Cuba’s Real Power Problem Is Socialism

Millions of Cubans remain without power in the wake of Hurricane Oscar, but bad weather is not Cuba’s real problem. Its centrally planned socialist economy is the root cause of the blackout and most of its other problems. 

Cuba’s nationwide blackout began a few days before Oscar made landfall when the Antonio Guiteras power plant went offline. Seven of Cuba’s eight thermoelectric plants were offline for maintenance or otherwise not operational. The failure of the Guiteras plant left the country without a major power producer. 

Oscar made things worse for Cubans on the island’s east end and will likely delay power returning to that region. However, other areas unaffected by the storm faced blackouts. The Cuba Electrical Union announced that 216,000 people in Havana, a city of more than 2 million, had their power restored Sunday, October 20th, only to have that grid collapse later in the day for the fourth time since blackouts began. 

Hospitals, hotels, and other businesses have limited power from generators, but fuel is in short supply and will not keep the generators running much longer. Venezuela has provided subsidized fuel to Cuba for two decades, but its own economic crisis has limited how much it can help Cuba in recent years. Meanwhile, fuel from the United States remains unavailable due to the embargo. 

But the root causes of Cuba’s lack of energy are homegrown. 

Without private property, socialist economic systems cannot provide the information and incentives necessary to create prosperity. Prices convey information about what goods and services are most scarce in market economies. However, prices in socialist economies don’t convey that same information because they are dictated by central plans or distorted by artificial scarcities due to the planners’ import controls. When I was researching a recent book in Cuba, I thought that Cuba should have a game show called “The Price Is Wrong.”

The lack of property rights also means that the managers of the factors of production, such as power plants, don’t have the same incentive to maintain them as entrepreneurs in market economies do because state managers are not entitled to the profits generated by long-term maintenance. Under socialism, entrepreneurs have no incentive, or even the right, to outcompete inefficient state firms to better serve consumers. 

Socialist systems stagnate and fail to create prosperity because of their inherent nature. Plenty of fuel could be imported from countries other than the United States and Venezuela, but the Cuban economy doesn’t generate enough wealth to afford it. 

North Korea is the only country in the world that is more completely centrally planned than Cuba, and it is perpetually without power. Satellite images reveal that the entire country, except the capital, is without power at night, and only about half the population has electricity for more than four hours a day.

Power is far from the only thing in short supply in socialist countries. According to the Ministry of Agriculture, beef and pork production is collapsing in Cuba. Starvation has been a recurring problem in North Korea ever since Soviet aid ended in 1991. North Koreans are not free to flee their economic woes, but Cubans are. As a result, more than 1 million Cubans, 10 percent of the population, emigrated in 2022 and 2023. 

Cubans took to the streets demanding greater freedom three years ago in protests sparked in part by power outages and food shortages. Despite President Miguel Diaz-Canel’s announcement that he will not tolerate protests, pro-freedom protests are exactly what Cuba needs again today. Until it scraps its centrally planned system and grants Cubans a large measure of economic freedom, Cuba’s economic and power problems will continue. 

The post Cuba’s Real Power Problem Is Socialism appeared first on The Beacon.

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