Saturday, April 12, 2014

Cuba Invites Foreign Investment But Bans Economist Mesa Lago

At the end of March, Raul Castro's Cuba passed a new law to attract foreign investment. Apparently, the goal is to increase foreign investment ten-fold.  Not surprisingly, the law was unanimously by the National Assembly. But whether this will solve the deep problems of Cuba's over-centralized bureaucratic economy is another question.  Within days of the new law, the Cuban government refused permission for the eminent Cuban-born economist Carmello Mesa Lago to speak about his new book on the Cuban economy to a program organized by Espacio Laical, a highly-read magazine of the Roman Catholic archdiocese of Havana, which has been allowed a margin of space.

Sam Farber and others have argued that Raul and the other military-party elite have in mind a Sino-Vietnamese model of centralized political power and a capitalized economy.  The banning of Mesa Lago leads credence to that view.

The most powerful economic reform that Cuba could enact would be to break the political monopoly and allow real political freedom.

 Havana Times reports

At the beginning of March, the renowned Cuban scholar Carmelo Mesa Lago was invited to attend an interesting intellectual gathering in Cuba. The organizers – particularly Cuba’s Espacio Laical (“Secular Space”) journal – had planned to pay tribute to Mesa Lago, now 80, and to launch his latest book about the Cuban economy in the era of Raul Castro.

It was an excellent initiative. Mesa Lago is the most important Cuban social scientist of our time. He has an enviable academic career behind him, has published many important books and can boast of an expertise that makes him a world authority on more than one issue. He is the kind of person that graces an academic event with his presence, and does so with the kind of modesty and joviality that often characterize greatness.

Mesa Lago is so discrete that only some time later, and through other channels, have we been able to find out that the Cuban government denied him a visa to visit the country of his birth. That is to say, the Cuban government, instead of rejoicing at the prospects of having someone of Mesa Lago’s intellectual and moral stature visit the country, instead of availing itself of his brief sojourn among Cuban scholars, decided to prevent him from attending the event and enjoying the tribute he deserved.

Here is a 2013 talk by Mesa Lago on his book.

Some questions and answers from the same session.

Here are some remarks about the Mesa Lago book from a review by University of Pittsburgh economist Marla Ripoll

The sad reality described by Mesa-Lago is that the social indicators for the Cuban economy are showing a declining trend. Although back in 1999 the Gini coefficient was 0.41, inequality has most likely increased in Cuba. Public employees have lost their jobs, and there are no private jobs to go to; social spending has been cut; access to schooling has been severed; and taxation remains regressive. With a drop of real wages of 73% between 1989 and 2010, raising poverty rates are as much of a concern as raising inequality.

Not that inequality in Cuba, although lower than in Latin America, has been exempt of the two issues that plague inequality everywhere: gender and race. Economists studying inequality around the world have pointed at technological change as the culprit of its recent increasing trend. But leaving technological change aside, which may anyways be marginal in countries in which barriers to technological adoption still abound, what is left is a society in which women and racial minorities face cultural barriers to economic mobility. One would have thought that the equality ideals of the Cuban Revolution, the very ones that traded off efficiency and equality, would have been conducive to resolving the more fundamental issues of human equality.

 As Mesa-Lago concludes, gradualism of economic reform in Cuba is really a reflection of disagreement within the ruling party on how much market activity to allow. But I think it is also a reflection of the lack of an effective plan that would spur economic development in Cuba.

Here is another review at Americas Quarterly. And here is the book Cuba Under Raúl Castro: Assessing the Reforms on Amazon.

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