Home sweet Havana

by Marshall on May 11, 2011

Dear faithful readers, please forgive the brief hiatus from blogging…I bring you a peace offering – economic food for thought!

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Owning a home isn’t just an American dream, its a common goal for people around the world. Owning a home is generally a good investment (not always), as it often brings dignity, security, and stability to a family. I’ve spoken with many Esperanza and HOPE loan associates who say one of their ultimate goals is to own a home where all of their children can fit and live comfortably.

But what does it mean to own a home? What does it mean to “own” anything? The bible, of course, teaches that we don’t own anything…we just administer what God has given to us. But what about in a legal sense?

In Cuba, 85% of the population owns their homes. Yet if you live in Cuba, you don’t fully “own” your home – because you don’t have the right to sell it. The Economist reports:

The only legal way to move in Cuba is by swapping residences—a slow, bureaucratic and often corrupt process known as the permuta(“exchange”), which requires finding two roughly similar properties and getting state approval. To avoid this hassle, some Cubans prefer to marry the owner of a property, transfer the deed, and divorce.

The goal of this policy is to limit the gap between rich and poor, towards a world without class differences. No more rich people amassing property at the expense of the poor. To be sure, we’d all prefer more equality. But crippling private property rights destroys economic incentives for gifted builders to construct homes to sell to anyone, rich or poor:

Because there is no incentive to build new homes, Cuba suffers from a dire housing shortage. Many buildings have been repeatedly subdivided. In some families three generations share one bedroom.

This isn’t just an isolated case. Peruvian economist Hernando de Soto (no, not the conquistador) was made famous for linking poverty in Latin America to a lack of full private property rights provided under the legal system.

“In most developing countries, the vast majority of people live outside the legal economy…Because they lack property rights, they cannot access capital or credit, so they cannot grow their businesses. Without a legal framework, the market system fails.” (link)

Rule of law and property rights. Boring stuff but it constitutes the architecture of economic growth. Get it right and you’ll have the privilege of being able take it for granted. Get it wrong, and your left short on houses, food, and opportunity.

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Chris Horst on Cuban Creativity

by Marshall on February 17, 2011

A short while ago, Chris Horst sent me a great article that inspired me to write about the dignity of entrepreneurship in Cuba. Chris now has an excellent new post with his thoughts on unlocking Cuban creativity:

At the core, we believe that God—the innovator of the solar systems, mountain ranges, and human emotion—has planted a glimmer of his creativity in us. When given the opportunity to do so, people will put that gift to work. Architects, chefs, artists, entrepreneurs, electricians, florists, educators and scientists each apply their God-given creativity in uniquely profound ways. Now, for the first time in decades, Cubans have the chance to do the same.

Follow the link above for the full post.

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The Dignity of Entrepreneurship in Cuba

by Marshall on February 8, 2011

Pop quiz:  Who said the following about entrepreneurship and self-employment?

“It is essential that we change the negative feelings that no small number of us harbor toward this kind of private labor.”

Here’s the grading scale:

  • 1 point if you said Barack Obama. Wrong, but understandable.
  • -5 points if you said Aaron Rogers. Not because he doesn’t know economics. Because he’s a Packer.
  • 10 points (plus a gold star!) for the correct answer…Cuban Communist Dictator Raúl Castro!

After 40 years of prohibition, Cuban private employment is creeping out of the shadows and onto the map, the NY Times reports.

Some interesting facts:

  • 85% of Cubans are employed by the government
  • These workers earning about $20 per month plus free healthcare, education, and an assortment of rationed goods.
  • It is illegal for Carpenters to build anything new, because there is no legal way to buy wood. They can only make repairs.
  • There are now 178 kinds of private jobs that Cuba permits. (This is both remarkable and sad.)
  • By the end of 2010, 75,000 new private businesses received government permits – an increase of 50%.

75,000 is more than a number. It’s 75,000 people, families, neighbors. Doing something new. Being creative. Improving their lives. Providing for their families with dignity. Offering a product or service that their communities value enough to pay them for. Ms. Álvarez is one of the 75,000:

“I feel useful; I’m independent,” said Ms. Álvarez, who opened a small cafe in November at her home in this scruffy town 25 miles from the capital, Havana. “When you sit down at the end of the day and look at how much you have made, you feel satisfied.”

Read the whole article here, and notice how entrepreneurship and hard work brings dignity and hope to those that previously had none. This is why I support economic freedom. This is why I work for HOPE International.

HT to Chris Horst.

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Wet and Wild with Hurricane Tomás

by Marshall on November 5, 2010

Hurricane Tomás is here, and it´s raining a lot.

For the past week the storm has been moving north through the Caribbean, and its now passing between the Western tip of Haiti and the Eastern edge of Cuba. Here in Santo Domingo (284 miles away from the eye of the storm), we´re escaping the worst of the 85 mph category 1 hurricane  winds. But it´s still going to be a rainy and windy weekend. No serious danger, just unpleasant to be outside.

The more rural parts of Haiti and the DR are at risk for landslides though.

I don´t have my camera USB cord, or else I´d upload some photos looking out from the North Santo Domingo branch office. We even have a few leaky windows, but its good to be indoors.

For a cool interactive map of the storm, click here.

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The Cuban Special Period – What’s for lunch?

by Marshall on October 21, 2010

Sugar water.

According to Andrés, a Cuban coworker of mine, from roughly 1991-94 his lunch every day was water with sugar. That’s it. “I was was so skinny you could see my bones,” he says with a big grin and a deep laugh.

This was during Cuba’s “Special Period in Time of Peace,” a severe economic crisis triggered by the fall of the Soviet Union and caused by decades of unsustainable economic policy. The innocuous name was courtesy of Castro, an example of his powerful rhetoric and a glimpse into his power-hungry soul.

It’s interesting to see how the principles of Cuba’s centralized economic planning contrast with the principles on which HOPE and Esperanza have built their microfinance operations. Collective ownership vs. individual responsibility. Top-down direction vs. bottom-up innovation. When people are treated as though they are valuable and capable creations, given freedom and responsibility within a framework of general laws and norms (instead of handouts and arbitrary commands) they tend to experience both material and personal growth.

This principled liberty helps turn sugar water into a hearty meal. And it empowers the helpless to become helpers.

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