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Cuba: Discovering personal independence

By Ronald R. Cooke
web posted October 12, 2009

For an economist, Cuba has been a perfect laboratory experiment. Fidel Castro was a charismatic leader, Cuba enjoyed economic and political support from Russia, it had a closed economy, and the revolution gave the government absolute control over the people. The government confiscated millions of acres of land and established collective farms under centralized planning. It all came together to create the perfect experiment in socialism.

And for awhile, it seemed to work. American liberals gushed with euphoric descriptions of the people's paradise. If anything went wrong, it was obviously America's fault.

But something was missing. Personal independence and the economic opportunity that comes with the freedom to work for yourself. The chance to create personal wealth. The pride that comes with being able to own the results of your labor.

An article on the BBC web site by Michael Voss, BBC News, Camaguey Cuba, entitled "Seeds of change in Cuban farming" describes a new Cuban revolution. In a bid to boost food production and reduce costly imports, Communist Cuba is leasing state-owned farmland to individual farmers and co-ops. Approximately 4.2 million acres will eventually be available. So far about 86,000 applications for land have been approved, with tens of thousands more Cubans hoping to participate.

Socialist state-run collective farms have allowed as much as half of the land they manage to become overrun with weeds. Although these farms control roughly two-thirds of Cuba's farm land, they produce only one third of the food. Collective farm productivity is so bad, Cuba has been forced to import over $2 billion a year in agricultural products. Much of that food could be grown locally.

Fidel Castro was devoted to socialist ideology. But socialism always fails to create economic wealth for a nation's workers, and it severely limits the wealth of the middle class. Backed by the police power of the State, oppressive and inept bureaucracies force their will on the people. This leads to frustration with the "system" and indolent behavior. (See http://tceconomist.blogspot.com/2009/02/is-this-end-of-wealth-creation.html)

Fidel's brother, Raul Castro, appears to be more pragmatic. As President, he has been willing to introduce reforms that give Cubans a chance to work for personal gain. Incentives, like the profit motive and productivity-related pay, are reappearing after half a century of an idealistic experiment in egalitarian socialism.

It is back-breaking work to make long neglected land productive. Much of the available land is covered in a thick, impenetrable, tall bramble called "marabu". It has to be hacked, burned, and uprooted before the fertile land can be used to grow fruits, vegetables, and cattle feed. Private farmers form co-ops to share capital intensive farm equipment. The Cuban government has decided it is now legal for them to hire farm workers, increasing the available pool of farm labor.

These farmers are a living experiment in free market capitalism. They earn more money because they sell more food. According to Voss, average earnings have risen to around $200 a month, roughly 10 times the national average.

If Cuba continues to introduce free market reforms, the door will be open for the Cuban people to achieve greater personal prosperity. If Raul wants an economic model to follow, he should spend some time with Luiz Inacio Lula da Silva, the President of Brazil. Lula, as he is known, is working to blend capitalism with populism in a regulated economy. ESR

Ronald R. Cooke is the proprietor of The Cultural Economist. This is his first contribution to Enter Stage Right.


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