Wednesday, April 02, 2008

Of reforms and flat panel TVs

As you would expect, the consumer “reforms” introduced by Raul Castro over the past few days – access to mobile phones, computers and the lifting of the ban on Cubans staying in luxury hotels - have received considerable coverage in the international media.

Much of the coverage has been reasonably favourable, praising Castro II for lifting such “absurd restrictions” and in the process, making life a little easier for long-suffering Cubans, etc, etc … Never mind that these absurd restrictions were introduced by the Castro brothers themselves.

Most outlets also have correctly reported that the changes will make no difference to the vast majority of Cubans, who cannot afford such consumer goods on current wages.

But few have properly explained the reasons why, so, let’s give it a go.

Reason 1 is the fact that with few exceptions, most Cubans are paid depressingly low wages by the State, regardless of whether you are a doctor or a labourer. The average wage is about US$17.00 a month.

Reason 2 is the fact that wages in Cuba are paid by the State in ordinary pesos while the State sells imported goods in convertible pesos, which are worth about 25 times the value of an ordinary peso.

But there is a third reason: price gouging by the regime.

You see, the price of imported goods sold in State stores are outrageously high, as confirmed by this dispatch from Mary Murray, who heads the NBC’s Havana bureau.

As an example, Ms Murray reports that a 26" Panasonic flat screen television - which went on sale for the first time in Havana this week - sells to Cubans for 1,961 convertible pesos.

That’s about US$2,120, which NBC says is more than double the retail price in other countries.

So, what do you do if you are unhappy with the price? Pop down to the store down the street? Well, no. The regime owns all the stores and they all have exactly the same inflated prices.

In other words, not only does the State pay its workers a pitiful wage in a make-believe currency that is not accepted in its own shops, but then the State engages in what can only be described as profiteering on a grand scale. No, make that, on a criminal scale. Pure and simple.

In most other countries, such outrageous monopolistic behaviour would see the retailer before the courts and possibly facing a jail sentence, or at least a hefty fine.

In Cuba, under the Castro brothers, it’s called a “reform”.

Go figure.


Anonymous Anonymous said...

great post. i was in havana last week and witnessed the state run price gouging. it's unbelieveable and so different from the american way. it's really hard to understand unless you've seen it for yourself. i bought a cuban friend two pairs of jeans on thursday. they cost about $58 in convertible pesos - about $70 USD. similar to our prices here--- but not the same at all since it would take my friend three to four years to earn the $$$ to buy the jeans. since he has to live on every penny he makes (and never has enough to feed his kids), he would never be able to buy them.

11:53 am  

Post a Comment

<< Home