The anticipation of Cubans about their new relationship with the United States is palpable. But when we visited there in October, a month before Fidel Castro died, we found most Cubans’ excitement was tempered with a sense of realism. They understand that their country is not ready for an onslaught of Americanos.
Cuban infrastructure is clearly an issue. The crumbling facades of the beautiful colonial style buildings in downtown Havana and elsewhere are very slowly being restored by government employees, but the Cuban bureaucracy is overwhelming. One sophisticated architect, with whom we spent an hour, explained that he started in the Bureau of Architecture and Reclamation 10 years ago when there were 200-plus employees. Today there are 10,000 “working” in the bureau, all of whom are government employees. One can imagine that management problems abound.
Havana’s port, which in theory would allow large cruise ships to dock, thereby not placing inordinate burdens upon small and inadequate hotel space in Havana, can barely handle the 650 people on a relatively small liner that currently docks there bi-weekly. The thought of a 4,000-passenger ship cruising into Havana was overwhelming to our guide.
The Cuban people we met were friendly, open and well-educated. There were few panhandlers on the streets. Education and health care are “free.” They, like almost everything else, are paid for by the revenues from Cuban businesses, 90 percent of which are outright owned by the government. The remainder pay heavy taxes.
Despite this, Cubans remain entrepreneurial. Many have opened restaurants, “paladores,” often in their homes. The food there is usually good, as are the treats from some privately owned bakeries.
Cubans are also resourceful and innovative. They manage to keep 1950s-era American automobiles running. The driver we had said his car had more than 2 million kilometers on the odometer. The engine had been replaced many times by Russian tractor engines.
In a break from the 1940s and 1950s, there seem to be few if any drug problems in Cuba. This is good news. However, there are no drug problems because there’s no money. The salary that all Cubans receive from the government is the equivalent of $60 to $80 a month, whether they be a physician or a bus driver.
Cuba has two internal currencies. The Cuban peso is worth about 4 cents. It is used for domestic transactions mainly in “ration stores” where subsidized essentials such as beans, rice, cooking oil and, yes, rum are sold to Cubans. The Cuban Convertible Currency (CUC) used by nonresidents, is worth about $1. Cubans who work in the tourist industry receive gratuities in CUCs. With tips and their government salary, chambermaids often make more than dentists in the topsy-tuvy economy.
The Cuban government has few sources of hard currency. In fact Cuba’s most profitable export is its trained health-care professionals who are sent to other countries. Most hard currency comes to Cuba via the salaries these health-care workers send back to their families. Exporting your brightest minds in this way does not sound like a good formula for economic growth.
In its own lethargic way, the Cuban government is trying to encourage investment. Some Spanish and French firms have built hotels, but they’re doing so cautiously. When Americans have tried to make initial investments in Cuba, things have not gone well. With the blessings of the Obama administration, American entrepreneurs Saul Berenthal and Horace Clemmons sought permission from Cuba to construct the first U.S. factory there since 1959. According to the Associated Press, Cuba first lauded the plans for the factory to build small tractors, but after more than a year-long courtship, the Cuban government dropped the idea without any explanation. Now resourceful Cuban mechanics won’t even have U.S. tractor motors to replace the Russian ones in their 1957 Chevrolets.
It seems to the casual observer that an industrious and genuinely pleasant population of 11 million Cubans is mostly being kept at bay by an immense bureaucracy steeped in socialistic thinking. Opening the country to U.S. tourists will help, but without a serious re-examination of the many archaic aspects of Cuba’s controlled economy, few improvements will be made. The secret will be how to keep the Cuban industriousness, spirit, love of life and an endearing culture alive post-Castro while its economy transitions into the 21st century.
Michael A. MacDowell is president emeritus of Misericordia University and managing director of the Calvin K. Kazanjian Economics Foundation.