by Patricia Linderman for the Foundation For Economic Education
As I opened the gate of the high security fence around my yard in
Havana, a black woman in her 30s glanced left and right and quickly
wheeled her rusty Chinese bicycle inside. Her name was Marta, and she
was wearing a pair of my shorts, which I had once traded her for a small
watermelon. This time she had pineapples in the plastic milk crate
attached behind the seat of her bike. I handed her a dollar for two
pineapples, then poked my head out into the street to make sure the
coast was clear before Marta pedaled away.
Luckily, there were no police officers stationed on the corner of my
street that day. Although farmers and gardeners have been permitted
since 1994 to sell excess produce, they must do so personally, in an
approved market stall, paying high license fees and taxes. Marta's
little enterprise, buying and reselling fruit, vegetables, and used
clothing, put her into one of the Cuban government's most reviled
categories: she was a "speculator." If caught, she would be charged a
huge fine, maybe even sentenced to jail. Furthermore, the Cuban Ministry
of Finance could confiscate everything she owned, without a hearing, for
the crime of "profiteering."
Surely Marta's visits to my door had not escaped the notice of the
neighborhood watch, the local Committee for the Defense of the
Revolution. A few subtle gifts of clothing or scarce vegetables probably
kept my neighbors quiet. But if Marta offended them in any way, or if
they thought she was getting too rich or too friendly with foreigners
like me, they could simply do their duty and turn her in. They had her,
in fact, right where they wanted her.
I lived in Havana from 1995 to 1998, when my husband, a Foreign Service
officer, was assigned to the U.S. Interests Section there. Since Cuba
and the United States do not have formal diplomatic relations, the
Interests Section is officially part of the Swiss Embassy. Yet it has
its own large building on Havana's waterfront and carries out most of
the usual functions of an embassy, including processing the 20,000 Cuban
immigrants the United States takes in each year.
Political repression in Cuba is the subject of much international
attention. Cuban elections are neither free nor fair. The media are
controlled by the state and permit no alternative views; antennas and
satellite dishes to bring in U.S. television are banned (although
foreigners and tourist hotels may use them). Dissidents are regularly
jailed on vague charges such as "dangerousness."
Yet during my time there, I found the Cubans' lack of economic freedom
to be even more injurious to their dignity and aspirations than the
denial of their political rights. The Cubans I knew were little
preoccupied with obtaining forbidden reading material or joining
dissident groups. Instead, economic restrictions forced them to spend
each day scrounging to provide a level of subsistence for themselves and
their families, often by illicit or illegal means. La lucha, the
struggle, they called it—not a revolutionary or even
counterrevolutionary struggle, but simply a struggle for survival.
It was all supposed to turn out differently, of course. After the 1959
Cuban Revolution, businesses and farms were nationalized, and housing,
utilities, basic foods, and even entertainment were highly subsidized.
Education and medical care were free. Salaries were low and their ranges
narrow; workers were rewarded with better housing or a new Soviet-made
car, rather than a raise. Eventually, material rewards would not be
necessary at all, according to the Revolution's political philosopher,
Yet this economic system was a house of cards, kept upright through
generous trade arrangements with the Soviet Union amounting to a subsidy
of some $6 billion per year. It collapsed when its patron did: Cuba's
gross domestic product dropped by 35 percent between 1989 and 1993. The
government declared a "Special Period in Peacetime," an economic state
Power outages became more frequent. The government touted the island's
"eco-consciousness" as gasoline supplies dwindled and bicycles replaced
cars. Schools remained open, but without paper or pencils (students
shouted back lessons recited by the teacher). Health care remained free,
but medicine and supplies were scarce: hospital patients had to bring
their own sheets, towels, soap, and food. As Havana residents scrambled
to produce their own food, the plaintive crowing of roosters became a
common sound in the city. "Why do they crow in the middle of the night?"
I once complained to a local friend. "They're hungry," she explained.
Reina, a tiny woman hugely pregnant with her first baby, worked in
a plant nursery. As I picked out some red hibiscus potted in rusty cans,
she explained that expectant mothers received a voucher for cloth
diapers, which were otherwise unavailable. The voucher could only be
redeemed after the eighth month of pregnancy. Reina complained that her
doctor was predicting a premature delivery, but the compañeros wouldn't
give her the diapers, since she hadn't yet completed her eighth month.
The rationing system, which had covered about a quarter of family
consumption before 1990, was expanded to nearly all basic goods. Cubans'
ration books, or libretas, now promised them a few pounds of rice and
dry beans a month, along with a few other foodstuffs and personal
necessities that might or might not be available. Shoes, for example,
were supposed to be rationed, but none arrived. Children were entitled
to powdered milk only up to the age of seven. The elderly were given
Cerelac, a concoction of dried milk and ground soybeans.
As the economy floundered, Cuba desperately needed new sources of hard
currency. The promotion of tourism was stepped up, and hard-currency
hotels, shops, and restaurants for foreign tourists began to appear.
With their bright signs, fresh paint, and well-stocked shelves, they
contrasted strikingly with the drab and barren facilities accepting
Cuban pesos. Traveling throughout the island, one could apply this
simple rule: if it looks good, it's not for Cubans. The Cuban Revolution
had aimed for paradise and achieved, finally, paradox.
Trying to retain control over the flow of money, the government issued
colorful "convertible peso" notes, worth exactly one U.S. dollar. Yet
the greenback itself quickly became the currency of choice. In 1993,
Cuban citizens were granted the right to hold dollars and shop in the
tourist stores. The government hoped to gather black-market money into
its own pockets and encourage the inflow of cash from family members in
the United States. In fact, the latter has been estimated to be Cuba's
single greatest source of hard currency, at more than $600 million a
year. A government wall slogan reads: "Hay que tener FE"—"You've got to
have FAITH." Cubans quip that FE really means "Familia en el Exterior,"
Yet unfortunately for most Cubans, only some 15 percent of the
population received dollars from abroad, and very few could earn hard
currency in the course of their regular jobs. The vast majority were
officially shut out of the expanding dollar economy.
A Cuban professional with a normal salary could not afford a cup of
coffee at the Hotel Nacional, Havana's towering 1930s landmark. "It must
be difficult," I once remarked lamely to a well-educated Cuban. "No," he
said with sadness and disgust, "it is not difficult. It is inconceivable."
Meanwhile, the government resisted giving up its monopoly on employment,
which it saw not only as an instrument of social leveling but as an
effective means of control. In 1990, 95 percent of employed Cubans
worked for the state; some 80 percent still do. The rest depend on the
government as well, for their ration books, their housing, their
children's educations, and even their right to stay out of prison—since
nearly all Cubans are breaking the law in some way as they seek to
provide for their families.
As the tourist industry and joint ventures with foreign companies
flourished, direct hiring of Cuban workers remained forbidden. Labor
contracts are handled by a government agency, which charges an average
of $400 a month for each worker. In turn, the workers receive some 250
Cuban pesos monthly, or about $12.50, for an effective tax rate of
nearly 97 percent.
In spite of the low salary, workers in tourist hotels and joint venture
enterprises at least had the chance to receive dollar tips, extra
payments under the table, or "bonus" baskets of scarce consumer goods.
The country's incentive scale gradually turned upside down, with hotel
maids and valets earning more than doctors, professors, and scientists.
Unsurprisingly, university enrollment in Cuba has dropped by half since
After a prominent pediatrician treated my son at Havana's leading
children's hospital, he invited me to follow his rattling little car to
his nearby home, so I would know where to find him in case of an
emergency. His apartment was in a four-story concrete-block building
with open stairways and laundry flutter-ing outside glassless windows.
He didn't even have his own phone; the number he gave me was that of a
neighbor down the hall.
A Cuban acquaintance of ours estimated that each person needed about $30
a month, in addition to a peso salary, to procure basic necessities such
as soap, toothpaste, and shoes. For many, the black market was the only
answer. Cigars were stolen from factories and sold to tourists on the
street. Bold black-marketeers rang my doorbell every day, trying to sell
stolen bags of coffee or even industrial-sized rolls of lunch meat
spirited out of a hotel kitchen.
Even worse, young Cubans quickly discovered the rewards of companionship
with tourists. Around five each evening, women and girls start to line
up along Havana's main roads in tight, colorful clothes. Many are
daughters of professionals, or even professionals themselves. They see
themselves not as prostitutes but simply women on the make, hoping for a
decent dinner, a new outfit from a hotel shop, or perhaps, if they are
lucky, the greatest prize of all: marriage to a foreigner and a ticket
off the island.
On a hot afternoon, I went for a swim at the Hotel Comodoro.
Tourists from Europe, Latin America, and Canada lounged by the sparkling
pool. A can of Coca-Cola, imported through Mexico in defiance of the US.
embargo, cost $1.50 at the pool bar. In front of me, an elderly foreign
man bobbed in the water, smiling. Two Cuban girls, about 15 years old,
floated beside him, whispering in his ears and kissing his sinewy neck.
In September 1993, the Cuban government reluctantly authorized
self-employment in more than a hundred occupations, such as taxi driver,
electrician, and artist. However, strict rules governed these new
professions. The self-employed are strictly forbidden to hire others;
only close relatives can assist them. University-educated professionals
cannot sell services in their area of training. High monthly license
fees are charged, whether or not the enterprise makes any money. The
state also takes a large cut of any income received.
Tiny in-home restaurants, called paladares, were authorized by the new
rules, yet they can seat only 12 patrons at a time, may use only family
members as cooks and waiters, and are forbidden to serve shrimp and
lobster, which remain a government monopoly. Many quickly surpassed the
state-run tourist restaurants in quality and value. Yet the closure rate
remains high, since profits often don't cover the license fees, and
crackdowns are common on those trying to get around the confining rules.
A Cuban-born colleague put us in touch with his uncle who still
lived on the island. We invited the uncle, a professional actor, to a
gathering at a paladar. We were served a simple but satisfying meal of
red snapper, rice, black beans, fried ripe plantains, and salad,
finishing up with coconut flan and coffee. After talking animatedly over
a beer, our guest polished off his dinner in silence. As we pulled out
$50 to pay the bill for five people, amazement and embarrassment showed
on his face. "This is like a dream, a dream of the old days," he said,
tears shining in his eyes.
The regime makes no secret of its reluctant toleration and suspicion of
self-employment. Fidel Castro has likened it to "a cancer devouring the
revolutionary spirit." In 1996, a sudden 300 percent jump in license
costs and a 650 percent increase in fees led many to relinquish their
permits; the total of registered self-employed dropped from over 200,000
In 1994, however, the Cuban leadership realized that food shortages were
threatening the regime's survival. By June, vegetables had practically
disappeared from Havana's official markets, and the first open
demonstrations and riots were taking place. The government announced
that surplus agricultural products could be sold at farmers' markets,
under highly controlled conditions, of course.
I stepped under the corrugated roof of the market in my
neighborhood. Today there were shriveled green peppers, small onions,
and a few piles of seasonal fruit. Off to one side, flies buzzed and
circled over a worn wooden counter. Men in dirty aprons stood behind it,
each with a single pig carcass. Farmers were required to sell their
wares personally and pay high fees for the privilege. There were few
buyers. The pork cost 20 pesos a pound. A sugar cane cutter in Cuba
earned 107 pesos a month, a doctor about 400. I paid for five green
peppers with a ten-peso note, the back of which depicted a sea of
uplifted fists clutching machine guns. Tiny background lettering
repeated "Patria o Muerte" (Fatherland or Death). The woman selling the
peppers would also happily accept U.S. dollars.
For ideological reasons, Cuba refuses to implement further reforms that
would unleash the economic vigor of its people. After a strongly worded
address by Armed Forces leader and heir apparent Rafil Castro, the Fifth
Communist Party Congress in 1997 rejected further liberalization. In a
speech to the National Assembly in July 1998, Fidel Castro maintained:
"The more contact I have with capitalism, the more revulsion it causes me."
Meanwhile, Cuba is again becoming a playground for foreign tourists, yet
there are no wealthy or even middle-class Cubans this time around. There
are simply the poor, who struggle to make ends meet and wait for things
to change. After 41 years, many who dream of a better life can only
imagine achieving it somewhere else.
As I left the market, I passed a man selling garlic. A four-foot
strand of neatly braided bulbs was 20 pesos, or one dollar. "Where are
you from?" grinned the gap-toothed, gray-whiskered vendor as I handed
him a green back. "United States," I answered warily, smiling in return.
His grin widened. "Will you marry me?" he asked.
About The Author
Patricia Linderman is a writer and translator currently living in
Leipzig, Germany. The Foundation for Economic Education (FEE), one of
the oldest free-market organizations in the United States, was founded
in 1946 by Leonard E. Read to study and advance the freedom philosophy.
FEE's mission is to offer the most consistent case for the "first
principles" of freedom: the sanctity of private property, individual
liberty, the rule of law, the free market, and the moral superiority of
individual choice and responsibility over coercion.
ILW.COM - immigration news: La Lucha: The Human Cost Of Economic
Repression In Cuba (6 November 2009)