Things you can learn well walking in Old Havana

Instead of talking about the research I did on Cuba, I thought I’d take this opportunity to be a little abstract and talk a little bit about doing research in Cuba.  To me one of the great benefits of study abroad programs is the ability to gain firsthand knowledge of a place from the people that are around you when you are there. I think this is especially true in our trip to Cuba.

Not to take away from the classroom experience, because I did learn a lot from our guest lecturers, but I think I learned a lot as well about Cuba and it’s economy in the two weeks that we were there from talking to people on the street and at restaurants etc. then I think I could have learned if I would have spent a semester reading about Cuba in academic journals from a library in the U.S.

Here’s one example. It was midafternoon in old Havana and myself and another student were walking down a side street when we came across of all things a pub. Being curious we stopped on in. The place was empty besides the three people that were working there. We sat down ordered something to eat and drink and started talking. Over the next few hours we filled out page after page in our notebooks, here is a sample of some of the questions we asked:

What did you do before you started working here?

Waiter’s answer: I was a professor of computer science.

Why did you leave your job as a professor?

Waiter’s answer: I didn’t really like it… and because I can make just as much money or more here.

Keep in mind the pub was completely empty the 2-3 hours we were there, with the only other person to come in was the shopkeeper from next door, who had come in to make change in peso for a CUC and get the numbers for the Florida lottery.

How does the self-employment tax work?

Answer: 10% of salary a month for contracted workers but you are contracted to one type of job and to one employer or 60 pesos a mouth for basic service jobs but you can change jobs and quit whenever you want... But it’s easier to find work if you’re a contracted worker.

What would you get paid if you worked for the state in these types of jobs?

Answer: About 365 pesos a month. Which is around $15 to $20.

How did the owner of the pub get the money to buy the place?

Answer: He loaned money from his family in Florida about 4 years ago.

What do you think about Granma?

Bartender’s answer: “It’s great for knowing when they are going to start working on the water pipes under the street. It’s no good at telling you when the work is going to be done though.”

Many more questions were asked and many more answers were given, and our understanding of some of the details how the Cuban economy worked and how people worked within it became more and more clear.  A 5 CUC tip were given by both of us. It seemed like everyday we were in Cuba conversations like this happened, with our Cuban professors, with each other and also with average people you meet along the way. I went to Cuba with a very basic understanding of how the country’s economy worked and to be honest with some pretty strong preconceived notions in my head but by the time I left I had a better understanding of the country but still a large amount of questions. This leads me to the topic of my research; one of the things that I think all of us found apparent was that Cuba’s dual currency monetary policy was causing a many externalities in the country’s macro-economy, one of which is a growing amount of inequality throughout the country. For a country like Cuba that fought a revolution, with one of the stated goals of ending inequality, this seems to be a paradoxical situation.

So the focus of my research was around why did Cuba introduce the CUC in the first place and what benefits has it gained from it? To make a very long paper short, the CUC was introduced in 2004 to help de-dollarize the Cuban economy after it had started to stabilized partially due to the reforms of the special period. At which point the Cuba economy started to grow and the authorities were reluctant undergo monetary change when experiencing high rates of growth for the first time in a decade. Then the financial crisis occurred and trade, liquidity and revenue decrease causing further unwillingness to move away from the dual monetary system. It is my opinion that now that economic conditions have once again stabilized it is time for the Cuban authorities to undergo exchange rate reform to bring the two currencies together if not unify them. If you would like to read more on this topic, below is a list of basic articles that I found helpful.

Being in Cuba changed, but also at the same time validated, many of the abstract concepts that I have learned over the course of my academic career. I still have many questions that have yet to be answered, but I think I gain a large body of knowledge over very short period of time by being there. One thing I am sure of though is the true benefit of gaining firsthand knowledge of a subject in which you wish to study, even from chatty well-educated waiters and bartenders on a slow day in old Havana.

1. Hernández-Catá, Ernesto. "Macroeconomic Effects of Exchange Rate and Price Distortions. The Cuban Case." Association for the Study of Cuban Economics; Cuba in Transition 21 (2011). http://stonecenter.tulane.edu/uploads/Hernandez-Cata_final-1318949703.pdf
2. Di Bella, Gabriel, and Andy Wolfe. "A Primer on Currency Unification and Exchange Rate Policy in Cuba: Lessons from Exchange Rate Unification in Transition Economies." Association for the Study of Cuban Economics: Cuba in Transition 18 (2008); http://www.ascecuba.org/publications/proceedings/volume18/pdfs/dibellawolfe.pdf.
3. Canler, Ed. "Pesos, poverty, and perversions: What’s wrong with Cuba’s money and how to fix it." Association for the Study of Cuban Economics: Cuba in Transition 18 (2008): 31-36; http://www.ascecuba.org/publications/proceedings/volume18/pdfs/canler.pdf
4. Di Bella, Gabriel, and Andy Wolfe. "Cuba: Economic Growth and International Linkages—Challenges for Measurement and Vulnerabilities in a Bimonetary Economy." Association for the Study of Cuban Economics: Cuba in Transition 19 (2009): 354-367; http://www.ascecuba.org/publications/proceedings/volume19/pdfs/dibellawolfe.pdf.
5. Orro, Roberto. "The Cuban Dual Monetary System and Challenges Ahead." Association for the Study of Cuban Economics: Cuba in Transition 18 (2008): 5-7 http://www.ascecuba.org/publications/proceedings/volume18/pdfs/orro.pdf