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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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.