I was fortunate to be able to divide my summer holiday between Cuba and Playa del Carmen in Mexico. Both share the crystal clarity of the Caribbean Sea, each has many cultural and natural attractions. I enjoyed them equally. But whilst most people would be content to relax I couldn't stop myself trying to draw lessons from their very different economies, wondering what I would do differently if I were President for a day!
Mexico is a signatory to the North American Free Trade Agreement. Nearly 80% of its exports go to the US, a trade worth $500 billion annually. As well as being a great tourist destination, Mexico has strong automotive and technology sectors. It has a very open economy with a total of 44 free trade agreements. Although wages are quite low it is using that to its advantage, drawing in high levels of investment and keeping unemployment rates subdued.
If Mexico's situation isn't perfect due to high income inequality, Cuba could not be more different. As a "communist" country, Cuba has a very high level of income equality. The problem is, this has been achieved at a very low income level (average wages are US$25 per month, whereas in Mexico there is at least a minimum wage of $5 per day). While Raul Castro's government has embarked on modest liberalisation (around 400,000 of Cuba's 11 million people now work in private enterprises), state monopolies still dominate most sectors, including owning its world famous cigar brands Cohiba and Romeo y Julieta. Still, the low income doesn't matter too much as there is almost nothing available to buy. I thought it was a quaint exaggeration that Cubans drive around in 1950's American cars. It isn't. Those that don't drive clapped out 1970's Ladas instead. It's only recently that Cubans could (if they had the money) buy computers and mobile phones.
To their huge credit they have apparently achieved a good standard of education and basic healthcare (average mortality of 79 years). It is a shame that teachers are now working as tour guides where they can earn more in tips in a day than from the state in a month. Many doctors have gone abroad under contract from the Government to bring in foreign currency.
Unlike Mexico, Cuba has a significant trade deficit being highly dependent on imports for its survival. It imports 80% of its food and without subsidized oil from friendly Venezuela the wheels would literally come off its economy. Historic conflict with the USA and the resulting trade embargo means Cuba has no chance to trade with America, benefit from US investment or tap into its capital markets even though it lies just 90 miles off the Florida coast. Although unemployment is technically zero, under-employment is visible everywhere with many people stood around doing very little.
So you might think Cuba is a rather sad place with not a lot of hope. But that's not the Cuba I saw. As if buoyed on by its musical heartbeat (Salsa and Rumba are everywhere) I saw a Cuba where the human spirit is very much alive. I met Nelson the humanities lecturer who took us round Havana (a beautiful, if crumbling, city) for the day in a 1959 Buick, Fernando the home chef who cooked a fantastic barbecue for us overlooking the Pinar del Rio tobacco farms, Oscar and Maria who hosted us in their bed and breakfast homes in Vinales and Trinidad respectively.
Some of these people told me they'd been literally starving in the 1990's when the collapse of the USSR caused Russia to slash its support costing Cuba a whopping 60% of its GDP overnight. Now Oscar and Maria are building extra bedrooms as fast as they can, as tourism grows. No one taught them about enterprise so it must just be in their DNA. These people don't care too much about politics; that would be difficult as Cuba is not a democracy. But they want, and need, the same as the rest of us; somewhere nice to live, good food on the table, a rewarding job, healthcare when sick and education for their children. In the long term, no ideology, US embargo, past failures or current bureaucracy is going to stand in their way.
In the UK we know from our own experience that capitalism isn't perfect. Neither has the Cuban way of life been all bad. But in the end it's economic growth that is missing from Cuba and it is that which is required to meet their daily needs. I'm backing Nelson, Fernando, Oscar, Maria and millions like them to start a new Cuban revolution, this time one that finally delivers what its people need.Suggest a correction