Thursday, May 20, 2010

Cuba's missed opportunities

I'll start by linking to and quoting Rory Carroll's Guardian article "Cuba suffers exodus of the best and the brightest as economy remains in the doldrums".

Young people, especially well-educated professionals, are fleeing the island. Tens of thousands have emigrated in the past two years. The exodus has alarmed the communist government but remains largely unreported, a taboo topic for state media.

"It's a sign that the revolution has failed, so they don't want to talk about it. We are losing our future," said Ricardo Martinelli, a university professor who has seen many of his students and his only child, a 23-year-old technician, emigrate in recent months.

Analysts blame growing frustration over President Raúl Castro's stalled reforms. After formally succeeding his brother Fidel last year, he promised economic liberalisation, but the average monthly wage remains $20 (£14). "What I notice more and more is the disaffection of youth: more people not seeing a future," said one European diplomat. A government-organised free concert on the Malecón seafront attracted a small fraction of the expected audience. When performers attempted rabble-rousing speeches, the crowd drifted away.

Unlike the mass exodus of the Mariel boatlift in 1980, when a chaotic scramble across the Florida straits seized world attention, this new wave of emigration has involved an orderly – and discreet – transit through Havana's José Martí airport. "At least 80% of my peers have left," said José-Miguel Marín, a 38-year-old scientist. "I keep track through Facebook. They are all over: Ecuador, Mexico, the United States, Spain."

Bureaucratic and financial hurdles remain, but Cuba has loosened restrictions on leaving, opening the door to those who have the will and means to wrangle a visa for another country. Often that means the best and brightest. "I saw people weeping when they were turned down for a US visa," said Carmen Gonce, 65, after visiting the office that represents US interests in Havana.

Ecuador has become a magnet, because it requires only a letter of invitation rather than a visa. Last year Cuban arrivals soared by 147% to 27,114, according to the national immigration agency. The number of Cubans marrying Ecuadoreans jumped from 88 in 2007 to 1,542 in the first nine months of 2009.

The whole idea of an economic transition in Cuba from socialism on the models of China or Vietnam, with political authoritarianism combining with a substantial widening of economic freedom, remains far from realization.

Cuba was supposed to be enjoying a new dawn. On taking office Raúl Castro promised to open up a moribund economy 95% controlled by the state, raising hopes that a Caribbean North Korea would become a growth tiger like China or Vietnam.

There have been modest steps: greater autonomy for farmers; the ban on owning computers, mobile phones and DVD players has been lifted; de facto privatisation of barber shops and beauty salons; bureaucracy clipped in provincial towns. But Raúl has ignored deeper reforms, suggesting his more doctrinaire brother remains influential.

"As long as Fidel is alive, Raúl will not cross him," said Ann Louise Bardach, author of Without Fidel: A Death Foretold in Miami, Havana, and Washington. "And for Fidel everything is about the fall of the Russians. He fears that if we open this, we lose everything."

Even now, recent reforms in the agricultural sector, distributing underused land to farmers, is being undermined by the high costs of mechanization and the lack of sufficient incentives to farmers--Cuba's not replicating China's successes in economic reform.

Many of Cuba's problems can be traced directly to its population issues. As J. Bradford Delong noted in 2008, Cuba on the eve of the revolution enjoyed levels of economic and human development comparable in Latin America only to developed Argentina and Uruguay, with higher standards of per capita income than most of southern Europe and one of the lowest rates of infant mortality in the world. The investments of the Castros' regime may have substantially increased levels of human development, but Cuba has lost tremendous amounts of ground economically. Once on par with Argentina and Uruguay, GDP per capita--at least according to the Penn World Table--on par with that of Mexico or the Dominican Republic. In the meantime, Cuba has adopted policies like the sharp limiting of urbanization that has doubtless played a major role in shifting labour in the Cuban economy from agriculture to higher value added sectors. One's tempted to conclude that Cuba's urbanization has been focused as much within Cuba (in Havana and smaller cities) as in the United States (in the Cuban-American heartland of Dade County), that for young Cubans moving to the big city means leaving their country.

Cuba is being very badly served by its rulers. The country has a narrow window, produced by its combination of sub-replacement fertility with continuing high levels of emigration. It has only a short amount of time in which it can grow rich, recovering at least some of the ground that it has lost over the past half-century. Instead, the current government has opted for policies of stagnation--economic, political, social--which will serve the country badly, perhaps allowing emigration as an escape valve for the unhappy young. This 2002 Library of Congress report makes it clear that Cuba's future economic development depends on a more economically rational distribution of its population, in economic sectors and by geography. Nearly a decade later, that hasn't happened.

Cuba may yet become a democracy, eventually, but I'm now much less hopeful than I was in my postings of 2006 and 2009 that Cuba will reform before it becomes a sort of Caribbean Moldova, impoverished and depopulating. Governments can adopt many different policies to deal with their demographic issues, but Cuba's government certainly isn't notable for its competency. Yes, replacement migration might be an option, but where would the migrants come from? and why would they head to Cuba, instead of the United States or Spain or any number of more attractive destinations? The possibility of self-reinforcing migration, as young Cubans leave a Cuba that would be left increasingly behind by other countries with better economic records and considerable need for labour and more follow suit as Cuba's position deteriorates, is a real one.


snakeoilbaron said...

Zimbabwe, North Korea and other such states have proved that democracy, liberty and prosperity can be easily supressed long after almost all of the citizens and even many of the elite class have lost all faith in the governing ideology.

There sometimes seems to be no breaking point at which things have gotten so bad that change becomes impossible to prevent. Every time things seem to be coming to such a breaking point and experts think that a regime will collapse, people just adapt to the newer, lower standard of living. And even when change does come, there is always a new group ready to give totalitarian/command economies one more try. Woody Allen was recently musing in a Spanish language magazine that he thought it might be nice if Obama could become a dictator for a couple of years so he could really get things done faster. While I don't believe that Obama would ever stay off the golf course long enough to orchestrate such action, it bodes so well for the future of human civilization that people who become rich and famous from freedom are often its biggest enemies.

The cycle never ends - it just moves arround the world.

Cicerone said...

If Cuba finally developes, it will urbanize further, bringing the fertility finally to lowest-low-levels, because La Habana is after vancouver the American city with the lowest fertility.

Randy said...

@ Snakeoilbaron: re: Obama, what? Cites for his totalitarianism would be nice.

@ Cicerone: Cuba can still continue to urbanize, regardless of whether or not it becomes a developed country: the productivity gains earned from become more urban can easily be sapped by the need to support an increasingly aged population with an increasingly smaller workforce.

gac said...

The time to change came and went in the 1990's. I agree with the observation that Fidel is still a force to be reckoned with and that he believes that opening up could leave Cuba in a situation similar to what happened in Russia. In order to stop this he attempted constitutional reform but missed the important point: reform.The communist party is just too deeply entrenched.It's clear the system is based on a kind of syncophantic, more or less corrupt political system. A police state, Cuba hardly resembles anything remotely resembling socialism. If anything it resembles a kind of militaristic fascism.Corruption is rampant from the street to the top-brass. The Party just doesn't get it ! It's sad to see Cuba back to where it was in the nineties with food shortages but the Party just refuse to change.Now people are so desperate they are resorting to hunger-strikes to get change. When will the people hit the streets? How can you make change when every day is a scramble just to get the bare necessities of life ! Very sad.