Tuesday, October 13, 2009
Cuba's Economy: The Demise of the Free Lunch
Under the Presidency of Raul Castro, Fidel Castro's brother, Cuba is making economic decentralizing reforms. This article takes a look at a recent reform to shutdown free lunch programs and compensate workers with a large (over 50%) salary increase. This is regarded as a good decision, as the free canteens served low quality, imported food and inadequate quantities. Now workers have the freedom to chose how to spend their food money, and domestic private food businesses could benefit from more business, although state run restaurants are expected to pick up most demand. Raul Castro is making other reforms, such as privatization of idle public farm land, with the over all goal of increasing productivity. These reforms represent the end of the communist ideology in Cuba, but are much needed to bring the country back from the edge of economic collapse.
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I was very interested to read this article for many reasons. The first is the concept that of the last two socialist economies in the world, this one seems to be headed possibly towards capitalism. Also, the author states that the current Cuba is a far cry from the "idyllic" one of the days of the Soviet Union. Instead of moral incentives, there is now a move towards material ones, combined with a reduction in the "social wage." Depending on the subsequent actions of Raul Castro, this could be the early stage of a transition to a different economic system.
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