Cuba: More user friendly socialism?

The Cubans can buy now the computers or cell phones. But can they afford them?

Questions:

1. The Cuban government allowed people for example to buy the computers or cell phones. In your opinion is it in some way significant change or regime is only trying to make the socialism on Cuba more “user friendly”?

2. The average monthly wage is about 17 USD on Cuba. Which social group could afford to buy the computer, to stay in the luxury hotel or to go to Varadero beach?

3. Could the  recent reforms (if we can call it reforms) contribute on economic growth?

Answers:

Terry Maris, Professor of Management, College of Business Administration, Ohio Northern University, former executive director at the Center for Cuban Business Studies

1. This is significant for symbolic reasons, but will produce little significant benefit for the average Cuban who simply cannot afford to purchase these items. In his first public address as President of Cuba (February 24, 2008) Raul stated, “In the next few weeks, we shall start removing the most simple excessive regulations and prohibitions.” The use of the word “excessive” is remarkable for the fact that it is an admission that some, if not many, regulations were too harsh.

2. Once computers are stocked in the stores (which currently they are not) those who will line up to buy them will be the Cubans who already have accumulated hard currency, that is CUCs rather than pesos. These are the people whose relatives living outside Cuba have brought or sent them dollars, euros, etc. There is already a public beach in Varadero of much lesser quality than the white sands in front of the plush resort hotels to which Canadians and other affluent tourists. Given the tourism apartheid that currently exists in Cuba I predict very few Cubans will be checking in any time soon.

3. The recent “reforms” will undoubtedly serve to benefit some Cubans, but these actions will prove to be woefully inadequate in stimulating the economy. For the Cuban economy to have a real chance at rebirth it will be necessary for the government to create a safe climate for foreign direct investment on a scale much greater than that which now exists. A major obstacle to economic recovery is Cuba’s staggering foreign debt. For example, Cuba currently owes Russia (the Soviet Union) $819 million in hard currency debt and over $20 billion in non-convertible debt.

I predict Raul’s “reforms” will likely have a modest placebo effect, but nothing more.

Mark Sawyer, Associate Professor of African American Studies and Political Science, UCLA

1. It is both. It allows people to be more “modern” and have more real freedom communicate and purchase things that make like easier.

2. Those who receive remittances from abroad and/or who are able to  get hard currency from work either legal or illegal.

3. My guess is yes. But of course I am not an economist. But  especially the land reform may contribute to growth.

Philip Peters, Vice President, Lexington Institute, Advisor to the Cuba Working Group in the House of Representatives

1. Sure the changes are significant.  It used to be that Cubans could not stay in hotels even in their own country.  That restriction is gone, and that has to be noted as  progress.

2. There are indeed Cubans who have disposable income in hard currency: taxi drivers and other entrepreneurs (legal and not), employees of foreign companies, people who receive remittances.

3. Hotels, phones, and computers are not the top economic concerns of the average Cuban.  Lifting these restrictions is positive but does not generate growth, new jobs, or higher income.

In the agricultural sector, there are some initial moves that seem designed to liberate productive energies.  Efforts like that are needed in all sectors to tackle the growth and employment challenges that the government itself has identified.  That way, Cubans will have not just the option, but also the ability, to shop as they wish.

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