A Letter on Cuba

Barry Sheppard

I APPRECIATE THE articles on Cuba from various viewpoints in ATC issues #141 and #142. They provide food for thought for socialists with different analyses of Cuba.

I would like to comment on the article by Frank Thomson in #141 on the Cuban economy, which I think gives a false picture. Thompson acknowledges that per capita Gross Domestic Product is a poor measure of a country’s economic wellbeing. I’ll return to that — but since he largely utilizes this measurement, I want to start there.

Thompson says, “…. in 2001, Cuba was the third poorest country in Latin America as measured by per capita GDP. Only Nicaragua and the poorest-of-the poor Haiti ranked lower.”

Be that as it may, in 2008 the situation was markedly different. According to the CIA’s “World Factbook,” Cuba ranked 107th in the world with a per capita GDP of $9,100. The world average, including the advanced imperialist countries (and the very poor), was $10,400.
The following countries of Latin America and the Caribbean rank below Cuba:

Colombia, #111 at $8,900
Surinam, #112 at $8,900
Anguilla, #114 at $8,800
Peru, #117 at $8,400
Dominican Republic, #118 at $8,100
Ecuador, #122 at #7,500
Jamaica, #123 at $7,400
El Salvador, #129 at $6,200
Guatemala, #137 at $5,200
Bolivia, #148 at $4,500
Honduras, #149 at $4,400
Paraguay, #151 at $4,200
Guyana, #156 at $$3,900
Nicaragua, #167 at $2,900
Haiti, # 202 at $1,300

It also should be noted that it is difficult to measure Cuban GDP in terms of U.S. dollars. The official exchange rate doesn’t reflect the real cost of living. This can be seen from the well-known fact that those in Cuba who receive dollars either in the dollar economy (tourism, mainly) or from remittances abroad have greater buying power than those who don’t. Also, basic food is rationed at low prices, and education and medical care are free to everyone, paid by the government from its general funds — and how are these to be converted to U.S. dollars?

The measure of GDP is: GDP = C + I + G + (X-M). C is consumption, I is investment, G is government expenditures, X is exports and M is imports. Cuba has to rely on large imports, and these have to be paid in hard currency, so this is a large minus when calculating GDP in dollar terms.

But my main problem with Thompson’s article is that he relies on averages.  Per capita GDP is an average, the GDP divided by the total population. To see how most people in a country live, it is important to know the distribution of income. At best, GDP is only a rough indication of total income.

The distribution of income in capitalist countries is extremely skewed. A very few have very high incomes, and most people have much, much less. The average income, total income divided by total population, tells us nothing about what most people’s income are like in the United States, for example, because the hundreds of millions of dollars that a very few make greatly raise the average.

One person making $100,000,000 balances out one thousand making $100,000, and ten thousand making $10,000 (and there are many people in the U.S. making that).

The real incomes of the very rich contain hidden amounts not counted per person. Some examples: capital returns to trust funds, and that portion of company and bank profits not returned to shareholders but reinvested.

A more accurate measure would be not the average, but the median (50 percent make more and 50 percent less). This too gives a figure too high because of the skewing of income to the very rich. Often figures are given for the median family income, but the median per capita income is less.

What would be the most accurate measure would be the mode, the amount the income of most people is bracketed around. The average, the median and the mode are often confused in the popular mind, but when statistics are highly skewed they are very different.

If a graph of the U.S. population on the X axis vs. income on the Y can be imagined, there would be a tiny tail of fewer and fewer people way out to the right towards incomes of $100,000,000 and higher, and we know there are higher just from the announcements of Wall Street bonuses, let alone the big capitalist families.

Most of the population would be clustered near the left, the mode, the highest point, and the graph would tail off from there. The median would be considerably to the right of the mode, and the average would be still further to the right.

Such a graph would be even more extreme if, instead of income, total wealth were plotted. In the United States, a sizable percentage has a total wealth of zero (do not own a home, stocks, bank accounts, and so forth). So the graph would run along the zero wealth line for a distance, rise up to the mode, and then tail off to the few who are the most rich.

In Brazil there would be an even higher percentage with a total wealth of zero. Brazil ranks a little higher than Cuba in the CIA’s chart, at #113 and a per capita GDP of $10,400. But Brazil has a tiny few of extremely rich people and a big number of poor people. Millions do have not enough food. In Cuba everyone has adequate food. Millions of Brazilians have no health care. Everyone has health care in Cuba. Millions in Brazil are illiterate. Cubans are highly educated and all schools through college are free. Ninety percent of Cubans pay no rent because they own their own homes.

A graph of income in Brazil would show a large mode on the left, at lower income, and a tail off to the right where the very rich reside. There are income disparities in Cuba, and income is skewed. There are different pay levels. Those who receive dollars earn more than those who don’t.

The bureaucracy skims off from its control over distribution, but not nearly the amount in the old Soviet Union, and even there bureaucrat’s incomes were nowhere near what capitalists “earned” – a main reason why the bureaucracy wanted a return to capitalism. But the graph in Cuba would not tail off to millionaires and billionaires. There are none. Not even $100,000-aires. The graph would have the average, the median and the mode closer together.

So Thompson’s unfavorable comparison between Cuba after the Revolution with Cuba under U.S. imperialist domination, dictatorship and gangsterism by using GDP is quite misleading. Income and wealth in pre-Revolution Cuba were highly skewed to the rich, and so were literacy and access to health care.

November-December 2009, web only