Cuba gone wild-er-er
Communist Cuba is revamping the state wage system to create more incentive by allowing workers to earn as much as they can, local media said on Thursday, in the latest sign new President Raul Castro wants to improve the country’s economic performance.
Under Labor and Social Security resolution nine, and for the first time in decades, there is no limit on a state employee’s earnings, state-television reported.
“For the first time it is clearly and precisely stated that a salary does not have a limit, that the roof of a salary depends on productivity,” economic commentator Ariel Terrero said.
The Cuban state controls about 90 percent of the country’s economic activity and employs the vast majority of the labor force, often setting wages from central offices in Havana.
Cuba has always prided itself on its limited range of salaries, while at the same time some jobs do have perks and in the past bonuses were available for some workers.
However, the egalitarian approach has come under fire in recent years for holding back production.
“One reason for low productivity is there is little wage incentive and this breaks productivity and stops bigger salaries,” Terrero said.
He said the resolution, signed in February but yet to be published in the official Gazette, is aimed at breaking the cycle.
Terrero said it corresponded with the socialist slogan, “to each according to his work, from each according to his ability.”
“It is our strategic objective today to advance in an articulate, sound and well-thought-out manner until the wages recover their role and everyone’s living standard corresponds directly with their legally earned incomes,” he said.
Raul Castro has also launched a major reform of the agricultural sector to create conditions for state and private farmers to legally earn as much as they can from their efforts after meeting state quotas.
Allowing people to reap what the sow. Nice to see he realizes people need incentives to work harder.
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April 12th, 2008 at 9:43 am
OK, inspired by xyz’s posting on disagreements I’m going to go for a refutation of your central point. I want to make sure I’ve got your central point correct though. So do you believe:
Wage systems create monetary incentives for workers that cause them to be more productive than a system that is not reliant on monetary incentives.
?
April 12th, 2008 at 10:14 am
Money is a commodity (originally) used to ease indirect exchange. What is the purpose for having indirect exchange? It’s a more efficient and scalable system than bartering. Why does one barter? To get what one desires to lower their uneasiness.
Therefore, by allowing an individual to actually reap what he can sow…. yes, it creates incentives for him to be more productive. If he is more productive he will reap more and have a greater ability to decrease his uneasiness.
Do you believe that caps on the return of productivity really leads to an increase or even stable productivity level. That it’s in fact not a disincentive to people? That people being paid the same wages regardless of their output stimulates them to utilize resources efficiently?
April 12th, 2008 at 2:05 pm
OK, I’m still working on wording the crux of your argument correctly. Would you say this is a brief factual representation of it?
I don’t want you saying I’m misinterpreting what you wrote or twisting your words so let me know if I got it right.
April 12th, 2008 at 3:48 pm
I’m pretty sure this topic has been thoroughly covered many many times before and I’ve given you copious amounts of reading material with regard to this topic but I will repeat myself for your pleasure.
I don’t know what will lower someone’s uneasiness. I don’t presume to know what people want. I just know they want. They desire to minimize uneasiness. To do so, except in extreme cases, they must interact with others who also wish to minimize their uneasiness. To live above substance level man must specialize to provide others with the ends and means they desire to lower their uneasiness. People are insensitived to optimize that process to lower the disutility of labor. In minimizing that disutility money was created to help ease transactions between individuals. To raise productivity helps minimize labor disutility and maximize their ability to trade for the things they want.
I believe that if you give the average human X for doing Y and X for doing 2Y and X for doing 3Y they will likely simply produce Y less they waste their effort. If they produce more it’s because their is a likely non-economic gain they receive from the labor process. For most people however that is not the case. In the real world it’s not likely you are both good at and enjoy and have a demand for the same thing. If you want to be able to acquire the things and services you’d like you must do so by helping your fellow man do the same.
For further understanding you are welcome to read Human Action by von Mises, watch the news, read some history. Human Action, Chapter XXI is on labor and wages if you’d like a shortcut.
Now, can you answer my questions? Those posed before and: What’s the hangup with money? Why the misrepresentation that it is an end instead of a means? How is it that the voluntary trade of items between individuals is exploitation? You often speak of doing for others yet discount the fact that an entrepreneur providing goods and services is helping lower their uneasiness? How do you argue against the fact that historically every instance of what you advocate has failed and usually left people far worse off then others in different economic systems? That it’s always had to be forced on the majority of people where as people naturally and voluntarily work in the free market and use money and that in those communities historically they have have a net increase of wealth? That it is those systems which have give us the advances in food production, healthcare, sciences, etc. yet at the same time increasing lesure time and freeing us from the large time investments otherwise required just to meet substatnce level?
April 12th, 2008 at 5:29 pm
bile’s thesis:
I believe that if you give the average human X for doing Y and X for doing 2Y and X for doing 3Y they will likely simply produce Y less they waste their effort. If they produce more it’s because their is a likely non-economic gain they receive from the labor process. For most people however that is not the case. In the real world it’s not likely you are both good at and enjoy and have a demand for the same thing. If you want to be able to acquire the things and services you’d like you must do so by helping your fellow man do the same.
bosco’s thesis:
The majority of people would work harder and greater minimize their uneasiness if they worked for the non-economic gains alluded to by bile. Our current system of providing extrinsic rewards for labor is artificially supported through state structures because ultimately it is untenable.
It is now well established through studies in education, psychology and economics that extrinsic rewards fail to motivate. At best a minimum of extrinsic rewards are required to meet the base of Maslow’s hierarchy but as Herzberg pointed out these are simply hygiene factors that have little to do with motivation as we experience it today. The facade over the structure of society designed to coerce us to value the material is beginning to fall away and those who study human nature, including NY times writers (hat tip to beetlbumjl), are taking notice.
For a long time society has had an innate fear of amassing material wealth. This shows up in our colloquialisms and quotes, including this recent one from Mr. Einstein:
The prominence of this idea has made it a rallying cry for those seeking to focus less on production and profit. It has also made it a target for iconoclasts.
There is good reason to be afraid of using extrinsic rewards (including but not limited to wages) to motivate people. In the short term people lose an appreciation of the value of the intrinsic rewards involved in the labor. In the long term you need to somehow make the people value the rewards you are giving them. In the US, we make people value their rewards through societal pressure initially fed by the school system. Once again quoting Albert:
Believe me I know this to be true. We teach Consumer Chem, Consumer Science, and Marketing. State schools are very concerned with molding a student who values material wealth, otherwise what incentive do they have to serve us our burgers or mop our floors? It’s a positive feedback loop with the initial impetus of uninformed greed kicking the whole thing off. Learn to value items. Get a job making items so you can buy more items. Make more items so you can buy more items, until the inevitable conclusion that all the energy in the system is used up. I’m not the only scholar who’s noticed this:
So all that gloom and doom, but the question remains what are our alternatives? How about survival. Among primitive cultures run-away consumption seemed to be a well-understood threat:
Now I know what your thinking: "Bosco if you want to go live in the wilderness and be a subsistence farmer/hunter, that’s fine with me but I prefer my luxuries." Firstly, you have been conditioned to believe that what you have a luxuries. Secondly I would advise that the answer actually lies somewhere between me chewing on tree bark in the woods and you buying a 50 inch TV for the bathroom. The first step is to recognize that extrinsic rewards are a poor way to motivate people and they historically lead to a weak hierarchy that is toppled through bloody revolution. The second step is developing an economy where people are motivated by the intrinsic rewards of their work.
April 12th, 2008 at 5:31 pm
Oh, also please don’t think I forgot your questions. I was gathering some sources for that previous response so I didn’t really get the time to give you answers. I’ll go through them later tonight thought. One quick thing your idea that we have more leisure time now than we did back when we were an agrarian society or even when we crawled out of Africa is incorrect. It’s come up multiple times before.
Also if you ever want to borrow any of the books I cite your more than welcome to. Unfortunately you can’t get them online like with the Mises stuff although you can find Einsteins "Why Socialism" online. It’s pretty OK.
April 12th, 2008 at 7:32 pm
Can you point to solid evidence to back that up? You posted one link. I can post one too. All the farmers I’ve ever known spent far longer working than non-farmers. My family owned 2 horses just for pets and feeding and cleaning them took up 20-30ish minutes a day. Just look at the numbers. People marry later, have less kids, retire earlier, have more efficient tools to clean and cook with, more efficient means of transportation. Jobs are far easier and less dangerous. This book about the Amish says the store owners have more free time than farmers. Also just because people work doesn’t mean they have to. If you work to kill time or gain more you are burning otherwise free time. They aren’t working for necessity but want. According to this:
This says:
There has been loss of leisure time in the recent history (and in random times in our history) because of the debasement of the currency destroying the wealth we had accumulated prior and government interference pushing up prices and taking more taxes. Not taking that into account you make a seriously ignorant assessment of the situation. But even with that happening technology continues to kept up in making daily life easier.
April 12th, 2008 at 11:38 pm
You continue to fail to understand what I said or what I’ve asked you to read. I did not ever say material items make people happy. Material goods are a means to uneasiness not the uneasiness factor themselves. You seem incapable of differentiating the two. There are means and there are ends. A proxy. They are not the same. The end of economic gains are non-economic gains. I don’t buy books because bound pieces of paper make me happy but because of knowledge they contain. I don’t buy DVDs and CDs because I like having lots of plastic discs but because the art is enjoyable. People don’t buy bigger houses and random shit to fill it with because that makes them happy… what makes them happy is feeling safer, feeling like they are on equal grounds with the Jones’. It’s a natural feeling. The feeling of inequality and jealousy is obvious and seen through our actions as well as those in the animal kingdom. And you like Maslow’s hierarchy so… level 4 esteem. Something that needs to be fulfilled. Fleeting or not.
You speak of schooling. They teach a fucked up mix of corporatism and socialism. Fascism if you will. They don’t treat capitalism. They don’t teach respect for human rights. If it were true that capitalism is responsible for the material consumption you like to bash why then is it that the strongest proponents of it are those who give to charity the most? Who volunteer their time to others the most? Who claim to be happier? Who make positive actions to increase the betterment of all mankind. It is the socialist leaning members of our society, the economic egalitarians, who are worried the most about the latest Apple product, assume it’s the government responsibility to feed the poor and care for the sick, and are overall lead less happy lives. Could you explain why those who are more closely aligned with your economic system are less happy? Don’t tell me it’s because they don’t live in a pure version of their system. We move more in that direction every day and yet those who believe in capitalism are happier still and many who come from ex-socialist States criticize us for going down the road to socialism.
I don’t follow your comment on run-away consumption. A capitalist system is by its nature a check on wasteful consumption. As I pointed out in my price gouging example. If property is disrespected and prices eliminated efficient use of resources is not calculatible. Malinvestment will occur. That Bushmen incorrectly addressed a problem and would be corrected by the market. As alluded to by the story he in fact does raise productivity by promising more, he just failed in delivering on that promise in a sustainable way. That seems to me to be advocating exactly what I’m talking about. Just because a mistake is made in calculation doesn’t mean the mechanism is flawed. The fact that the market adjusts, and adjusts for the very fact people want to achieve more, validates my point. It is the vastness of the game and the lack of restriction through property and competition that leads to the killing of all them.
You speak of Maslow. Lets assume his hierarchy is accurate. A look at modern consumption and what it has brought us.
Physiological: All easier to acquire than at any time in man’s history. We now have such wealth that food and water can be used to fulfill higher needs.
Safety: newer forms of housing security from locks to windows to security systems. We are safer then ever.
Love/Belonging: social networking websites, cell phones, MMORPGS, Xbox Live, PSN, the Wii, digital cameras, forums, Second Life.
Esteem: videogames, sports, hobbies of all sorts, education devices.
Self-actualization: social networking, videogames, digital cameras, digital camcorders, computers for music, ebook readers, the internet in general, Wikipedia.
We consume things for the end of all levels of his hierarchy and to claim you can achieve any of them without consumption is fallacious. Maslow said that a self-actualized person embraces the facts and realities of the world rather than denying or avoiding them. You consistently deny the reality of man and the reasons for his actions. Instead of dealing with them you wish to suppress them. You have the arrogance to claim to know what people desire and what would be best for their lives. You fail to understand the reality that is that items purchased are a means and not an end. There is no such thing as extrinsic rewards that do not exist but for satisfying as you call intrinsic rewards. That everything people do is motivated by "intrinsic rewards." That my computers are not just things to collect. They are challenges. They are creative outlets, they are machines which allow me to solve problems and communicate and educate.
What would you call the communist revolutions throughout the past 100+ years? Every single one was violent. It has been freedom and competition which has brought about the increasing ease of needs fulfillment and uneasiness minimization.
Are you claiming it’s never been tried?
There are 2 major flaws in your logic. First you keep claiming that it’s indoctrination that causes all this. That people would otherwise believe like you. That implies human naturally have these tendencies. If that were true… how is it that we got to this point in the first place? Seems to me there is a first event problem here that you can’t answer for. Why in Cuba, USSR, China, Hebrew kibbutz, etc. did their indoctrination fail? It would seem to me that if man is naturally anti extrinsic reward proxy to intrinsic rewards AND they are being taught it… that they would be the most productive and happy people on the planet. Seems to me the USSR and China was only productive in things they needed to compete with outsiders in and murdering people. Actually scrap the latter… putting people in gulags and work camps was hardly efficient. Second you make no attempts to prove the system is viable. That in fact a collection of individuals would produce a functional society. You’ve made no attempt, ever, to solve scarcity and resource allocation, subjective value issues, labor inequalities, etc. Exactly how this system would work. Giving examples of the system working on even a micro scale. I don’t care what you offer… as with everything else if you don’t have demand for your system unless you plan on using force to get people to participate you aren’t going to get anywhere with it. Given history and observations in human behavior I see very very little demand for your system.
April 13th, 2008 at 12:40 am
I’d like to point out that the communist in the article was the one who is clearly advocating incentivising people through compensation.
Are you saying bosco that these communists are impure or misunderstanding the meaning?
April 13th, 2008 at 6:25 pm
In response to bile’s comments on leisure time:
I have found the most prominent, and painfully empirical analysis on the subject of post industrial revolution free time to be "Time and Work in England 1750-1830" by Hans-Joachim Voth. This seems to be the body of work people always come back to. Voth concludes that society at the time was receiving more material items and less free time to actually use them. He theorized a direct trade off between consumption and free time. Also, the link provided is only a preview. I have a copy I printed out from JSTOR when I was attending TCNJ if you would like to borrow it.
Hearkening to an earlier time in human history, we have this quote:
I think many people make the mistake of only looking at relatively recent changes in free time. If one is truly concerned with improving society it is also important to look back at it’s origins. It is also interesting to note the research that has gone into dispelling the myths that primitive societies are backwards and brutish. Actually the series of lectures and papers resulting from "The Original Affluent Society" covers a lot of this debate that we’re having right now. I’m sure you will google it and read the criticisms on Wikipedia, I know I would if I was in your position.
If you want recent anecdotal evidence of whether or not people have less free time just ask the elderly. Their thoughts can be quite enlightening. Also you didn’t ask me to explain why free time is a good thing so I’m assuming you agree with me that it is. In case you decide to change your mind midway through, it’s interesting to note that mortality rates seem to be proportional to employment rates raising questions about whether or not working is good for our health.
April 13th, 2008 at 7:39 pm
And where did that theory lead?
What people? Reading over the reviews of the book it seems he pieced together all the information based on second and third hand data and even says the times of the day he estimated people worked varied greatly. I understand the data is difficult to obtain but it’s hardly a solid foundation. I don’t argue that people may work longer hours at times but that alone means nothing. Why do they work? If you want X twice as bad as Y you are willing to put in the time to obtain it. You appear to be presuming that labor linearly results in happiness which is not the case. Nor is consumption, as useless a term as that is, linear in reward.
Do you account for the fact we live probably twice or even three times as long as we did in times past. Or that we choose to work above subsistence and have far more possibilities open when we do have free time. I just did a quick calculation and I spend about 11 hours a week to cover rent and food. So if I wanted to just survive week to week without saving for retirement or extras… 10 to 15 hours a week would cover it. Do you bother to include retirement in your calculations? The fact we live to 80+ y/o on average? Total free time is not a running calculation. It’s an aggregate number over the life of an individual. If I don’t work from 55 to 80 for example because I saved up to do so prior… you’re looking at 90%+ free time a day for 25 years. So I spend a certain amount of time over subsistence to save up for my future leisure while helping my fellow man achieve likely the same. There is no way to determine how much leisure time one has now a days anyway. If I worked in a factory i’d have a whole lot less free time. I enjoy non-economic gains while working, some of which is doing work (a portion on my coding time that i’d be doing in my free time otherwise) and some which is reading articles and listening to books and radio shows while compiling or down times. There is also the varying disutility of labors to account for. I’d rather sit at a desk a bit longer ever day than work doing manual labor for less. You have to account for what is done and what can be done in your free time. If you end up sleeping more or simply resting more that’s hardly free time efficient used in comparison.
So along the same lines do you really place the free time of a Bushmen in the same category as modern man? They hardly had the width and depth of knowledge we have. Just because they weren’t out hunting or patching up their hut doesn’t mean they had anything to do besides spend time with their family’s which according to Maslow is only of medium importance.
I’ve talked with many elderly people… I worked in a hardware store for years recall. I found primarily that people exaggerate times of past. Years ago was both easier and harder. Walked to school up hill both ways and the people were far nicer and happier than today. Life was slower but it went by quick. People tend to think times past were better and tomorrow the world is ending. The fact that people of all ages tend to be equally happy… i don’t give much weight to arbitrary stories.
That article isn’t talking about work in general. It’s talking about stress. All they are saying that economic upturns can lead to stress just as downturns. Well no shit. We already know stress can adversely affect your health and that a busting or booming economy can cause more stress then an average one. Again you can blame government interference for the boom-bust cycle of business.
April 14th, 2008 at 8:58 am
Hey nice response! I thoroughly enjoyed it, so I thought I would write a couple lines telling you so. Tonight hopefully I’ll have some time to address your questions in detail.
April 15th, 2008 at 7:37 am
I personally don’t have a huge hangup with money. I think it’s an abstraction and I prefer trying to avoid using it when I can. I find it easier to keep track of how hard I’m working for something if I exchange labor directly for that item.
I try not to make too many distinctions between means and ends. What matters most is what you do in the short term, trying not to violate a categorical imperative.
You and I differ greatly in what we feel is "voluntary". I recognize the term as subjective, you do not.
Is this is statement?
Which economies are you going to saddle me with? Cuba, China and Russia? Cuba has been treated like a pariah despite the fact that the standard of living improved following Batista. Our continued war with Cuba certainly isn’t giving them a fair shot at success. China was effectively raped by imperialists driven by capitalist greed for so many years it’s surprising they can do anything. Despite that, the rate of famine in the region has gone down since the revolution. Even with the horrible starvation during the great leap forward they are still feeding people better than they did previously. Russia is one of the most statist regimes ever to evolve from a revolution. The true anarcho-communists of the region were completely duped by the Bolsheviks. Do you want me to saddle you with the US economy and call it a "capitalist free market"?
Because it has been forced in the past doesn’t mean it needs to be forced in the future. Also keep in mind your idea of forced and my idea of forced are quite different. I think if someone has never been introduced to any other systems, they are effectively being forced to use the system currently in place. Most capitalist systems are maintained through force.
You know how I feel about post industrial leisure time. Advances are great, but you need to examine a technology’s impact on society and then decide if you actually want to use it. That which is new is not always better. That which increase production is not always an "advance". Your metric for determining whether or not some technology is beneficial is much too simple.