An article by Michael Voss on BBC Internet News caught my eye this week (4/25/2008). Raul Castro has taken several small measures to give the Cuban people an opportunity to improve their circumstances. He has lifted the ban on owning cell phones, DVD players and PCs. Cubans can now stay at the same hotels as foreign visitors. Small family farms and private cooperatives - which currently produce more than half the country’s food on just a fifth of Cuba’s arable land – will be allowed to purchase or take over additional state owned acreage. There will be less red tape and bureaucratic control over what to plant, and there will be better (read: free market) access to farm supplies. The government has raised the price it will pay for some farm products. For the first time, it will be legal to hire farm workers. Enterprise workers will be able to earn bonuses based on productivity and maybe there will be no ceiling on what a worker can earn.
The Cuban people have already demonstrated their resiliency.
Cuba went through the chaos of an oil shortage in 1991. Local meat production and locally grown fruits and vegetables suddenly became very important. Local community neighborhoods learned greater self-sufficiency. People had to change their lifestyle in order to get by with less energy. And they were forced to make these changes in a hurry.
Fidel Castro called it Período especial en tiempo de paz - "A Special Period in a Time of Peace". It was a period of economic and cultural crisis. Cuba suddenly found that Russia was no longer able to supply it with the economic subsidies and oil products Cuba needed to survive. Oil imports dropped by approximately 53 percent, crippling Cuba's oil fired electric power system. Refrigeration and air conditioning failed. Chronic power shortages crippled transportation, agriculture, and industrial production. Estimated GDP declined by 33 percent, real wages fell, and unemployment soared. There were food shortages. It has been reported that Cuban adults lost an average of 20 pounds.
The Cuban people adapted to the crisis. From 1991 to 1995, they introduced locally grown sustainable agriculture, overhauled their economy, changed their diet, and adopted new lifestyles. Organic farms and urban gardens became socially acceptable. A home grown mass transportation system developed. Authorities enforced car-pooling. Locally grown fresh vegetable production increased 10 fold. Women had fewer babies. (Annual population growth declined from .8 to .4 percent !) The American dollar was used to provide a stable currency. Eventually, GDP growth resumed. The "Special Period" got Cuba through its initial cultural and economic crisis.
Although Castro ran a socialist dictatorship, he did not use coercion to meet the challenges of Cuba's "Peak Oil" crisis. Instead, he loosened the reins on private enterprise. He told his people that things would be very hard. The Cuban people were forced to find their own solutions. They quickly figured out how to get by with less energy.
Cuba’s experiment with personal initiative during its fuel crisis was not lost on Raul Castro. He apparently understands the entrepreneurial innovation it unleashed and is perhaps a more practical leader than Fidel. If he truly wants to improve the economic condition of the Cuban people, he will continue to loosen the tight grip of a cumbersome and ineffective central planning system.
What he will then discover is the stark difference between the limitations of centrally planned economic systems, and the far more robust growth of a market based economy. The reason for this difference is very simple. The quest for personal gain is human nature. Most of us are naturally competitive. The roots of these attributes are embedded in the basic survival instincts of our animal behavior. Food, water, shelter, security, and so on. The more we have, the more self-confident we feel. If we have the opportunity to increase our personal well-being, most of us will put in the time and effort to do so. It’s all very natural.
As a result, political systems which create the opportunity for personal gain are more likely to have the support of the population being governed. (There will always be dissidents).
Conversely, any political system that decreases or eliminates the opportunity for personal gain also decreases our interest in its success. In nations with this form of government, most people discover their quest for personal economic success is best found by working outside the “official” political structure. This was, and still is, a key characteristic of the Russian political system. It exists in Cuba. And as a matter of fact, multiple examples of underground economic activity can be found within any system of government - including democracy.
If we are not particularly interested in the survival of our current political system, then it – in turn – must use coercive measures to ensure our obedience. Hence the need for the apparatus of the police state to enforce uniform economic and ideological behavior. It is no accident that Communist and Socialist political systems are also oppressive forms of government. Restricting the fundamental desire for personal gain creates frustration and anger. Followed by cynicism, ridicule, and rebellion.
When a government restricts the opportunity for personal success, it guarantees two things: people working within the system will do as little as possible to achieve the ideological goals of the system; and most of the people who are able to work outside the system will be motivated to put in the time and effort to do so.
1. In the former case, people working within the system will espouse the quest for political power as a means of achieving personal gain. Politics becomes far more important than progress. The success of the political system becomes immaterial because they are really not motivated by a desire to find practical, common sense, solutions to current challenges. Hence, the effectiveness of the political system deteriorates.
2. In the latter case, the chance for economic gain becomes a primal motivator of clandestine private behavior. Monetary transactions are not reported. Goods are manufactured and transported by a network of “unknown” intermediaries. Services are rendered after personal negotiation.
Although government can not guarantee personal success, it can create the opportunity for personal gain. If Raul Castro understands this basic principal, he has the means to drive incredible economic growth by unleashing the creative energy of the Cuban people.
Ron
