Tuesday, February 13, 2007

Piketty and Saez, call your office...

...'cause if you want to study inequality, there's been a laboratory experiment going on for nearly half a century just south of Florida:

"Fidel has starved us," he whispered. "Yes, there is a lack of food but it is more than that. We are starving for information, for opportunity, for freedom. We want to enjoy the same things as those people over there," he said as a fresh batch of tourists spilled out of the doors of a tour bus.

Cubans struggle to survive on an average wage of less than £10 a month to supplement the state rations which provide them with basics such as rice and beans and either one small bar of soap or tube of toothpaste a month.

Visiting foreigners can spend almost double that on a taxi ride to the airport or a meal in one of Old Havana's state-run restaurants.

"It sticks in the throat," says Oscar Espinosa, an independent economist and dissident who was jailed in 2003 for criticising the regime's economic strategy and is now confined to his home on conditional release.

"Such obvious inequality in a country where for decades the people have laboured in the mistaken belief that they are creating a classless society. The truth is we have created a paradise for tourists and those that live off them, but for the rest of us, daily life gets worse," he said

Cuba's society has been split into those with access to the CUC, the convertible currency used by tourists and sent in remittances from those abroad, and the majority of the population who must rely solely on their salary paid in Cuban pesos.

Castro introduced the dual currency in the 1990s as a means of the boosting the economy after the collapse of the Soviet Union when Cuba threw open its doors to foreign tourists. Last year almost 2.5 million foreign travellers, mainly from Canada, Britain, Italy, Spain and Mexico, visited the Caribbean island.

The changes are credited with keeping the economy afloat but also created a vast and troublesome gap between the population of 11 million dividing those who have the convertible currency and those who don't.

"You can't buy anything with Cuban pesos," said Mr Espinosa. "Anything worth buying – soap, cooking oil, shoes – must all be purchased in convertibles.

"We are in a situation where a bell hop or a chambermaid can earn many times the salary of a doctor or civil engineer. What incentive is there now to train to be such a thing?"

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