Monday, 8 August 2016

Casey Mulligan visits Cuba

Economist Casey B. Mulligan went to Cuba and earlier in the year posted some observations on his trip:

On boats:
Government permission is needed to have a boat. The fishermen’s boats are smaller than a normal rowboat and therefore too small to take far from shore (e.g., to another country). Most seafood has to be imported. This is a clear case where the regime has sacrificed productivity in order to exercise control over its people.
On paper:
In order to make opposition more difficult, paper is scarce throughout the country. This is another clear case where the regime has sacrificed productivity in order to exercise control over its people.
On livestock:
Cows are still government owned. They cannot be killed for beef; all beef is imported. It is also illegal to sell beef in some situations. I believe that Cubans can own chickens and other birds. Urban dwellers may even be encouraged to own chickens. I do not know who owns the horses.
On residences:
Until recently, Cubans could own their home but could only sell a home to the government. In other words, it was more like living as a tenant for zero rent and being paid something for vacating. Now Cubans tell me that they have a right to buy and sell homes (since 2011; even now Cubans cannot own more than two homes), and that Cubans typically live in a home owned by a family member. They do not pay property taxes and often do not have mortgages, but they do pay for metered electricity and gas. For multi-unit buildings, it has never been clear who has the property rights (does the roof of an apartment building belong only to those who live on the top floor?).

The urban residences are densely populated. They were originally constructed in the 1920s or 1950s with tall ceilings and room sizes that would be familiar to Americans. But since the Revolution the rooms and hallways have been subdivided many times, including vertical subdivisions known as barbeques. Not much lighting is used. [...]

The disrepair and proliferation of subdivisions are to be expected when quality housing is prohibited from commanding a price or rent premium in the marketplace and when property rights are lacking, as during the half-century before 2011.
But
There are families who are permitted to rent out space in their homes to tourists. A blue emblem marks such homes. These homes are nicely maintained.
On shopping:
Cuban families receive a ration book that allows them to obtain food (for ten days a month?) at regulated prices in quantities according to the size and composition of their family.

We were told not to take pictures in the food stores. I visited one of them and was encouraged to leave because “it was not for tourists.” I sat outside another as customers came and went.

The stores sell less than two dozen distinct items in large quantities. E.g., large containers of canned mangos, three-liter bottles of soda, three-liter bottles of water, eggs in trays of 30. There was no refrigeration, even though it was hot. There are plenty of flies and stockouts. [...]

Large containers are probably not what people would pay for in a market setting, given that so few of them have cars (although I saw a couple of customers pull up in horse-drawn carts) and the small size of their living places. But packaging, availability, variety, and refrigeration are all good examples of non-price product attributes that can be expected to disappear when prices are regulated (Mulligan and Tsui 2016).

Clothing and electronics are, and market exchange rates, cheaper in the U.S. than in Cuba. Many of these items are obtained when Cuban-American family members visit. I don’t know if or how they were obtained prior to 2009, when the family visits began to be permitted.
On politics:
To be blunt, my overall impression is that Fidel Castro is like an abusive father with several million “children” that he abused. Many of them ran away from home and still hate him many decades later (you can meet them here in America). Others stayed, continue to take the abuse, and focus on a few apparently good things that he does/did. To put it another way, the Cubans still in Cuba obtain a significant amount of some kind of psychic value from Castro and the Revolution that partly offsets the large tax they implicitly pay in terms of foregone freedom material goods and services.
On labour
Cubans own their labor in the sense that they get wages for most of their work.[10] However, their employer is typically the government and those wages are far below their productivity (which is itself low). Government employees were paid about $20 per month in 2014, whereas national income per worker was $839, which suggests that government employees keep about five percent of the value of what they produce.

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