Manuel Hinds, 26 noviembre 2016 / QUARTZ
The death of Fidel Castro provides a good occasion to discuss the reasons why Latin America has lagged so much in its development, obliterating the high expectations that the region manages to generate from time to time. It went through one of these cycles quite recently.
Just a few years ago, highfalutin economists and commentators, observing that many Latin America countries were growing faster than developed countries, rushed to say that they were finally developing and would become “the engines of global growth,” only to see, a few years later, that the growth was not the result of any domestic policy or development but just the result of a boom of commodity prices—the low-value-added products that represent most of the region’s exports.
The region generated similarly high expectations at the time of its independence two centuries ago. It had enormous reserves of natural resources and its strong cultural connection with Europe promised a common economic development. All over the subcontinent, wars of independence were fought. The new states were based on the liberal British ideas of democratic constitutional rule. Their institutions were modeled after the constitution of the United States and the French Declaration of the Rights of Man and of the Citizen. Different from Europe, Latin America was not burdened with the weight of absolutist kings and a formal aristocracy. It seemed to be the world of the future.
The extent of the expectations that the new republics raised at the time can be appreciated in the following paragraph, written by two Swiss physicians who visited Paraguay in 1819 and were forced by its sinister dictator, Doctor José Gaspar Rodríguez de Francia to remain in the country until 1825:
At no remote era, perhaps, the republics of South America may expect to enjoy a high degree of prosperity, and be enabled to exercise a salutary influence over the governments of Europe…Hence, then, the importance of Paraguay is not to be estimated by its present condition, so much as by that higher state to which it will, in all probability, ultimately arrive…Once settled, it will go on progressing by freedom of trade, and the progress of civilization…When the population of South America shall experience that natural growth, which has been hitherto hindered by vicious institutions; and when its foreign connections shall be multiplied—then will this province [Paraguay] attain fresh importance, becoming, in consequence of the convenience of its rivers (the Parana, the Paraguay and the Vermejo), the centre of commerce with Matogrosso and Upper Peru [Bolivia]. All these advantages will give to Paraguay a leading rank amongst the rising states of South America—. May they, in their turn, be taught from the experience of their misfortunes, to appreciate the fruits of Dictatorships and Presidencies for life!
Messrs. Rengger and Longchamps would be surprised to learn that almost two hundred years after their trip, free trade is not yet a reality in Latin America and that the region has not yet learned from the experience of its misfortunes to appreciate how bitter are the fruits of dictatorships and presidencies for life. They would be disappointed to find that in the early 21st century people would be ruminating over the death of a president for life who was as creepy as those they saw in the early nineteenth century.
There is no equivalent to Bangalore in the entire subcontinent. The long-term economic performance has been quite disappointing, too. The period of independence coincided with the Industrial Revolution, which radically changed the entire world. Latin America was left behind in terms of industrialization by Europe, the United States and Japan in the nineteenth century and by the Asian Tigers in the twentieth. Throughout these two centuries, Latin America has not been able to create an advanced industrial society. No Latin American industrial company has been able to compete globally against companies from developed countries in complex, industrial products in the way Korean, Singaporean and Indian companies are doing. No Latin American university has become a world class institution of learning and research. Naturally, Latin America lags the world in terms of innovation and knowledge, the ultimate sources of wealth. There is no equivalent to Bangalore in the entire subcontinent.
This situation has not changed in the recent past. From 1980 to 2009, while other emerging countries like China and India began to accelerate their transformation, the region’s production by inhabitant declined from 38.8% to 28.8% of the average of the rich OECD countries. Rather than closing, the gap with the developed countries was widening at the end of the twentieth century.
Fidel Castro was not the revolutionary that he pretended to be. More than anything, while European and other now developed countries grew into societies governed under the rule of law, which provides the long-term security that people need to invest in the long term, Latin America remained subject to the vagaries of arbitrary caudillos, who toppled previous caudillos promising instant development and riches for everybody, only to become as rigid and exploitative as their predecessors, waiting uneasily for their death or the next coup that another caudillo would stage to dethrone them. They destroyed in the process any resemblance of institutional integrity that could have existed in their countries. Rather than the rule of law, they installed and maintained the rule by arbitrary, chaotic personal decisions. The preference for these kinds of rulers is what has deterred the development of Latin America in all the dimensions of progress.
Fidel Castro was not the revolutionary that he pretended to be. A revolutionary in Latin America would be someone who would terminate with the arbitrariness that has stifled the region’s development and would establish the rule of law. Arbitrariness was the mark of Castro’s regime. He piloted his country by the seat of his pants. Rather than revolutionary, he was the embodiment of the traditional caudillo, or leader. He was a voice from the past.
Castro was not a Marxist, either. For him, Marxism was just an instrument to get power, not an objective or a guide. He created a tropical dictatorship tied to the will of one single individual that was totally different from what Marx envisioned as the dictatorship of the proletariat in the Northern fringes of Europe. Any ideological linchpin would have done for his rule—communism, fascism or the doctrine of the divine right of the kings—as long as it justified the rule for life of one single dictator over the entire society.
Castro was not a Marxist, either. For him, Marxism was just an instrument to get power. The conduct of the economy is one of the areas in which his chaotic decision-making, typical of the caudillos, was evident. The servile way in which his arbitrary decisions were implemented, without any institutional control, evidenced the archaism of the Castro regime.
Right after the Revolution, Castro decided that he wanted to reduce Cuba’s dependence on sugar exports by diversifying agriculture and industrializing the country. He was no longer interested in sugar because he was going to produce cars by the mid-1960s. He ordered entire factories of different products from Eastern Europe. The machinery was never installed; it rusted in the ports while the existing industries nosedived after they were nationalized. At the same time, sugar had become a bad word for the bureaucracy. The area under its cultivation went down by 25%, nine sugar mills were dismantled and the rest of them were neglected.
The decline in sugar exports and the expenditures in the industrial machinery that was never used generated a balance of payments crisis. Castro reversed his priorities and decided to put all his efforts on increasing the production of the very sugar he had neglected.
He was distracted, however, by a dalliance with the dairy industry. He became wildly enthusiastic about it in spite of the fact, which many experts explained to him, that Cuba did not have any competitive advantage in dairy products. The best cattle breeds could not be adapted to the Cuban tropical climate, and the cows lost energy and died early without reaching their production potential. All the people around him understood this. He, however, wanted to increase the supply of milk in the country. Foreigners explained to him that he should concentrate in beef production, which could be competitive in Cuba, and use the beef revenues to import all the dairy products he wished. To Castro, however, this was counter-revolutionary thinking.
Castro kept on doing failed experiments with cattle, spoke for hours on television about cows, mummified one of them and put it on display as a hero of the revolution. The servile functionaries he had created let other sectors decay as they concentrated their attention on the imaginary dairy products that would flow in such abundance that Cuba would export milk to the Netherlands.
Then the declining exports turned his attention back to sugar. In 1965 he set an objective: to produce 10 million tons of sugar by 1970. However, by 1969, four years into the program, Cuba was producing just 4.5 million tons. As the 1969-1970 agricultural year progressed, Castro became increasingly obsessed with the target he had set. He forced people working in other productive activities to drop these and rush to help in the sugar harvest. Other resources were diverted for the same purpose until the rest of the economy starved. He even postponed the celebrations of Christmas and the New Year to July 1970 to avoid any interruption of the titanic effort. The goal was not achieved. The harvest was only 8.5 million tons.
But the main problem was that the production of everything else collapsed as a result of Castro’s obsessive drive. Cuba never recovered from this disruption, neither in the sugar industry nor in the rest of the economy. By 1991-93 the production of sugar had fallen to 6.2 million tons, and it fell further to just 3.8 million tons in 2000-02. It fell by almost 40% in just ten years. Cuba’s world share went down from 23% to 8% of the sugar exports markets. The value of sugar exports went down from $3.959 billion to $511 million during the period.
Castro blamed the remains of capitalism that still existed in Cuba for his failure. In 1968, in the midst of his drive to increase sugar production, he launched the Great Revolutionary Offensive to remove these leftovers. He closed all the private shops, forcing people to go to the dismal official shops, where empty spaces were overwhelmingly larger than those occupied by a few, bad-quality products. Alleging that 95% of private hot-dog vendors were profiteers and counter-revolutionaries, he abolished them. By the 1970s, the economy had collapsed. Like the production of sugar, it never recovered.
All this had severe consequences for the consumption of the population. The ratio of the Cuban GDP per inhabitant to that of the major eight Latin American economies fell from about 70% to about 30% under Fidel’s watch, from 1959 to 1995. Just during his mad drive to produce 10 million tons of sugar it fell from 53% to 44%.
Poverty, dependence and revolution
Cuba was able to survive economically only because Castro sold his services as a revolutionary to the Soviet Union in exchange for huge subsidies. He kept alive the revolutionary flame and the hatred against the United States in Latin America and elsewhere, and sent soldiers to fight in Angola in support of the Soviet Union’s objectives in the area. The Soviet Union transferred the subsidies in various ways, including the purchase of sugar at inflated prices and the provision of enormous quantities of oil at very low prices, some of which Cuba re-exported for gain.
The dependence on the Soviet Union for survival is evident. The Soviet subsidies led to an increase in GDP per inhabitant in the 1970s and 1980s. Yet, when the Soviet Union collapsed in the early 1990s, the GDP per inhabitant fell by 40% in absolute terms. As a percent of the average of the eight major Latin American economies, it fell from 54% to 30%. This, 30% of the income per capita of the eight major Latin American countries, is the true level of the Cuban economy, without subsidies from other countries. It had been 70% when Fidel took power.
The economy recovered in the 2000s because Cuba found another government that purchased its revolutionary services—Venezuela. Now, however, Venezuela has collapsed as well, and Cuba is left to its own dwindling devices again.
Castro managed the multiple collapses of production and consumption in his typical style. When he celebrated the tenth anniversary of the Revolution in January 1969 with one of his long speeches, he asked the crowd whether they would agree with a reduction in their already low sugar rations. They duly said, Yes! Then, eighteen months later, in July 1970, when he announced that it was not just sugar that was in short supply but also many other basic products, including dairy, he offered to resign. The crowd shouted, No! When the Soviet Union collapsed, he told the multitudes that Cuba would have to reduce its consumption ever further in order to continue fighting for socialism. He waited for the applause, and it unfailingly came.
He pretended to believe that these crowds, which he obviously controlled, represented the people. He pretended that they were so representative that he abolished all political parties in Cuba just days after the revolution, saying that thrusting people into politics so soon after their liberation would be a crime because politicians were opportunistic and hypocritical. Parties were never allowed again. Elections, which he said would be held within fifteen months after the Revolution, were postponed until the Revolution was complete, which never happened.
To control the crowds and the population in general he set up in 1960 the Committees for the Defense o the Revolution in every village and in every city block, to keep watch on their neighbors. In time, 80% of the population formed part of these committees. In the 1960s, between 7,000 and 15,000 people were killed and at least 30,000 people were held as political prisoners.
The sad legacy
There is no doubt that there are many people in the world that would want to do what Fidel Castro did—playing with an entire country as children play with little soldiers, putting them to the task of industrializing the country, and after failing, putting them to breed cows, and after that failed, cultivating and harvesting sugar, and after all these failures, telling them that they should accept lower rations of food and all other essentials. The extraordinary thing is that people did not question him, that they obeyed like cattle, that there was no institutional setting that would stop the madman’s destruction of the country. Hitler, Lenin, Stalin, Mao and other totalitarian leaders could not have done that.
Certainly, they threw their countries into terrible disasters, but they could not have survived without showing some successes: Hitler had the increase in production during the Great Depression of the 1930s and the initial military victories in the 1940s; Stalin had the industrialization of the Soviet Union in one decade and the defeat of the Nazi invasion; Mao had the consolidation of a state in a previously chaotic territory.
Latin Americans keep on believing their promises after so much retrogression and repression. Fidel Castro was able to fail continuously and still he lasted longer in power than any of them, showing only one achievement: an improvement of the health indicators of the population, which, even if better than those of most of Latin America, are not comparable to those of the developed countries. Such achievement was not worth the terrible sacrifice of freedom, individual rights, economic progress and dignity that he extracted from the Cubans. Cuba’s health indicators are similar to those of Costa Rica, a democracy that has not destroyed its economy and the morale of its people to attain them.
Overall, when looking at the way Fidel Castro destroyed the Cuban people, stayed in power for so many decades, then delegating his power to his brother, one can only remember the obscurantist regimes of Dr. Francia and his colleagues of two hundred years ago.
Messrs. Rengger and Longchamps, the two Swiss physicians who were kidnapped by Dr. Francia would be very disappointed, not because politicians like Francia and Castro have survived through two centuries in Latin America, but because, sadly, Latin Americans keep on believing their promises after so much retrogression and repression.
Even sadder is the nature of Castro’s messages, which he mainly focused not on improving the fate of the Cuban people (how could he if their living conditions went down almost continuously?) but on hating others—the United States, the Cubans living in the United States, the capitalists, the counterrevolutionaries that he saw around every corner. He survived not by injecting hope but by injecting hatred.
His behavior reminds of Big Brother in George Orwell’s novel 1984, who instituted the Two-Minutes-Hate program every day to keep the population in a state of feverish hatred. “A Party member is expected to have no private emotions and no respites from enthusiasm. He is supposed to live in a continuous frenzy of hatred of foreign enemies and internal traitors, triumph over victories, and self-abasement before the power and wisdom of the Party.” Nothing positive, everything negative.
One day Cubans will wake up to understand that for 55 years they wasted their lives, surrendering their freedom, their economic wellbeing and their dignity for the sake of giving satisfaction to the dark hatreds and hubris of yet another Latin American caudillo. And they will find that the hatred that Castro injected in them is the main obstacle to their progress.
It is a very sad legacy.