Cuba - The Second Economy

First a quick explanation about Cuban currency.  There are pesos convertibles (CUC) and national pesos (CUP).  One CUC is worth 25 CUP.  Most Cubans are paid in CUP but tourists mainly use CUC.  Either currency is accepted for the most part.

Convertible (CUC) pesos and national pesos (CUP)

Our first excursion was with Jorge, a “Tour with an Economist”.  We met Jorge at a park near our house along with two other older couples from Boston who were traveling together and a couple from England that are on a 10 year round the world camper trip (see https://thisbigroadtrip.com/)!  They did not bring their camper to Cuba.  Jorge and his friend (also named Jorge) are both trained as economists, but never practiced.  About 80% of Cubans are employed by the government, but government salaries average 30CUC/month.  A beer costs 1 CUC, dinner for two at a nice restaurant, 30 CUC.  Not that you can’t get a pizza and soda at a government restaurant for about 1 CUC. But basically you can’t live off the average government salary so everyone has “la busqueda”, the search, for other ways to earn money.  The Jorges are getting in 2 economic excursions a day plus another all day excursion to the family farm outside of Havana 2 days a week through AirBnB and even with fees paid to AirBnB, transfers of money from a Miami-based company to a Cuban bank account, and government taxes, they could probably make 30 CUC a day if they have several people on each tour.  On the other hand, they have other people that help with the tour that they pay money to as well.

For our tour, the first step was taking a public bus.  I have never been on a bus or subway where I felt more like a sardine than on this bus. Even a sardine would have more space I think. Fortunately the ride was only about 5 minutes.  Bus rides cost about 0.40 CUP.  When we got off the bus Jorge explained about people who can find things.  These are the people who know how to get things not generally available at a store.  For example, can’t find a mattress, ask a guy hanging out in front of a  store and he can take you to another guy who has a bunch of mattresses.  Where do these come from?  Well,  maybe someone who works at the state mattress factory declares some mattresses to be “defective”.  Another guy is paid off to not notice that the mattresses didn’t get destroyed  but were instead loaded into a truck.  Then you might also need to pay someone to gather receipts that weren’t collected by a buyer and one of those receipts becomes yours to show you “legally” bought the item.  People sell all kinds of things out of little storefronts or just sitting along a shopping street.  Like in Russia, if you see a line in front of a store, get in it, because someone must be selling something you need.  Jake spent more time than I did exploring exactly what people were selling and for how much.  We stopped for juice at a stand where juice costs 2 CUP, rather than the 2 CUC we had paid earlier in the day at a restaurant in the tourist area. 

The tour ended at Granma’s house.  She was probably in her 70s and had lived in Old Havana.  After the Revolution their apartment building was condemned and torn down and they were sent to live in a shelter, for 20 years. The shelter was like a big warehouse with partitions for your living space.  Shared bathrooms and kitchen.  She said she knocked on a lot of doors trying to get compensation and a new place to live.  Eventually she was given the opportunity to buy an apartment at a subsidized rate with money deducted from her husband’s paycheck.  She and her husband are divorced now, but they continue to live in the apartment together.  I asked why she had three refrigerators and she said 2 were hers and one was her husband’s.  She gets a pension of about 10 CUC a month and supplements this by baking croquetas for parties, mending and altering clothing, and of course hosting the people on these tours.  She provided rum and cokes (Cuba libres, the coke being the national brand, not CocaCola) and crackers with a mayonnaise spread.

Many goods are “seasonal”.  Sometimes literally only available during certain seasons, but more often just meaning a temporary shortage.  When we were there, there was a shortage of flour for instance.  Brazil has elected a new right wing president and most flour importation comes from Brazil.  The Cuban government disapproves of the new Brazilian government and now Cuba gets no flour from Brazil.  Yanelis had a big water purifier in her home, but she can’t find filters for it right now even though the thing was produced in Cuba.

Our other tour was a “farm to table” tour.  I’ll talk more about the farm in a post on food, but our guide for that tour was trained as a lawyer but has spent most of his career working for tour companies.  Our driver was a mechanical engineer and he does some consulting work for an Italian company, works some with a government agency, and does the marketing for the farm to table tour.  One of our cab drivers is a physical therapist but just bought a 1958 car that he is going to fix up to drive people around.  Maria’s husband worked as a gardener at the national botanical garden for a number of years but the salary was too low and now he has a license to operate a cart from which he sells crackers and apparently he makes more money doing that than as a gardener. 

The fact that you can’t make a decent living as a professional despite a free education system has meant that many people are forgoing college now to work in the private service industry instead.  Cuba has been exporting doctors and doctors who agree to work abroad basically get a bonus paid for by the other country.  Brazil had several thousand Cuban doctors, but the new government wanted to pay the doctors directly rather than pay the Cuban government, and so Cuba has withdrawn all those doctors. 

A typical street in Central Havana

Parks are wifi hot spots and so everyone goes there to check their messages. You purchase wifi access on a card purchased from the government via street kiosks mostly.

Revitalization continues from Old Havana into Centro along a pedestrian only street

A receipt showing the price in CUC vs CUP

Along the Malecon looking towards Central Havana

School kids on their lunch break

If you do earn more than $2000 CUC a year in a private business you have to declare that income and it is taxed at 50%.  Hmm, wonder how many people declare that cash income they are receiving?  There are though still “spies” in every neighborhood who might report an increase in spending on goods or major home repair or speaking out against government policies.  Many of these people have themselves been caught doing something illegal and reporting on others keeps them out of jail.