Saturday, January 18, 2014
How to understand Cuba
John Paul Rathbone traveled to Cuba and has an interesting article on the FT. He begins with a striking piece of data: "in a dusty Havana parking lot, a group of Cubans examine the prices of the modern cars they can now buy from the state for the first time: $263,000 for a 2013 Peugeot saloon that retails in Europe for $30,000". Yet his overall interpretation may not be the most accurate. According to the mainstream view on Cuba that he shares, Cuba is moving to slowly and timidly. Many liberalization reforms do not work because they are reversed or implemented too slowly. This type of approach assumes that a fully functioning market economy should be the ultimate goal and the faster you move to it the better. Yet Emily Morris, a UCL researcher,in her dissertation (and upcoming book) calls for a very different interpretation of Cuba. Using evolutionary economics, she shows how the Cuban government has always adopted a pragmatic strategy of "trial and error" and gradual adaptation. The issue is how to confront the problems of the present and gradually improve productivity, but without creating major disturbances or questioning the major objectives of the overall model (some level of equity and social provision for the whole population). Of course, this approach is not always the most efficient in economic terms but may be the most successful and politically savvy in the long run. In conclusion, we should evaluate Cuba in its own terms and considering the political constraints and development goals as a central component of the process and not simply as obstacles to a more market-friendly environment.