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Sunday, December 18, 2016

Best intentions and unintended consequences

I read a story from the New York Times today (Cuban tourism) about an unintended effect of the surge of tourism on the lives of ordinary Cubans. It seems that the Cuban government failed to anticipate the flood of new tourists (3.5 million last year). One might think that in a normally operating economy these arrivals would result in some sort of positive effect on the island economy, with all of the external currency injected into the economy. However, that was not the case.

What happened is that in order to meet the needs of the visitors, goods (especially food) normally which met the needs of ordinary Cubans were diverted to feed the visitors. Cuban citizens were left with empty shelves and soaring prices. The response of the Cuban government was both predictable and maladaptive. The government placed price controls on basic staples which served to make the price on paper affordable but in reality made the unavailable to the average Cuban citizen.

There is an irony here. I suspect that those individuals now most likely drawn to Cuban travel are ones who have an element of good Samaritan motivation.  And yet, the immediate effect has been to make the lives of ordinary Cubans worse, at least in the short term. The market for supplying the tourism sector with what now are luxury goods is giving at least some Cubans an opportunity to better their lives, but not without more unintended consequences. The Times article describes the activities of Leticia Alvarez Canada, a nurse who gave up her job to sell snacks from a cart and increased her income by 10-fold. This does not bode well for health care delivery.

It seems that the tourists who visit Cuba are likely unintentionally undermining the very system they likely hold sympathy for. In contrast, the staunch anti-Castro elements which have successfully lobbied to keep Cuba isolated for more than five decades may very well have helped create an environment of isolation which was necessary to perpetuate the regime.

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