Socialism Sucks, page 4
Two cervezas didn’t give me beer goggles strong enough to overlook the shoddiness of the hotel. Three out of the four elevators were out of service, and we waited what seemed like forever before we decided to hoof it up the five flights of stairs with our bags. We found our room down the dark hallway, and Bob needed both the key and his shoulder to open the door.
At first the room seemed okay. The beds were neatly made, and despite missing a knob, the air conditioner turned on and blew cold air. That was important, since I was sweating like a whore in church after climbing all those stairs.
From the balcony, with its cracked glass railing, we had a view of the ocean, the deteriorating twin tower, and an abandoned courtyard. The bathroom, however, was the real gem. One of the metal ceiling panels was missing; there was mold everywhere; and, as we’d find out the next morning, running water was not guaranteed.
Bob and I have hiked many mountains together, and we’ve spent plenty of nights sleeping on the ground. We’ve definitely gone without indoor plumbing. This was nothing we couldn’t handle. We decided to go relax at the pool.
Luckily, we caught the elevator as it rumbled to a stop at our floor. It was stuffed with people and their belongings, and as we squeezed in, I had some idea of what it would feel like to leave Cuba by boat.
The pool wasn’t any better. Empty beer cans floated in the cloudy water. The twenty seats of the swim-up bar had long since deteriorated, and the mirror behind the bar was broken. Luckily there was a snack bar that sold beer. Our immediate surroundings at the decaying hotel were mostly offset by the nice ocean view, as long as you ignored the litter-strewn beach and the abandoned oil tank half-submerged in the rocky sand.
Before the revolution, Cuba had a thriving urban middle class, along with widespread rural poverty. Twentieth-century socialists claimed socialism would deliver greater equality and out-produce capitalism by ending wasteful competition, business cycles, and predatory monopolies. Socialism hasn’t delivered the goods it promised in Cuba or anywhere else. Today, Cuba is a poor country made poorer by socialism.
Here’s why: almost a hundred years ago, the Austrian economist Ludwig von Mises explained that socialism, even if run by benevolent despots and populated with workers willing to work for the common good, could still not match capitalism’s performance. Socialism requires abolishing private property in the means of production. But private property is necessary to have the free exchange of labor, capital, and goods that establish proper prices. Without proper prices, socialist planners could not know which consumer goods were needed or how best to produce them. Socialist planners often compensate for their lack of market pricing by relying on prices from foreign capitalist countries or their own country’s black-market prices, but foreign-market prices and internal black-market prices are obviously poor equivalents to local free-market—another way of saying “accurate”—prices.
Socialism also gives tremendous power to government officials and bureaucrats who are the system’s planners—and with that power comes corruption, abuse, and tyranny. It is no accident that the worst democides of the twentieth century occurred in socialist countries like the Soviet Union, Communist China, and Nazi (National Socialist) Germany, where planners simply decided to eliminate populations they thought interfered with their plans.3
The democides were justified in the name of making a “new socialist man,” a perfect worker who would outperform his exploited capitalist counterpart, but that guy never showed up. Socialist workers chronically underperform because they and their managers are not rewarded for their performance. Workers and managers in a capitalist system are rewarded, and so have an incentive to do better, to innovate, to experiment, and to gain new knowledge and skills.
The Hotel Tritón’s decaying edifice was a crumbling tribute to Cuba’s central-planning problems. Cuba had the resources to make large capital investments in state-run enterprises when it received aid from the Soviet Union. But many of these hotels can’t generate enough revenue to sustain the initial investment. Cuban government planners then had to pick which hotels to subsidize to prevent decay. The Hotel Tritón didn’t make the cut. It was rotting, inside and out. And nobody cared because nobody owned it.
After about half an hour of sitting by the pool I’d had enough relaxation. “This place sucks.”
“Socialism sucks,” said Bob as he drained his beer. “Let’s go into the city and see what’s happening.”
After a thirty-minute ride in a Soviet-made Lada, which is best described as a life-sized Matchbox car without the bells or whistles, our driver dropped us off in La Habana Vieja, or Old Havana. Most tourists visit this district to see the old churches and the historic fort, but we were there to check out the commerce. We discovered that fifty-eight years of socialism had not succeeded in stamping out the entrepreneurial spirit of the Cuban people.
“Señor, you want cigars? It is a special day. Fifty percent off Cohibas. Come with me.”
We heard about ten different versions of the same pitch dozens of times during our trip. It seemed every day was a “special day,” and nearly every Cuban in the streets had a place where we could get “authentic” Cuban cigars at a substantial discount. Government-operated stores and factories monopolize the Cohibas and other name brands and sell them at prices few Cubans can afford, so Cubans smoke cheaper cigars, and the street hawkers scam tourists into buying them, repackaged with name-brand labels and souvenir-worthy boxes. It seems like a steal. And it is—for the sellers.
To be fair, not all the street entrepreneurs were frauds. Plenty of Cubans huddled in stairways and other alcoves, where they displayed paintings or other handicrafts for sale. But none of these goods were sold from permanent commercial establishments.
After ten minutes of walking Bob quietly observed, “There aren’t any stores. No advertisements.” It wasn’t entirely true. There were a few stores, but the paucity of normal commerce was striking.
In a capitalist economy, entrepreneurs create businesses to make profits, which they earn by pleasing their customers. But in a socialist system, a bureaucrat decides which businesses can open, where they can operate, and what they can sell, and he really doesn’t care what the customer thinks. Adopting a socialist system is like turning your whole economy into a giant Department of Motor Vehicles.
Our strategy for seeing Havana was simple: walk until we got too hot, stop for beers until we felt refreshed, and repeat as necessary. The absence of commercial signs made this harder than one would think. Restaurants and bars were easy enough to identify once we were standing in front of them. But it was hard to stand on any street corner and distinguish residential streets from commercial streets. This is not a symptom of poverty. Go to any non-socialist poor country in the world and there is no shortage of advertisements and signs. Beer companies subsidize the signs of retailers serving their products in almost every country on the globe. But not in Cuba. The problem is that no one makes any more or less money whether you find your way into their store or not. So nobody gives enough of a damn to put up a sign.
At one beer stop in Central Havana, well away from the tourist area of Habana Vieja, we found ourselves in the midst of a happy-hour crowd. There were many attractive young women. The music was loud and very good, and the alcohol was flowing.
For the record, Bob and I both married our high school sweethearts, and while we may drink a lot while traveling, we are not looking for sex. The risks of disease and divorce are too high a price to pay for a quick lay. (And because we know our wives will read this, it is also very, very wrong.)
One young chica struck up a conversation in Spanish with Bob and invited us to hang out with her and her friends. We knew the drill by that point. At best, they were looking for some rich tourists to buy them food and drinks all night. At worst, we would end up bruised and naked on the outskirts of Havana. Bob declined repeatedly until she went away. As we left, a different chica followed us out to repeat the same offer but with something obviously more explicit in mind.
In Central Havana, the lack of commerce unrelated to tobacco, alcohol, or sex was striking. Habaneros lived in these neighborhoods. So where did they shop?
We found one store that was a large open room with high ceilings and cement support columns. The space could have easily housed a factory. Instead, on the right side of the room was a long orange lunch counter with fried chicken, rice, and fried plantains on the menu. On the left side of the room, behind a counter, there were shelves with bottles of rum, cases of the local cola, a few canned goods, cartons of eggs, and large sacks of rice next to a scale. A line of Cubans shopped their way down the counter. The place was an odd mix, somewhere between the worst imaginable version of a grade school cafeteria and a grocery in which 95 percent of the stock is depleted.
The limited number of product choices and the eclectic, even illogical, product mix is typical of Cuban stores. A small store on a main avenue in Central Havana sold plumbing fittings, dresses, candles, and some sort of cleaning material. We did find a convenience-style store with what you might expect: soda, juice, bottled water, snack food, cigarettes, and some canned goods. But in this store, and every other store, in each product category you had one choice, whether it was one type of detergent, one type of paper towel, or one brand of flour. Bob tried to take a picture, but a clerk told him that photos weren’t allowed in stores.
Cuba’s socialist economy manages to produce some items, but notice the utter lack of variety.
Almost by accident, we found an indoor shopping mall. We saw no signs, but happened by when someone opened the door, treating us to a refreshing blast of air conditioning. The selection of products here was somewhat better, but still very limited. Bob summed up the Havana shopping scene in four words: “This is just sad.” I tried to find a Coke, but of course that was nearly impossible. All they had was their one brand of what I called “Commie Cola.”
Still, not everything in Cuba is completely state-run. In 1997, it became legal for Cubans to register a business and rent out up to two rooms in their private residences. More recently, the two-room restriction was lifted and homeowners were allowed to hire non-family members to work for them, and the state’s per-room tax was lowered 25 percent. Since then, the rental housing market has flourished.
To investigate the contrast between the state-run hotels and the privately owned casas particulares, I booked two nights in a casa in Central Havana. The owner was married to an Irishman and lived most of the year in Ireland, but a neighbor named Laura met us outside the three-story apartment building. The exterior was unremarkable—white with green paint and balconies on most units, with clotheslines hanging from them.
Laura greeted us promptly and, unlike Hotel Tritón, had record of our payment through Airbnb. At the top of two flights of stairs, she opened the door to a well-kept, two-bedroom apartment. There was a combined living room and kitchenette, a room with a double bed, and one with two singles. The bathroom was clean, stocked with toilet paper, and had reliable hot water. The two air-conditioning units worked well, and the balcony had a view of the ocean and the Malecón, Havana’s famous seafront promenade. Bob wasn’t sure what Malecón meant, but he joked that it could be translated as “bad econ,” and that sounded about right. At fifty-seven dollars a night the apartment was three bucks cheaper than Hotel Tritón but vastly nicer, and in a much better location.
The stark difference between the government-run hotel and the private apartment rental was not a fluke. After spending two nights in our Central Havana casa particular, we took a grueling six-hour drive to the old Spanish colonial town of Trinidad on the south-central coast. Trinidad, founded in 1514, was a major center for the sugar and slave trades, and in 1988, it was named a UNESCO World Heritage Site. We arrived without lodging reservations because we had read in the guidebook that there were more than five hundred private apartments and rooms available for rent in the small town.
Our enterprising driver tried to direct us to the casa particular of a friend, but we declined. We felt we’d overpaid for the lunch he had arranged on the drive over, and insisted on going to Plaza Mayor, the central town square. After six sweaty, windblown hours in a ’51 Plymouth, we didn’t care where we’d sleep that night. All we wanted was cold beer, and lots of it.
We walked about twenty paces and came upon a decent-looking bar with fans, and we were on our second beer when we noticed that the guy at the next table was using an old 1950s Russian-made, cabinet-style TV as a chair, while two chairs hung upside-down nearby on the wall as decorations. That image captured perfectly the relative price structure in Cuba.
Our server noticed our bags and asked if we needed a room. At first I refused, because we had heard room rates go up five dollars when a middleman brings you to the house. But she said that the owner had an apartment available above the bar. Not lugging a bag in the heat sounded appealing. So did having a fully stocked bar right downstairs! I left Bob with the bags and headed upstairs to meet the owner. Bob warned me that fifty U.S. dollars was the max he was willing to pay.
The room was large, clean, and well-kept, with two single beds, cold AC, and a bathroom with reliable hot and cold water. There was a large patio with tables, chairs, and ashtrays that would be great for me to continue chain-smoking cigars after Bob crashed for the night.
“¿Le cuenta noche?” I asked my host, glad that Bob wasn’t there to make fun of my awful Spanish.
“Veinticinco.” Twenty-five dollars. We took it for two nights.
We returned to Central Havana two days later, again without a reservation. We’d planned to continue staying at casas particulares since the other two had been so nice. But we were again hot, battered, and grumpy after the long drive, so the first priorities were beer and food, in that order. About a ten-minute walk from the Capitol, we found a place for lunch with a balcony and a breeze on one of the old main boulevards that had a wide, tree-lined walking path in its center. The government-owned Hotel Caribbean was two doors down.
I asked Bob to check it out because I was tired of lugging my bag around in the heat. Bob had the hotel staff show him the room before he booked, and I can only assume the ice-cold AC desensitized him to the filth that surrounded him, because he reserved it for fifty dollars for the night.
Yes, the AC was refreshing, but the broken bathroom door, cracked toilet seat, shower mold, lack of any hot water, leftover soap used by the previous guest, hole in my towel, suspicious-looking stain on Bob’s towel, and used drinking glass that came out of a bag labeled “sanitized” were considerably less impressive.
The state-owned hotels in Cuba suck, but they don’t suck because Cuba is poor. They suck because no one cares. The people who own casas particulares care because they profit when people opt to stay in them. Their desire for more money leads them to reinvest some of their revenue to maintain and improve their property, so that more people will choose to stay with them in the future.
Private property rights give people the incentive to preserve resources (like housing) for the future. The managers of the state-owned hotels don’t have the same incentive because they don’t benefit from the hotel being in better condition in the future.
What is true for accommodation is also true for food, as we discovered throughout our trip. On our second morning in Havana, after we had left the Hotel Tritón, we asked a taxi driver to drop us at a restaurant near our casa particular. He dropped us off in front of a nondescript, multistory building. There was a large open door and a well-maintained staircase but otherwise nothing to distinguish this building from any other. Once we climbed the stairs, things were entirely different.
El Guajirito is one of approximately two thousand private restaurants in Havana. Cuba began allowing private restaurants in 1993, but at that time they were limited to no more than twelve seats, prohibited from serving seafood and beef, and required to pay very high taxes. By 2010, the official state media reported that no more than seventy-four private restaurants were operating in all of Havana. In 2011, the restrictions were relaxed; restaurants could now seat up to fifty people. Prohibitions on serving beef and seafood were also lifted.
El Guajirito had three large, air-conditioned dining areas and a well-stocked bar. The whole place was decorated in a sort of Latin American cowboy theme. The large, commercial-grade, stainless steel kitchen could have been in any high-end restaurant in the United States.
Bob was as eager to eat there as I was. “This place would pass any health inspection in the States.” The amount of capital invested was impressive indeed.
“The local talent is nice, too.” Bob pointed out an attractive young waitress wearing a short skirt, sexy cowboy-style blouse, and a cowboy hat. Everyone on the waitstaff was attractive, and they all spoke English as well as anyone we met in Cuba. In short, the human capital matched the physical capital that was invested in the place.
We started with a house cocktail, which was more “girly” than we expected, and then ordered a bottle of wine and an appetizer. My meal of shrimp, Caribbean lobster tail, and fish was quite good, as was Bob’s ropa vieja.
Over a dessert mojito we asked the general manager about the laws governing the size of private restaurants, because this place clearly seated more than fifty people.
“American spies! Trying to figure out our system!” he joked. Funny, but he was avoiding the question, so we asked again. He eventually shrugged, put his hand over his eyes, and said, “Well, I don’t know. There may be a little . . . ” and his voice wandered off. As far as we could gather, that meant the restaurant could be large—unofficially, of course—if you knew how to work the system. We’d later learn that some restaurants obtain separate licenses for a café and a restaurant and then combine them in order to get around the fifty-person limit.
We ate at private restaurants for most of the week. None of the others was as fancy as El Guajirito, but most served equally good meals. And that was the problem. The menus were virtually identical everywhere. Socialism claims to promote equality, but frequently what it delivers is just sameness.
