Russ Roberts

Casey Mulligan on Cuba

EconTalk Episode with Casey Mulligan
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Cuba.jpg Casey Mulligan of the University of Chicago talks with EconTalk host Russ Roberts about life in Cuba. Mulligan, who recently returned from a trip to Cuba, discusses the economy, the standard of living and some of the peculiarities of communist control.

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0:33

Intro. [Recording date: September 9, 2016.]

Russ Roberts: Casey, welcome back to EconTalk.

Casey Mulligan: Well, I'm so glad that we have the freedom to enjoy a program like yours.

Russ Roberts: There is something special about the United States. And I say that because our topic for today is your recent trip to Cuba. Which I found fascinating--you wrote it up on your blog, Supply and Demand, and we'll put a link up to that post. How did it come about that you went to Cuba? How did you get there [?]? Because although there have been some lifting of restrictions, it's not so easy to get there, right--is my understanding.

Casey Mulligan: Well, I mean there's some background to it. I've been teaching public sector economics at Chicago most of my career. And a couple of aspects that I found important to look at--one of them, democracy or non-democracy aspect of public sectors--whether their elections are competitive or not, and the regulation and planning aspect. And, I teach a lot of them in my class, but most of it out of a book. And I wanted to see that. And my wife and I, not too long ago, had gone to China, thought maybe that's maybe a communist country and we could see some of those things; and they certainly do have the non-democracy aspect. But the planning aspect of it is long gone. So we said, 'Well, maybe we should go to Cuba or North Korea or something like that.' At the time it wasn't clear how to achieve that--whether we'd be allowed.

Russ Roberts: Is your wife an economist, Casey?

Casey Mulligan: No.

Russ Roberts: It's an unusual vacation concept for some people: 'Hey, honey, let's go to a horrible dictatorship for a vacation.' You have a very understanding wife, it seems to me.

Casey Mulligan: Well, it was always clear we were going to be able to come home, so that's important.

Russ Roberts: You're a good husband. So, anyway, you should have tried North Korea or Cuba. And how did you get into Cuba?

Casey Mulligan: Well, it looked like our government really opened opportunities for Americans to go there. I think Canadians and Germans have been going there for a lot longer. Anyway, they started showing up on tour groups as a possible destination. So, our kind of calendars lined up, and so we went. We signed up to go. And in the next week we heard that our Mayor of Chicago was also going with his family; and the Obamas were going as well. So, it must have been something that happened in terms of Americans getting access there--my understanding.

Russ Roberts: It's party time. Mulligans, Obamas, and Emanuels head to Cuba and paradise. How long did you go for? How long were you there for?

Casey Mulligan: We were there a week.

Russ Roberts: And, just in terms of planning--can you get on the Internet and explore things about Cuba from the United States? Can you do things like, 'I wonder what it would be interesting to look at. Where should I stay? Where can I eat?' Or do you kind of have to arrange that on the fly once you got there?

Casey Mulligan: Well, both of those approaches can be taken, but I used a tour group that I'd used before, and they really handle everything. And they had explained to me that--of course, they are very sensitive to their customers and what their customers like. Tend to, I guess, be older people. Americans. But the Cuban government presents them with, really a menu of things that they can do with the tour group: places they can go, people they can interview. And the tour group chooses from that menu.

Russ Roberts: So, in that experience, how much freedom did you have to explore things or talk to people who were sort of not pre-approved by the tour group, through the government?

Casey Mulligan: We would have several hours--I would say, a day--that the tour, they didn't schedule things for us; and therefore we could--we were free to wander off. You know, the police wouldn't stop us if we took a taxi into the middle of the country or just walked down the street and talked to people. Which we did, for sure: went in some stores. That was one of our main goals, was to try to see it unscripted.

Russ Roberts: And, before we talk about what you saw, presumably you went to Cuba with some preconceived notions about their economy. You might call them biases. You could call them priors. How much do you think that colored what you saw when you were there and how you saw it? Do you think, did you have, were you conscious of that when you were there? And did you try to push back against that and look for things that might not agree with your priors?

Casey Mulligan: Well, um, I guess one of the priors I had with the Cuban people was to not like the Castros or the regime or the Party. And I learned that--maybe I don't like them but not quite in the way that I thought. I had thought--I know Che Guevara is very popular around the United States in certain circles, college students and so on. I had thought that maybe they wouldn't like guy. But they actually liked him, in various ways; they thought he was a good example. He would roll up his sleeves and do the dirty work. That they were fortunate as citizens to do as well. So, I guess that was the biggest surprise that I had. And I started to understand that, you know, the Cuban Americans and the Cuban Cubans, they are different on this. And most of the exposure that I had had in terms of meeting people who were Cuban or reading what Cubans had to write about Cuba, they were from the Cuban America. And they are more angry toward the regime and the people living there.

7:50

Russ Roberts: You know, part of that is selection bias, obviously. Some of it could be--by the angers people being more likely to leave, perhaps. It could be the fact that--once you are there, you want to make the best of it. Or it could be just that those people who are left behind have better lives for a variety of reasons, care about different things and are somewhat content. So, what you wrote is that you sensed a reasonable or quite a bit of pride in the Cuban system, from the people, at least, that you talked to. Is that accurate?

Casey Mulligan: Um, it's a little bit exaggerated. I witnessed some proud moments for them. They--in particular, an episode that I read about and that people talk about was, in the early 1960s, I guess it was Che Guevara's idea but certainly Castro supported it--that illiteracy program for the country. And so they took kids that were not really high school in the cities--and they were illiterate, because they were in high school and they were in the city. And they sent them out to the country, to help with the farm work during the day. Which I'm sure the farmers appreciated. And then teach the farmers to read at night. And then that--that was [?], a 9-month program or something like that. And then at the end each of the farmers wrote a letter to Castro, you know, with their new skills. And the--teenage--people who--the teenagers are proud of that today. Of course, they are not teenagers any more. And the rural people, I think, look favorably on that. And it was really the government's idea. So, that I thought people were genuinely proud of. There was other talk about things like, 'Well, we, the Cubans participated in this International Congress and that International Congress.' I don't perceive that they were all that proud of it. They were all just parroting some of the bullet points that I think the State Newspaper puts out.

10:02

Russ Roberts: You do hear--we'll talk later about health care. But you hear that--when I debate or discuss Cuban economics with sympathizers, they always mention the high literacy rates and the great health care. We'll talk about health care in a minute. But let's just start with some basics of just walking around the street. One thing you remarked on is that many of the buildings you saw were not doing very well. Tell us what you saw. And why you think--what explains it.

Casey Mulligan: Yeah. Right out of the airport, I noticed--the very first thing I noticed was the complete lack of advertisements. That's the first thing I saw. And we can come back to that. But then, within a few minutes after that, I was amazed at how crumbling the buildings were. At first, you know, the airport, you land, and first thought, 'Okay, maybe we're in a rough neighborhood,' or whatever. And of course the buildings aren't going to be that great.

Russ Roberts: Yeah. The buildings near O'Hare or Midway in Chicago sometimes don't look so healthy, either. But, go ahead.

Casey Mulligan: So, then, but when we got to the waterfront it was like the same story: the buildings were, you know, falling down. They were--and sometimes they were half a pile of rubble, sometimes a whole pile of rubble. And paint was long gone--they were last painted in 1958, maybe. They were really in bad shape. Very little new stuff. There were some renovated things, especially around where they took the Pope. But people were living in these buildings that were falling apart. And if it rained--and it did rain a number of times when we were there, especially in the afternoon--you know, it would fall apart even more. And some people would hit the point where they had to be moved out, because it was no longer safe by any stretch of the word to live in those premises any more.

Russ Roberts: So, that's hard to believe. Right? For someone who hasn't been there. I've never been to Cuba. I wrote a book that had a Cuban element in it and I did a lot of reading for that. I've seen a lot of pictures, which tend to show colorful cars and interesting-looking buildings. The impression you are giving is that it's, the city, say, Havana, is in literal disrepair. It's not like, 'Oh, I saw a building that was falling apart.' It's like, common. Is that correct?

Casey Mulligan: Yes, it's common. And the other thing that came to my mind, I had read this book on rent control, a number of people contributing: Milton Friedman, Ed Olsen was one of the main editors; I think maybe Walter Block was, as well. And that book, on kind of alternating pages, they would show a picture of a bombed-out part of a city of that had been bombed; and then they'd show a picture, part of a city, that had been subject to rent control. And they were trying to--they asked the reader: Can you guess which is which? And it was hard. And I actually know Ed Olsen a little bit. I thought, 'Boy, you guys are really exaggerating.' I was a little surprised that Ed would do that. But that's the first thing I thought of when I got there, is like, 'Wow. These places kind of look like they've been bombed. But there have been no bombs.' It's been an economic system that acted like a bomb.

Russ Roberts: I think--part of the reason--I owned that book. I don't know if I can put my hands on it, but I used to have that, I had that book at one point in my life. And being a free market guy and a big anti-price-control guy, I always loved that book. But you have to face the fact that in San Francisco and in New York City and I'm sure, maybe Chicago, I don't know, there is "rent control." Now, it's not rent control the way it was originally implemented in some cities. They put a lot of exceptions in, and a lot of ways to create some incentives while trying to keep the rent low for certain tenants. So I think part of the reason that book seems so provocative is that it's hard for us to relate to it if we don't know the historical examples that those are capturing. Right? Where there were--the exceptions. You are suggesting, though, that in Cuba, there is zero incentive to take care of the buildings. Who owns them, and why aren't they being repaired? Why aren't people fixing them?

Casey Mulligan: Well, ownership is a little blurry. For most of the regime, the State owned it, but the people who lived there, they had the right to live there. So, when the time came for them to move, they would receive some kind of payment from the government. So, you could say they were selling it to the government. Or you could say it was a bonus for vacating their property, either way. But they couldn't sell it to a third party. And the payment wasn't based on how well they maintained it, or anything. Then, pretty recently--I'd say in the last 5 years--they, people are allowed to sell and buy property: I think you can have a maximum of 2 or 3 or something like that. So there is a resale market now. So that is one aspect of the property rights. For most of the time it wasn't really owned by people. The other aspect of it is that property rights in the apartment buildings, I learned, was unclear. Of course, the inside of your apartment would be yours. But, what about the common areas? What about the roof? Did that belong to the people who live on the top floor? Or everybody? It wasn't clear. So not much got done about keeping rooves under repair. And actually some of these buildings, as they start to fall apart, you get new common areas that are--it's hard to--you know, the property lines aren't so clear when the building is splitting apart and crumbling. And so you have areas of these buildings, it's not clear who owns them. But people are using them.

Russ Roberts: And you talk about this phenomenon of dividing the story of a building essentially into two stories, creating apartments--I don't know how to describe it exactly. You want to try? The Barbecue phenomenon?

Casey Mulligan: Yeah. So, the buildings there were really--most of them were built either in the 1920s or the 1950s. There were kind of two building booms. And in terms of the size and structure, it was pretty similar to what we would build here. People kind of like kind of large rooms. Maybe a little bit taller: so [?] what you would have due to the heat and everything. But now, people don't live in that kind of luxury. They really want a smaller place. And so they divide these places up. You can imagine putting in a wall. But then they also put in a new ceiling between the old floor and the old ceiling. And they call that upper floor, if you will, or they might call it a loft: They call that a Barbecue, because it gets hotter up there in that top half of the room. And then they will have, there will be a little hole in the new floor/ceiling, and a ladder up the wall that people would climb up there. And they tend to do their sleeping up there, and their, maybe some storage. So they've expanded the square footage by really a factor of 2. Not the cubic footage, of course, but the square footage.

16:31

Russ Roberts: I was--I found it poignant when you talked about there are some special regulations for boats. Tell us what those are and how you found out--fishing boats--how you found out about them.

Casey Mulligan: Well, they--I'm actually quite interested in boats just as recreation, and so I wanted to see what the boating situation there. I'd heard something about, well, it's not easy to get a boat, if you are a Cuban citizen. And so there, I looked around. And also I asked about the fishing. And there's not a whole lot of fishing. And the fisherman that I saw were in very small boats. Smaller that what I would call a rowboat. They kind of operated like a rowboat, but it was a very small boat. I was amazed that you could fish without getting swamped. But, yeah, I would see guys out there in the morning in these very small boats. And I would presume that the reason they were allowed to have a boat like that was because you can't take it anywhere off shore. For example, to Miami. So, that's what they were doing. And as a result, the fishing industry is not very productive. I mean, how much fish can you catch in a little boat like that? And so, amazingly, a country like that imports its fish. To the extent fish is eaten in Cuba, it's going to be--the vast majority is going to be imported. I mean, even while I saw a fishing tournament there, that was all foreigners. So, they held a tournament and that looked like fun; and people brought their boats from Miami or maybe Europeans who happened to be in the area. And these were nice fishing boats. And they caught a lot of fish. Recreationally. But the Cubans don't have things like that.

20:01

Russ Roberts: What did you eat while you were there? And how did you eat it? I know there are restaurants in people's homes. What kind of--how did that work on the tour?

Casey Mulligan: It was--I really liked the tour company: they took care of us well--so, we were not eating like the locals. And a number of the stops were in private restaurants, that were maybe part of somebody's house. They've recently allowed, in the last 3-4 years they've allowed restaurants to be in an actual business, you know, with the boss and a payroll. So we met employees who worked for the restaurant and where were an official employee. And their customers were tourists. They are nice restaurants. They--every once in a while they would apologize that they wouldn't have this flavor or that flavor because it is hard to find the ingredients. So, even in the fancy places we saw an element of that. And even an idea of the pricing was about what it would cost in Chicago to go to a nice restaurant, so that would be--you would be talking a month's wages for the Cubans. So you can imagine if they have trouble finding ingredients at that level, that, how hard it is for Cubans in general to find ingredients to make dishes that they might like.

Russ Roberts: Did you see any black market cash transactions? Kind of a personal question. Maybe you don't want to answer that.

Casey Mulligan: Well, Yeah; I am just trying to think in my mind how much of it was tourist-specific versus locals. Um--

Russ Roberts: I assume if you want to buy something in Cuba, you can use dollars--American dollars. Is that correct?

Casey Mulligan: No--not literally. They have a currency there that is only used by the tourists that--1-1 with the U.S. dollar, it is pegged to the U.S. dollar--there's a hefty fee that comes out. So, but it's--

Russ Roberts: Hmm.

Casey Mulligan: So, but it's designed to be 1-to-1 with the U.S. dollar. I understand that there are stores--I didn't go in any of these stores but there are stores that the locals can use dollars. So--and they would be getting--I understand they can use regular U.S. dollars; and they are getting those U.S. dollars from relatives in the United States.

Russ Roberts: Did you get any beef?

Casey Mulligan: Yes--yes, we had beef. All the beef is imported. I think it's--100% of the beef is imported because the [?] to [?] a cow.

Russ Roberts: So, why is that? They have cows. Right?

Casey Mulligan: They do.

Russ Roberts: A small number. Not a big number. But there are cows.

Casey Mulligan: They do have cows. They are government-owned. And they are for milk--which there is quite a shortage of milk. But they are for milk. And they wouldn't want a non-owner of the cow to kill it and use it for the beef.

Russ Roberts: Listeners recently complained I don't quite Hayek, my favorite Hayek quote, enough; but it does remind me: 'The curious task of economics is to demonstrate to men how little they really know about what they can imagine they can design.' There you have this bizarre world of state ownership, worrying about milk. These strange consequences: can't get beef. When I read your account of this, I was thinking back to a story--I actually found it on the web, from 2004, from the Chicago Tribune. It says,

In communist Cuba, only the state is allowed to slaughter cattle and sell the meat. Citizens who kill a cow--even if they raised it themselves--can get a 10-year prison sentence. Anyone who transports or sells a poached animal can get locked up for 8 years.

"My brother-in-law got a 12-year prison sentence for killing 12 cows," said an accountant who lives in the cattle-raising region.

But it's not [Russ:--this is the crazy part--] unheard of for Cubans to sneak into a pasture at night and butcher a cow on the spot. Residents have been known to descend on a cow struck by lightning, carving it up in minutes even though the meat often is charred and they risk a fine if caught by police..

The same thing can happen if a cow is hit by a car or dies of illness or malnutrition, in giving birth or of old age, even though residents admit the law requires them to leave the carcass alone and notify local officials.
Then--it talks about someone who works for a large dairy farm who recounted, "scores of people scrambled to a nearby railway with knives and machetes when word spread that more than a dozen cattle had been struck by a passing train." So, at least then, some of the--I don't, that just is a crazy story. There was some cattle, I assume, raised for some kind of beef, maybe, not just for milk. Not just cows for milk. Do you think?

Casey Mulligan: Um, I saw a number of cows. They didn't have a lot of beef on them. But it could be that they're doing that. The types of regulations that you mention from that story--the Cubans volunteered those sort of rules. Even when we were there they were saying they were tough on the cows and accounting for them, and when they died and why they died. They are more interested in the circumstances of a dead cow than a dead person.

Russ Roberts: That's unusual.

26:14

Russ Roberts: Let's talk about grocery stores. Did you go in some? Could you go in some?

Casey Mulligan: We were discouraged from that. It's what our tour company told us. And then, I did go in some; and when I would go in there would be Cubans who discouraged us. But we went in. Now, you called it a grocery store. They are on a rationing system, so the families get a book even to this day: they get a ration book that gives them permission to buy a certain number of units at the State price. And so these stores that I went into, we can call them a grocery store: they just had grocery items that the government was distributing with the ration books. I believe you could also buy over and above your ration at another, higher price. There wasn't a whole lot in these stores. Maybe a dozen or two dozen distinct items. They came in very large packages--so, a big can of mangoes was one of items I saw.

Russ Roberts: Just like Costco.

Casey Mulligan:

Cubanbakery_C_Rooks.jpg
Cuban bakery. (Photo courtesy of C. Rooks. See his comment in the comment section below.) Note tall soda bottles in upper right corner.
It's the same principle as Costco, I think, because they want it to be cheap. So, minimum of packaging and so on. Eggs, they were in trays; they were very large trays; I've never seen such big trays. I think they were 30 or 40 to a tray. Three liter bottles of soda, tall bottles. Items like that. And they would be--and I think milk. I didn't see milk, but I understand that the milk was rationed to the members of the family who were less than 7 years old: they get a certain number of units. Not enough for that child to use for the entire month, but there are a certain number of units they'd buy at the state price. And the state price was--I don't know--like an eighth, let's say and eighth of what it would be in the United States, say, for an egg, on a per-egg basis. Of course, you are not getting refrigeration; you are not getting packaging. You are not getting helpful store hours or even a place to park or anything like that. But, that was about the pricing.

Russ Roberts: So, I once hosted a Russian family when they had first arrived in the United States; and our family was assigned to them through the Jewish Federation. A lot of Soviet Jews and Russian Jews came out at various times; and to ease their transition to American life, sometimes there would be a family assigned to help them. We volunteered to do that. And one of the more interesting parts of that was taking them to the grocery store. And I may have told th story before, but there were two things that were fun about it. One was the produce section just was a source of tremendous fascination and amazement to them. And then the second part was that, though we didn't speak Russian and they didn't speak English, the mother of the family communicated she wanted to make bread, and she wanted to buy yeast. So, yeast is a very small item: it's physically small; it's hard to find in a store. A couple of obvious places to look. We looked and we couldn't see it. So we asked a person, one of the employees, to help if there was any extra yeast in the back. And they went in the back and found some and brought it out to me. And the Russian woman looked at me with like a new sense of respect. Like, 'Ah. He's important. He gets the yeast.' And I tried to explain to her that really anyone could get the yeast. They just hadn't put it out, and they would now put it out for everybody. And I just wonder, when I think about your experience of those primitive groceries, whatever you want to call them: Do the people of Cuba know that their relatives, say, in Miami or just anywhere in America or lots of other more developed countries, there's plenty of food to buy all the time to buy when you want?

Casey Mulligan: Oh, yeah. They know that. I also noted--I guess I could have figured it out before I got there--but I also noted that the very large fraction of people who have family just in the United States, or certainly abroad, and almost all of them would volunteer why they weren't gone yet. And they would give an explanation. And when they were going: 'I'm a few years from retirement; then I'm going to go to my daughter's house.' So they know. They have immediate family there: that's one way that they know. Recently, the immediate family has been allowed to visit a fair bit, and they come back with suitcases full of stuff. You can't put liquid milk in a suitcase, but a lot of powdered milk goes in a suitcase. Television sets. You can bring anything--5 bags in. And so a lot of the things that they have came from an American store.

Russ Roberts: I think when the, in the Cold War when you would tell Russians, Communists, that--I should mention, by the way for those listening at home if you don't know: Cuba is a Communist country, and it's run by a dictator who kind of through the bureaucracy who owns what where, prices, etc., availability. But when you'd say to people during the Cold War, to Russians, that Americans live better, I think--or when Khrushchev came here--I think in the 1950s, maybe early 1960s, it was early 1960s--I think he assumed that the profusion of material wellbeing that he saw was a stage show. There was a thing in the Soviet Union called Potemkin Village, where visitors would come and be shown a thriving place that was a sham, a theater, to deceive people about how easy life was there. Potemkin backwards--I had to write it down, but it's 'Nikmetop'--I wonder if people thought, Soviets who came to the United States thought they were getting a Nikmetop Village: a sort of anti-Potemkin-Village of fake prosperity; but in fact was real. Is there--it's hard to know, of course, you probably didn't talk in detail with people--but I wonder, when they see things on TV or when they hear from their relatives, that they think it's exaggerated? Of course, immigrants to the United States, in the late 19th century, were told the streets were paved with gold. They were told how fabulous it was. And of course it wasn't true. It was exaggerated. But it wasn't so exaggerated compared to, say, rural Poland, where many of those immigrants came from. And similarly I would think it would be hard to exaggerate the difference between a thriving American city in Florida, anywhere in Florida, versus Savannah.

Casey Mulligan: I didn't sense that kind of attitude. Like I said, a lot of them were holding American goods. They had put their own hands on them. So I don't know that there was any ground to be skeptical.

Russ Roberts: I'm just thinking--I think if you took--you know, if you went to Costco or a modern, giant, Safeway, standard, Walmart, supermarket in the United States, and you took someone from Havana there, I think that gap between the profusion and the reality they live under would be shocking.

Casey Mulligan: Yeah. There's no doubt about that. It's not in their face, the difference. They may be aware of it intellectually, but it's not in their face. That's true.

35:05

Russ Roberts: So, let's talk philosophically for a minute. When Elián González was taken to Florida, out of Cuba, and, if I remember correctly--I think his mother may have died on the trip? Or anyway, he was with relatives in Florida. And his father requested that he be returned . We never knew or couldn't know whether his father was under pressure from Castro to just say that--this was in the 1990s. And the U.S. government made the decision to return Elian to his father. And this was a cause for a lot of conversation. I'll never forget, though, that one pundit said he was lucky to have the opportunity to grow up in a country that was not as materialistic as the United States, not as focused on money, more egalitarian, more equal distribution of income. And so, he was fortunate. I found that to be a bizarre thing to say, for a lot of reasons. One of them being that the material wellbeing in the United States, which is what we are talking about right now, relative to Cuba is only one of the many reasons that I think most people would prefer to stay here than live in Cuba. And the guards face south. They keep people from leaving. They don't stop people from coming in to Cuba. There aren't--there's not a line. The line is to get out, not to get in. But, did you have any reflections on that, in terms of just the wellbeing? There are certainly things about a free market system that can be tough on one's emotional wellbeing. It is competitive; it tends to, can emphasize material things unnecessarily, overly. Did you have any thoughts on that while you were there?

Casey Mulligan: Yeah; I was interested in that. I was looking hard and asking about, you know, 'Are there people who came back? Are there people who, they came from another Latin American country and chose to come to Cuba?' I had trouble finding those people. So that's one aspect, is, they are voting with their feet; and like you said, the feet, oars, and the boats seem to go in one direction. The other thing that I wasn't so aware of: I was always aware you had really incomprehensibly large famines under Stalin and under Mao. But not really in Cuba. But I heard a lot of people talking about this 'Special Period,' which they described as starving. They didn't starve to death. But they talked about the malnutrition that they endured, the lengths that they would go to, to get food. The father may have walked 20 miles out in the country to tend a little garden that he had put together because there was just no food to find for the family in the city. And they vividly remember: Anyone my age or even younger vividly remembered what they considered--being very hungry. Literally hungry. And worried about survival. Most of them did survive in the sense of not dropping dead from starvation. But they were very worried about surviving. And that's not something that you run into in America too often.

Russ Roberts: Yeah; I don't want to--well, I just think it's important to make clear that--especially as an economist--that money isn't everything. And material wellbeing isn't everything. But it's--you don't want to be hungry. And you do like a roof over your head, especially if it's raining. But when I was thinking about Elian Gonzalez, I was thinking that--it's not so much that he'd have more stuff--he'd have more pairs of shoes if had stayed in Miami--which he would have, I suspect. And he would have had more video games and more toys--and more food, more beef, etc. But that's not really what makes life better. It is part of why people leave poor countries to come to a richer country, certainly. But for me, when I was thinking about that 5-year-old boy, my thought was. 'Which place will let him flourish? Which place will let him express himself? Which place will let his creativity come alive? Which place will his life have more meaning?' And that's a tougher question. I think there are parts of it that are pretty open and shut, but there are parts of it that aren't. And I'm really asking--when you saw--and of course you can't see this in a week. But walking around, did you get the feeling that it was a somewhat happy place? Or a dysfunctional place? Or is it just a place where people don't happen to have nice apartments or food? Or is there something more going on beneath the surface that's more important than food and money that was part of their lives?

Casey Mulligan: Well, they definitely had part of their lives than were more than the food and the money. I'm not sure I viewed it as attractive, necessarily, but no doubt about that. There is a thriving arts area there: people dancing, those sort of activities. Not everybody is into that by any means, but there is a segment of people who exercise that. Um, I did kind of think--when, I'd been to the Dominican Republic, when I was there, and I had asked, you can guess what year it was, I'd asked 'If you'd take me to where Sammy Sosa grew up,' which was a very poor area piled up with garbage, really. And he'd seen the people there; and they are the people--I saw as--they appeared happy to me. They were smiling. The Cuban people weren't as happy as that. It's not that they were running around complaining or anything like that. But I made kind of that comparison. They are--they ought to be--they are struggling. So, there are very few vehicles for them. So they are walking. And it is hot. And there aren't many buses. And the buses that are there are just overflowing, literally overflowing with people. And that's what they are dealing with every day. Russ Roberts: But that's what they are used to. My parents grew up in Memphis in the 1930s without air conditioning. Which would be unbearable for me. But, to them, they didn't think of it that way. So the fact that they walk in the heat--I don't know, do they care? Is it really a source of--is it dispiriting to them? I don't know.

Casey Mulligan: It didn't look like they were enjoying themselves as much as the Dominicans were, in Sammy Sosa's neighborhood.

43:16

Russ Roberts: What did you learn? When you think back on the trip, you saw some things that you hadn't seen. You got some first-hand knowledge of life in this peculiar, publicly-run--it is in some sense a police state but my impression is it's not a police state like the Nazis or Stalin's time. It's not as fearsome. You can't--I assume you can't criticize the regime much. But people seem to go about their lives; or I assume--you didn't mention it--they don't seem to be in fear. So you got to observe this firsthand. What did you learn besides--what was valuable to you from the experience?

Casey Mulligan: I'm not sure where to begin with that. I can think of some items, like--I learned how--I call it the Castros or call it the regime or the other revolutionaries, how they dealt with opposition. And it's really very different than Stalin and Mao. Because Stalin and Mao, they had the mass purges. And these huge famines. And that took care of a lot of their opponents. That's not what happened in Cuba--that they migrated. Of course, I was aware of the migrants. I probably should have mentioned: my aunt moved from Cuba to [?] in 1959. But she is just one example of many people who were on the opposite side of Castro and Che and everybody, and they left.

Russ Roberts: Well, I think they killed a bunch of people and imprisoned them in the early days, for sure. So I don't think it was like just a peaceful migration.

Casey Mulligan: Well, the reason my aunt left was so they didn't get killed. But it--I think it's on a much smaller scale than the Stalin and the Mao. And I think migration was an option. And actually, the dynamics of the migration, I found pretty interesting. I learned that there really is a wedge that's been driven between the Cubans outside of Cuba and the Cubans inside. It's a strange relationship because of course the Cubans outside are sending money to those inside, and even coming to visit, and bringing stuff. Although not for the entire society. Especially the blacker Cubans would have, many, much less likely to have American contacts. But, the Americans in Cuba are really angry at Castro, to this day.

Russ Roberts: You mean the Cubans in America.

Casey Mulligan: Yeah, in America. Sorry. The Cubans in America are really angry. And they still remember that, 'That's my house. That's my farm that you took from me.' Or from my father or brother or uncle. And they are angry about that. And that's probably some of the source of American policy against Cuba. The Cubans there aren't angry in that way. In fact, maybe some of them--

Russ Roberts: Well, that's because they are living in the farm where--some of them were the beneficiaries of it. But you are making a deeper point. I apologize.

Casey Mulligan: But that's another interesting dynamic of it. So, there may be living--in what in 1958 was somebody else's house or somebody else's farm. And I think some of them view the Castros today as maybe the only things standing between them and having to give it back.

Russ Roberts: Yeah.

Casey Mulligan: And so that's--you can think of it from Castro's point of view, you know, taking care of his opponents with the migration solution rather than the murder solution, is different. And may be part of the reason why he outlasted, or part of his regime outlasted the Communist regimes in China and in Russia--the Soviet Union.

47:42

Russ Roberts: Let's talk about the embargo. Which I have long been in favor of getting rid of. And President Obama has recently, at least, lifted some aspects of it--I don't know to what degree yet and how long that will take. But certainly we are on a different path. And as you pointed out, Cuban Americans in the United States, particularly in Florida, were very adamant about that embargo. And probably the reason it existed. And certainly felt very strongly about it and were very upset--have been upset with the prospect of it lifting. But it seems to me that it has been a perennial excuse for Castro as to why his country has not done as well, say, as Puerto Rico, which you write about. Or other similar places over the time period since the Cuban Revolution of 1959. And so, what are your thoughts on the embargo? And did you hear much about it while you were there, from Cubans?

Casey Mulligan: Yeah--but there--before I went there, I guess, I would have been inclined to approximate--I would empathize that it was an approximation. But I would approximate the impact of the embargo as zero. They can just trade--

Russ Roberts: Because they can import from other countries, obviously.

Casey Mulligan: Yeah. The goods take a different route; and 'What's the big deal?' kind of would have been my attitude, before I went there. And now I--I'm able to [?]--I would say that there is a real effect of the embargo on the standard of living of the people. Maybe more than transaction costs or some way to trivialize it. So that's kind of my analysis of it. The people talked about the Embargo a lot. But they said that, you know, the Embargo, it has an effect on us but let's not misunderstand that as the only problem or even the Number One problem that we have. And they even explained to me that--Raul, not Fidel, but Raul had been saying the same thing--like, let's not blame the Embargo for our problems. I figure where Raul's coming from is that the Embargo might get lifted; and then he doesn't want to backpedal too far. So this is a way of pre-empting that, probably.

50:35

Russ Roberts: But that really makes the point that the Embargo was a very powerful, potentially propaganda weapon, for the Castros over the last 50 years, 60 years. And that getting rid of it is going to make them--exposes them. It says, 'Okay. Now it's up to you. You've got no excuses. Your policies are on the line.' And, my view--you write about the fact that Internet access is not very good. It's limited. But, you know, the Internet and other tourists, people like you going there--it's hard to sustain that regime. And that level of control of people's lives: where they work, what they make, and where they live--in a modern era. It's going to be very challenging. I just can't see the system sustaining itself for, say, in 20 years. In maybe 10 years I think it will be essentially--they'll start like the Chinese; they'll open up certain things. And then they'll lose control of it--and Cuba will change.

Casey Mulligan: Can I be a devil's advocate a little bit?

Russ Roberts: Yeah, sure.

Casey Mulligan: There is this series of books coming out every other year called Cuban Communism. I have the 11th edition. I think there's 12 or 13 of them. So, this has been going on for a period of 20 years or something like that. These--every edition says what you said.

Russ Roberts: Ha ha ha ha ha ha ha ha....

Casey Mulligan: And--

Russ Roberts: I hate to laugh. I laugh at it myself. It's a tragedy. I don't really--there's nothing funny about it. But it is funny from a Social Science perspective.

Casey Mulligan: And that's kind of one of the things I was looking for--is one of--that regime has passed some kind of market test. Okay, it's not a free market in everything like that. But they have held their position for a long time. I think of the Khadafis--you know, we all like to say Khadafi [Muammar Gaddafi, Libya--Econlib Ed.] was a bad guy. But he held his job for a long time. He was doing something that was of some value. And now that he's gone we kind of see the value that he was delivering. And that's one thing I was kind of looking for--was there, are people gaining some kind of value out of this regime? And what is it? And I don't know the full answer. But like I mentioned, the story of the literacy program. There are elements of that that there was some pride that they had. And, you know, we got to think about the alternative: when the Castro's regime is gone, what's going to be there instead? And is it going to be a Libya or is it going to be a modern, 21st century China? I don't know.

Russ Roberts: Well, we don't know what a modern 21st century China is going to look like in 5 years, either. They've got a different set of problems. And it's not clear that their current path is sustainable, to me, anyway.

53:47

Russ Roberts: But I want to go back to this question of, um, passing a market test. It's not much of a market test, right? If I have guns and I can exploit people and force them, to--basically, enslave them in the sense that I can extract profit from them--I can keep their wages artificially low; I can tax them; and I can keep the proceeds from my buddies--that system, which is a huge part of human history--right?--democratic free market regimes are the exception, not the rule. But most of human history is about the exploitation by the powerful of the power-less. I don't consider that much of a market test, other than no one else came along and took it away from them. So, I don't--the fact that there are good things about the system--I don't see them--they are not obvious to me that the regime has provided, that has created a stable system. To me, it's more that: they had the power; they used it to enrich themselves and to enrich their friends who kept them in power. As the Castros. And, yeah, maybe they believed whatever their ideology was. It doesn't matter. But I don't really see the longevity of the Castro regime as telling me anything about how effective they were in making the citizens happy. Maybe pacifying them. I don't know. It doesn't seem to be much of a--not a very attractive market test to me.

Casey Mulligan: Again, I think of Libya, or even the Saddam Hussein examples. That, um, when they were forcibly removed externally, things got a lot worse.

Russ Roberts: Yeah, but that's not the same point. Right? I agree with you, but--

Casey Mulligan: --but a lot of people who--A lot of people who lived under them understood that the alternative was even worse.

Russ Roberts: But it's not a menu. You don't get to choose. If you said--I think the mistake we make in evaluating these as observers and social scientists and politicaly scientists is to say, 'Gee, wouldn't it be great if--if Cuba were like Florida, they'd be thriving.' Well, that's silly. They can't be like Florida. We don't have the road map to get there from here. And so, if we, if, just for example, if I think the United States did try to assassinate Castro in the 1960s, shortly after the Revolution, or at least considered it; and if we had successfully done that, yes: Certainly they might have been replaced by something worse. So, that says, 'Be careful in what you wish for. Don't always be confident that getting rid of something bad leads to something better.' But I don't think that's the same thing as saying: Because they kept away something worse, say, by being in power, that they provided something of value. I mean, for example, the crime rates are low in dictatorships often, because police are everywhere; and nobody wants to go to the prisons; and it's a well-known factoid, I think it's probably even true. So, does that tell you--that's a side benefit? That's a silver lining of a very dark cloud? That in, you know, Communist Russia or Nazi Germany there wasn't that much theft or murder. But that isn't what kept the regime going. It wasn't like, 'Well, you know, we'd rather have freedom but if we had freedom we'd have a high murder rate so we don't want to have that. It's just that that's one of the side effects of having a dictatorship or a totalitarian state, is that you don't get a lot of murder: you don't get gang warfare, say, or tribal warfare in a system like Iraq's.' Okay, but that system is not designed to do that. The leaders aren't giving that as a way to "please the market." It's just a side-benefit of their own exploitation.

Casey Mulligan: I agree with that. They need support--you say they have guns; but you can't have a gun pointed at everybody's head at every moment. You need some kind of support. And people who are on the margin of support have to think about: Do I want to be unsupported? Do I want to slip the poison in the guy's lunch or whatever action they might take? And perhaps some of them are aware of--maybe I'd be doing more harm than good here. 'I resist; I obviously harm myself and I'm going to harm my country as well, so I'm not going to do it.'

Russ Roberts: Yeah, I understand that. I'm not convinced that, when we look at totalitarian, authoritarian regimes that their stability is--thinking of it as "passing a market test" is the same way we think of--I don't know--Walmart doing well for a long period of time. It just doesn't strike me as the right metaphor. I don't know.

Casey Mulligan: Okay. We'll agree to disagree on that one.

Russ Roberts: Okay.

59:20

Russ Roberts: Are you going to go back? You want to go back? And, finally, do you have any--despite my optimism, which empirically has to be questioned because of the point you made in the book suggesting for a long time that this is coming. This actually reminds me of the sign in the bar: Free Beer Tomorrow. It's a permanent sign: Freedom Tomorrow. But I do think it will come. And I'm also reminded of this quote about Marx: 'He was so far-sighted that his predictions haven't even come true yet.' So, I'm going to fall into my--I'm going to make my Marxist prediction that freedom will come to the Cuban people in slow and perhaps steady ways over the next 10, 20 years. But I could be wrong. So, are you optimistic and will you go back? And what would you expect to find if you did go back in the next few years?

Casey Mulligan: I've wondered about whether I would go back. I guess I'm on the margin there. Probably would. But it's not on the top of my lists of anything, I guess. Optimistic in what sense? For the Cuban people? I am optimistic that they are going to have more opportunities to leave, and you know, that's a choice that they might be able to make that they wouldn't have made in the old days, or wouldn't have been available. So at that level, I think freedom is tomorrow for a number of them. Whether there will be freedom on that island--it's harder to say. I definitely hope for it, but that doesn't make it happen.



COMMENTS (27 to date)
Paul Bogle writes:

The discussion about grocery stores and the food supply reminded me of Boris Yeltsin's visit to a local food store in the late 1980's. After touring the Johnson Space Center, Yeltsin decided to visit a nearby supermarket. His famous quote was "Even the Politburo doesn’t have this choice. Not even Mr. Gorbachev,"

Though we didn't know it at the time the Soviet Union had was in its last days. Our lives were a bit different also pre-internet and smart phone. The Houston Chronicle ran a redux of the event a few years back. Interesting stuff.

http://blog.chron.com/thetexican/2014/04/when-boris-yeltsin-went-grocery-shopping-in-clear-lake/

SaveyourSelf writes:

At ~ 59:00 Russ Roberts said, “I'm going to make my Marxist prediction that freedom will come to the Cuban people in slow and perhaps steady ways over the next 10, 20 years.”

Hayek said wealth and poverty were the result of moral rules of behavior. [I’m still trying to work through the implications of that argument]. If that is the case, then there would be no cause for optimism that the Cuban society would spontaneously increase in wealth over time without the introduction and adoption of new morals. I can think of at least five places new morals might emerge in a third world economy: 1) The internet – unlikely in Cuba given their primitive infrastructure 2) Christian Missionaries -- Islamic missionaries won’t do. There are no extremely wealthy Islamic countries. Buddhist missionaries might work but I think Buddhist missionary is a contradiction. Given the success of Israel, Jewish Missionaries might work, but I’ve never heard of a Jewish missionary and I’m not able to know how successful Israel would be if the USA didn’t give it billions of dollars of aid each year. Hindu missionaries...no good. There are no wealthy Hindu nations either. 3) Trade - when trade barriers drop, a tiny fraction of the Cuban society would be exposed to new types and rules of behavior. Domestic traders exposed to the new behaviors may choose to adopt some of them. Those early adopters would then serve as examples for other Cuban’s to emulate. 4) Television - learning morals from actors and artists is probably not the best idea ever. 5) Schools – If the government runs the schools then presumably the teachers are already well versed in the morals of the government planners. The government would, therefore, have to change its morals before the school could, but where would the government learn said new morals? They'd have to travel, which is expensive, and we're talking about very poor countries, so that's not likely to happen.

I think Hayek’s proposed causal chain of Moral rules causing wealth differences is likely true. Therefore, I don’t think there is any cause to believe a poor country would spontaneously improve itself naturally. Moral rules have a habit of being both stable and self-propagating. However, if you really wanted to move, say, Cuba along, the easiest route, from what I can deduce, is to open trade with their port cities—initially—and allow Christian Missionaries to relocate within the country.

Gandydancer writes:

@SaveyourSelf: When's the last time a country's economic performance improved as a result of an influx in Christian missionaries?

Cuba used to be, of course, a much better economic performer than it is now. I don't think their current problems arose in any direct fashion because of a decline in personal Christianity.

Todd K writes:

It looks like Cuba's economy is the strongest that it has ever been. In current dollars, Cuba's GDP/capita ppp was:

1990: $14,000

1994 :$10,000

2005: $14,000

2013: $20,000

(According to Trading Economics, where the 1990 is the first year given.)

Juan C writes:

I normally don't comment, as a non-economist I am here to learn but on the subject of my native country there is definitively some knowledge and experiences I can share that will help others better understand Cuba.
First I will commend Russ moral clarity and intuitions on this issue, even though you have not been there you have a very good grasp of what is going on except perhaps with your optimistic view of the future of Cuba.
Something that comes up several times in the conversation is how the regime has managed to keep control for such a long time. It all comes up to the totalitarian nature of the regime with its total control over the population down to the block level in the cities. The government is the only employer, the only educator, the owner of all media, you have to register where you live and you cannot move at will, you have to carry an internal passport where all the details of your live are shown, all that enforced not just by the police but by your boss at work, your neighbor that runs the block Committee for the Defense of the Revolution and the myriad other organization to which you have to belong (trade union, women's league, "pioneers" sort of boy scouts for the kids, students leagues, professional or artistic guilds) all the so called "transmission belts" of the Communist Party.
At the end of the day this system had created not just control but a web of complicity and shame in which most people in one way or the other have participated and which not only creates fear and paranoia about being punished if you don't support enthusiastically the regime but also fear of retribution for you own actions in support of the regime. Add to it the constant propaganda which even if it cannot bury the harsh realities of the country and the much better life outside it is enough to confuse, obfuscate and most importantly paralyze. This is the state of the population at large, judge by yourself if this "constituency" has been formed by any positive intercourse between the rulers and the ruled.
Of course at the very beginning there where some things that appeared to be positive, some actually were as the literacy campaign or the vaccination campaigns, some fake like the illusory transfer of titles of property to urban renters and small tenant peasants but just to buy time while the wheels of control were put in place all combined with harsh repression including the executions by fire squads of a few thousand people and the internment of several other thousands in an island that at that time had only 7 million people. I am not going to said that the regime has been as barbaric as Stalin, Mao,the Kims or Pol Pot, but always remember we are dealing with just shades of barbarism here and also remember that if Castro and Che had their way the whole island along with a good chunk of the US, Europe and Russia would have been incinerated in a nuclear war, that just tells you about the true nature of the beast. Will continue in another post.

Juan C writes:

Now on more specific topics.
I will not assign much value to the opinions people are willing to share with unknown strangers. I once gave a candid opinion to one exchange student from Mexico in Cuba, the guy unaware of the consequences challenged his minder with what I had told him...well I learnt my lesson and counted my lucky stars that I was allowed to keep my job. Also remember that people there have been thoroughly indoctrinated at school, do not have easy access to alternative information,especially to different systems of thought and are under a constant barrage of propaganda reinforcing the regime mythology. Even if they can grasp the failures of Fidel Castro many still think inside the regime framework so that they may think that Raul is better (but thwarted by his brother) or that (thankfully) dead Che or Camilo would have been better and so on.
I realized communism was bad and not working but as to the how it was that I only got it when I came to the US in 1995 as a 38 years old, this brings me to the differences between Cubans in the island and Cuban-Americans. There is a difference between the first wave which didn't lived much or belonged to the upper middle-class and those of us who came later and were raised under the regime, often like me in the family of regime sympathizers or who were at some point part of the regime machinery. Among the latter there is more understanding and also some shame, less hatred of the common folk of which we were part, but no less hatred, perhaps even more of the rulers that not just took from us things but our dignity and self-respect. Cubans in the island are still uninformed at best, confused, not free to share what they truly think but it transpires as Mulligan perceived in the certain sadness they show in comparison with the Dominican poor.

Kurt Koller writes:

Went to Cuba for my honeymoon in March of 2001. Flew to Jamaica for a few days, to Cuba for a week, and back to Jamaica for a few days, then back to NYC. (Was living in NYC at the time). Zero problem traveling, they even had a special passport stamp for Americans that didn't identify the country and they stamped it on a certain page.

Had no problem traveling, saw lots of Americans in Cuba while we were there. We were required to stay in a state hotel for 1 night, the rest of the time we spent in people's homes. At the time it was permissible for Cubans to rent 1 room out in their home and had to pay a high tax. Many people quietly rented out two. We also are in mostly home restaurants. There was a heavy tax on signage, so the restaurant operators paid people to get people from the street and sell them and lead them there, on a commission basis.

At the time we went the official currency was the us dollar.

The worst part of the trip was the Jamaican travel agent gave the card info to someone in the US and there were fraudulent charges. The other thing was we traveled light and were completely searched and our luggage torn apart a bit looking for drugs on the way back in. (We were selected for screening.) Felt ironic.

Kurt Koller writes:

Also the non-state home restaurants weren't allowed to sell some items, like shrimp. They weren't on the menu but every place had them. The food was great (and it was awful in the state-run restaurants). People there were positive about the liberalization going on at the time. They had Coke etc all imported from Mexico. We saw a number of new cars at the time as well.

Juan C writes:

There is no real property rights in Cuba, the government may give you title to your home or a piece of land but it can take it back on any flimsy excuse plus it puts so many restrictions on selling or disposing on it, including at time the outright prohibition to do it as to render it meaningless and the laws change capriciously also, they could be relaxed at some point, tightened at other depending of the perceived political needs of the government. The same goes for small business including farming, authorized when things are going very bad, crushed when things get better and the owners are becoming well off exciting the envy of others and becoming a target for demagogy. It is very easy to do a crack down as in order to do anything in Cuba you have to violate the laws (like the one Kurt mentioned about the shrimps), buy something in the black market, frequently stuff stolen from the government and cheat on confiscatory taxes and licenses.
I have seen those cycles several times so people do not have incentives to make long term investments, if they still try is because they have to survive. In the case of the buildings there is also shortage of materials for up-keeping and repairs along with the issue of who owns the common portion of the structure. Lack of enough new construction is what led to the subdivision of houses into smaller units and additional rooms as families grow and branch in the same house, not because somehow people prefer smaller living spaces. Most of those constructions are illegal and contribute to the collapse of old buildings not designed for such a load.
Cows...Thanks to Castro's experiments and lack of incentives with state ownership the livestock in Cuba dwindled, it used to have one head of cattle by people when he took power and Cuba was largely self-sufficient. The stories that Russ related are true although they sound incredibly bizarre to an American. The wife of a friend of mine who lived on the countryside told me she was on the lookout for the birds that feed on carcasses because people bold enough to kill a cow often just cut a leg and run leaving the animal bleeding to die, immediately the scavenger birds show off and she run to where they pointed to take some of what was left behind.
Grocery stores in Cuba you have to see them to believe it and even the stores that sell in hard currency lack most things you find in a modest American supermarket, not to mention the variety. Most people coming from Cuba are just overwhelmed with the choices, sometimes to the point of breakdown, not just on malls or supermarkets but even in restaurants. As Mulligan said it is not the same to know about it as to have it in your face and have to make a decision about what you want.
The "special period"...I don't even want to think about it. Public transportation almost collapse, you have to move around in a bicycle with too little food to sustain you, whatever food you got which was in many cases truly unfit for human consumption you have to divide it to have at least a little each day...I ate in the evening and went to bed immediately or hunger will keep me awake. One thing was never in short supply, benzodiazepines to keep people sedated and cheap alcohol. We were lucky that one of my brothers was is Brazil and sent us vitamins and some food as well as soap and toothpaste. For years after coming to America I had nightmares about somehow visiting Cuba and not being able to come back, call it PTSD. I was so desperate that I left on a suicide trip on a raft, thankfully I made it here alive, never to come back to Cuba.
Finally if you want to see the real Cuba without having to go there open Google Earth, activate the pictures layer and click on the thousands of pictures regular people post there.

Kevin writes:

I found the people's support/admiration of the Castros unsurprising. People are weird animals. Obama has made African Americans poorer and worse off by most metrics, but the metric they prize is not material but tribal and so give him support of 90s. I suspect if Obama was declared emperor for life and instituted a socialist European country his popularity would stay high for a long time. The strong man reminds us of primal impulses towards the hunter gatherer leader and no matter how oppressed and poor these leaders make us, they tend to have decent support. The norm of all history is violent control of the masses by the elite. Many are conditioned to be happy about this as long as they see their team as winning or perceive an external threat that is greater.

It reminds me of an old anecdote from Econtalk about gouging and young men who drove to a hurricane area with an ice truck to sell ice. People stood in line to get ice, but the prices were "too high" and the cops were called. The people waiting in line for ice cheered when the cops took them away. People are nuts.

People support and love dictators all the time. People support, admire, and even love elected politicians that care nothing for them and only seek to advance their own power, and outside of their "TV personalities" are nasty human beings. People are wired in weird ways.

CougarNation writes:

The discussion about rent control and crumbling cities reminds me of what Walter E. Williams has said... "The quickest way to destroy a city short of carpet bombing is rent control."

Jim Kennedy writes:

I have a dear friend, Mona, who fled Romania to the USA when Ceaușescu was in power. Years after Ceaușescu died her mom was able to come to NYC. After landing at Kennedy Airport, her mom wanted to go to a McDonalnds. They went and it was crowded. Her mom pushed herself to the front of the line. Mona asked her "What are you doing?", Her mom said "They are going to run out of food; we must get to the front." Mona told her, "Mom, they won't run out of food." Very telling.

(health care)
When Mona lived in Romania she got appendicitis. She went to the hospital. They told her they were out of anesthetic, so they had her bite on a stick and a nurse held her down as they operated. She got peritonitis and she had to undergo 2 more operations again without anesthetic.

Recently we hosted high school students from China. They were amazed that we would drink water from the faucet.

Larry writes:

Russ, Does Professor Mulligan speak Spanish fluently? If not, how was he able to communicate with the Cuban people?

Miller writes:

With socialism, you wait on bread, whereas with capitalism, food waits on you.

SaveyourSelf writes:

I noticed yesterday that the quote Russ Roberts made in the podcast which I commented about [above] concerned “freedom,” but my response concerned “wealth.” Related concepts, for sure, but not identical. Sorry about that, Russ.

@Gandydancer “When’s the last time a country’s economic performance improved as a result of an influx in Christian missionaries?”

  • Good question. Tough to answer with any certainty. I am aware of a lot of Christian missionary work on the continent of Africa. Some parts of Africa are seeing economic improvement. But the causal argument I put forward was not so much that Christianity improves economic performance as some groupings of morals—rules of behavior—when dispersed across a whole society, lead to an increase in population size and overall wealth when compared to alternatives. Since at least some of the wealthiest countries in the world are predominantly Christian, that hints that some of the morals conveyed through Christianity are key to economic prosperity. Admittedly there are many poor Christian countries as well, which leads me to believe that some of the morals contained in Christianity are harmful to large, complex economic systems. I have only educated guesses as to which morals of Christianity—or Buddhism or Judaism—are beneficial for economic performance and which are not, but that is expected and unavoidable since, according to Hayek, it is often not possible to know, in advance, which moral rules will advance a society. The only way to find out is through trial and error in a competitive environment.
  • It is worth considering, however, the possibility that some Christian countries being wealthy and other being poor is simply the expression of random distribution. Which would mean that Christianity—and its morals—are not causally related to economic performance at all, but just happen to be present in countries that are wealthy or poor for other reasons. I lean away from that argument at present because of the absence of wealthy Islamic countries. I’d expect to see some randomly wealthy Islamic countries if the morals of a religion had no effect on economic prosperity. (According to NPR, in 2010 31% of the world’s population was Christian and 23% was Islamic.) Turkey comes closest to being a wealthy Islamic Country, but good grief, the Country’s military has to go to war every 8 years or so against the Islamic faithful to make that work.

David Zetland writes:

@SaveyourSelf and @gandydancer,

I looked into the religion-development lit a few years ago. Countries with Protestant missionaries had faster development than those with Catholic missionaries, because the protestants emphasized literacy for their members to read bibles in local languages.

David Zetland writes:

Interesting podcast, but I wish that Casey had walked into shops and visited more restaurants, as I did when visiting in 2006. (Notes: http://www.kysq.org/me/diss/making.htm#Cuba)

I really agree with Casey on that "market test" discussion, as Cuba's regime is merely another dictatorship, and many of them leave their citizens even more miserable (compare Cuba's zero deaths with all the tragedy in Haiti due to Hurricane Matthew). Going further on THAT topic, what would most of us (and much of the world) say if Trump was elected president -- and acted much as he has in this campaign? Is democracy an automatic winner in the market for political systems?

Back to Cuba, I'd say that the government was popular for awhile for helping many people improve their lot (not so much now that they see the small share of tourist money in their pockets.). It's not an accident that they are more enthusiastic than the refugees in Florida who left due to their wealth status. The embargo has had some impact on Cuban development (more expensive goods; awkward partners), but it's hurt the US far more: Cuba would have one less reason to excuse its performance (as discussed), but also the US has lost an obvious and powerful opportunity to work together -- via Trade, Mr Smith -- and thus add to assets worth far more that money.

Also, I want to recommend that Russ and Casey look into El Paquete, or the Cuban internet, to understand just how WELL informed they are about the US and World: http://abcnews.go.com/International/package-el-paquete-illegal-cubas-number-employer/story?id=33279812

Finally, I'd propose that Russ's "How can we get Walmart like competition among countries?" would be most usefully encouraged by adopting a global dual-passport scheme, i.e., http://www.aguanomics.com/2012/04/decentralized-path-to-development-and.html

Madeleine writes:

I think it's easy to romanticize Cuba. An island paradise free from advertising and the stress of capitalism. Quaint shambling old buildings, brightly painted '50s cruisers. So on.

I feel like Cuba is as much of an example of Communism as Disneyland is of a fairy kingdom. It's Communism-as-kitsche, a Communist theme park.

That's what makes me the most depressed, really. As Russ pointed out, Cuba prevents its citizens from leaving. Well of course they do!

I hope that everyone who visits Cuba realizes that they are visiting a zoo. A human zoo.

C Rooks writes:

It sounds like travelers had uniquely different experiences based on their agenda. I traveled to Havana solo in 2008 from Panama for four days. Some of the unique experiences included:

-I stayed in someone's home that I reserved online prior to arrival. The host was nice and usually offered me dinner, but I can't say the food was visual appealing, so I usually passed and went out to a restaurant.
-Carrying a significant amount of US Dollars to the country as American citizens couldn't utilize the ATM or credit card network once there. I hid the money I didn't carry in my spare shoes in my suitcase (I swore there was a little shrinkage - the owner's kid cleaned the room and perhaps knew the US travelers hiding places).
-Having someone beg me to buy them milk as they had met their ration, while travelers were allowed to buy at will.
-Repeatedly frequenting restaurants with 30+ items on the menu, only being told that there were only a handful of items available (usually spaghetti). I can't say I enjoyed the food there much, but I did have a good Cuban sandwich at a bar which I split with a local.
-Going to bakeries with virtually empty shelves (wish I could post a photo).
-Flagging down 1950 style US vehicles for a ride. It is illegal for them to pick up passengers, so they will usually pull into an alley where you can get in. Most rides were a flat $1-$2. The official taxis were Russian made Lada's that were more expensive. I remember a driver telling me that the Castro regime was good for him as they protected his job (analogous to many US municipalities trying to block ride sharing operations today).
-Having to go to a store to make an international phone call. One employee made the call for you and directed the call to a phone booth where you picked up. Internet access was usually found at hotels and connections were horrid.

Overall, it was a good experience but Cuba is not a place I would be dying to return. I am happy the Obama administration started to relax travel restrictions - one of the few positive policy actions I can agree with during the past eight years.

[Photo, courtesy C Rooks, is now here and in the Highlights above. Econlib Ed.]

Glenn Mercer writes:

I think that quote about Marx was actually about Trotsky: "Proof of Trotsky's farsightedness is that none of his predictions have yet come true."
--Isaac Deutscher

I found that via Google on the internet, so it must be correct! (grin)

jw writes:

- For a great look at the real Cuba, try and find "Chris Tarrant: Extreme Railway Journeys: Slow Train to Guantanamo Bay" on your local PBS channel.

- On Che's "He would roll up his sleeves and do the dirty work." I can understand brainwashed from birth Cubans not understanding, but I wish more college students wearing Che T-shirts understood that Che's dirty work included personally shooting many bound political prisoners in the head and directing the execution of thousands of other political prisoners.

- On "And the U.S. government made the decision to return Elian to his father", for those who don't know or remember, here is what Bill Clinton and Janet Reno's administration meant by "decision to return": https://upload.wikimedia.org/wikipedia/en/3/36/Inselian.jpg

- I agree with Russ on the "agree to disagree" that guns overwhelmingly trump the lack of value add in a dictatorship. It is hard for me to understand how anyone can see it differently, given North Korea, Stalin, Mao, and on and on. Many, if not most, totalitarian dictators die of old age, not by overthrow.

Adam writes:

Astute point Russ, regarding the regime not reflecting a sort of "market choice." Mulligan picks out a few cases where the removal of a dictator led to chaos, but there's no reason to believe this is a binary decision. How many countries transitioned to democracy successfully after WW2? Or the end of the Cold War?


During WW2, parts of Asia occupied by Imperial Japan prospered immensely but also had substantial local rebellion. If market forces are at work, why wouldn't the people be grateful for the development and the value added by the regime? Likewise in North Korea today, does anyone believe the regime is in power because they are providing some sort of value? Like Russ said, eventually you acquiesce because you don't have guns.

I guess it bugs me because Mulligan's language is the same that China uses when it throws democracy advocates in jail. We have zero way of knowing whether a country will transition successfully to democracy beforehand. Why reflexively take the pessimistic view?

Robert Swan writes:

Cuba is well outside of my experience or knowledge but it's interesting to contrast the rosy picture painted by some people who have never lived there with the description commenter Juan C has given (which strikes me as being nearly as bleak as "1984").

Prof. Mulligan takes a big leap in saying that Gaddafi was in power so long he must have been doing something of value. Doesn't seem right to me. No doubt he did things of some value to some people, but I don't think that's what kept him in power. What revolutionary says "Yes, he made the trains run on time. Let's leave him be"?

I think it's the less reasoned "who'll bell the cat" question that keeps people like Gaddafi in power for so long. That's not to say that the country didn't descend into chaos after his fall, but fear of chaos was not what kept him in power.

VexedListener writes:

I have been a fan of EconTalk for a long-time, and some of the episodes, such as those with Autor, have been great. But this episode was out-of-line.
I would like to know how a single week in Cuba on a tour by your guests merits a show on this topic. Neither of you had expertise on the Cuban economies, and the anecdotes you used were based on very superficial, or potentially incorrect, information. Did it occur to you that there are Cuban economists, probably living in the US, who you could have spoken to on this issue? Let me be clear that I have no issue with the idea of an episode criticizing the Cuban economy, which I think is a clear disaster, but get somebody who has a clue, and can speak with some experience as a Cuban or real expert on the island (I do not mean to suggest your guest is clueless about economics, he is very accomplished, but just very unprepared to speak publicly on this particular topic (language, actual research experience in Cuba, etc.)).

Andrew Certain writes:

I'm a big fan of Econtalk and ideologically I share much with Russ and his guest this week. However, I think that some Mr. Mulligan's perceptions were some combination of the tour company he used and his "priors."

The most obvious example was his description of the "grocery store." There are three different kinds of places where people can get groceries. The first is the ration store. These are in every neighborhood and only supply the staples (milk, eggs, flour) that are part of the rationing system. Then there are two types of grocery stores that sell a broader range of items. The first sells mostly (exclusively?) domestic items, and the prices are denominated in regular pesos. The second sells mostly imported items and the prices are denominated in convertible pesos.

The two types of money are Cuba's way of trying to keep prices on some things low for its citizens while having market prices for other things (that are mostly bought by tourists). So when you go to change money, you get CUCs (the convertible pesos); government workers are paid in CUPs. Mr Mulligan's description sounded like he confused the first two types of store, and we were also "discouraged" from buying things in the store with local goods, but not for any government reason. The reason we were told is that it would be considered inappropriate as rich foreigner to be taking advantage of the artificially low prices at the CUP store.

In the CUC store, which apparently he didn't visit, there were plenty of goods to buy. Here's one photo I took in the CUC store. To get CUCs, you have to work in the private sector.

Another example was his comparison with the Dominican Republic and how the Cubans didn't seem "happy" as the Dominicans, with the implication that it's because they don't have as much freedom. It might be be true, and it might not, but my guess is that if you went to a random place in the US (or northern Europe), people might not seem as "happy" as the Dominicans either. Lots of that is just cultural; implying that it's because of their government system is, I think, silly.

Economically now in Cuba, there are people who work for the government and people who work in the private sector. There are only certainly types of businesses that you can open, and most of them are focused on tourism. The people in the public sector get paid in CUPs, and they don't get paid enough to live. The rations supply about 25% of the food you would need to live each month. You have to have somebody in your family working in the private sector. People who work in the private sector usually get paid in CUCs, and they can afford cell phones, imported food, etc. The family who owned the B&B that I stayed at were clearly doing quite well. Their kids had nicer bikes than my kids do!

Having grown up with the standard US perception that Cuba as essentially the same as the Eastern Bloc was under the Soviets or as China is, I was very surprised by what I saw in Cuba (I traveled to East Germany in the late 80s and I've been to China). The Cubans I talked to openly talked about what they liked and didn't like about the current system. I mostly spoke with people in the private sector (since that's mostly who we were interacting with), and they were excited about having more opportunity. They talked about the better incentives of private enterprise and with disdain about how most of the government workers don't even show up for their jobs. But they were also wary of losing something in the transition to a full market economy.

There's a great sense of shared responsibility in the Cubans I interacted with. We visited several private farms with restaurants and they all had social outreach programs, e.g. art programs for seniors, ecology education for teens, etc. They felt that their relative wealth meant that they had a responsibility to give something back to the community. I think that they worry that as things become more market-driven, some of that will be lost.

I certainly wouldn't want to live in Cuba today, and part of that is that I wouldn't be able to live nearly as well as I can given economic opportunities there. However, having been to places such as South Africa and Costa Rica, and can say with confidence that the poorest people in Cuba are dramatically better off than the poorest people in many places. I just didn't see any abject poverty in the way you see it in those places. There were some, as our guide put it, "humble" neighborhoods, which were definitely poorer than urban neighborhoods in the US; however, there wasn't the abject poverty you see in many African, Asian or Latin American countries.

I also agree that all things being equal, a democracy is better than a dictatorship. But as Russ has said many times on the podcast, you can't compare a messy reality to a pure idea and conclude that the idea is better. The capitalism that was practiced in Cuba in the 1950's was horrible crony capitalism, with a dictator at its head. The notion that most Cubans were free before Castro and oppressed now is silly. Our naivete in this area is what led to the Bay of Pigs disaster. It's very complicated, and the alignment of Cuba with the Soviets means that we've only heard the most simplistic version of what's going on there.

I don't claim to be an expert on Cuba after a week-long visit. But I also know that the situation there was much different than I had been led to believe, growing up in the US. There are other perceptions of Mr. Mulligan that I also think are incorrect, such as that people are lining up to leave the country (e.g. I met an architect who was educated in Switzerland and came back to work on saving the crumbling building of Havana - the crumbling buildings part is definitely true, though the cause isn't as simple as "rent control" or "property rights").

But I encourage people who are interested in Cuba to see for themselves, though I also acknowledge that most people, like Mr. Mulligan, will see what they are prepared to see.

Andrew

John Wolfe writes:

Interesting podcast and comments. I was in Cuba for a little over a week on a people-to-people tour in February of 2016.

A few comments:

*run down buildings: we had some conversations with Cubans about this and many commented on the difficulty in getting supplies because of the embargo. It is my understanding that any company that trades with Cuba cannot do business in the US and any ship that loads or unloads in Cuba cannot come to a US port for 180 days. So, in a country that doesn't have the resources, natural or capital, it is dependent on imports more than, say, the US. Also, the limited trade provides little currency to use in buying foreign goods. However, there was a large amount of renovation going on in Havana at the time we were there. I suspect that the loosening of the embargo and the influx of tourist currency is starting to make renovations possible.

*Cubans are moving little by little into private enterprise or private/public enterprise. A frequent observation, both in Havana and in the countryside, were the signs indicating that there was a room to rent. One type of sign indicated the owner could rent to anyone and a different sign was that they could rent only to Cubans. The houses that were renting to non-Cubans were in very good repair. New paint, landscaping, etc. One of our group spoke to a homeowner and the report was that in the owner's part there wasn't much in terms of appliances, furniture, etc. But in the rental part there was air conditioning, new appliances and nice furniture.

*I had coffee most mornings in the lobby with a US developer who has been working in Cuba for seven years getting positioned to develop a high end golf / beach resort. He has experience developing similar resorts in the US (it wasn't DJT!!!). He commented that they have been able to get some legal changes in property rights that give him and his investors confidence that they will be able to develop a property. Their first step will be to get fiber optics to the island to provide the communications infrastructure they will need.

In sum, an interesting place. If I were younger and had an enterprising, rather than corporate, spirit I would be quite interesting in starting a joint venture on the island.

I guess a final thought is that it seems to me that it is nearly impossible for any US native to fathom what it is like to be a small, not well endowed island just a short way from the worlds most dominant economic and military power and to have that country interfere with your country in every possible way.

Andy McGill writes:

A starving island nation that does not allow fishing. That sums up communism in a single sentence.

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