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Why Cuba could be the next Silicon Valley (eventually)

Mike Elgan | March 22, 2016
Cuba is an Internet backwater, but I think its next revolution could be digital.

When I visited Cuba eight years ago, it was like traveling back in time. Today, I don't get that feeling. Part of this is material. Back then, nearly all the cars, maybe 90%, were those old pre-revolution U.S. tuna-boat size vehicles. Today, the percentage of ancient cars has dropped, according to my very unscientific estimate, to maybe 65%.

But mostly, the change is in the people. There's a sense of bustle and possibility in the air that didn't exist in 2008 -- at least among the minority participating in the liberalized parts of the economy.

There are two kinds of businesses in Cuba now. There are the old kind of government-owned enterprises, which account for roughly 90% of the businesses in the country. "Service" at these businesses is horrible, like the worst DMV in the United States. Incompetence and apathy is common if not total. This reality is stark in places like luxury hotels. Imagine a gum-popping, eye-rolling, slow-moving DMV clerk as your server in the restaurant at the Ritz-Carlton. That's what you find in hotel restaurants in Havana.

Then there are the privately owned businesses, where proprietors are eager to serve their customers. An astonishing 9% of the people in the Cuban labor force are now self-employed cuentapropistas. The people I encountered who own their own small business were friendly, helpful, enterprising and highly competent.

Cubans can own property now, too. In fact, they can own two homes, if they can afford them.

After the 1959 revolution, the government took possession of all the homes and apartments. Citizens were allowed to live in them with the Cuban government as their landlord. In some circumstances, Cubans could pass those homes on to relatives or friends or even trade houses. But they weren't allowed to buy, sell or own homes.

The housing shortage was brutal. One man I met in 2008 lived in a one-room house with his adult son and daughter-in-law, and even his ex-wife. Three "bedrooms" were arranged by hanging sheets between the beds in what before the revolution was a grand colonial mansion.

Foreigners are not allowed to buy property in Cuba, but I'm told by Cubans that they're doing so anyway by partnering illegally with locals who pretend to own it. This black market in real estate is both pumping money into the economy and exacerbating the housing shortage.

The housing market is weird, too, because real estate agents and advertising are both banned.

In fact, all marketing is banned. The only advertising in Cuba appears on giant billboards and walls; the messages promote the history, people and ideals of the revolution.

Things are surely changing in Cuba. The biggest agent of change is the Internet -- and that's amazing, because most Cubans can't use it.

 

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