Thoughts on the political economy of Cuba, Jan-2023

Our recent trip to Cuba was fascinating. What a beautiful place — plenty of history, and the arts, music, and architecture are legendary. The people of Cuba face many challenges, not least the 60+ year old economic embargo by the United States. But the Cuban people are resilient, and manage to move ahead even if they need to step sideways to do it.

A brief history

My pedantic soul won’t let me begin without a history lesson. Most Americans think of Cuba as “communist/socialist,” which is fairly accurate. Fidel Castro (with many others) overthrew the Batista regime on New Year’s Day 1959. Let’s not kid ourselves. The US-backed Batista regime, in power since Batista’s 1952 coup, was the latest horror show in a line of anti-democratic regimes reaching back to Columbus: dictatorial, corrupt, and all around Not Nice People. No one, including JFK, should have been surprised at the broad base of popular support for the revolution. Many of the wealthy fled the country, expecting to be gone a few months. The new government nationalized almost everything, including most businesses—many of which were, at that time, owned by US interests. Aha.

Castro declared himself Marxist/Leninist several years after the revolution, and the US began sanctions. The Cuban governing party officially became communist a few years after that. During this period (the early 1960s), Cuba aligned with the then Soviet Union. The US launched the Bay of Pigs Invasion debacle (referred to as the “Bay of Pigs Triumph” in Cuba). The Cuban Missile Crisis followed as night follows day.

From this period through the collapse of the Soviet Union in 1991, Cuba remained firmly aligned with the soviets. Relative to aligning with the US, it’s not obvious to me what this alignment gained them other than sticking it to the US. Cuba got Soviet cars, equipment, tourists, and a steady stream of investments. It’s clear what the Soviets gained: a lovely vacation spot and, far more important, a really sharp thorn in the toe of the US.

The Soviet Union collapsed in 1991, which had immediate and resounding effects on Cuba. Their economy (GDP) shrank 35% in 4 years. For those of you not schooled in economics, this is Very Bad, akin to the US Great Depression of the 1930s. Unsurprisingly, food and energy were rationed and a wave of emigration ensued. Recovery from 1995-2020 was slow but steady, and the economy shifted away from agriculture toward tourism (Cuba is really beautiful!). Most tourists are today Canadian, European, or Russian.

US sanctions have continued since the early 1960s, with a brief easing during Obama’s administration, a significant tightening during “That Man”’s tenure, and a slight re-easing under Biden.

The current state

Like most putative communist states in the 21st century, Cuba’s economic rules continue to loosen. Although most Cubans work for the government, and most enterprises are state-owned, there are an increasing number of private businesses. We ate primarily at private restaurants, which are unsurprisingly better quality than their state-owned competitors.

Our overall impression of Cuba’s economy: poor, but not terrible. No one looked hungry. We observed no one living on the streets. We saw 3 beggars in a week (which is about what you see in 20 seconds in California).

But, Cuba is experiencing its worst emigration crisis since the 1980s. Covid wreaked havoc on the newly-aligned tourist sector, which caused shortages, which caused protests, which caused crackdowns, which caused emigration. Cuban families are having fewer children, which means the population has actually shrunk over the past few years. Maybe by as much as 10%.

OK, But…

Blah blah blah, statistics and history. What did we observe and experience? We saw so many really interesting things about the Cuban political economy that it’s hard to choose what to focus on. Here are some highlights:


There was very little traffic, in Havana or in the countryside. Most people cannot afford cars. There weren’t even that many scooters or motorbikes. We saw no electric or hybrid cars, but were pleased to see a handful of electric scooters in Havana. We saw few bicycles, even in the city, which is a shame because Havana is pretty flat. It seems like a bicycle is something that Cuba could manufacture itself, though it does not.

We were enchanted by the hitchhiking system in the countryside. Early in our trip, we observed that people stood around at every expressway exit. It turns out they are hitchhikers! Government owned cars are required to pick up hitchhikers if they have space; private cars are encouraged to do so. Some locations even have a government-employed monitor in a blue tunic, who oversees the process. Drivers use hand signals (for example, “car is full” or “ending my trip here”) if they pass the hitchhikers without stopping.

The classic American cars from the 1940s and 1950s are legendary. Most on the roads are in immaculate condition, and are used for tourism. The vast majority have replaced their engines, often with diesel, since fuel efficiency wasn’t a thing when these cars were made. Most newer cars are Chinese or Korean, with a few Peugeots and Renaults. Even in the humid tropical climate, cars are well maintained and not rusted out. Cars are too expensive to waste!

Outside the city, we were surprised to see horses for transportation and oxen for field work. Nowhere near as many horses as cars, but still quite a few. Yoked oxen plows were about as common as tractors. All the field animals looked as well maintained as the cars, which makes sense.

Healthcare and COVID

Cuba’s healthcare system is famous, and justifiably so. Life expectancy is 78; child mortality is better than the US’s. There are 6 doctors for every 1,000 people (more than twice the US rate). Cuba trains its doctors internally, and it also educates a significant number of medical students from other countries. Medical workers are a vital export: Cuba sends doctors to many needy places. There is quite a controversy about the government expropriating the majority of the payments made to their expat doctors. Doctors in Cuba earn the standard government wage of $50-60/month. That is not a typo. And doctors have fewer opportunities to supplement that income than those in the tourist-facing industries such as taxi drivers, who can earn $60/day. Although the government pays for medical education, this still seems crazy.

Cuba’s health response during COVID was admirable. Of course it was economically devastating, as tourism completely evaporated. But the centralized nature of the government—and the fact they’re an island—helped keep infections low during 2020. Cuba developed their own COVID vaccine, which went into widespread deployment in mid 2021. There’s no dicking around with vaccine hesitancy, and the vast majority of adults have been vaccinated. On the other hand, the US sanctions make a big impact on everyday healthcare. Even something as simple as alka seltzer is hard to get, and probably comes from the US via the black market. I didn’t notice any pharmacies.


Oof. The good news is that Cuba has a very high rate of owner-occupied housing: 90% (the US is 65%). The bad news is that houses are super expensive because construction has not kept up with demand since forever. And the standard government salary is $60/month. Though the owner lives in their house, so do their children and grandchildren. Multigenerational living is less appealing when you’re all sharing a tiny space.

The best way to buy a house is to be a senior government official, a taxi driver, a baseball star, or have a generous relative in the US. A housing complex a few miles outside of Havana, built a decade or so ago, was peopled by younger families who moved to Havana from the country. If you helped build the housing, the deal included 10-15 years of rent, followed by ownership (no mortgage!), but there just aren’t enough units.

The housing stock is a mess, too. Many of the most desirable houses—mansions—were abandoned after the revolution as their original owners fled (or were kicked out by the government). The servants moved in and jerry rigged living quarters. A few years after the revolution, the government granted ownership to everyone wherever they were living, so some of these once-glorious mansions were granted to groups of unrelated people: the main bedroom to person A, the library to person B, and so on. Sixty years on, person A has grandchildren with nowhere else to live. Imagine how a house’s infrastructure projects get done… how do you replace the roof or upgrade the electrical? I’m confident there’s no HOA to negotiate these challenges.

A lot of Old Havana suffered from these kinds of problems, with the resulting deterioration in the buildings’ integrity. There are a lot of buildings that redefine run down. However, the authorities have been working hard, and nearly half of Old Havana has been renovated. Truly renovated, not torn down and replaced with new concrete monstrosities (unless the old building was unsalvageable). Part of the rebuilding program includes finding housing for those displaced during construction, or permanently if the building is repurposed. There are some nicely located facilities on the outskirts of Old Havana for temporary housing. Renovation is super expensive for cash-strapped Cuba, and some of the highest visibility projects are supported by foreign governments and organizations. Not American, of course.

More about the embargo

The US sanctions on Cuba are harsh, and viewed negatively by the rest of the world. The UN annually passes a resolution condemning the embargo, approved by everyone except the US and Israel. Global disapproval is not enough to remove the embargo; I wonder what it will take.

The embargo originally evolved during a tit-for-tat between Cuba and the US, which ended up driving Cuba into the arms of the Soviets. Whatever the public facing justification, Deputy Assistant Secretary of State Lester D. Mallory wrote an internal memo in 1960, arguing in favor of an embargo “to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.” This does not make me proud to be an American.

The most recent US State Department verbiage talks about the embargo supporting “every brave Cuban in their call for human rights and fundamental freedoms,” in response to the Cuban government’s repression of protests during 2021. Frankly, this justification does not ring true: the US maintains country-level sanctions against 6 countries (Cuba, Russia, Venezuela, Syria, Iran, and North Korea). Without defending Cuba’s human rights record, there are tons of unsanctioned countries with worse records.  

I don’t doubt that the Cuban government is repressive, but repressive enough to justify the most draconian embargo in modern history? It’s easy to believe that senior officials corruptly benefit from their positions, and clearly the black market flourishes throughout the country. But Cuba is well above the halfway point in formal measures of corrupt regimes, coming in slightly less corrupt than China, Jamaica, and South Africa.

The justification for the harsh Cuban embargo is shaky. Whatever the public justification, it’s hard to see its persistence as anything but a response to a segment of the Cuban community in the politically important South Florida polity. Worse, the embargo and sanctions are ineffective. It’s been over 60 years, and the revolutionary government has not fallen and is not falling. The Cuban government is not reforming its policies in order to get the embargo lifted.

In fact, there is a very good argument to be made that the Cuban government doesn’t particularly want the embargo to be lifted. The US embargo makes an excellent bogeyman for the problems faced by everyday Cubans: shortages of food and medicine, lack of capital for investment. While the embargo has certainly impacted Cuban life, the policies of the centrally managed economy—and the government’s unfortunate tendency to renege on its borrowing obligations—have had a far greater impact, especially in today’s globalized economy.

My final thoughts

For the various reasons discussed here, the Cuban people have learned to make do. They are resilient and creative, and live on a beautiful island that hasn’t yet been developed to death. Although I’m not a fan of the Cuban government, I do admire a country with pretty flat distribution of wealth; some care taken about how and what to develop; and pride in their rich history and fabulous arts.

I am not an academic or politician: my opinion is worth exactly what you’ve paid for it.

2 thoughts on “Thoughts on the political economy of Cuba, Jan-2023

  1. Thanks. Joy. Very interstellar. I lived in Mismi for 30’years and many of my friends were Cuban American. Some who same from Cuba, most of the younger ones American-born so I have more mixed feelings about Cuba than most of my progressive Ashland friends who kind of think Cuba can do no wrong ona “my enemies enemy is definitionally a good guy.” Theory.
    And yes, the leaders of the Mismi Cuban-American political leaders were right wing awful, but on issues like Elian Gonzalez reasonable people could take either side
    Hope the trip is continuing wonderful


  2. Thanks for this. Your observation and conclusions are much in accord with mine and Sharon’s from six years ago. I suspect we saw a somewhat more vibrant society then. One dissent. While I agree that Cuba’s government should allow more democratic participation, name a more effective government in the region. Their government will hopefully evolve into a more republican form, but folks can express themselves in art without much fear and in organs of local governance.


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