Fired Up By Cuba Policy Change

A version of this post appeared in the San Antonio Express News.

I'm fired up by the new US policy
I’m fired up by the new US policy

I’m totally fired up that the Obama administration relaxed travel, trade, and diplomatic restrictions on Cuba last week.

Removing the US embargo will not raise up Cuban people’s lives as much as we hope without the Cuban regime, for its part, embracing more of a market system.

For over 50 years, the Castros took every public speaking opportunity to point their fingers North and blame all of their country’s ills on the US.

By lifting the US embargo, we at least remove the Cuban regime’s primary excuse for the past fifty years of horrific economic conditions of the Cuban people under the Castros.

It’s not the embargo, it’s their suppression of a market economy.

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Markets vs. Cuban Socialism

I’ll be the first to declare that our markets-based system has tremendous failures.

Markets are unjust.

Markets – without a safety net – heartlessly leave children, the unemployed, and the elderly in poverty.

Unregulated markets commonly lead to the terrible treatment of consumers and the environment.

But to paraphrase Winston Churchill’s famous quip about Democracy, I would say free markets are the worst form of economy, except for all those other forms that have been tried from time to time.

winston_churchill
Churchill had something pithy and brilliant to say about everything

One thing that made me a card-carrying Adam Smithian Wealth of Nations-thumping pro-markets guy was visiting Cuba under the Castros.

My wife and I visited twice in the 2000s. We’ve visited many resource-limited countries. But nothing compares to Cuba.

In Cuba, everything is illegal

In the absence of any legitimate way for ordinary Cubans to earn enough to get food to eat, corruption envelops every day life.

Everyday. corruption.

Not for anything special, or anything nice. Just to get enough calories in the body.

For us as tourists, simply securing a room in a private home for a few nights in Havana involved a cat-and-mouse game to fool the local police.

“Ok, I’ll arrange it all for you,” the man offered at our café, his eyes scanning for signs of government authorities.

“Follow me down this road. About two minutes after I go, walk to the end of the block, turn right, and I will meet you inside the third doorway. Make sure you do not follow me too closely, as the police are watching.“

One day in Cuba and you will become a card-carrying Capitalist
Just spend one day in Cuba and you will become a card-carrying Capitalist

This was all standard procedure for renting a room. The homeowners – like thousands in Havana – desperately needed to earn dollars to buy bare necessities. The room cost us about $5 per night.

To further support that family we bought a home-cooked meal from them for another $2. I knew it was the best our host could do, and her eyes asked for a kind of understanding of their difficult situation as she laid the pigs-knuckles plate plaintively in front of us, murmuring “No es mucho pero esta hecho con mucho cariño” – “It’s not much but it is made with a lot of love.”

We wanted to cry.

Later, we slipped into an illegal restaurant –known as a paladar – run out of another private home that was desperate to earn dollars, despite them running the risk of breaking the law and being arrested.

Incidentally, you do not want to be arrested and go to a Cuban prison, as described in Reinaldo Arenas’ memoir Before Night Falls.

The Cuban health care system

On our second visit, my wife lived for six weeks working and researching in a Cuban hospital.

She arrived in Cuba ready to admire their health care system – free, universal, and reportedly successful. Long story, short: You do not want to get sick in Cuba.

The doctors are excellently trained, they have outstanding vaccination rates and access to prenatal care, but the facilities and access to medicines are awful.

When a woman who worked for her hospital needed specific antibiotics for a persistent infection, could she access the vaunted Cuban health care system?

Absolutely not! Appropriate antibiotics were unavailable to her, except through corruption. She ended up paying precious (and illegally obtained) dollars to the limousine driver of a Communist Party member, who had access to scarce antibiotics that ordinary Cubans do not.

With markets for nearly everything outlawed, everybody must cheat merely to gather life necessities.

Spying on everyone because everything is outlawed

Cubans are not allowed to move within the island to seek employment, without permission from authorities – which permission cannot be obtained without corrupt connections.

But hunger is a powerful motivator. People stay at friends’ houses illegally in Havana, for example, hopeful to earn dollars. They have to sneak in and out house, however, fearful all along that neighbors would report them.

The official Cuban Party propaganda since the 1960s has maintained that US sanctions primarily caused the degradation of the Cuban economy.

With US sanctions lifted, that lie at least will be exposed.

 

 

 

 

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This US History Sounds Marxist, And Also Basically True

Im_a_marxistCan something be basically Marxist and also basically true? Of course my answer is yes, because Marxism as a tool for analysis can sometimes be summed up as a ‘Follow The Money.’

As an economic and political system Marxism has – so far – been as awful a system as we humans can manage to create [possibly in a four-way tie with Fascism, Talibanism and whatever you’d like to call North Korea’s ‘Juche’ system.]

As political analysis, however, Marxism has much to lend to it. Primarily the view that we can understand major economic groups as sharing common interests that they will, in aggregrate, try to advance at the expense of other major economic groups. This article below strikes me as a largely accurate, Marxist, view of US History. Enjoy!

Defending Wealth in America article.

In other semi-related news, I’m slowly making my way through Piketty’s Capital. Very enjoyable so far, and I’ll do a review as soon as I can.

marxist-feminist-dialectic

Please see related posts:

Inequality in America video

Book review of Plutocrats by Chrystia Freeland

TED talk of inequality from a Plutocrat

 

 

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TED Talk Video On Inequality From A Plutocrat

I think we should talk about inequality far more than we do. Even if I do not agree with the speaker, I would like to engage in the dialogue with anyone who speaks intelligently about the topic.

I’m embarrased to admit I haven’t yet read Pinketty’s Capital, but I will.

In the meantime, this is worth watching.

I don’t love his “We rich people should care about inequality because of the future pitchforks we face, so let’s be self-interested and work for more equality.”

I would prefer an argument that includes an ethical component, something along the lines of “equality helps increase human dignity.”

In his favor, however, he’s smart, provocative, and trying to be non-ideological, all of which I appreciate. Also, I like the examples he gives of the City of Seattle, and the Henry Ford theory of wages. Worth watching.

Please see related post:

Inequality in America – A must-see video presentation

Book Review of Plutocrats by Chrystia Freeland

Cash Transfers and Inequality

ted talks

 

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Cash Transfers and Inequality

conditional cash transfersMarkets work great, if the goal is to

1. Maximize total output;

2. Encourage innovation;

3. Reward maximum effort;

4. Reward talent; and

5. Use resources most efficiently.

As a result, limiting markets tends to impair one of more of the above, valuable, outcomes. Also, non-market solutions to problems often produce sub-optimal results in one or more of the above areas.

Markets work poorly, however, if the goal is to

1. Make sure that the maximized output gets distributed equitably, or justly.

What I mean by that is that while some people control hundreds, thousands, or millions of times more resources than other people, its hard to argue from an equity, or justice, standpoint that some people are hundreds, or thousands, or millions of times more ‘worthy’ of the world’s resources than others. Especially if you include in your analysis of the efficacy of markets the estimated 870 million people on this planet in poverty, at the lowest end of resources, without basic survival necessities such as food, water, and shelter, sanitation, or protection from destructive elements.

Markets also work poorly to

2. Overcome inter-generational barriers to human development over long periods of time, where the upfront costs only get paid out over, for example, decades. For those aforementioned 870 million people in poverty, for example, its not enough to just say “let the markets be free,” because that’s not likely to help. The real long-term solution of human development for the most impoverished requires the investment of extraordinary resources today, right now, in order to make it possible to lift the next generation (or more distant generations) up to a standard at which a market economy even has a chance of working, through such things as education, skills training, and connection to productive economic networks. That extended ‘payoff’ over decades basically doesn’t work for markets or capitalists. I mean that markets don’t invest well in communities to achieve a return on human capital 50 years from now, even though realistically, that is what is needed.

I’m thinking about all of this after reading a review in The Economist about experiments with transfer payments, especially for the word’s poorest.

Discussing ‘transfer payments’ in the United States often degrades quickly into political name calling, with pro-market folks mistrustful of social democratic or socialistic approaches to alleviating inequality. Outside of the US – or more specifically in areas of extreme poverty – it becomes perhaps easier to discuss the efficacy and theory of transfer payments. Clearly a ‘market solution’ is not happening right away in situations of extreme poverty, or fast enough to alleviate clear human suffering, so a taboo solution like ‘transfer payments’ in some contexts (the developed world) becomes easier to discuss, I think, across a broader spectrum of ideologies, for basic practical reasons. People are dying and suffering right now, so in a sense we can leave aside the ideology and theory, and try to discuss what works.

Cash Transfers

The Economist ran this interesting review last year of programs known as Unconditional Cash Transfers (UCT).

UCTs are typically philanthropic programs that drop unexpected money on very needy people – a rural villager in Kenya identified by a Google satellite image by his lack of electricity in one example, with the hope that even small amounts of money can catalyze higher standards of living and human development in very efficient ways. Targeted UCTs may seek out mothers in a certain region, with the credible theory that mothers can best decide how to feed, clothe, and educate their children, if they only had a boost in resources to do so.

UCTs contrast with a more conventional development model of Conditional Cash Transfers. CCTs typically seek to influence and incentivize behaviors, around vaccinations, or education, for example. If the children attend school, the parent receives cash, for example

The UCTs provide a tantalizing alternative to the paternalism of CCTs, by requiring less resources to administer and enforce. Imposing conditions means the philanthropy or government behind the transfer has to build a structure of monitorig compliance with its rules.

So far, The Economist reports, the CCTs show more effectiveness at addressing the root causes of poverty. Still, the rise of UCTs will bring in more data over time to continue the comparisons. Even though these fall firmly in the ‘non-market solution’ category, the competition between the styles should lead to improvemnent.

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TED Talk on Inequality – Insights from Rigged Monopoly Games

Definitely worth watching this.

Social scientists rigged a Monopoly game to see how people’s behavior changes with changes in socioeconomic status.  And they tested other games to study the effects of money on things like empathy.  You may not be surprised, but you will be interested.

 

 

Please see related post on Monopoly

and related post on Inequality in America

monopoly

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David Simon Says It All

David Simon, creator of The Wire, wrote the best piece I’ve read in a long time about inequality in the West, and our impoverished political dialogue about it.

Please read this in full because  Simon engages with complexity, and that doesn’t work in just one paragraph.  Nevertheless, I will summarize it for you:  “Capitalism is about to seize defeat from the jaws of victory” by disregarding some of the diagnosis, and some of the methods, of Socialism.

With Bankers Anonymous, my goal is to write non-ideologically. I comment on topics as an ex-finance guy with experience and extraordinary respect for the advantages of markets.  I liked selling bonds, I liked investing rich people’s money, I like earning money, and markets work WAY better than anything else we’ve come up with for raising standards of living, generating material comfort, innovating in health care, and creating leisure time.  You name it, markets work better for creating a better life for billions of people.

At the same time kids – right here America, within a few minutes walk from my house – kids do not have enough to eat.  Markets alone aren’t exactly working for everyone.  So please don’t give me your Ayn Rand “Capitalism Uber Alles” libertarian bullshit about free markets are always best, or that a health care reform aimed at insuring children and unemployed people is an inevitable move to Marxist totalitarianism.

Simon’s piece is worth reading in full.  You don’t have to be a Marxist in practice – and Simon is not one, and I am not one – to recognize the ways that raw capitalism is unhelpful in some areas, and totally broken in others.

We need a mixed system and anyone who believes in a ‘purer’ system of capitalism, or socialism for that matter, is missing the point.

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