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You Say You Want A Revolución?

When I told people that I was going to Cuba for a week in April, I got a lot of questions. People asked me if I was going illegally (I was not) and if I am a communist (I am not).

I traveled to Cuba on a religious visa. It was a humanitarian trip, and the group I traveled with delivered much-needed supplies to Cubans. While Cuba is close to the United States geographically, the trade embargo limits our exposure to our Caribbean neighbor. Americans cannot purchase Cuba’s goods and we are not allowed to travel there, except in special circumstances.

Before I left, I was not sure what to expect. I hadn’t had much time to research the country in the months leading up to my trip because of Palisades Hudson’s busy season, when taxes come first and indulgences like travel planning take a back seat.

As I boarded my flight, I had visions of authentic Cuban food that would put our local Cuban restaurants to shame, and baseball teams that would crush the New York Yankees or at least the New York Mets. Unfortunately, I didn’t see these things on my trip. While we ate well in Cuba, we mostly ate surrounded by other tourists. The locals cannot afford the kinds of food we were eating, and the native diet consists of staples like rice and beans. I didn’t see a single Cuban sandwich the whole time I was there. I fear that in the same way we have developed our own idealized version of Chinese food (no one is eating Sesame Chicken in Beijing), we have done the same in the U.S. with Cuban food. Oh, and the Cuban baseball season ended shortly before we arrived. Cuban ballplayers may be as good as I hoped, but I didn’t get a chance to see them.

While I did not see the things I had expected, it was still an eye-opening experience filled with surprises. Our guide told us Cuba is a land filled with contradictions. By the end of the trip we knew what he meant.

Cuba is officially a communist state, and everyone receives rations, along with free education and health care. But the rations are not enough to live on, and salaries for most Cubans are meager. A doctor makes about $15 per month. To improve their lives, everyone looks for ways to exploit the system, within the rules of course. For example, one of the other main industries in Cuba is catering to tourists. We ate at a restaurant in Cuba that charged similar prices to what you’d pay in America at a four-star restaurant. The food was great and the service was impeccable. The owner proudly showed us pictures he had taken of himself with numerous celebrities who had visited his restaurant, and told us he had been to Florida numerous times to visit family and friends.

Our tour guide told me that the tax code for restaurants in Cuba is simple. Owners of small private restaurants, known as “paladares,” pay $2,000 per month to the government, and get to keep the rest. After serving enough well-off tourists, a restaurant owner can pay his or her tax and pocket the rest of the revenue. Not what Karl Marx had in mind!

The average Cuban lacks many of the things we norteamericanos take for granted — from quick Internet access to air conditioning on a hot day, from clean tap water to a Cuban sandwich. The standard of living in Cuba is lower than I expected. But a short-term visitor on an escorted tour of the island cannot readily know how Cubans feel about the government that has left them in this condition after half a century of power. The Cuban regime tolerates little criticism or dissent, and I would not have expected to hear anything other than what ordinary Cubans told us, which is that they love Fidel and Ra√∫l Castro.

On the other hand, Cubans may give the government a lot of credit for at least providing a tolerable standard of living that is better than what they had before. Cuban children are taught from an early age about how bad things were before the revolution. And make no mistake: things were bad before the revolution. There was political violence and rampant corruption. Prostitution was a huge industry, necessary for many women to make ends meet. Compared to the decades before the revolution, many of today’s Cubans may be happy just to be where they’re at, especially since so many of the most discontented have left, mainly for America, over the years.

I got the impression that most Cubans believe they will see the U.S. embargo lifted in their lifetimes. Fidel Castro has stepped away from power since falling ill. His passing may be all it takes to restart the conversation between our country and Cuba. If Cuba adopts some form of capitalism and the embargo is lifted, this would be a major booster shot for Cuba’s economy.

In the end, I was surprised at just how badly communism has failed in Cuba. You would think that if any country could possibly implement communism and still provide a decent standard of living for its citizens, it would be a small, nimble country, rich with natural resources and cheap labor. But Cuba continues to struggle. According to our tour guide, the fall of the Soviet Union meant $6 billion per year of trade disappeared overnight, and things never fully recovered. Cuba’s many beautiful pre-revolution buildings, now decrepit and crumbling, serve as a symbol for what could have been.

Over the years we have seen our own government continue to grow and expand into new areas. The new health care laws that were recently passed will increase our government’s involvement in the medical industry. The government now is deeply involved in the automobile business and in the financial system. At this point, many are not confident that this expansion of government will improve our way of life or make our country stronger.

In the future, when someone says that the cure to a problem is more government, I will think of Cuba. Cuba should not just be looked at as a source of great baseball players and fancy cigars. We should see it as a reminder that big government, taken to the extreme, doesn’t work.

Vice President and Chief Investment Officer Paul Jacobs, of our Atlanta office, contributed several chapters to our firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55, including Chapter 12, “Retirement Plans;” Chapter 15, “Investment Approaches and Philosophy;” and Chapter 19, “A Second Act: Starting a New Venture.”

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