the local level. Local democracy is a powerful and evident expression of local political will. Local politicians have to deal with and manage things that matter to people day to day in an environment focused on delivery. It is an extremely useful training ground in the skills of political management and public administration that would have sadly diminished during much of Cuba 1.0 if the experience in Soviet republics and other transitional states is any guide. Political change at the top should be deferred to provide ‘cover’ and a framework of stability while the skills and political personnel of the new democracy are established through local democratic action in support of the new economic model.
8) Prevent corruption! In the pantheon of economic behaviours that can distort optimal resource allocation corruption is likely to be the worst. The firm belief is that the best, real defence against the growth of corruption is transparency led from the top. So, for example, the top echelon of government should all complete an annual, public declaration of their assets while in office and even for some years afterwards. For other senior government and state enterprise leaders a less public method of annual disclosure may be more appropriate. For this an Integrity Commission of eminent citizens can act in loco parentis for the people by vetting annual declarations of assets by senior managers. Finally, the measures that the state institutes to prevent corruption should also be demanded of other significant corporate entities (private or otherwise) in the economy.
9) In addition Cuba 2.0 must work hard to preserve the twin socio-economic pillars of Cuba 1.0 the deservedly famous achievements in education and healthcare. Whatever is new must not destroy that which is of enduring value from the old for it is education that will ignite the economic creativity that is so necessarily a part of this plan, as it will provide the skills to manage its implementation. And it is reliable, universal healthcare that will, amongst other benefits, help ensure good labour force availability and productivity by diminishing absences due to illness.
There is more of course but this list will suffice for now. Cuba 1.0 was, in its day, an icon of socialism and non-alignment for the Caribbean. However the feeling now is that the Cuban people need a new Cuba. Even the casual visitor can sense their urgent material and almost spiritual need for Cuba 2.0. The past must pass. Perhaps Cuba 2.0 through the success, fairness and creativity of a new economy will become once again an icon of reconstructed socialism for our peoples and these times.