Drop in Foreign Tourists for Cuba  

For the First Quarter of 2018, Cuban Tourism Ministry’s commercial director, Michel Bernal, told a news conference in Havana that Cuba had a 7% decline in foreign tourists.  The reporting of this press conference by Reuters of London and by Cuban sources has interesting differences.

Reuters’ Report[1]

There are two major reasons for this reduction.

First is the reduction of U.S. tourists, which was only 56.6% of what it was for the same quarter in 2017. Director Bernal said that this decline was attributable to the U.S. restrictions and warning on travel to Cuba that were imposed by the Trump Administration.

Another reason for the overall decline was unjustified foreigners worries about the devastation wrought by Hurricane Irma last September and that has been largely repaired.

The overall decline has hurt Cuba’s private sector (the self-employed sector in Cuban terms) that operates bed-and-breakfasts, private restaurants and guides.

Cuban Reports

The primary source of information for Cubans is the hard-copy issues of Granma, the official newspaper of the Communist Party of Cuba. There also are Cuba’s Internet sources: Cubadebate and Diario de Cuba.

  1. Granma’s Report[2]

Granma did not mention the overall 7% decline in tourism for the first quarter of 2018. Instead it stressed (a) that the “growth of the Cuban tourist industry . . . is a sign of the confidence of the sector in the security and stability of the Greater Antilles;” and (b) Cuba’s recent receipt of “the Excellence Award as the safest country for tourism during the XXXVIII International Trade Fair -Fitur 2018, which took place in January in Madrid.”

Granma did acknowledge that Mr. Bernal had mentioned there had been a “slowdown caused mainly by hurricanes Irma and Maria,” but that Cuba still expected five million tourists this year. Also mentioned was what it called the U.S. “’unjustified ‘travel alert, ‘which tells the citizens of that country “’to reconsider travel to Cuba.”‘ The measure of aggression it tried to justify with the supposed risk of suffering ‘acoustic attacks’ on which, after months of research, there is no evidence or scientific evidence.”

  1. Cubadebate’s Report[3]

This report mentioned the 7% overall decline in the first quarter, the projection of 2 million foreign visitors through May and 5 million for the entire year.

It also reported that the largest number of visitors were Canadians followed by Cubans living abroad. In third place were “American visitors, who because of the blockade imposed by their government cannot travel to the island as tourists and whose arrivals decreased at the end of 2017 due to the passage of Irma, in addition to the restrictive measures promoted in September [2017] by the President Donald Trump. [The reduction of American visitors also was] influenced by travel alerts to Cuba, issued by the State Department after the alleged incidents that occurred in previous months in which officials of the US Embassy in Havana were implicated.”

Cubadebate is a Cuban website published by the Circle of Cuban Journalists against Terrorism , in which Cuban journalists and other nationalities collaborate. It aims to be “a space for information and exchange on topics related to subversion actions and defamatory campaigns organized against Cuba.”  It is published in seven languages, including Spanish and has become the most visible digital medium on the Cuban website.

  1. Diario de Cuba’s Report[4]

A more detailed report of the press conference appeared in Diario de Cuba. It had the 7% decline of tourists in the first quarter. It also said that after Canadians and Cubans living abroad, “US visitors appear in third place, despite measures taken by President Donald Trump, late last year, which included a travel alert to its citizens after the symptoms experienced by diplomatic personnel in Havana.”

Although this blogger has not been able to ascertain much information about this source, it is believed to originate outside Cuba, probably in the U.S., and is believed to be affiliated with Cubanet, which describes itself as an independent source of Cuban news since 1994.

Conclusion

It is not surprising that the number of American visitors to Cuba has declined and that it is attributable in substantial part to the Trump Administration’s harsh rhetoric against Cuba[5] the new U.S. regulations about Americans’ travel to Cuba[6] and the new State Department Travel Advisory about Cuba.[7]

Americans, however, should recognize that there are still 12 categories for legal travel to Cuba by Americans,[8] that the new State Department Travel Advisory for Cuba does not ban travel to the island and instead suggests Americans reconsider any plans to travel to the island and that the asserted basis for the Department’s urging Americans to reconsider is the reported adverse health incidents experienced by some U.S. diplomats who were staying in only two hotels in Havana (Hotels Nacional and Capri).[9] Moreover, Americans also should recognize that visitors to Cuba, especially from the U.S., help to support the privately owned bed-and-breakfasts, restaurants, tour guides and others, which now has nearly 30% of the Cuban economy and which is a potential force for changes in Cuba.

In short, as a three-time traveler to Cuba, I urge my fellow Americans:  go to Cuba and have a great time![10]

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[1] Acosta, U.S. visits to Cuba plunge following Trump measures, Reuters (April 24, 2018); Reuters, U.S. Visits to Cuba Plunge Following Trump Measures, N.Y. Times (April 24, 2018).

[2] Pérez, We are a safe tourist destination, Granma (April 24, 2018)

[3] Rectified note: 7% decrease in tourist arrivals to Cuba in the first quarter, Cubadebate (April 24, 2018).

 

[4] The arrival of tourists to Cuba in the first quarter of the year decrease by 7%, Diario de Cuba (April 25, 2018).

[5] See, e.g., President Trump Announces Reversal of Some Cuba Normalization Policies, dwkcommentaries.com (June 19, 2017)

[6]  See, e.g., New Restrictions on U.S. Travel to Cuba and Transactions with Certain Cuban Entities,  dwkcommentaries.com (Nov. 8, 2017); Reactions to New U.S. Regulations About U.S. Travel to Cuba and Transactions with Cuban Entities, dwkcommentaries.com (Nov. 9, 2017); Additional Reactions to New U.S. Regulations Regarding Cuba, dwkcommentaries.com (Nov. 11, 2017).

[7] See, e.g., A New Travel Warning for Americans Traveling to Cuba, dwkcommentaries.com (Sept. 19, 2017); State Department’s New Travel Advisory System for Cuba and Other Countries, dwkcommentaries.com (Jan. 11, 2018); Perplexing Status of U.S. Travel to Cuba, dwkcommentaries.com (Jan. 30, 2018).

[8] U.S. Treasury Dep’t, Office of Foreign Assets Control, Frequently Asked Questions Related to Travel to Cuba (Questions 5 through 37).

[9]U.S. State Dep’t, Cuba Travel Advisory.

[10] Given the new requirement for U.S. person-to-person travel to be with an organized group, one organizer of such groups worthy of consideration is the Center for Cuban Studies based in Brooklyn, N.Y. It specializes in small groups  with different themes such as African Roots of Cuban Culture, Art & Architecture and Cuba in Transition. In addition, for groups between 4 and 20 persons, it will create customized journeys.

U.S. Needs More Immigrants

With longer life expectancy, increasing numbers of baby-boomer retirements from the active labor force and  a low birth rate that now is lower than the death rate, the U.S. increasingly faces the need to find more workers. The source is obvious: more immigrants.[1]

Barron’s Article[2]

A noted business publication, Barron’s, put it this way, “Across the nation, in industries as varied as trucking, construction, retailing, fast food, oil drilling, technology, and manufacturing, it’s becoming increasingly difficult to find good help. And with the economy in its ninth year of growth and another baby boomer retiring every nine seconds, the labor crunch is about to get much worse.”

“Census Bureau projections show the overall U.S. population, a rough proxy for the country’s demand for goods and services, growing faster than the workforce— which supplies those goods and services— through 2030 and probably beyond. From 2017 to 2027, the nation faces a shortage of 8.2 million workers, according to Thomas Lee, head of research at Fundstrat Global Advisors.”

Another restriction on labor supply is the “people [who] have dropped out of the workforce, owing to factors such as disability, opioid addiction, and prison records that make it hard to snare jobs. The labor force participation rate, which measures the percentage of the adult population that’s working or actively seeking employment, has dropped to 63% from 67% in 2000.”

Washington Post Editorial[3]

A Washington Post editorial opens with this statement: “American employers in an array of industries — manufacturing, agriculture, trucking, home building, energy, food service, retail and others — are warning that a long-brewing labor shortage is reaching crisis proportions.”

While the U.S. needs more skilled and English language-proficient immigrants, the editorial continues, “employers in food processing, retail, landscaping and other industries that rely on low-skilled labor are already desperate for workers.”

“By driving away legal and illegal immigrants even as unemployment flatlines and baby boomers retire, [President Trump] deprives businesses of oxygen in the form of labor. That’s not a recipe for making America great.”

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[1]  The above demographic challenges are not just U.S. problems. See World Faces Demographic Challenges, dwkcommentaries.com (April 3, 2018).

[2] The Great Labor Crunch, Barron’s (Mar. 10, 2018).

[3] Editorial, America needs more workers. Trump’s war on immigration won’t help, Wash. Post (April 8, 2018).

U.S. and Cuba Continue To Cooperate on Agriculture 

Quietly the U.S. and Cuba are continuing to hold bilateral meetings on various topics. Recently, for example, the meetings have covered cybersecurity, drug trafficking, terrorism, irregular immigration and money laundering.[1]

The latest, on April 10 and 11,  in Washington, D.C. was on the subject of agriculture.[2]

This meeting provided the opportunity to review the state of the implementation of the countries’ Framework Memorandum of Understanding on Agriculture and the Memorandum of Understanding on Animal and Plant Health. In particularly, both parties reviewed the compliance with the activities previously agreed upon, and analyzed the new actions proposed and other initiatives to give continuance to the technical exchanges.

This bilateral cooperation benefits both Cuban and U.S. farmers and helps promote the sustainability and development of agriculture, which are related to organic agriculture, soil management, water conservation, the prevention and treatment of plant pests and animal diseases, as well as to the actions for organic certification and seeds, among others.

The Cuban delegation was led by Moraima Céspedes Morales, Director for International Affairs at the Ministry of Agriculture, and composed of other officials of the ministries of Agriculture and Foreign Affairs. The U.S. delegation was led by John P. Passino, Director for Western Hemisphere at the U.S. Department of Agriculture and composed of other officials of that agency and of the Department of State.

The meeting was held in an ambiance of respect and professionalism. Both delegations shared the view to underscore the importance of maintaining the bilateral cooperation in these topics.

Conclusion

It is refreshing to know that the U.S. and Cuba are continuing to hold meetings on various subjects of mutual interest despite all the hostile rhetoric from the U.S.

At the same time it is disappointing that there was no mention of this latest meeting on the websites of the U.S. Departments of State or Agriculture or in the U.S. major news media.

However, on April 5, U.S. Senator John Boozman (Rep., AR) addressed the subject of U.S. agricultural exports to Cuba in a short article that stated the following: “United States’ producers are unable to fully tap into the Cuban market because federal law prohibits private financing for agricultural trade with Cuba. This misguided policy creates a major roadblock to trade. That’s why Sen. Heidi Heitkamp, D-N.D., and I introduced the Agriculture Export Expansion Act to lift the ban on private banks and companies offering credit for agricultural exports to Cuba. It’s a small step that would help level the playing field for farmers and exporters, while simultaneously exposing Cubans to American ideals, values and products. A true win-win for American farmers and the Cuban people.”[3]

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[1]  This blog has commented on these bilateral meetings. E.g., Cuba and U.S. Continue To Hold Bilateral Meetings on Various Issues (Jan. 18, 2018).

[2]  Cuba Foreign Ministry, Representatives from Cuba and the United States talk about cooperation in agriculture (April 11, 2018); Cuba Embassy in U.S., Representatives from Cuba and the United States talk about cooperation in agriculture (April 11, 2018); Cuba and the United States exchange on cooperation in agriculture, Granma (April 12, 2018); Washington and Havana talk about agriculture in a new technical meeting, Diario de Cuba (April 12, 2018).

[3] Boozman, Time to expand U.S. agricultural exports to Cuba, WashingtonDC100 (April 5, 2018).

The New York Central Railroad’s 1907 Woodlawn Crash

In the midst of the national political debate over railroad freight rates of 1907, the New York Central Railroad and William C. Brown, its Senior Vice President and my great-great uncle, had to confront the tragic human, legal, financial, political and public relations problems presented by the February 16, 1907, crash of one of its trains in the Woodlawn section of the Bronx. The train with one of the new type of engines (electrical) left the tracks, killing 24 people and injuring another 143.[1]

Remember that this occurred during the construction of the Grand Central Terminal in midtown Manhattan, which would require the replacement of steam-powered locomotives with electric-powered ones that previously had not been designed, manufactured and used. [2]

The Central’s Chief Engineer, William J. Wilgus, was in charge of designing the new electric engines, and General Electric Company was manufacturing them. The initial test run in September 1906 had been successful.

If the new engines were outlawed, the Railroad faced financial ruin. If the Railroad were deemed to be negligent in any way, that too presented many problems. For example, an assistant district attorney called for an investigation of the Central’s executives for possible indictment for manslaughter.[3]

Dr. Kurt C. Schlichting’s Hypotheses Regarding the Crash

Some of the documents about the Crash have been analyzed by Dr. Kurt C. Schlichting, the holder of the E. Gerald Corrigan Endowed Chair in the Humanities and Social Sciences and a professor of sociology and anthropology at Fairfield University (Fairfield, CT). Here are his conclusions from that investigation:[4]

  • In testimony before the New York State Railroad Commission, the Central’s President, William H. Newman, and Senior Vice President, William Carlos Brown, testified that the fault was Wilgus’ design of the engines.
  • Wilgus, however, proud of his design work and his professional reputation, strenuously disagreed with this assessment. Therefore, Wilgus did his own investigation and concluded that the cause of the wreck was a track defect at the point of the wreck and a widening (or “nosing”) of the track due to the heavier weight of the electric engines. This would make the Central’s Operating Division liable.
  • Wilgus thought Newman and Brown agreed with him, but Brown in an April 1907 memo told Wilgus that the engine design by Wilgus was flawed and thus the cause of the wreck.
  • In response Wilgus prepared an April 9th detailed report defending the design and instead arguing that the cause was a spreading of the track (nosing) due to the extra weight of the engine. This was seen as a “time bomb” for the Central and its top executives for liability for putting the new engine into service without adequate testing and for possible perjury in their testimony to the Commission.
  • On April 12th, the Central’s vice president and chief general counsel, Ira Place, visited Wilgus and explained how his memo would damage the Railroad and that Newman and Brown could go to jail if the report were made public. Therefore, Place instructed Wilgus to burn the report, and Wilgus agreed to do so.
  • The Central’s lawyer delivered the same message to Newman and Brown, and they obeyed the instruction and destroyed the report.
  • Under the direction of Brown, the Railroad then proceeded to made significant changes to the design of the engines without Wilgus’ knowledge and consent. Wilgus felt double-crossed and told the Central’s lawyer that he had re-created the report.
  • Wilgus put a copy of the re-created report in a box of records given to the New York Public Library with instructions that it was not to be opened without his permission until after his death.
  • This collection of papers also included testimonial letters about Wilgus from J. P. Morgan, William K. Vanderbilt, Ira Place and W.C. Brown. A letter by Brown before the crash, for example, stated, “The great work undertaken and practically completed by you, of changing the power within the so-called electric zone and the reconstruction of Grand Central Station, was the most stupendous work of engineering I have ever known; and it has gone forward practically without a halt, certainly without a failure in any essential feature.”
  • Wilgus resigned from the Railroad on September 20, 1907.
  • No criminal charges were ever brought against the Railroad or any of its executives regarding the Woodlawn Wreck.

 Reaction to Schlichting’s Analysis

I have not seen or reviewed the documents that Dr. Schlichting has and I am not an engineer. Thus, I am not in a position, as Mr. Brown’s descendant, to refute the above analysis. But I do have the following points:

  1. Wilgus was out to protect his professional reputation as an engineer and thus has an interest in casting blame elsewhere. Moreover, he was never subjected to cross-examination on his criticisms of Mr. Brown and the others.
  2. According to Schlichting, Wilgus went to great pains in designing and testing the new engine. A good argument can be made that this was reasonable care, not negligence.
  3. Yet after the Crash, the railroad at the direction of Mr. Brown and without Wilgus’ participation successfully redesigned the engine and eliminated the problem. (Presumably this involved reducing the weight of the engine.) Thus, Wilgus was not essential to designing the engine, and the redesign suggests that he had not done all that he could have done on the initial design.
  4. Brown and the other railroad officials had not had an opportunity to defend themselves against these charges.

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[1] E.g., ONLY SECOND TRIP OF DOOMED TRAIN; Passengers Were Frightened at Speed Made Early in the Run. “CRACKED LIKE A WHIP,” Card Playing Commuters Soon Gave Up Their Games in the Swaying Cars, N.Y. Times (Feb. 16, 1907); CENTRAL WRECK; EIGHTEEN DEAD; New Electric Train Leaves the Tracks in the Bronx. MORE THAN 40 INJURED Passengers Ground to Death as Upset Cars Dragged Along the Ties. LAID TO OVERSPEEDING Bodies Chopped Out of the Wreckage—Motor Cars Never Left Rails. ENGINEER IS ARRESTED. Police Find Him Early This Morning—The Coroner Already Investigating, N.Y. Times (Feb. 16, 1907); NEWMAN QUIZZED AT WRECK INQUIRY; President Tells of Central’s Methods at the State Commission Hearing. RELIES ON MEN BELOW Details of Operation Are Left to Heads of Departments, President Declares, N.Y. Times (Feb. 27, 1907); WARNING WAS GIVEN BEFORE FATAL WRECK, N.Y. Times (Mar. 6, 1907); Weak Track Caused Wreck, N.Y. Times (May 8, 1907) (N.Y. Board of Railroad Commissioners conclusion)l PBS, The Woodlawn Crash, 1907.

[2] See Grand Central Terminal’s Centennial, dwkcommentaries.com (Feb. 2, 2013); Another Report on Grand Central Terminal’s Centennial, dwkcommentaries.com (April 7, 2014); Sam Roberts, Grand Central: How a Train Station Transformed America at 110 (Grand Central Pub; New York 2013).

[3] In early March 1907 the New York Central was held “culpably negligent” by the Coroner’s jury  and the Coroner held the company, its President Newman and its Board of Directors for the grand Jury. (Company Blamed for Bronx Wreck, N.Y. Times ( Mar. 5, 1907). Later that month the New York Central and two lower-level officials were indicted for manslaughter in the second degree by a New York State grand jury. (Central Indicted for Manslaughter, N.Y. Times (March 28, 1907).)

[4] Kurt C. Schlichting, Grand Central Terminal: Railroads, Engineering and Architecture in New York City at 82-106 (Johns Hopkins Univ. Press; Baltimore, MD; 2001); Kurt C. Schlichting, William J. Wilgus and the planning of modern Manhattan at 63-66 (Johns Hopkins Univ. Press; Baltimore, MD; 2012). Dr. Schlichting based his conclusions on documents in Box 7 of the Wilgus Papers at the New York Public Library.

 

 

U.S. President Theodore Roosevelt’s Second Term (1905-1909): Federal Regulation of Railroads

During President Theodore Roosevelt’s second term (March 4, 1905—March 4, 1909) the major developments regarding federal regulation of railroads were congressional enactment of the Hepburn Act in 1906 and proposed increases in such freight rates in 1907-1908.

The main provision of the Hepburn Act empowered the Interstate Commerce Commission to impose “just and reasonable” freight rates while banning rebates and preferential rates.The debate over this legislation and its terms were covered in prior posts.[1]

Now we look at the controversy over proposed increases in such freight rates in 1908.[2]

Following the Financial Panic of late 1907 [3] and  the continued economic recession in the first half of 1908, railroads felt pressured by Roosevelt not to cut wages while believing they could raise profits only by raising freight rates. As a result, some roads announced such increases. Roosevelt did not like this, especially in advance of the November 1908 presidential election.

During this new battle over freight rates, President Roosevelt met at the White House with W. C. Brown, now the Senior Vice President of the New York Central Railroad and my great-great uncle, who through letters and speeches had been the most vocal advocate for raising rates. Indeed, Brown provided the President with a collection of Brown’s speeches and other materials, Freight Rates and Railway Conditions. One was the Freight Rate Primer, which in comic-book form argued that an increase in rates would have minimal impact on the common man. Comic Book Propaganda!

Afterwards in an August 6, 1908, letter, Roosevelt told Brown that raising rates just before the election was very unwise, and instead the issue should be addressed later “purely on its merits.”

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[1] See these posts to dwkcommentaries.com: Federal Regulation of the Railroads in U.S. President Theodore Roosevelt’s Second Term (1905-1909): Introduction (Aug. 19, 2014); Federal Regulation of the Railroads in U.S. President Theodore Roosevelt’s Second Term (1905-1909): The Hepburn Act (Aug. 29, 2014); Reactions to the Hepburn Act Regarding Railroads’ Freight Rates, July-December 1906 (Sept. 8, 2014); Public Debate About U.S. Regulation of Railroads, January-May 1907 (Sept. 12, 2014); President Theodore Roosevelt’s “Decoration Day” Speech About the Railroads (May 30, 1907) (Sept. 14, 2014).

[2] See Edmund Morris, Theodore Rex  (Random House; New York; 2001).

[3]   See U.S. President Roosevelt’s Second Term: The Economy and Securities Markets of 1906-1907, dwkcommentaries.com  (Sept. 11, 2014).

Steven Pinker’s Analysis of Wealth and Inequality

“The world has made spectacular progress in every single measure of human well-being,” as noted in a prior post, is the cheery synopsis of the new book, “Enlightenment NOW: The Case for Reason, Science, Humanism, and Progress “ (p. 52)  by Harvard University’s Johnston Family Professor of Psychology, Steven Pinker.

Two of the measures that he examines are wealth (Ch. 8) and inequality (Ch. 9), both of which illustrate his overall analysis over long periods of time and for the whole world with unusual sets of data and graphs.

Wealth

For wealth, he starts with the proposition that “wealth is created . . . primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor . . . [and] that we can figure out how to make more of it” (p. 80).

His graph of Gross World Product, 1-2015 (p. 81) shows virtually no change from year 1 through the middle of the 19th century and then virtually a straight-upward line through 2015. This “Great Escape” from poverty was due to “the application of science to the improvement of material life,” “the development of institutions that lubricated the exchange of goods, services, and ideas” and “a change in values” or “endorsement of bourgeois virtue” (pp. 80-85).

The next graph–GDP per capita, 1600-2015 (p. 85)—shows, Pinker argues, that “starting in the late 20th century, poor countries have been escaping from poverty in their turn,” thereby converting the Great Escape to the Great Convergence. This is also shown, according to Pinker, by data and graphs of World income distribution, 1800, 1975, and 2015; Extreme poverty (proportion of world population), 1820-2015; and Extreme poverty (number), 1820-2015 (pp. 86-88).

For Pinker, the following are the three major causes of this Great Convergence:

  1. The “decline of communism (together with intrusive socialism).” Market “economies can generate wealth prodigiously while totalitarian planned economies impose scarcity, stagnation, and often famine. Market economies, in addition to reaping the benefits of specialization and providing incentives for people to produce things that other people want, solve the problem of coordinating the efforts of hundreds of millions of people by using prices to propagate information about need and availability far and wide.” Moreover, many market economies also “invested in education, public health, infrastructure, and agricultural and job training, together with social insurance and poverty-reduction programs.” (Pp. 90-91.)[1]
  2. Better leadership in developing countries (p. 91).
  3. The end of the Cold War (p. 91).
  4. Globalization through an explosion of international trade (p. 92).
  5. Advances in science and technology (pp. 94-96).

Inequality

The initial premise of this chapter is that unlike “health, prosperity, knowledge, safety, peace “ and certain other factors, “economic inequality is not a fundamental component of well-being.” The contrary view confuses inequality with poverty. (Pp. 98-102.)

Here Pinker asserts that inequality comes with modernity and refers to the Gini Coefficient as the usual measure of economic inequality with 0, when everyone has the same as everyone else and 1, when one person has everything and everyone else has nothing.  (Pp. 98, 102.)

He then displays three graphs of the Gini Coefficient: International inequality, 1820-2013 (population weighted and unweighted), Global inequality, 1820-2011 and Inequality, UK and US, 1688-2013. These graphs demonstrate, he says, that “inequality in the world is declining.” (Pp. 98, 103-06.) An historian, Walter Scheidel, is said to have identified the Four Horsemen of Leveling: mass-mobilization warfare, transformative revolution, state collapse and lethal pandemics by obliterating wealth and killing large numbers of workers. (Pp. 106-07.)

Moreover, “modern societies now devote a substantial chunk of their wealth to health, education, pensions, and income support (the Egalitarian Revolution).” This has “redefined the mission of government to include such social spending to inoculate citizens against the appeal of communism and fascism, to benefit the entire society, to indemnify citizens against misfortunes against which they can’t or won’t insure themselves and to assuage the modern conscience.” (Pp. 107-08.)

The conclusion from Pinker on this issue is the following:

  • “As globalization and technology have lifted billions out of poverty and created a global middle class, international and global inequality have decreased, at the same time that they enrich elites whose analytical, creative , or financial impact has global reach. The fortunes of the lower classes in developed countries have not improved nearly as much, but they have improved . . . The improvements are enhanced by social spending, and by the falling cost and rising quality of the things that people want. In some ways the world has become less equal, but in more ways the world’s people have become better off.” (P. 120.)

Conclusion

The overall thesis of this book– The world has made spectacular progress in every single measure of human well-being—is very attractive. What are the counter arguments?

The above summary of Professor Pinker’s analysis of wealth and inequality raises at least the following questions:

  • Many of the data sets used by Pinker are not well known. Therefore, do they accurately and fairly depict what they purport to depict?
  • It seems valid that “wealth is created . . . primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor . . . [and] that we can figure out how to make more of it.” Any legitimate objections to same?
  • Is it valid to state that “in the late 20th century, poor countries have been escaping from poverty in their turn,” thereby converting the Great Escape to the Great Convergence?
  • Are Pinker’s reasons for the Great Convergence valid?
  • Is economic inequality not a fundamental component of wellbeing?
  • Is the Gini Coefficient a valid measure of inequality?
  • Are the major causes of Leveling or reduced inequality these factors: mass-mobilization warfare, transformative revolution, state collapse and lethal pandemics?

Comments from others who know more about these data sets and analyses are earnestly solicited.

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[1] Right now we are seeing Cuba struggle with whether and how it will modify its communist economic system to allow greater private enterprise. See Economic Challenges Facing Cuba’s New President, dwkcommentaries.com (April 5, 2018).

 

 

 

 

 

Economic Challenges Facing Cuba’s New President 

According to John Caulfield, a former Chief of Mission of the U.S. Special Interests Section in Cuba (before the 2015 reopening of the U.S. Embassy in Havana), Miguel Diaz-Canel, when he becomes Cuba’s President of the Council of State on April 19, “will face serious challenges from the moment he takes over. Cuba’s Soviet-style economic model is not working. Raul has acknowledged as much and in 2011 began to implement economic reforms that allowed many Cubans to become self-employed and buy and sell residences. These changes have allowed some Cubans to achieve relative prosperity, while the majority is stuck in low-paying jobs.”[1]

Caulfield added, “Their success caused a negative reaction from inside the Communist Party that saw the rise of these non-state workers as a threat to the system. Recognizing these concerns, Raúl [Castro] told the National Assembly last summer that he took personal responsibility for ‘errors’ and froze the concession of most new business and self-employment licenses.”

This will present Diaz-Canel and the Cuban Communist Party with a dilemma:

  • Pull “Cuba from its economic morass” by introducing “urgent reforms to eliminate economic distortions such as the use of two national currencies and inefficient state industries,” by attracting “private foreign investment to generate new exports and rebuild Cuba’s decaying infrastructure” and by allowing “Cuba’s incipient private sector to grow.”
  • Or reject this reform agenda and thereby halt the creation of private wealth and a threat to the Communist Party’s domination of the island.

The case against reform may have been strengthened by the apparent success of the Mariel Special Development Zone, a deep-water port and adjacent land for industry and distribution businesses on the north shore of the island west of Havana. Currently 10 projects are operational, related to several sectors, including industry, biotechnology and pharmaceuticals, logistics, construction, food processing, and real estate, and this year another  six (Richmeat, Profood Service, Devox Caribe, Bouygues Construcción Cuba, Engimov Caribe, and Nescor) will begin operations while another 18 have been approved and await implementation.along with construction of an Agricultural Terminal, a second business center and other infrastructure.[2]

The Mariel Special Development Zone received another foreign investor on March 29 when a Vietnamese entity signed an agreement to develop an industrial park of 156 hectares in the Zone. Another eight agreements with such entities were signed that day at the conclusion of the visit to the island by Nguyen Phu Trong, general secretary of the Communist Party of Vietnam. One of these agreements called for the construction of a 50 megawatt bio-electrical plant and an agricultural development combined with the use of renewable energy to generate electricity.[3]

On the other hand, as noted in a prior post. Secretary-General Trong in a speech at the University of Havana emphasized the need for the incorporation of market economic measures in communist systems.

At the end of last month there was a public debate in Havana about Cuba’s emerging private sector. A survey of the 200 attendees revealed that those with the highest monthly incomes of 20,000 CUC (roughly $20,000) were the owners of rental houses, paladares (restaurants), musicians, small farmers, and, on a smaller scale, scientists, miners, ministers, workers in the sugar industry, lawyers, and doctors. Havana, Ciego de Ávila and Matanzas, were considered the provinces with the highest incomes in the country. On the other hand, at least 25% of the Cuban population lives below the poverty line, and the average monthly salary for State workers in 2018 rose to 740 Cuban pesos (approximately 30 dollars). The audience also discussed what pattern of inequality the population was politically willing to accept and whether this  which could fracture Communist ideology on the Island.[4]

Overriding all of these issues and problems is the recognized need for Cuba to eliminate their dual currency system. According to Pavel Vidal, a Cuban economist,“It is impossible for Cuba to achieve a significant and sustainable improvement in the productivity of its economy so long as it operates with two national currencies, with multiple exchange rates between them and an official exchange rate that is excessively overvalued.”[5]

However, Vidal said “state enterprises that show permanent losses should be closed or merged instead of being allowed to operate in a ‘financial bubble’ where they are sustained by implicit subsidies received every time they pay for imported inputs using an overvalued exchange rate. This bubble must be burst, and the state sector must be restructured. Enormous amounts of financial and human resources have been wasted in supporting state enterprises with no economic value.” Vidal added that if the Cuban government chooses true currency reform, “it should be accompanied by not only a greater opening to foreign investment but also by liberalization of the private sector. An expansion of the private sector, he said, “would allow Cuba to absorb the unemployment that would be produced from enterprises that go bankrupt.”

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[1] Caulfield, Cuba’s next president faces choice between economy and communism, the Hill (April 4, 2018).   Many of these issues have been discussed in posts listed in the “Cuban Economy” section of List of Posts to dwkcommentaries—Topical: CUBA.

[2] Martinez, Promoting development and connecting Cuba to the world (Photos), Granma (April 3, 2018).

[3] Peraza, New accords strengthen strategic relations between Cuba and Vietnam, Granma (April 4, 2018).

[4] Ramirez, Rich “comrades,” Diario de Cuba (April 4, 2018).

[5] Whitefield, Cuba desperately needs to reform currency system, but timing couldn’t be worse, Miami Herald (April 4, 2018).