Thinking Poor or Poor Thinking?

Shortcomings on the Left and Coaching from the Right
In a study cited in the Journal of the Research Group on Socialism and Democracy, a sociologist Mayra Espina found that:
Without producing a mechanism for restoring the relations of exploitation or of private property on a large scale, the Cuban [‘90s] reforms…led to re-stratification, providing the context for the growth of poverty as a social problem, the expansion of the at-risk segments of the population, and a general trend of widening socioeconomic inequalities.

Economist Viviana Togores is also cited, who found that about 49% of the Cuban population fell under the category of income-poverty when measured under a Baskets of Goods approach. Unemployment is at a mere 1% as of 2008, so this has nothing to do with it. Nominal wages have not kept up with increases in consumer prices – this is the main reason. Coupled with other hardships, such as having too many dependents and on the levels of inequality that lamentably still exist in the country also add to the fire.

The University of Havana has found that there are inter and intra regional inequalities, like for example the quality of housing, access to consumer goods and some social services, and in respect to the level of socio-economic development provided to some regions over others. It further states that a large part of these problems are caused by spatial inequalities inherited from before the Revolution and because of controversial and faulty economic reforms taken in the 1990s. In any case Togores’ study finds that the “redistributive effect of social expenditures – in education, health, social assistance, etc. – while it does not compensate for the loss of purchasing power, does have a favorable effect on the population, especially those in more needy sectors.”

And that is perhaps Cuba’s main lesson to export – a commitment to work from the ground up, to help develop the poorest individuals first. The safety net provided for workers and their families and for people whose needs aren’t being met because of health reasons, has grown stronger over the decades and has helped to sustain a healthy and educated society, albeit taking small economic strides forward.

In 2007, for instance, out of 11+ million Cubans, social security beneficiaries were 1,571,924, and the number of people receiving social assistance was at 595,181. Contrary to what most of us believe in the West, this does not create lazy people asking for hand-outs from the government. Some Cubans who receive assistance still work, but need the assistance in the face of the economic hardships. Others cannot work due to health circumstances.

Under the administration of Raul Castro new steps have been taken to open up the markets a bit more. A reform to allow the setting up of small businesses – which do have to pay a tax – and which looks to reduce unnecessary bureaucratic power in the country has recently been passed. The main objective is to reduce the government’s roles in areas of agriculture, retail and construction. The buying and selling of automobiles and homes is also being discussed.

The vision is to allow small, private businesses to step in and inject a much needed jolt into a stagnating economy. In an attempt to reverse the separation of salary-scale from work-effort, farmers no longer receive equal pay from the government, but rather “moral incentives have given way to productivity-related pay,” according to a BBC article. Over 8,000 plots of unproductive state-owned land are now being leased to individual farmers.

The important thing is that the steps being taken to open up the economy maintain Human Development at their core. The notion of Moral Obligation over Individual Enrichment has been fundamental in the educational system of Cuba. Concerns from all sides of the political spectrum often warn of the potential for the inequality and concentration of power of which we’ve spoken to arise because of these reforms; but as I spoke with many Cubans, the general feeling was one of visible confidence in the sustainability of the values and social development that the Revolution has made possible.

There are other parts of the world that have also shown impressive Human Development records and that have reduced the level of inequality and of poverty to record-low levels. The Scandinavian countries, for instance, have been historically revered for not only their neutrality but also for their commitment to social programs and for the high standard of living that practically everyone enjoys. Redistribution of income levels are in big part to thank for this.

Income equality across the Scandinavian countries has, in average, brought everyone to the same level-playing field, therefore giving them all access to the same opportunities. China also has strong social institutions that offer the most vulnerable sectors safety nets to keep from falling into absolute poverty. Of course, the democratic record in the country is questionable, but the fact that people in China do have access to more social assistance than we do here is undeniable.

Given the magnitude of the economic growth the last couple of centuries have been endowed with, the global poverty that continues to exist is appalling. In this new age – and in these dire circumstances – it is time for us to divorce ourselves from political prejudices and past antagonisms that hinder any compromise and any progress.

Currently, the United States is a prime example of what happens when two opposing political ideologies solidify a concrete wall between them and neither side can get through. As things stand, it seems the President has fully caved in to the Republicans as the so-called “balanced approach” seems to only cut nearly $3 trillion in social programs while refusing to raise any revenue by taxing the richest individuals in the country. If working together is what is prescribed for the world to reduce poverty, looking at current U.S. politics may be the most venomous drink we can take.

Some poets believe that only through constant personal turmoil and emotional agony can their creative-self emerge. The world is reaching such poetic levels of poverty and insecurity that time has come for its inhabitants to work together. Long has it been since we realized the Economic Prowess that Capitalism boasts; long has it also been since we witnessed the Juggernaut that Soviet Socialism was. But in this new century of hope and progress, it is due time for us to realize that where the former fails in social development, the latter compliments it; and likewise, where Socialism impedes economic prosperity and individual growth, Capitalism picks up the tab.

ARB Team
Arbitrage Magazine
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