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Another Perspective
Economic Libertad?
Cuba’s baby steps toward liberty.
Millions of economic transactions take place every hour in the United States, too many for any central committee in Washington to handle or even Understand, even if they all graduated with honors from Harvard’s Kennedy School of Government.
For the most part, the economic transactions happen instantaneously, automatically sending market signals that organize production according to size and color, spontaneously determining losses, profits, wages and prices.
And so, if we want organic pomegranate granola with cherries, it’ll be there, right on time for breakfast every day on the capitalist shelves. It’s the same with red Corvettes or caramel ice cream with cinnamon bun dough and a streusel swirl.
It takes a little longer to get it right once the central controllers take charge of deciding things.
Starting on October 1, 2011, some 52 years after Fidel Castro shot his way to power in Cuba, it finally became legal for some poor guy in Cuba to sell the 1965 Russian-made Moskvich piece of junk he’s had sitting up on blocks in his front yard for the better part of half a century.
Previously on this island of alleged power to the people, Cubans were permitted only to sell their own automobiles if they were manufactured before the 1959 revolution.
By some strange twist of collectivist logic, reselling any car that was produced in the post-revolution period was viewed as an act of capitalist sabotage, a crass act of individualism and greed.
As a result, it paid to keep a legally transferable ‘57 Chevy on the road, even if it was held together with coat hangers and duct tape. That’s why the streets of Havana look like those shopping center parking lots in the U.S. on Sunday afternoons in the summer when the vintage car guys get together in their shined up ‘59 Impalas and ‘56 T-Birds to sit on lawn chairs, drink beer, and listen to Chubby Checker.
But now things will be different in Cuba, more like a free market, according to President Raul Castro’s speech to the National Assembly in December 2010, pushing his effort to cut bloated government payrolls and encourage private sector initiatives in Cuba’s failed economy. “The state has no business getting involved in a matter between two individuals,” he proclaimed, sounding more like Ron Paul than brother Fidel.
The new decree from the Cuban government allows someone to sell his own car from all years of production, even post-revolution models, and also permits, with a progressive tax penalty, the ownership of more than one car per person.
The Cuban government, additionally, wants 8 percent of the price of each car sold, with buyers and sellers each to pay a 4 percent tax. Try to cheat on that and you’ve got to worry about some neighbor on the Committee for the Defense of the Revolution getting a few extra pesos in his government paycheck for squealing.
New cars can be only sold in state-owned monopolistic dealerships. The state-established price on a new Hyundai runs around $30,000, not counting the bribes that may be required to get the right color and a half-speedy delivery.
The average income in Cuba is $20 a month, so a $30,000 Hyundai is equal to the total income for 125 years of the typical Cuban worker. If the worker could manage to save 10% of his pay every month, he’ll have the $30,000 in 1,250 years.
Under the new rules, any buyers of a new car will be required to prove they made the money for the purchase in a government-approved occupation.
That might not be so easy. Under various government dictates, for instance, hundreds of occupations were disapproved for Cuban women, including the jobs of grave digger, house painter (unless the house was extra short) and deep sea diver.
It was legal under the government rules to open a restaurant, but anything bigger than 12 chairs for customers was prohibited, no matter how much the neighborhood liked the food.
Employees in a restaurant were also illegal — too hierarchical for the collectivist mindset — so someone seeking to be a restaurateur had to be like one of those multi-armed Hindu deities, able to simultaneously seat customers, clean tables, cook the food, serve drinks, pay the bills, play the bongos, and wash the dishes.
About the Author
Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise and an associate professor of economics at Robert Morris University in Pittsburgh.
Letter to the Editor View all comments (21) | Leave a comment
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c. j. acworth| 12.22.11 @ 6:28AM
Interesting about the cars. Sounds like where we are headed. You can only buy from a Government-approved/owned maker (call it, oh, I don't know, Government Motors or GM for short) and the only ones available will take the average Joe about 1,000 years to pay for, but at least they will be "green", and add little carbon to the environment. Until they get into a minor fender-bender and the high-tech batteries burst into flames.
Brian Mc| 12.22.11 @ 7:17AM
And how dare you try to sell your carbon-spewing vehicle while there are so many who, through "no fault of their own", do not have the same opportunity to make a profit.
Mike D.| 12.22.11 @ 9:31AM
Heres the Volt story. Typical when Government gets involved. Next step to fix the problem will be to force everybody to buy one, of course all for their own good!
http://www.michigancapitolconfidential.com/16192
TrueBlue| 12.22.11 @ 12:51PM
There's a reason Chevy has been pushing the government to raise taxes on gasoline to push the prices up.
oldfart| 12.22.11 @ 7:49AM
Welcome to the Obama/OWS future for the USA. It took Castro 52 years to figure out it does not work - I wonder how long it will take the Saul Alinsky crowd to admit progressive/socialism won't work and how many people will suffer for it.
VonMisesJr| 12.22.11 @ 9:24AM
It worked just fine for Fidel and his inner circle. This is not lost on our Dear Leader.
Jacob R| 12.22.11 @ 11:20AM
Our Dear Leader has just put up a Holiday Tree in honor of our Dear Leader. Are you suggesting that you aren't eternally and infinitely grateful, indebted and humbly obedient for what our Dear Leader has done?
Timothy L. Pennell| 12.22.11 @ 9:06AM
Hey. Even a Journey of 10,000 miles, begins with ONE STEP.
It's a Start.
Moe Blotz| 12.22.11 @ 9:15AM
Right in, then you have to walk before you can run.
Dave | 12.22.11 @ 9:23AM
Actually, this column on Fidel's Excellent Adventure ought to be required reading for any kid entering his freshman year of high school civics and history. Unfortunately in today's government schools, chances are the teachers unions and re-educationista movements would file any truth telling about the effects and outcome of prolonged communism as derogatory to Caribbean Hispanics and their culture, and charge the teachings under federal hate speech legislation, prosecutable by law.
You say there's nothing like that in federal hate speech legislation? Well, four more years of Dear Obama and you'll have it. In spades.
For now, the federal plan is to keep 'em dumb and livin' on the government dime. That way, it's easier to control the sheep.
Say goodnight, Beaver.
John Navratil| 12.22.11 @ 11:05AM
Dave,
High School Civics? Do you mean "like how a bill become a law" and all that rot? The government schools aren't teaching that any more. It's too dangerous for the hoi polloi to have the sort of seditious knowledge.
History? A course in U.S. and your particular state history are required in middle school and are completely watered down. You'd have to be a History major in college to get anything with any meat. We most certainly wouldn't want "America's future" to think their brilliant ideas are recycled from the ash heap of history.
TrueBlue| 12.22.11 @ 12:53PM
I used to get in a lot of trouble for correcting my history teachers and their schoolbook "facts". I doubt it's gotten a whole lot better.
rhoetus| 12.22.11 @ 3:38PM
"Scattering the Ashes" by Maria Del Carmen Boza
http://www.amazon.com/Scatteri.....0927534754
Howard| 12.22.11 @ 4:41PM
That article seems to articulate what Obama and his Harvard minions would like to accomplish. Viva Socialism Barack!
Niniane| 12.22.11 @ 7:51PM
While I agree 100 percent with the article, one thing needs to be mentioned: the booming black market in all communist countries. I read about little Estonia after the fall of the Soviets becoming the largest exporter of copper wiring. They didn't have a copper mine, but they were trying to install street lights. Each night the wiring would be stolen by the workers. After all, since there was no private property, stealing from the government is no big deal. After all the thieves owned some of that copper wiring. It took them about a decade to get out of that mode of thinking.
marilyn| 12.22.11 @ 8:47PM
Everyone knows the black market is Castro's dirty little secret. Without the black market, Cuba's economy would have crashed years ago.
JmsA| 12.22.11 @ 10:27PM
The Cuban economy crashed a long time ago, from 3rd to 4th largest in Latin America, and trailing only Argentina, Venezuela and Brazil in GDP in 1958, to that which even Haitians when intercepted at sea by the U.S. Coast Guard, beg not to be taken to Cuba. People go hungry over there, on purpose, spending endless hours every day in lines hoping against hope they will get something half decent to put on the table at dinner time. Going to bed hungry really sucks, believe me. Hunger is a great tool for controlling the masses. The former soviet block used it with greast success. The black market in Cuba only and truly benefits the petty functionaries, not the everyday Cuban, whom if caught trafficking in the black market risks serious prison time, if not worse, including being sent to a labor camp for counterrevolutionary activities, as many as five years for selling a pair of shoes, or even a few eggs. I've seen socialism, which is what's being gradually foisted upon this great country, and believe me, it is not pretty.
Richard Baker| 12.23.11 @ 1:12AM
Cuba is the country lefties laud and hold up as a paragon of virtue? They're as nuts as Ron Paul and his supporters.
Quartermaster| 12.25.11 @ 8:55PM
Or anyone that supports Romney, Gingrich, Bachman, or any of the other midgets. The GOP is nuts, just like the Dems and they aren't different enough from the Dems to make any difference at this point. We are screwed either way.
Sadly, Paul is the only one that seems to know what to do domestically. As for the rest, meh.
Richard Baker| 12.27.11 @ 6:11AM
If Paul were President we'd be in a war within 6 months due to his loony ideas on foreign policy. Our enemies would be gleeful. Paul is as loopy as Lindbergh was with the pre-WWII America First movement. Since WWII we have had world leadership thrust upon us as the last undestroyed country and Paul would have us hide at home. Those days are over.