The country of Cuba has been one of the longest-operating socialist economies in the world. The Cuban government, however, has been taking slow and careful steps toward a freer economy. Starting Nov. 10, Cuban citizens will be allowed to buy and sell residential property.
Limited private property in Cuba
As reported by the Communist Party daily paper Granma, citizens of Cuba are going to be allowed to buy and sell property. The property transactions must be done through a Cuban bank and are subject to an 8 percent transaction tax, payable to the Cuban government. Initially, it is expected that not many transactions will take place. The transactions will also be heavily regulated, with no citizen allowed to own more than one primary residence and one vacation home.
Legalizing illegitimate transactions
Though this move by the Cuban government is a significant move toward a freer market, it mostly legitimizes transactions that have already been happening. Cuban citizens have been allowed to swap homes for many years with no money transferring hands. Money or things of value would often transfer under the table if one home was particularly larger than another. By legalizing home sales, the Cuban government gains the ability to regulate these transactions.
Slowly moving forward
This freer market mentality in Cuba is happening very slowly, but it is happening. The private market in Cuba has been growing, as the government approves entrepreneurship and small-business ownership. Currently, more than 80 percent of employment in Cuba is private and 20 percent is private. The Cuban labor federation will have to lay off more than 4 million workers in order to maintain financial stability. The goal for the Cuban government is to move 35 percent of the population to the private labor force. Cuba, technically, is the only economy to meet the World Wide Fund for Nature’s definition of sustainable development. Sustainable development, however, does not measure economic stability.
Sources
NPR http://www.npr.org/blogs/thetwo-way/2011/11/03/141986460/cuba-approves-buying-and-selling-of-residential-real-estate
New York Times http://www.nytimes.com/2011/02/04/world/americas/04cuba.html?_r=1&pagewanted=all
Christian Science Monitor http://www.csmonitor.com/World/Americas/2011/1103/Cuba-legalizes-private-real-estate-transactions
Human Development Index http://en.wikipedia.org/wiki/Human_Development_Index
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