GIC Member Perspectives: Havana, Cuba InitiativeJanuary 25, 2019
On January 13, 2019 Barry and Nancy Shapiro of Sarasota FL traveled with David Kotok to Havana Cuba as part of GIC (Global Interdependence Center). GIC is an international group of which David Kotok is a former program chair. Its purpose is to foster communication between foreign governments and promote foreign commerce. I was there because of an invitation from David. The other guests had a wide variety of qualifications and achievements and could not have been better traveling companions.
I do not have permission to publish names so they have been omitted. The group included the following:
- Three Members of the Atlanta Federal Reserve
- Founder of National Municipal Research, New York
- Founder of Capitalogix, a Dallas based tech fund
- Chief Investment Officer of Fieldpoint Private, Connecticut
- Entrepreneur from Sarasota
- David Kotok, Chairman and Chief Investment Officer, Cumberland Advisors
- Founder of Pingora Asset Management, Boulder, CO
- Christine Schlesinger, a highly respected volunteer in many Sarasota Non Profits
- Management consultant in Organizational Behavior, Sarasota
- Financial advisor, New York
- Economic advisor to the Boston Consulting Group, Boston
- Wealth Management, Boston
- Montefiore Health, New York
- Founder of a West coast binding and mailing company, Newport Beach, CA
Their resumes are too lengthy to recount here. Their intelligence and insight added much to trip. Nancy and I found them to be some of the nicest people to travel with.
The first thing you notice when entering Cuba are the 1950’s restored American cars. They are fantastic and common throughout Havana. Those of you who are old car buffs would be heaven in Havana.
Another thing that immediately stands out is the substantial disrepair of the buildings and infrastructure. Nothing in the way of maintenance has been done for over half a century as can be seen here in old Havana.
I am not going to recount the five days in chronological order because it was such a whirl wind trip it all seems to mush together. We were scheduled from 9:00 in the morning to after dinner every day and evening. Nancy and I now need a vacation. I am going to try to group the story around common events.
We met lots of local Cubans, experts in their fields, who told us about Cuba and its many challenges. They include:
- An urban planner discussing socio-economic issues, including Cuban infrastructure, housing, investment and restoration programs.
- An economist discussing the Cuban economy, reforms and outlook for growth.
- A discussion with a lawyer who had practiced in Cuba for 20 years.
- Cuba’s top specialist on foreign investment.
- A group of local entrepreneurs.
Each discussion had the same theme, that Cuba’s Socialist society and Communist politics had, and is, stifling the Cuban economy. What was a surprise was to learn that it’s all by design. The government does not want any accumulation of wealth and in fact generates a never-ending list of regulations to promote the equalization of income among all the population.
The lack of any market forces to influence the economy eliminates incentive and in fact creates great differences between their society and the rest of the world. The population is heavily taxed to the extent of almost eliminating personal growth and income.
Being authorized to own a business is almost impossible due to extreme restrictions placed on ownership. Businesses are generally owned by the government. Private citizens can work at service jobs, but must pay half their sales (not net income) to the government. We ate at only Paladars which are private, not state owned restaurants.
Little things were baffling.
- A farmer cannot buy a tractor
- An individual cannot open a bank account
- No credit cards and no credit
- No bank accounts
- A business cannot buy parts
- A farmer cannot buy the best seeds
- And so much more
My reaction was ‘how stupid’. But the population has now been under such rule for 60 years. Most of the population have never lived any other way. They can’t even envision alternatives because of the government’s restriction on the use of the Internet, American books, movies, and television.
We were left with great frustration at the futility of it all, only to realize the Cuban’s live with this every day without any expectations.
We met with several Cuban entrepreneurs and were flabbergasted at some of the things we heard. Here we are having lunch with a Cuban entrepreneur who runs a computer repair business.
Some examples of the resulting reality for Cubans are:
- Graduate engineers find it more profitable to be a taxi driver than work in their chosen profession
- A computer repair person cannot purchase computer parts
- Doctors are contracted out, through the rest of the world, but significantly to Venezuela, and must work where told and for Cuban wages
- A restorer of old cars cannot buy parts
- A principal at a school earns about $5 a month
- The average wage is about $25 a month
- Business licenses are almost impossible to get
- All businesses and land are owned by the government
- It’s a cash society with no bank accounts or credit cards
The other side of the coin is the social services the population is provided from the government.
- Free education through PHD studies
- Free health care from a splinter removal to plastic surgery
- Monthly food allowances for every citizen, including the new-born. Everyone gets the same, 2 pounds of meat, half a dozen eggs, 6 pounds of sugar, and rice that can be purchased at local markets using government issued ration coupons
- Free housing
I have to say that the Cuban people, in my view, were a happy people, and didn’t seem to be as bothered by their predicament as I was.
Several meetings with the Cuban government were arranged for us including:
- Cuban Ministry of Foreign Affairs
- Cuban Ministry of Foreign Trade and Investment
- Central Bank of Cuba
There was a central theme here as well. Everyone complained about the US embargo, loved Obama for removing it, and hated Trump for reinstating it, and think the American goal is regime change.
The officials see and understand the success of several socialist countries like China and Viet Nam. But at the same time they defend their strict system. They understand its failings but want to fix the problems. It’s like not throwing out the baby with the bath water. They a very proud of their people, they are strong nationalists.
If you notice, I have not used any names of the Cuban officials. All of us felt that both private citizens and government officials were surprisingly candid. We do not want to embarrass anyone, and in fact several speakers showed a certain nervousness with the discussions. Also notice there are no pictures of the meetings.
Finally, if our goal was to open dialog, I think we did well. The discussions were open and we all had the opportunity to ask questions. David believes that not many Americans, and certainly no American government officials, ever have these kind of discussions with Cuban authorities, and we were privileged to have such an open discourse with Cubans at the ministerial level. I think the Cuban’s enjoyed the discussion as much as we did.
Did any of this make a difference? Don’t know. Are we likely to have improved relations with the Cubans? I doubt it. But you have to start someplace, and maybe that’s what we did.
Now we certainly had fun investigating Havana as well. GIC did a spectacular job and had arranged everything. All meals were at popular local paladars. Terrific sights around the city. Famous entertainers. Popular night clubs. We visited two artist’s studios and had a breath-taking visit at a local dance studio. And so much more. Following are some photos that I hope capture the spirit of the adventure.