Change and Continuity in Cuba

Tourism is one of the few sectors in Cuba that has seen growth in the past six decades. Nearly all the others have fallen.

14ymedio bigger14ymedio, Carmelo Mesa-Lago, Pittsburgh, April 9, 2019 — The 60th anniversary of the Cuban Revolution is an opportune time to examine how things have changed and how things remain the same in the intervening years. The country’s market economy lasted until 1958 but, by 1961, had been transformed into a centrally planned economy overwhelmingly dominated by state-owned enterprises and collectivized agriculture. The market took a back seat to the central plan.

Though it has failed throughout world, this economic model survives largely intact in Cuba, resulting in monumental economic inefficiency that has negatively impacted growth. The dependence on the sale of sugar, which constituted 75% of total exports in 1958, was replaced with an 80% reliance on professional services and tourism.

Cuba was not exporting any professional services in 1958, while the number of tourists in 2018 was 18 times what it had been thirty years ago, with income from this activity 53 times what it had been back then. continue reading

Oil production is 79 times what it was in 1958 and Cuba now even produces natural gas. The dependence on energy imports has been reduced from 99% to 50%. Previously, social services were mainly limited to urban areas and were provided, at least partly, by privately-run organizations. Now those services are state-managed, virtually universal and free.

On the other hand, Cuba’s foreign debt is 190 times what it as in 1958, and that is after significant debt forgiveness by the Paris Club, Russia and other countries. Annual population growth in 1953 (the last time a census was taken) was 2.1% compared to a 0.2% decline in 2017 due to an increasingly aging population. The proportion of older adults rose from 9% of the total population to 20%. Cuba has the oldest population in the region, which has increased the health care and pension costs.

In regards to continuity, in the past six decades Cuba’s socialist economy has not managed to eliminate or significantly reduce its enormous reliance on trade with, or investment, aid and subsidies from another nation.

A 55% reliance on exports to the United States in 1958 became a 72% reliance on the Soviet Union and, since the beginning of the 21st century, a 44% reliance on Venezuela.

Between 1960 and 1990, the Soviet Union loaned Cuba the equivalent of 58.5 billion euros but only got back 450 million. The rest was written off as price subsidies and non-reimbursable aid. The collapse of the Soviet bloc in the 1990s led to a severe crisis in Cuba. At their peak in 2012, Venezuelan aid, subsidies and investment amounted to 11% of Cuban GDP.

In spite of substantial foreign assistance, the economy stalled — average annual growth from 2014 to 2018 was only 1.7% — due to the economic system’s inherent inefficiency. The target for 2019 is 1.5%, a quarter of the 6% officially acknowledged as the level needed to generate adequate growth.

In 2017, most manufacturing, mining, agriculture and fishing production was below the 1989 level. Only tourism showed a significant increase. Foreign trade has suffered a systematic decline: 6.76 billion in 2017.

The surplus generated by the Cuba’s primary source of foreign exchange — the export of professional medical services provided by doctors, nurses and related professionals — decreased 35% from 2012 to 2018 due to the economic crisis in Venezuela, which had been paying 75% of the cost of these services. Overall trade with Venezuela also fell from 44% to 17% of GDP, the supply of oil fell by half, and all the country’s investments in Cuba were halted.

These problems led to a cut of eight percentage points in social spending from 2008 to 2017 with a resulting decline in health and education services. From 1989 to 2017 the value of pensions fell by 50%, home construction by 80%, and the wage adjusted for inflation by 61%.

The US embargo is blamed for these problems. This was true 25 years ago but Cuba now trades with at least eighty countries, including the US, and has received investments from multiple nations. The embargo still has negative impacts — sanctions are imposed on international banks that do business with Cuba — but the fundamental cause of these problems has been the inability to generate exports to pay for essential imports, both of which have declined in recent years.

Between 2007 and 2018, Raúl Castro tried to solve these problems with market-oriented structural reforms. They had no tangible effect, however, due to extremely slow implementation, disincentives, taxes and an about-face starting 2017.

Neither the new president, Miguel Díaz-Canel, who favors continuity, nor the new Constitution, which was ratified on February 24, have changed the essential economic model. This is an absurd attitude given the collapse of the Venezuelan economy and the teetering of its regime due internal rebellion and international pressure. Maduro’s fall would further aggravate the current crisis in Cuba.

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After Trump, the Deluge / 14ymedio, Carmelo Mesa Lago

Donald J. Trump addresses the Joint Session of Congress. (EFE)

14ymedio bigger14ymedio, Carmelo Mesa Lago, Miami, 5 March 2017 — In his speech to Congress last Tuesday, Donald Trump was magically transformed into a statesman and looked “presidential” for the first time. He offered something for every member of society: new infrastructure, one million jobs, paid maternity leave, cutbacks in the high cost of medicines, special education for students in difficulties, defeat of “Islamic radicalism” and all of this, in unity, without hatred and in support of the resurgence of the nation. Was this a real transformation or just a well-rehearsed reading of a speech written for him and projected onto a screen? In any case, his key proposals did not change, only his tone: A good one-hour speech cannot erase twenty months of incessant stumbling.

Shortly after Trump announced his candidacy in June of 2015, I wrote a statement with Enrique Krauze, signed by 68 prominent Hispanic intellectuals, academics and artists, where we criticized the magnate’s ideas and predicted the disastrous effects of them. There was a prestigious academic who refused to sign the statement because he believed that the clown’s candidacy would quickly evaporate (just like what happened with Hitler). With 45 days in power, the US and the world are already suffering the devastating effects of his nonsense. continue reading

Trump is an egocentric narcissist, an arrogant know-it-all who proclaims himself the best on any subject

Trump is an egocentric narcissist, an arrogant know-it-all who proclaims himself the best on any subject (self-described as “outstanding in his performance”); thus he does not take advice and improvises creating chaos. From the beginning he said he would deport 11 million “undocumented” Mexicans. In February he decreed that people from seven Islamic countries could not enter the United States, none of which have sent terrorists to the country. This order created massive problems in airports around the world, with American residents refused entry, and measures had to be improvised to relieve the catastrophe; fortunately a district court overturned the executive order and Trump denigrated them as “so-called judges.”

Another sinister trait is his racism and xenophobia: against Mexicans and Hispanics, women (“with my power I can grab them by their genitals”), African-Americans, Muslims, Jews and gays. He dismissed as unfair (for being a “Mexican”) a judge born in the United States who approved the complaint against Trump University; he denied he was a racist and paid 25 million dollars to the scammed, to stop the spread of the scandal.

The effects of his discrimination has been horrendous: attacks on Mexicans; the murder of an Indian engineer, taken as a Muslim, to the scream of “leave my country”; the airport detention of Muhammad Ali’s son, interrogated because of his Arabic name and religion (the agents denied this); the resurrection of the white supremacist Ku Klux Klan that brazenly supported him; the proliferation of Nazi swastikas; the bomb threats against 53 synagogues and the desecration of a hundred Jewish cemeteries; the attack on a gay couple because “we live in Trump country now.”

His motto “America First” was used by American Nazis during World War Two. Reacting to the question of a Jewish journalist he exclaimed, “I am the least anti-Semitic person in the world,” and despite his abominable treatment of Latinos he insists that they adore him. Although his discourse denounced those attacks, his rhetoric of intolerance, division and hatred has incited them.

His motto “America first” was used by American Nazis during World War II

Trump is a pathological liar: Obama was not born in the United States, three million of Hilary’s votes were fraudulent, public attendance at his inauguration was the highest in the country’s history and also higher than the massive demonstration of women against his misogyny. His advisor Kellyanne Conway invented a massacre in Bowlling Green to justify the deportations. All false.

A Freudian lapse is his constant catch-phrase “believe me.”  His Orwellian construction of “alternative facts” is a remembrance of “1984,” a trinket to deny the truth. He denounces the leaks to the press by officials as a crime that has to be eradicated and insinuates that Obama has been responsible for them.

His praise of Putin as a strong leader is detestable. Advised that the Russian autocrat is an assassin, that he annexed Crimea and dreams of retaking Georgia, Trump responds with the excuse that those in the United States “are not innocent.” He asked the FBI to end its investigation into his relations with Russia, based simply on his word: “I haven’t talked to Russia for a decade.” Another scam because he talked to Putin after his inauguration and was in Moscow in 2013.

Michael Flynn, his national security advisor, resigned when it was discovered he lied about talking to the Russian ambassador in the United States; and the Attorney General Jeff Sessions did the same. If Trump really is not guilty, why is he so afraid of that investigation?

Worse yet is his authoritarianism and irritable attacks against all criticism even it it’s documented. At the beginning of the election campaign he refused to answer a question from the Mexican journalist Jorge Ramos and violently expelled him from the premises. In his first press conference as president-elect he refused to let the CNN reporter ask a question, accusing him of “fake news” (what irony!), days later accusing the New York Times of the same thing, and in the last week he referred to the “fake media” as “enemies of the American people.”

Later The NY Times, Buzzfeed News, CNN, The Los Angeles Times, Politico, BBC and The Huffington Post were excluded from a meeting with Press Secretary Sean Spicer. He also disqualified his opponents: branding the hero of the Vietnam War John McCain a “loser” for having been captured, while he himself evaded military service through some trickery, and mocked the brilliant Meryl Streep (nominated for an Oscar 20 times), saying she was Hollywood’s most “overvalued” actress.

Stubbornly, Trump has insisted many times that Mexico will pay for the wall, something firmly denied by President Peña Nieto and two former Mexican presidents

From the beginning he promised to build a “fantastic” wall on the border with Mexico that would put an end to the entry of “criminals, drug addicts and rapists,” denigrating Mexican emigrants who play a crucial economic role in the United States. The wall will cost at least $20 billion and will not stop immigration because it takes place mainly by air.

Stubbornly, Trump has insisted many times that Mexico will pay for the wall, something firmly denied by President Peña Nieto and two former Mexican presidents. Changing tactics, Trump says he will finance the wall with a 25% tax on all Mexican imports, which will trigger a similar policy in the neighboring country. In his speech to Congress he announced legislation to protect “the victims of the migrants.” Mexican Foreign Minister Luis Videgaray has been emphatic that Mexico will not admit non-Mexicans deported from other countries.

The blind Republican fury against “Obamacare” was exacerbated by Trump with his call to “repeal and replace.” Two days before his speech he said that “nobody knew how complicated health care is”; in fact he is the one who didn’t know, unlike Obama and tens of thousands of experts that Trump ignored.

There are 22 million citizens covered by the affordable health plan and there is no idea if they will remain covered and how. In his speech he tried to offer something new by ensuring that those with a prior chronic illness will have to be covered, something that is already in the law, which he doesn’t know.

One of his first actions was to overturn the Trans-Pacific Partnership, creating a vacuum that is rapidly being filled by China, which he provoked with his announcement that he would strengthen ties with Taiwan, abandoning the American policy of a single China from the time of Nixon (later he tried to undo the damage). He proposed to renegotiate or annul the North American Free Trade Agreement, which would provoke a serious crisis in Mexico, the second largest Latin American economy and the main trading partner of the US, which could destabilize the region and generate a global trade war.

His latest delusion is to increase the defense budget by $54 billion, cutting back vital programs by the same amount, such as protection of the environmental and international aid

His latest delusion is to increase the defense budget by $54 billion, cutting back vital programs by the same amount, such as protection of the environment and international aid; although he has promised not to touch social security, there is fear he will privatize it. He will also reduce taxes, benefiting the richest 1% of the population, something that is enthusiastically supported by his cabinet of billionaires.

When the tax reduction is added to the $20 billion cost of the wall and the trillion dollars in infrastructure, the budget deficit will soar. His speech to Congress did not explain how he will finance his great vision of the future, he just said that “money is pouring in.”

It is astounding that the Republican congress allows such nonsense that goes against their neoliberal beliefs such as freedom of trade, a balanced budget and reduction of public debt, as well as the risk of increasing Russian power and Chinese expansion. But doesn’t matter, they were rejoicing, standing up and applauding Trump’s speech. After him, the deluge.

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Editorial Note: This text has been published in the Letras Libres website and we reproduce it with the authorization of its author.

Carmelo Mesa Lago. Cuban economist. Degree in Law from University of Havana (1956). Professor Emeritus of the University of Pittsburgh.