Tuesday, October 26, 2010

The Cuban Economy In One Easy Lesson

The Cuban economy cannot be described in one easy lesson. But here is my take on it:

In theory all Cubans are equal. Their society is based on the ideals of Marxism. The Government "owns" everything, there is no private ownership of houses or businesses, the Government "owns" them all.

Workers are all paid about the same, maybe exactly the same. I understand that pay to be around twenty convertible pesos (CUCs) a month. A CUC is worth about $1.20 CAN so 20 of them amounts to $24 per month. In Cuba, education, housing and medical is free so all you have to use this money for is food and clothing, both of which are very cheap for local people.

As I mentioned before, there are two currencies in use, the CUC and the Cuban Peso or National Peso. One CUC can be exchanged for twenty four Cuban Pesos.

Here is an example of how this works. There is one toll road in Cuba and it is between Varadero and Habana. If you are a Cuban with a privately owned vehicle the toll cost is two Cuban Pesos or about seven cents. If you have a rented car or a foreign owned vehicle (different colored plates) you go through a different toll gate and the toll is two CUCs or about $2.40. Roly told us it is also a very simple matter to bypass the toll booth and most Cubans do. It is therefore us “rich” foreigners who pay for the road and that is fine.

There are two types of produce markets. Government markets where prices are controlled but the range of products is sometimes limited and “free” markets where farmers are allowed to sell product that is left over after their commitment to the government is met. Prices here are still in Cuban pesos but are maybe four times higher. The product in these markets is better and more varied.You make your decision on what to have for diner after you see what the Government market has to offer that day and buy what you can there. You then may make a stop at the free market for one or two things. The day Roly took me to the Government market they had white rice and squash but very little else.

Like the farmers, most people have found a way to make extra money. You could be a waiter in the day and a neighborhood plumber at night, working for a few under the counter pesos. Our friend Roly has gotten hold of an almost new Canon digital camera and makes extra money photographing weddings and quinceañera (fifteenth birthday parties for girls). He also guides tourists like us. His education and experience makes him invaluable.

There is also a huge Black Market. Everything is available if you know where to look. The existence of and need for this Black Market is, according to Roly, one of the failings of Cuba’s political system.

There is a current shortage of potatoes and onions in Cuba and Roly wanted to impress us with Christie’s Scalloped Potatoes which requires both. We were in a market looking in vain when a bystander heard Norma mention “potatoes” and took her aside to ask her if she wanted some. He disappeared for a while and returned with a bag of potatoes. She paid him and told Roly she found potatoes. Roly replied that there is an actual shortage so the only place they could have come from was the government storage bins of next years seed potatoes. Someone had stolen them from that storage so the shortage situation is now compounded and will probably extend into next year. We found some legal onions that needed a lot of trimming and the scalloped potatoes were delicious!

Anyway, the system is not perfect but then no system is perfect. I will expand on the housing system later.


  1. Glad to hear you had a successful and, I hope, enjoyable visit to Cuba. For me, your comments pointed out as many shortcomings to their system of government as advantages. Still to have universal health care, which seems to be eluding the US, is not a bad thing.

  2. It seems that some sort of modified system - a mix of socialism and free market. But, some level of a better quality of life for the masses as exampled in the U.S. and Mexico.

    The disparity between the haves and the have nots is simply too great in the U.S. and Mexico.

    Interesting report. Others have told me they found Cuba expensive?

  3. Your experience in Cuba makes great reading. It also makes me wonder if there isn't some way to get seed potatoes and onion starts into Cuba. From the US I don't even know where to start. Do you have any ideas?

    Joan from Salem, Oregon

  4. The American blockade of Cuba is still in effect Joan. The USA would like to see the Cubans starved into submission. They would not provide seed potatoes or anything else.