Joined at the Hip

Both Cuba and the United States are facing a critical problem: how to distribute income. Cuba’s socialist economy wants to have an equal distribution throughout the population. The Cubans I talked to told me that they make somewhere between $30 and $40 a month. UN data available online increases that by a factor of 10. Even so, it isn’t much. Cuba is slowly allowing a “private sector” to emerge in an effort to create more wealth for everyone. But they are doing it slowly and cautiously. By contrast, the United States has no ideological commitment to income equality. It opts for a free economy. Let the chips fall mostly where they may. When Obama mentioned the “R” word (redistribution) during his first campaign, opposition to it became a cri de coeur of the conservatives.

In his January 27, 2013, column in the New York Times, Paul Krugman fought back:

Republicans have a problem. For years they could shout down any attempt to point out the extent to which their policies favored the elite over the poor and the middle class; all they had to do was yell “Class warfare!” and Democrats scurried away. In the 2012 election, however, that didn’t work:  the picture of the G.O.P. as the party of sneering plutocrats stuck, even as Democrats became more openly populist than they have been in decades.

As a result, prominent Republicans have begun acknowledging that their party needs to improve its image. But here’s the thing: Their proposals for a makeover all involve changing the sales pitch rather than the product. When it comes to substance, the G.O.P. is more committed than ever to policies that take from most Americans and give to a wealthy handful.

Krugman’s comment underscores the fact that the United States is currently engaged in a real battle over redistribution. Indeed, for the past half-century we have seen an unprecedented migration of the nation’s wealth to a small segment of its population. The chart shown below (from Wikipedia) indicates that in 2007 the top five percent of the population controlled 62 percent of the nation’s wealth.

Edward N. Wolff chart reproduced from Wikepedia
During the 20th century the great economic conflict was between capitalism and socialism. In a nutshell the former wants to maximum profit, the latter wants to maximize satisfaction of human needs at the expense of profit. The 21st century marks the apotheosis of capitalism. China and Russia, both standard bearers of socialism in the 20th century, have given way to capitalism. Cuba is on the verge of a similar transition, though probably one not so radical as in China or Russia. But there is a problem. Capitalism works pretty well for 20 percent of the people and not so well for the rest. Here is what Castro himself said about the matter in a speech before the Group of 77 South Summit Conference in 2000:

In over 100 countries the per capita income is lower than it was 15 years ago. At the moment 1.6 billion people are faring worse than at the beginning of the 1980s. Over 820 million people are undernourished and 790 million of them live in the Third World…The world economic order works for 20 percent of the population, but it leaves out, demeans, and degrades the remaining 80 percent. We cannot simply accept to enter the next century as the backward, poor, and exploited rearguard.

It isn’t ironic that the United States and its professed enemy, Cuba, are both struggling with the same economic problem. It is the economic problem facing everyone in today’s world: how to make an economic order that works for everyone?