Notes From a Failed Revolution

Just last month, economist Bob Aliber visited Cuba, keeping his eyes open and jotting down statistics and observations. Below, excerpts from the informal paper that Bob, a professor of international economics and finance at the Booth School of Business at the University of Chicago, has circulated to a few of his friends. (Note that the topic headings are mine.)

Cuba, 50 years after the Revolution:

Honey, I Shrunk the Country

Cuba is shrinking; its revolution has hit the end of the road. Its population is growing at the rate of 0.1 percent a year, literally stagnation. The female reproduction rate is 1.7, or 0.5 percent below the rate necessary to maintain a stable population. In the next fifteen years, the number of women between age 15 and 40 will decline, and the number of births will decline further if the reproduction rate remains unchanged; the population will decline.

The best and the brightest vote with their feet, between thirty thousand and thirty five thousand people leave each year for the opportunities in Miami and Mexico and Spain and Venezuela. (For reference, if the Cuban population were more or less constant with zero growth, there would be one hundred twenty five thousand in each one-year age cohort–the ten year olds, the twenty year olds, the thirty year olds, etc; hence about twenty five percent of each age cohort leave. The intuition is that the proportion of university graduates and professionals who leave is higher.)

The dependency ratio of the number of retired to the number of workers will increase, as the number of seniors increases relative to those in the active labor force, living standards will decline. And the dynamic is that more people will leave….

Old Cars in Good Shape and Old Buildings in Bad Shape

20110116-_DSC1014_5_6_7_8.jpgThe fleet of 1947 to 1959 Chevys that circulate in Havana is amusing. Many of these vehicles are well maintained, and their upholstery is in remarkably good shape….New vehicles are not available in Cuba or are prohibitively expensive, while the cost of repairs of the sixty year old Chevy is modest by American standards. My guess is that the repair labor earns US$3.00 to US$5.00 an hour.

The deferred maintenance in the housing stock and public buildings is depressing….Sections of older Havana are remindful of the bombed sites in London and in Berlin in the late 1940s and the early 1950s–or of some parts of Chicago that had been abandoned by stable families because of gang violence.

The contrast between the love and affection shown the older automobiles and the decay of the eighteenth and nineteenth century buildings in old Havana appears to parallel private ownership and public ownership.

Fifty Years

There are now fifty years of data on the economic achievements of the Castro government. Its achievements in improving literacy and the health of the public–and especially the declines in infant mortality and the increase in longevity–are impressive. All of the deferred maintenance suggests a country in decline, one that has been “eating its capital.” The public and private savings rates are among the lowest in the world. The low birth rate for a poor country is a vote by the young women of Cuba that the government has failed to deliver on promises of abundant food. The outmigration of the young is like a vote of no-confidence in the management of economic opportunities.

The failure of leadership to respond to daily evidence of mis-management is remarkable.

As Ronald Reagan remarked, Fidel Castro promised to create the greatest Hispanic city in the Western hemisphere, and he did just that—only it was Miami, not Havana.