These pretzels are making me thirsty!!!

The general equilibrium theory proves - and this is the principle of free market economy - that when each individual maximize his and only his own utility, then the economy will reach prices that will lead it to an equilibrium which is efficient. The exact terminology is "Pareto Efficiency", which means that it is not possible for one individual in the economy to be better-off without causing any other individual to be worse-off...

Ok, so let's be honest with all these stuff. First of all, the theory is based on very specific assumptions, which we don't know for sure if they take place in the real world - such as assuming that our preferences are convex sets... how can I know if my preferences are a convex set? Well, actually that is not such a crazy assumption, but it does not matter now. This is not the point of this post.

The point of this blog is, that we usually meet people all the time in the streets, which are of course maximizing only and only their own utility, and totally ignoring the utility of others... and I am certain that this is not leading to any efficiency whatsoever. During the past two weeks I have experienced some of these situations, and those people are so dumb that their actions deserve to be spread around the world through my blog so that you can join me in thinking how dumb they really are...

The first situation was while driving to the Hebrew University in Agron St. in Jerusalem. There were two jeeps each on one lane, talking to each other (it seems like they were very good friends, and did not talk in a while). The street of course is two lanes wide, and there was a traffic light some meters ahead of the two jeeps. The traffic light was red, but then in turned to be green. These two individuals kept talking to each other (there were no more cars before them), while I am honking constantly behind them, letting them know that (1) the traffic light is already green and they should move on, and (2) that I am pretty upset! I was completely ignored. These guys kept talking about their wives, or their mothers (just as I did inside of my car) and just ignored me and the other cars behind of me honking. In any case, they decided to say goodbye after a minute or so of the light being green, and they accelerated in order to catch the green light. Guess what? When I reached the junction, the traffic light turned red (they actually passed in yellow). Of course, then the taxi driver behind me started yelling at me that I was not agressive enough and he blessed me by saying that I was an idiot... That also pissed me off. What was he expecting me to do?

So now that I mentioned taxi drivers, they are separate species in these kind of stories. Again, a couple of days ago, traffic light turns green, and the taxi cab does not move. That was a wider street and I could move on the side, but, why does he do that? He just doesn't care AT ALL about what is happening behind him... He just stayed there. But this thing of stopping on a green light is common down here. Once I could not pass the traffic light because a guy who was lost stopped on the green light and asked a police woman how to keep going... a police woman! Can you believe it? Then when I got stuck in the red light because of him (he did manage to pass in yellow) I asked the same police woman: "If you give tickets for crossing on red, why don't you give tickets for stopping on green?"... She just laughed and did not replied me.

Another story (I have lots of these). With my two friends M&M we were driving to Mount Scopus in Jerusalem, and at some point the road is only one lane wide, and everybody must pass through a small tunnel. That is exactly on the side of the Old City walls, and there is a space for buses to stop there so that they can drop their passengers. Well, this nice bus driver in front of us did not find a place to stop on the side, because there were many other buses, and he decided to stop in THE MIDDLE OF THE ROAD! He dropped all his 40 passengers, of course, no pressure, the rate of going out of the bus was like a 0.2 passengers/second, meaning a passanger every 5 seconds. He just ignored that there was a line of 30 cars behind him, and that maybe an ambulance could come by, or that there are other people in the world other than himself that can be in a rush and have to get on time to a meeting or class!!!

And this is related to the fact that people sometimes think that they are the only one in a hurry, and others in the world have things much less important to do than themselves. I can feel this specially when going to the doctor. While sitting in the waiting room (everybody made his appointment, and everybody is waiting for his number to be called), then always a guy suddenly comes to you and ask you if he can go before you because he is on a hurry, and he does not have time... What does he think? That I love to come everyday and sit on a waiting room just for fun? What does he want me to answer: "Well, actually I'd love to! I'd love to sit here for another two hours and wait, probably your life is more important than mine, so come over!"... This really annoys me. People really do think that others are less busy... why? That is probably because of the signal you are giving (or not giving) waiting in line. If you are sitting quietly without asking everybody else if you can step in before them, then you are giving a signal that you don't care to wait, and this might be perceived as a consequence of not being busy. But, my question is why he did not think about the fact that he would be busy at that hour when making an appointment that day at that hour?

Now, a third kind of stories. Here in Israel this is very common, or at least that is how I perceive it. You are sitting in front of the bank employee, with the doctor, with the income tax office employee or even with a lecturer (meaning that you already waited in line, and it is your turn) and then, suddenly, a third person comes along, and start talking and asking questions to the person who is receiving you. It can be in person (such as other bank employees that come and talk to the employee you are sitting with to ask him about how to do this and how to do that) or it can be by the phone (the personal phone of these people rings). So, when this happens I am expecting that they will say to their peers or other people: "Hold on sir, I am with a customer"... But no! They answer them and keep talking, and even on the phone! Can you believe it? I am just sitting there as an idiot, and these guys are talking to other people... I think this does not appear to be that annoying, but let me exemplify it. I went to arrange some things at the income tax office (this is a story by its own, coming soon) and I waited in line and I sat in front of the lady who received me. Then, I start explaining her what do I need, and she starts seeing my stuff, and it appears that I was missing one small document. Then she receives a call in her cell phone, god knows from who, but it seems like it was family or something, and she started checking this person's details on the computer (she asked him for his ID number and started to answer questions about income tax). So, I then thought to myself, what is this lady doing? Tell your cousin or your mother (I was thinking about her mother as well inside of my head) to come, wait in line and do their stuff just like I did... or if you want to help them, don't be so insolent, and do that after working hours, or when you are not receiving anyone else. Then I could not stand it and I asked her: "Lady, are you with me or what?", and she started screaming at me: "Wait sir, you don't have all your documents, and I am working, this phone call is work"... of course is work, that is exactly my complain, work, but only with people in front of you, and not with your family that is calling you to give them a hand without coming over here. Of course I shut up, and waited, like an idiot.

But these people get pretty upset when you complain about these things. Also, once in the bank I was waiting in line, and there were lots of people, and I was called and it seems like the manager was also receiving people in line to help her piers. So I sat with her, and as expected, every 2 minutes another employee of the bank came and ask her what to do, how to do it, when to do it, etc. I also told her: "I am sorry, but why can't you concentrate on me for a second, I feel it is disrespectful"... Well, she did not scream, but she told me: "Look, I do not receive people usually, and I am making you a favor that I received you now...". Why does she think she was making me a favor? Maybe she is making a favor to the other employees, but not to me. I would have prefer sitting with anybody that can do my stuff without interrupting me every 2 minutes. Moreover, if she knows that she has to assist her staff constantly, why did she start to receive people from the beginning?

In sum, these are the things in life that make you think, what the hell are they teaching me at school? Here everybody is trying to maximize his utility and, no way, this is not efficiency. But what I have learned, and sadly I agree, that in these situations one can only take a deep breath and say to yourself: "These pretzels are making me thirsty!!!"

Cuba - Day 4 (Finally!)

The plan for this last day was mostly open. I decided to start walking in direction to the building of the Synagogue and Jewish Community to say goodbye to my friend W that worked there. I found all the workers outside the building because Health Ministry workers came to fumigate all the buildings in the area against dengue fever. W told me that it seems like there is an epidemic, but the Cuban government is very careful not to declare that officially in order not to affect tourism.

I then walked to Havana University. A beautiful campus. The Union of Communist Youth (UJC) is very active in campus, and you can see their offices and fliers all around. Many UJC fliers contained pictures of Che Guevara, Simon Bolivar and Abraham Lincoln. In the middle of the campus there was a tank as a tribute to the Cuban Revolution of 1959. I managed to reach the Social Science Faculty, and I stood on the hallway, and heard what looked like an economics class. They were talking about capital gain and exploitation... was it pure coincidence? Maybe...

Main Entrance to University of Havana

I went to the bookstore to buy some books. One of them showed in the front a huge demonstration of Cubans wearing red shirts. I asked my friend W about those demonstrations, and how come they are so crowded even at mid day (when people are working). He told me that he remembered that some times in the University classes were canceled and there were buses outside in order to let people reach the demonstration. Sometimes, you even had to sign that you reached the place. It seems like there is a lot of control inside the university. The student bodies are well connected to other state intelligence organisms. Avoiding these demonstrations could cause you trouble in the future.

From there I went walking to Jose Marti Memorial building, which is a 70 stories building from where you can have a panoramic view of Havana. There I met a group of 30 elementary school students, who were somehow amazed when they found out that I was there (not for me being me, but for me being a tourist). It is a beautiful place. I managed to payed the lowest price (the one in Cuban pesos) by saying that I am a Venezuelan student in Cuba, making an ophthalmology course. Before you say I am cheap, I did this not that much because of the money, but in order to see whether that 'sympathy' towards Venezuelan was real or only rumors. Here are some pictures of Havana seeing from this tower:

Panoramic view of Havana

House of the Communist Party in Havana

I spent the rest of the day walking and watching, watching and walking. I ate dinner with Roberto and his family, and I also met again S and M to say goodbye. I sat for a while in Malecon to see the sunset, and went to ask a taxi cab to pick me up at night for going back to the airport. Please enjoy as I did from a seeing the Malecon in the late afternoon:


Lastly, from all the things I learned in Cuba, there was one phrase that I saw in Roberto's place, that really helped me to somehow summarize what I have learned from Cuba and from Cubans. Here it comes:

"Good, please grant me with

SERENITY to accept the things that I cannot change,

COURAGE to change those I do can, and

WISDOM to identify the difference between these two things "

Let's hope God will give Cuban people these three elements...

Cuba - Day 3 (Cont.)

Last post was extremely large, so I divided it into two parts... so this is the second one. So, before you start, go back and read the previous post. And the one before that. And the one before, and the previous one also... so, go and read all the posts before going forward!

Well, one of the questions I had on my mind during my visit to Cuba was about the cars. I told several times that most of the cars are very old (very very old!)... But the question is who can buy a car? Why are some Cubans "allowed" to own cars, while others not (in this socialist regime)?

Well, I talked about that with M at her place and she explained that cars are divided in several categories:

• Blue license plates are state-owned cars to be used by ministries employees and other government workers. They must report mileage status after using them, and cannot be used for personal issues.
• Maroon license plates are also state owned cars, but for white collar functionaries, such as ministers for example. Those were newer cars, and it seems like they do not have to justify their use with mileage reports.
• Green license plates are owned by the FAR, which is the acronym for Fuerzas Armadas Revolucionarias - the Cuban army.
  
• License plates with a T in them are rented cars for tourists. Nice and newer cars.
• Yellow license plates are usually in the oldest cars, and this is the private cars category. The taxis that can be payed in Cuban pesos are of this category also.
  

Individuals in the past could have received a private car as a recognition for being a good worker or even by buying it. Today, one who seeks to own a car must buy it, since the economy does not have enough resources to recognize its workers. However, M says, the bright side of this is that there won't be corruption in giving cars to workers who don't really deserve them.

At that point, M's father came home, and I met him. He was a CDR's activist, and he told me about the "CDRs day" which was actually that very same day. All around the island, at night, people prepared food in large pots in the streets, and danced until midnight. M's father was in his way to the party in the street. M told me that almost all neighbors contribute to the event donating 20 cuban pesos for the happening. This could be a lot of money for Cubans...

However, it seems like they do have money from abroad. They must... otherwise they cannot survive. But there are at least a few families who don't have family abroad that can send them money. And I these people must figure out other ways to survive, like exploiting their abilities. For example, I was very impressed to see in downtown Havana some stands that were selling (in foreign currency of course) cars figures made out of soda cans.

In any case, back to political issues, I also talked with M about the Cuban constitution. I showed her the one I bought in the morning in downtown Havana for 40 Cuban pesos. She showed me a updated version of it, and we talked about one of the emends that eliminates an article which allowed Cubans to form a new political party by recollecting ten thousand signatures. A few years back, the position leader did recollect ten thousand signatures, but afterward the Cuban assembly advances this emend having at least 3 million signatures supporting it. This way was completely eliminated the existence of another political party other than the Communist party in the Island. I asked her if she thinks this is democratic, and she said that it was clear to her that the emend was supported by much more people than the new political party request... What do you think?

This lead us to talk about the political repression in the island. M claims that the political inmate are people who really are a threat to security and stability in the Island, and many of them were involved in terrorist attacks. However, she argues that the opposition leader lives in his home without having any repression against him, and he is not in jail.

But repression is all over the Island, and it is easily perceivable. S told me her own story. She was then 18 years old, and she is a very nice and happy girl. She told me that in Cuba, for higher education, studying what you really want is not that simple. S wants to be an actress. That is why she applied to complete her senior high school requirements at an special arts institute. This instituted is very limited in capacity, and they admit some 5 Cubans every year out of a pool of 400. She made it to the last round with another 15 candidates. It was clear that all of them, if they reached that point of the process, were very good actors. Finally, five were admitted, and S was ranked in the seventh place. Coincidentally, the first five were family of famous actors in Cuba. The story does not end here. She was offered to join a new "program sponsored by the revolution" in which she will learn acting, and she would be able also to teach acting. This was when she was still in high school, at age 15. She accepted the offer, and to be accepted she had to sign a contract in which she committed to teach acting for 8 years in schools anywhere in the island after finishing her studies. Well, three years passed since, and she just realized that she does not want to teach acting. She does not want either to study how to teach. She wants to act. Then she decided to drop out from the program. After a few months, she saw that the salary she received from acting in another group (not related to school) was not the same one as she always received. When she asked for an explanation, they told her that she has received compensation payments, and that she was no longer working there. She became a deserter of the revolution because she drop out of the acting program. S was only 15 when she signed a contract committing herself what to do the next eight years of her life. Do anyone of you knew with certainty what you wanted to do when you were 15 years old? I certainly don't.

This story was really scary for me. The system has this large list of "deserters" that they pass it from place to place, creating incentives for you to repair what you did wrong (by firing you for example...). Being in that list can prevent you from traveling abroad, buying foreign currency and many other things which are for sure related to one owns freedom.

Now S joined another institute in which she studies pantomime and other scenic arts. She is not sure however that she will receive her degree because her name is still in that list.

The Cuban government constantly say that the Cuban people might not be rich, but they live with dignity... Is this dignity???

Cuba - Day 3

I went out and started walking along the coast in order to reach the US Interests Section in Havana. In front of it, there a square full of black flags, each one with one white star on it. There were 168 flags in total, and the monument was founded in 2006. The 168 flags represent the number of Cuban victims as a result of "American terrorism" (this is what they say - not me), and as for 2006, the number coincided with the total years of the "struggle against imperialism" counting since Cuba's independence war in 1838. All over the place there are posters with anti-American propaganda. On the other hand, the building of the Interests Section has a big electronic board in which they transmit contra-revolutionary messages sometimes at night. This is the closest to the cold war I've been to...

The US Interests Section Building in Havana, and the "Flags Square"

The next stop was Copelia Square. There stands "Copelia Ice Creams", in which Cubans can buy ice creams with Cuban pesos (this is the same place where the movie "Fresas y Chocolate" was filmed). This place is administered by the government, and the employees who serve the ice cream are state employees. I did not eat ice cream, and the place was quite empty in the morning. However, when I passed by again in the afternoon, it was full of Cubans, who were standing in line to get into the square (there was some maximum capacity). For those wondering what was the price of the ice cream, it was 5 Cuban pesos for four scopes.

I then decided to go to Habana Vieja, which is the name of downtown Havana. So I went again to the street where the American Cars passes by, and I raised my hand giving a signal to the next one to stop. My Cuban friends told me that the only thing I have to say is "Capitolio", which was my final destination. Speaking more than that could expose my real identity (being a tourist). I shared the cab with another 5 Cubans. I reached my destination, and payed 10 pesos to the driver as everybody else did.

Downtown Havana is a sample of an old city of the nineteenth century. Narrow streets, lots of squares and colonial houses. The "Capitolio" is an almost exact architectonic copy of the American Capitol building. It was constructed when the Cuban government was highly influenced by the US (before the revolution of course), and it was the home of the national assembly. Today it is the building of the science museum of Havana. Behind the Capitol the cigars factory - Partagas - can be seen. In its surroundings, many Cubans were trying to sell me boxes of cigars at lower prices, probably false or stolen from the factory. I did not buy any, not because I really didn't want them, but because my flight back to Israel was through the USA, where Cuban cigars are forbidden by law.

The Capitol building, today the Science Museum

One of the narrow streets in Habana Vieja

In front of the Capitol is the Central Square. There stands the statue of Jose Marti from which the gold stick was stolen (read Day 2 of these series). In the square there were many Cubans senior citizens discussing out loud about last night baseball game. In the surroundings there were many stores, but only in a few of them received Cuban pesos as payment - the rest received only foreign currency.

It was close to noon, so I sat on the stairs to the Capitol to wait for S, a nice young girl who I met the night before at the Jewish community event. She came together with her friend M. They came to show me around the city. The first thing we did is going to the Museum of the Revolution. S and M bought the tickets for the three of us at low prices (for Cubans). The exhibition presents the history of the revolution, starting from Cuba's independence from Spain.

"Che" Guevara, Camilo Cienfuegos and me in the Revolution Museum

Afterward, we went for a walk around downtown but we decided to go back to the Vedado area. So we took the bus. This was an incredible experience. The "guagua", that is how they call buses in Cuba, had 3 workers: the driver, the guy who check that everyone has a ticket and another guy standing at the back entrance checking that nobody will step inside the bus without paying. Three workers for one bus... Is this the reason that Cuba's unemployment rates are significantly lower than the continent average? Also, take into the consideration that each person pays 0.2 Cuban pesos for his bus ticket, so I haven't seen numbers, but at first sight it seems like a very non-profitable business... Of course, public transportation - and specially in Cuba - is not intended to be profitable.

M invited me over to have dinner at her house. After taking a shower I went to her house. She lives in a two stories apartment, and the apartment and furniture in it was well above my expectations. M's room was big enough, a queen size bed, TV, VCR, bookshelves full of books about Communism, Cuba, Che Guevara and even Chavez (all of them with C), and a wall full of pictures of Che and Fidel in the begging of the revolution.

The apartment, which was in the highest floor of the building, was property of her family before the "triumph of the revolution", and they are still the owners. Regarding rented flats before the revolution, the government expropriated the apartment from the real owners, and transferred the ownership to the tenants who were living there at that time. In Cuba tenants are the owners of their home, and it is forbidden to own more than one residence. The houses cannot be bought or sold, but can be exchanged between two families who are wiling to do so.

M is 17 years old, and she is the Chairwoman of the union of senior high school students in La Habana province. She is a supporter of Fidel and the revolution. She praises Fidel and Chavez. However, there are some issues which she dislikes about Cuba - and she does not hide that - specially in issues concerning to liberty rights. She does not like the difficulties to travel abroad, o how people are labeled as "anti-revolutionary" or deserter because of issues which are not that serious. He is against of demonstrations in which people burn flags and pictures of the President of the USA. She thinks that is immoral, even thought she dislikes President Bush policies very much. She is very idealist and very bright at her young age. We also talked about Israel, Zionism, constraints, political prisoners, the opposition, the government, Fidel and Raul, the economy, etc. Her mother also explained to me about the rationing booklet. With this booklet, Cubans can buy food in local currency at subsidized prices. However, she said, it is not possible to satisfy all the needs of family only with the food provided by the government. The products that families buy with the booklet are rice, beans, pork meat, salt, pepper, oil (every three weeks) and other very basic goods. To buy almost everything else Cubans have to pay with CUCs.

The economic situation of Cuba has been deteriorating significantly since the fall of Soviet Union. This is when Cuba entered the "special period" as denominated by the government. The perceivable feeling is that the economy might collapse in any particular moment, however, the political repression is keeping it alive.

Cuba - Day 2

Ok... so to ALL of you who were anxiously waiting for the second part of these series of posts (yeah right...) here it goes. My second day in my 4-day long visit to La Habana Cuba.

I woke up at about 8:30am, and ate a cracker I brought with me from Venezuela. It was Tuesday, September 26th, 2006. After Roberto and I finished all the details about the payment, I decided to go out for a walk. Habana seemed like a very quiet city compared to other capital cities I've been to. This might be a reflection of the kind of economy of the Island.

As a tourist who has been always hearing bad things about Cuba, it was not clear what are the things I should not do in the street... I also tried to wear clothes which did not make me appear as a tourist at first sight, and I don't have an explanation for that, since - of course - my non-cubanness is impossible to hide.

Well, I started to walk across Paseo Avenue. This is one of the main roads of the city, which goes through the middle of Vedado zone, and starts in the "Malecon" (pier) and extends to the Plaza de la Revolución (The Revolution Square). Well, first thing that you can see clearly in the streets: no Coca-Cola and Pepsi commercial posts... not even beer. Nothing. Nada. Instead of that there was political propaganda. There were plenty of people wandering around the streets. Some of them looked like they had nothing to do.

While walking, a guy, who was wearing the traditional "guayabera" shirt, and who was a few steps in front of me dropped his keys. I picked them up for him, and we started talkking. Jose is a ophthalmology technician (do you write this like that in english??? Katherine help!). Well, he appears to be a nice guy, and he told me that he has a couple of Venezuelan patients (yes, my Venezuelan accent revealed my origin). Venezuelans nowadays are welcomed in the Island. I guess it was always like that. Venezuela and Cuba always had good relationships, and many things in common: Salsa, baseball, food... But I guess that Chavez policies towards Cuba and against USA are being seen with good eyes among the average cuban, and this makes them respect even more their venezuelan tourists. Well, I asked Jose where can I but the local press. He told me to follow him, he will take me to a kiosk nearby. In the meanwhile we started to talk a little bit about politics, and about how Jose loves so much Fidel and thanks the revolution. However, just before saying goodbye he asked me if I can give him 2 C.U.C (this is 2 convertible pesos), which is a bit more than USD $4. He told me he need the money to buy milk to his little daughter. I had no Cuban money with me and it was a very embarassing situation. I gave him some cents which I had in my pocket from yesterday's change, and he left. At that point I understood two things: (1) he was not that happy with the regime and (2) that he probably droped his keys intentionally. Ahhh... just for the record: there was no kiosk in the area.

The "Comités de Defensa de la Revolución" or CDR (committees for the defense of the revolution) are everywhere. In every wall, they have their motto and official graffiti. Messages such as: "Revolution for every neighborhood!", "Alert and combative!", etc. The CDR's are groups organized in some sort of hierarchy at levels ranging from streets to neighborhoods, municipalities and cities. I think that the original idea was to give some sort of soberany to the people and influence easilly to the upper levels. The CDRs are in charge of local issues, and it is composed by the neighbors themselves. Outside of Cuba, the CDRs are also known as having some sort of intelligence role, by using the same infrastructure to spy on the neighbors that might be involved in any kind of contra-revolutionary activity.

CDRs presence in La Habana

The monetary system is almost impossible to understand. There are basically two currencies in Cuba. The Cuban Peso, which by that time its value was 24 pesos per dollar. The average Cuban worker earns about 400 cuban pesos per month. There is also the convertible unit (CUC), which is the money for tourists. The exchange rate is basically 0.9 CUC per one dollar, and it is fixed. What does that mean? That the CUC is a dollar, but the government takes a comission of 10 cents for each dollar exchanged. This is a lot of money people. Specially because not only tourists use this currency, but cubans themselves. My next task was to inquire further about the currency...

I went to 18 and B street to buy some fruit, as Roberto suggested. The place is a fruit market in cuban currency (pesos). There were several stands, each one of them selling fruits, vegetables and even plastic bags (for sale). In the surroundings there were "juguerias" - natural juices stands - which also included lunch for sale for about 20 pesos (less than a dollar). The interesting thing was that the lunch did not came with fork and knife, so people improvise some sort of fork with using paper, or either bring a spoon from their place. I keep walking along 17th street. By coincidence, I saw the building of the Jewish Sepharadic congregation of Cuba. I got in and introduced myself to Raquel, who was the director general of the congregation. She showed me around, and we talked a little bit about the difficulties of the Jewish community in Cuba. I asked her also where can I buy a toothbrush? I forgot mine in Venezuela (so that morning I had to improvised a new technique on brushing my teeth without a toothbrush). She opened a drawer, and offered to give me one toothbrush. There were many other things in the drawer that the congregation gives to its members regularly. I of course thanked the offer, but refused to accept it. Raquel, a physician, showed me the synagogue, and a Sefer Torah which is 3 centuries old. The synagogue was in very good state. I thanked Raquel and went back walking around the city.

In the streets I noticed several brahnces of CADECA - the official currency exchange organism in Cuba. There I saw Cubans - not only tourists - geting CUC (or "chavitos") in exchange for dolars. The economy lives in CUCs. Cubans receive dolars from their families abroad, and they change them to the local currency to buy things. Of course, they can buy with their dolars either CUCs or Cuban pesos. Most of them buy CUCs. The reason is that the supply of products in Cuban pesos is scarce, and most places sell things in CUC (which is very very expensive for Cubans, since the prices are similar to prices everywere else). I then entered to a subterranean place which was a warehouse full of electric appliances. It seems like Cubans were allowed to change electronic appliances for newer ones to overcome the energetic crisis of the island (newer electronic appliances save more on energy). I did not understand how did they pay for them (in what currency) and did not want to ask, because Roberto told me not to ask too much, since someone could come to me and say that I am "getting out of the touristic context".

It was already passed the afternoon, and I went back to my room, since I was supposed to visit that night the other Jewish Community located in Patronato, which organizes each tuesday an encounter between young adults. After taking a shower, Roberto's son waited for me and together we had a ride with the president of the sepharadic community in his old car from the decade of the thirties. There I meet some Cuban friends I met before in the year 2003 in Guatemala and other friends I met in Israel. That night I went with two friends to Habana Vieja (downtown Habana) to have something to drink and eat.

To go to Habana Vieja we traveled on an "American Car", which is a shared taxi that goes along the same route all the time (very old cars of course). My friends told me to shut up, since tourists usually don't take these cars, and they shoudl travel in taxis which charge you in CUCs. The American Car charges each passanger 10 cuban pesos. There in the Habana Vieja I invited them to have something to eat, and we walked around a bit. They took me to the Hotel Raquel. It is a hotel with lot of Jewish things in the decoration. I asked them about why do Cubans cannot stay in hotels (actually now, in 2008, Raul Castro already changed the laws so that Cubans are allowed to stay in Hotels). The answer was very simple: while some Cubans can afford staying at a hotel, others cannot, and this could alter the levels of socio-economic inequality in the Island. But, it is a fact that Cubans can enter Hotels, and can eat at places which are 'meant' for tourists (meaning places in which you pay with CUCs). I got in to such places with them. But they usually don't go because it is very expensive for them.

Me with my two Cuban friends in a pub that produces its own beer.

I asked them also: where do people get money from? How can they have CUCs? Well, as I thought: most of them get the money from families in the 'exile'. The government allows this because they earn 10 cents for each dollar. All cubans find somehow a way to survive. Either by receiving money from abroad (most of the cubans have someone in the exile), or by making their own business for which they have to pay very high taxes (as a counter incentive not to open a business) - like the one Roberto has. There is also crime: one of my friends told me how a gold stake in Jose Marti's statue was stolen, similarly to a diamond in Cuban's old parlament building.

Already late at night, American Cars are not available anymore, and we got no other option than to take a 'tourists' taxi: most of them Lada models from the nineties. I went back to my room exahusted, and thanked my two friends for their time...

Cuba - Day 1

It is time to write a little bit about socialism... isn't it?

Well, this post is based on writings I made on my trip to La Habana in September 2006. While visiting my family in Venezuela, I decided to pack my stuff, and have a 4-days long visit to La Habana Cuba. Since there are lots of things to write about, I will divide this in several parts, each part describing each day of my visit.

Well, many people asked me "What the hell are you going to do in Cuba?, go any other place!, don't leave your money to Fidel!"... I think this argument is a little bit silly. I can assure that most of the people that told me this - if not all of them - buy many products made in China per year, helping the Chinese economy... I remember to all of you, that China declares itself as a communist country. However, my reason to go to Cuba is not that I have sympathy to communist regimes, but I have what I call "historic curiosity". I want to see and understand historic processes, which don't seem that are going to be there forever, with my own eyes. Unfortunately, it is impossible to visit Moscow of the eighties... and did not want to miss the opportunity of seeing Cuba (while Fidel was still El Presidente).

Everything started from the plane when I arrived to Habana close to midnight. I could hardly see light over the island. Closer to Habana I could see more light, but still much less than any capital city of another Latin American country. The airport was almost empty at midnight. Many flags hang on the main hall of the airport, and surprisingly USA and Israel among them.

The main hall of Habana's International Airport

The immigration process was kind of weird I must say. The immigration officer asked me to show her my ticket out of Cuba... maybe she suspected that my intentions were to stay in Cuba as a foreign illegal worker forever. In any case, I gently asked her not to seal my passport, to which she answered me quite angry:

-"We do not stamp passports sir, why do you ask?"
-"Well, they told me that I have to ask in immigration not to stamp it", I said
-"Ahhh... so they told you...", she replied with a "I understand you are influenced by the empire" tone.

In any case, she let me in and I arrived to the customs area. All the passengers, without exceptions, went through an X-rays machine and a manual body check with metal detectors. Our hand bags went through the same process. It was a typical airport routine, but with one difference: in other airports the check is before boarding the plane, and not when arriving to the country.

After that we went to pick up our luggage. Each bag also was meticulously inspected by custom officers before reaching the luggage carousel. Frequently, customs officers put aside one bag without letting it reaching the passengers. I never understood what happened with those bags.

Many of the Cubans that were in my very same flight brought from Panama electrical appliances, hinting two things: (1) that they have money to buy them, and (2) it was a very common thing, as the customs officers appeared to be indifferent to that.

After giving my customs declarations to the officers standing at the exit, one taxi driver offered me to take me to my destination for USD $20. On the way we talked about the city, and he talked about how much he admires president Chavez. He also praised Chavez's speech at the Generaly Assemly of the UN only a couple of days before that (the one in which he said that the General Assembly hall smells like sulphur because the Devil - Bush - was there yesterday).

The road to the city appeared to be relatively short. It was full of factories and old industries, which seemed to be completely deserted. There were very few cars in the streets, all of them very old. I saw also a few people in the streets (it was already about 1am) talking and walking, which is not a common phenomenon in Latin cities, or at least not in Caracas.

We reached my destination, street E 104 between Calzada and 5ta, and we waited long time until we woke Roberto up, thanks to our loud calls and me ringing the bell several times. Roberto rents a room in his house for tourists, and this is a legally established business in Cuba. My friend Enrique suggested me to stay there, and the payment was much cheaper than a hotel - USD $25 per night. The conditions, I must say, were very good. Much better than I imagined. Well, even thought I called Roberto some days before, he was expecting me to come earlier, therefore he was not awake. He opened the door and give me the keys to my room.

Exahusted from the trip, I went to sleep...

On ultraorthodox jews and ancient tribes in Africa

I was talking to my ex-boss a couple of weeks ago about economic development. We talked about how the west tries to promote public policies that induce economic growth and a better "quality of life" on the less developed regions.

He told me "You know, I saw a poll the other day about happiness, and the Jewish ultra-orthodox sector (in Israel) was the happiest one... So why do you want them to go and study, or to go and participate in the labor force? They are happy just the way they are". Well, two things should be taken into consideration:
1) My ex-boss is himself a religious guy (not an ultra-orthodox, but of course that he has some kind of sympathy towards them).
2) I am not a big believer of polls. Moreover, I am not a believer of polls when they try to measure something that is unmeasurable, like happiness.

What is happiness? How do you measure it? Ultra-orthodox Jews, together with Israeli Arabs, are the poorest sectors of society in Israel. Not only in terms of money, but also in terms of education. So, how come they are happy??? But on the other side, if they are that happy, why do they need political parties that promote laws for their sector. But this is an issue for another debate.

Well, economists are aware of the difference between wealth and happiness. People are not better-off by how much money they make, but how much utility they have from consumption, leisure, human capital, having children, etc. However, our mistake is that we think that the utility function of most human beings are similar in their components. For example, everybody enjoy consumption. Is this a fact? I am not sure.

Another example is the one that came up in a conversation with two fellow students: M and R. They are very bright, so they deserve to be immortalized in the web pages of my blog. Take for example a lost tribe in Africa. Maybe they have higher utility than any average new yorker well positioned family. Who says that if we introduce to that tribe schools, hospitals and more efficient markets they will be better-off?

Well, there are some possibles answers. First, the tribe is happier in terms of what they know. Is this so? For example, let's assume that the well positioned family can afford living as the tribe. Why don't they do that? Maybe this means, by revealed preferences (see the previous post) that living near central park with 2 BMW's is making them better-off. On the other hand, the tribe cannot afford living in Manhattan, probably. So, in terms of what they have they are the happiest, but because they don't know that they could have a better quality of life.

However, maybe if we give the tribe air tickets to New York and a place to stay in Manhattan, they will probably ask us to go back to their little place after a while.

So here we are talking about culture. The quality of life that we are used to have in the west also affects the culture we live in and the same happens the other way around: culture affects the quality of life. So the debate turns to be more difficult. What culture is better? How do you measure 'culture efficiency' or whatever?

I think there is no way to do so.... And probably given their culture, the tribe in Africa and the ultra-orthodox Jews are the happiest. But, maybe (as my friend M said yesterday), the incentive to induce a change in these societies is not necessarily for their sake, but for ours. If ultra-orthodox Jews will increase their labor supply, and will have better schooling indicators, this will have a positive impact on the economic indicators of Israel. Although they won't be necessarily better-off, we will. And if the society as a whole will be, is it worth to induce the changes in these societies?

This is already not a dilemma for economists... or at least not for me.

In the meanwhile, I will start thinking about the next topic...

The Kibbutz

I just came from the festive dinner marking the last day of the 19th summer school in economic theory at the Hebrew University. I saw Kenneth Arrow, an economics Nobel price laureate, and one of the most brilliant minds of the world, being called by the waiter to serve the rice... well, he actually did not serve it, but he opened the large pot. In any case, I never thought that I could be having dinner with seven Nobel price laureates and talk about nothing...

In any case, things that one never thought that could be happening, can actually happen. As the pioneers who came to Israel in the fifties and founded the kibbutzim, it was not possible seeing the kibbutz falling apart as they are today (or at least most of them).

Well, it is not my intention to explain why kibbutzim are falling apart, but here is an interesting story. Last Friday, I went to a Kibbutz near Jerusalem to have dinner at my neighbor's family. I became very good friends with my neighbor who is a very nice girl who also studies at the Hebrew U.

The kibbutz has been almost fully privatized. I don't know exactly how is the income from the kibbutz activities distributed, but I do know that the kibbutz members keep their wages as they are (either if they work inside or outside of the kibbutz).

One of the decisions is that the kibbutz land will be divided among its members. Also, they are transferring the ownership of the houses from the kibbutz to the families. Since houses are on land (duh!), families that receive ownership on their house, are receiving also ownership on the land below it. Ok, so problem solved you may think. Let's give to everybody their house and their little garden so that they can seed tomatoes in it.

Well, guess what? There are some houses with two stories, and two families living there - one on each floor. So, what can we do there? We can give ownership per floor, but each family will receive half of the land that belongs to them.

So I have a solution. Let's cut the house in two, and wait for the immediate response of the families. The first that says "NO! GIVE THE HOUSE TO THE OTHER FAMILY, WE PREFER THE HOUSE NOT BEING DESTROYED" are the winners! They keep the house.

Ok, this won't work. Actually, also the strategy of King Solomon wasn't perfect. Maybe the fake mother is also a good human being, and prefer that the child will stay alive, and she was also faster in her response. It is not that we go on the street and we are totally indifferent to murderers who kill everybody but our sons...

In any case, the question is: which family is keeping the house? The one who lives in the upper floor or the other one? How do you take a fair decision?

Well, the decision was based on kibbutz tenure. The family who has been a member of the kibbutz for a longer period of time, is the one keeping the house. The other family will receive land to with a new house.

Total justice or total catastrophe? Maybe the second. Families (of course those who are not keeping the house) are going to the court to sue the kibbutz for the decision. Even though they are receiving a new place, most of them prefer to stay in their current house, which is located in a better spot. So look at the irony. The kibbutz: the big, strong, happy and indivisible family... this is what happening 60 years later. The own members who founded the kibbutz are suing the same kibbutz, because of private property issues...

The kibutztroika is an unavoidable process. Since kibbutz members know about quality of life outside the kibbutz, does this mean that they are revealing their preferences? Economic theory explains about the revealed preference. If you have 5 bucks, and you can buy either a cup of coffee or a cup of tee, and you decide for the coffee, then I can understand from that behavior that you prefer a cup of coffee over a cup of tea, and that actually, the coffee makes you happier than the tea.

If kibbutz members can still maintain their lives inside of the kibbutz but they have decided to have an "out of the kibbutz" life... Is this a reason to think that the free market is better than the socialism of the kibbutz? Or maybe they can't maintain the kibbutzim as they are? Is it because that the rate of return to agriculture has significantly dropped since these kind of jobs do not require high levels of human capital? Who knows... I can't answer this question, and probably neither can you, but this could be a nice discussion.

In any case, as I just told Prof. Arrow walking out of the restaurant: "Thanks! The rice was wonderful!"

Here you can see a small report on the kibbutz:

Rationality...

Jerusalem, 2:30 am. Can't fall asleep.

I can't think of anything interesting to write either. Maybe a short intro will do.

Can an economist think of any rational explanation to insomnia? Is there any incentive to stay up late and write blogs? It is hard to think of any.

The most interesting part of being an economics graduate student (at least for the really geeks, such as myself) is that you try to link every interesting thing you see to economics. Such as: what are the incentives behind the actions other people do, or what is the strategy I should "play" in order to reach my goal in this situation, or what composes the utility function of that other guy!? I must admit, it sounds like it is very boring, but it is actually funny... and it really helps you to understand other people. I think all who read Freakonomics agrees with me...

I heard Prof. Robert Aumann (Nobel Prize in Economics Lauréate 2005) about a week ago at the 19th Summer School of the Institute of Advance Studies of the Hebrew U. He talked about one of Arrow's economic model which gives an explanation to discrimination due to skin color or other observable characteristics. I know, it sounds awful. But his point was very right. Discrimination is rational. It does not mean that it is something good. But it can be explained as a rational behavior. The same with wars. Wars, even though most of the time we think otherwise, are rational. Ahmadenijad is rational. Before you stop reading and say "this guy is crazy, let's get out of his blog", wait a second, trust me, you may agree with me if you reach the end of this parragraph. In any case, most of the decisions of human beings are guided by rational behaviors. And the only way of avoiding several outcomes, such as discrimination, war or an Iranian president who wants to blow out Israel, is trying to understand the rationality behind them, and only then act to generate the proper incentives that will offset the undesired outcome.

Yes, I know what you are thinking. This guy thinks that because he is an economist he can solve all the world's problems with a mathematical model. Well, I don't. First of all because I don't consider myself to be good with those kind of models. But even if I did, I am not thinking that those are the solution to all of our problems, but for sure they can help us to understand reality, or at least, make life more interesting.

I guess you will see lots of things of this kind in this blog. You are all welcome to comment and give some ideas about interesting topics.

It is 3:01am. My laptop automatically adjusted the screen's brightness level to the lowest one, hinting that the battery is low enough. I think it is time to sleep.

The Homo Economicus