Categories:
International Trade
Liberty
Tiny Sunrise Airways runs 12 direct flights weekly from the Cuban cities of Havana, Camaguey and Santiago to Port-au-Prince. Cubans interviewed in the market said they spend about $700 on airfare, food and lodging and another $700 on merchandise, which they resell at a markup high enough to make several hundred dollars profit per trip.
Most of those interviewed said they made near-monthly trips, generating more than $2,000 in extra income a month in a country where annual state salaries are less than $400.
This is from Michael Weissenstein, “Cubans fly around the world hunting shopping bargains,” The News & Observer, December 11, 2018.
HT2 Tyler Cowen.
Read the whole article, which is not long.
The article and especially these 2 paragraphs above say so much:
1. First, Haitians are almost certainly much better off than Cubans. That shouldn’t be surprising given that Cubans are still suffering under Communism, now with a few nods to slightly freer markets. But it’s striking nevertheless.
2. Second, this inefficient way of getting goods to the Cuban markets implies that very high barriers to imports are making Cubans much worse off than otherwise. Spending $700 plus time to arbitrage a relatively small number of goods is very expensive. My gut estimate is that ending all trade barriers would almost immediately double per capita income in Cuba.
3. Third, and my commentary: I hope Fidel Castro is burning in hell.
READER COMMENTS
James Hanley
Dec 13 2018 at 3:53pm
“Second, this inefficient way of getting goods to the Cuban markets implies that very high barriers to imports are making Cubans much better off than otherwise.”
Better off?
David Henderson
Dec 13 2018 at 4:16pm
Oops. Corrected. Thanks, James.
Quite Likely
Dec 13 2018 at 4:30pm
Cuban life expectancy: 79.0
Haitian life expectancy: 63.5
(and just for comparison: US life expectancy: 78.5)
Maybe extend your definition of “better off” beyond the price of consumer goods?
Starting from behind the veil of ignorance it’s pretty clear that you’re much better off as a random Cuban “suffering under communism” than a random Haitian, and very likely better off in Cuba than as an American in the bottom half of the income distribution too.
Yaakov
Dec 13 2018 at 6:47pm
In the mid-90s we met people who said they were flying for similar reasons between Israel and Kazachstan. I could not figure out how it was profitable.
BC
Dec 13 2018 at 7:36pm
“Since Cuba did away with a hated exit permit five years ago, Cubans are packing flights to destinations with easy entry requirements….bringing goods back for others — is technically prohibited…but it is rarely prosecuted.”
It’s amazing how enterprising people become when given even the slightest freedom. That includes both the officially unsanctioned Cuban importers and the merchants in the “Cuban markets” and “Little Havanas” in the destination countries. They’re all responding to solve the shortages created by Cuban communism, all without coordination by some central authority.
On the other hand, “Driving the trade away from Miami has been the Trump administration’s decision to pull most staff from its Havana embassy last year, ending visa processing there.” I thought Trump wanted to increase US exports….
Pajser
Dec 13 2018 at 11:23pm
This article confused me so much that I had to look at definition of “better off” in dictionary. It says (a) more money, and (b) to be in better position. According to CIA data, Cubans GDP PPP/cap is 11 900 dollars; Haiti 1 800 dollars. They spend that money, individually or collectively – it cannot be that Haitians are better off. Life expectancy in Haiti is 63 years; in Cuba, 80 years. It means, roughly, that death toll of capitalism in Haiti is 2 million of people in last 70 years, right?
But that shopping abroad thing – is it something surprising? I live in EU, and I know people who still go shopping in other EU but also in non-EU countries, like Switzerland, Bosnia, Turkey. I read Americans go shopping in Mexico. Is it true? Is it essentially different phenomenon?
JFA
Dec 14 2018 at 8:52am
Yeah… I’m not sure this article points to Cubans being worse off. So they travel to get their goods. How different is that, really, from hiring someone to travel to get goods (i.e. like all of us do implicitly when we go to the store). It does point to dysfunction in imports going into Cuba, and Cubans would be better off if that wasn’t the case. Nor does this address the ability of Haitians to buy the things Cubans are buying things. A tailor rarely has as nice a suit as his customers.
Jon Murphy
Dec 14 2018 at 9:34am
The big thing is the cost. Middlemen (retailers, wholesalers, etc) all act as agents who reduce the costs of buying things. This system is clearly dysfunctional in Cuba. The costs of buying those same items in astronomical when one thinks it is cheaper to fly to Haiti, buy there, smuggle back, and resell (or keep for one’s personal uses).
JFA
Dec 14 2018 at 2:03pm
I worded that poorly. The idea implied in this post is that if you travel somewhere to buy goods, you must be worse off than the people you buy it from. While this may be more costly than hiring someone to do it for you, the principle would still seem to apply. Just because you are getting something from somewhere else (whether you go there yourself or hire someone to do it for you) doesn’t mean you are worse off than the people you’re getting it from.
As others have pointed out, most GDP/person numbers put Haiti as the poorest country in the western hemisphere for several years (I wonder if that’s changed with recent events in Venezuela). The life expectancy numbers also tell a different story (though bad data are not out of the question… Vincent Geloso has written on this).
I don’t think Cubans are living in a magical utopia, but I don’t see the evidence actually telling the story of Haitians being better off than Cubans. Communism is bad, but sometimes kleptocracies (like that of Haiti for just about all its existence) are worse.
I appreciate David’s post, but he was unconvincing.
David Henderson
Dec 14 2018 at 3:45pm
JFA is absolutely right. I blew it. My point #1 is almost certainly wrong.
Re Pajser’s CIA data on Cuba, though, while I can certainly believe that Cubans are better off than Haitians, the $11,900 is almost certainly too high.
Dylan
Dec 14 2018 at 4:06pm
One other thing, I’m curious if you’ve been to either place? I know perceptions as a visitor can mislead, and I certainly would not like to live in either place, but if I was forced to choose Cuba would win hands down.
David Henderson
Dec 14 2018 at 6:02pm
No.
Comments are closed.