How poor does Cuba look?

by on February 26, 2008 at 6:04 am in Economics | Permalink

The question is why anyone might think Cuba is doing OK, relative to northern Mexico.  Megan McArdle offers (more than) two points:

3) Deep poverty is much more picturesque than moderate poverty. Poor
countries have their old colonial buildings still standing, because no
one had the money (or the reason) to tear them down and put up
something bigger. The countryside is dotted with adorable houses made
out of natural materials and natives wearing colorful traditional garb.
Animals graze in verdant fields, besides teams of sowers and reapers.
Middle income countries are smoggy, and almost everything looks like a
cheaper, shabbier version of what you get in the US. Scenic landscapes
are despoiled by cinderblock buildings with hideous tin roofs, or
trailers; cities are choked with boxy modern buildings that look
something like our housing projects. The genteel decay that looks
gothic and intriguing on an old Victorian mansion just looks seedy when
it’s eating away at badly poured concrete. Affluent Americans
underestimate the utility value of things like having personal space,
or an automobile.

4) Cuba was relatively wealthy in 1959; it therefore has more
of the markers, like old majestic buildings, that we associate with
wealth.

I found the most evident signs of Cuban poverty to be the unceasing supply of articulate and sometimes weakly sobbing mendicants, none of whom sounded like con men, all of whom needed money to buy food and clothes for their families.  The most shocking part is what small sums of money they would ask for or be made happy by.  Or the numerous women — and I mean ordinary women in the streets — who would offer their bodies to a stranger (handsome though I am) for a mere pittance.  Yes in Cuba there is good access to doctors but anesthesia is in short supply and the health care system stopped improving long ago.

If you want to understand northern Mexico, get out of the Tijuana tourist strip and visit Hermosillo.  Count the number of new housing developments, and then count how many of them are inhabited by fairly dark-skinned, previously dirt poor, Mexican mestizos.  Put that number over the number of buildings in Havana that do not have serious maintenance problems and see if you can divide by zero.

It’s quite possible that a lower middle class Mexican eats better food than you do, but there is no chance of that for anyone in Cuba except the top elite.  Powdered milk is a luxury there

I’ve long thought that Prague looks much richer than it is, and that the ugly northern Virginia or Houston looks poorer than it is.  Where else looks deceivingly rich or poor?

Johan Almenberg February 26, 2008 at 7:45 am

I think a lot of Western Europeans underestimate how poor Russia is based on the elegant-slash-bombastic architecture of Moscow and St Petersburg. Throw in a sprinkling of luxury goods retailers and large black German cars, and the deception is quite effective.

Anyone having a stopover in London but only seeing Heathrow will no doubt think that they are in one of the poorest corners of Europe.

Luis Enrique February 26, 2008 at 8:07 am

I’m surprised how many people come back from Cuba talking about how wonderful life is there. Yes, there’s a lot to like (the look of the place, the music, the people) but if you ever managed to get people to talk to you about their life (including talking to doctors and teachers from the supposed jewels in Cuba’s crown about the organisations they work in) then you get a different picture. And yes, the many sobbing women offering to have sex with you ‘for free’ if you give them some food for their children, is also a clue. I know Haiti is worse, I just am surprised how many people think Cuba is better than it is.

greatzamfir February 26, 2008 at 8:17 am

GDP per capita for the Czech republic is something like 12000 $/yr, with high PPP compared to the US (the world factbook uses an almost factor 2 PPP multiplier, but that seems a bit too high to me) . Add in that Prague is the richest part of the country, and I’d say that Prague doesn’t look poor because it isn’t poor.

Rue Des Quatre Vents February 26, 2008 at 8:46 am

Seoul and Gwangju in South Korea look much much much poorer than they are.

Matthew February 26, 2008 at 8:51 am

This post about women selling their bodies to tourists for some food for their children makes me heartsick.

Does anyone here know of any worthwhile charities to help people in Cuba improve
their lives, hopefully by supporting market institutions and small
businesses?

Don K February 26, 2008 at 8:59 am

Large parts of Tokyo (the parts with endless rows of 3-4 story 1950′s pre-stressed concrete buildings) look pretty shabby. I guess it’s what comes of having your city flattened by bombing, and putting up replacements in a hurry after the bombing stops.

Amber February 26, 2008 at 9:36 am

Houstonian here, and wanted to agree wholeheartedly with your observation. Houston looks poor for one of the same reasons it feels rich: the lack of zoning laws. With the exception of a couple deed-restricted neighborhoods, all the very nice parts of town have a few run-down houses (or abandoned warehouses or factories) among them. But because any of these can instantly (talking six months or less) become three $300k townhouses, house prices are very, very low ($150k median). With much less money locked up in mortgage payments, we have lots more left over for shopping and eating, and damn do we do a ton of that. On a traffic-filled trip to the mall last weekend my husband and I were lamenting oil at $100 a barrel.

Also, as a pretty new city (100 years old, roughly), Houston lacks the charming old buildings that make other places seem nicer. And the sprawling nature of the place means that offices are scattered all over, so we don’t have the downtown density (less so than even places like Dallas, Atlanta, Los Angeles, etc.) that also is associated with wealth.

Houston also is one of the most diverse (on a neighborhood level) cities I’ve ever seen, but that’s another topic, I suppose.

Richard February 26, 2008 at 9:47 am

I think that Bob (accumulated wealth) and Don K(wartime damage) have two parts of an explanation.

One of the biggest factors in judging the prosperity of a city is the architecture, and the quality of architecture is generally representative of the prosperity of the city at the time the building was built.

If you take a city that has been prosperous continually for many centuries, like Paris, then what eventually sinks in is that there is great diversity in the buildings – there are great buildings from practically every one of the last nine centuries.

Prague, for a comparator, is a much newer city than Paris, and was only really rich for a short period under Rudolf II, but was extraordinarily rich then, and had one of the all-time leading patrons of the arts spending the income of a great empire to beautify his capital. So there’s lots of really good architecture, but for a completely different reason.

If you want a sense of the wealth of a city now, then the best way is to look at new buildings, and also at the people, and the businesses. It can still be hard – for instance a moderately prosperous city with big variations in wealth can look either very poor (lots of beggars) or very rich (expensive stores) depending on what you look at.

Chris February 26, 2008 at 10:08 am

I second the point about Heathrow.

Pavel February 26, 2008 at 10:22 am

Prague is a wealthy city, in fact. Its GDP per capita is well above the EU-15 average. Plus, the income structure is relatively very egalitarian, thus no really poor neighborhoods.

Richard – it’s pure nonsense that Prague is much newer than Paris. There are all architectural styles in Prague from Romanesque to Gothic, Renaissance, Baroque, Classicism, Art Nouveau, Art Déco, Functionalism… to postmodernism. Prague’s diversity rivals that of Paris, OK, Prague is smaller and not as rich as Paris.

As I’m spoiled with Prague’s charm I often find other cities uninspiring. I like New York, Washington DC and Boston, but last year I’ve been to Seattle and was rather unimpressed. Thanks for the Space Needle, though. Atlanta was pure boredom then, sorry to say that, no offence intended.

Mason February 26, 2008 at 10:41 am

I think Cape Town’s wealth and wealth distribution can accuratly guessed by the buildings. Some new lavish homes, many modest homes and appartments, lots of extremly poor shacks. (BTW great place to vaction, breath takingly beautiful, just stay way from the shacks)

Tim Kane February 26, 2008 at 10:54 am

Urban blight is a well-known phenomenon. What about suburban blight? I have to guess there is some good analysis of this new development. The idea of development happening in extending rings around a major city is correct, but won’t the rapidity of re-development also be a decreasing function of distance from the center? Taht is, will the next 50 years see a wave of suburban blight (where the displaced residents of gentrified city centers go)?

jorod February 26, 2008 at 11:14 am

Jamaica looks poor and is poor.

Suburbia was largely built by moving the middle class from the cities to the outer areas. This was a result of the Great Society government policies of the 60s and 70s. I suppose a rebirth of good paying jobs in the inner city could bring people back. That seems to be happening since the 1980s, the result of Reagan’s economic revitalization.

However, another trend is the growth of mega suburbs which are small cities in themselves. Also, airports are a magnet for attracting economic growth and consequent porpulation growth. Transportation is becoming a major issue due to energy costs. People may start living where they work again. Telecommutting is also growing, nullifying the transportation problem.

After tearing down the public housing slums, cities like Chicago have large swaths of land available for re-development. Can the government screw this up? As the patronage armies and government bureaucracies grow in the large cities, taxes are becoming a major burden for the middle class and an obstacle to development. Increasingly, the center city is populated by an economic elite like ancient Rome. Government appointments are powerfully sought after. I think the practice of royal licenses may make a come back. Schools become dysfunctional. Instead of circuses were have public works like parks and sculptures. Anyone for a temple of Jupiter?

Independent George February 26, 2008 at 11:56 am

After tearing down the public housing slums, cities like Chicago have large swaths of land available for re-development. Can the government screw this up?

Yes.

Anonymous February 26, 2008 at 12:34 pm

Many Irish towns appear to be poor but have high average incomes. Ireland has a very high per capita GDP.

There are two reasons. One already mentioned is that Ireland was poor in the recent past and doesn’t have the accumulated wealth of, say, England. The other is that since Ireland joined the Euro the interest rate has been below the inflation rate for most of the time. This means that most people choose consumption immediately and do not invest.

It’s strange. Go out in the evening and you will see women in expensive designer dresses walking through tumbledown streets to drink expensive drinks in expensive bars.

greatzamfir “European per capita income levels were way, way below US levels, even in its richest countries.”

The discussion above about latent wealth shows the problems with income and GDP as measures of wealth. GDP change may be a good measure of progress, but is absolute GDP an accurate measure of wealth?

Early in the 20th century european cities were expanding but there was much already in place, much more was built in the US. The building of many american cities involved a lot of trade, but was this trade not part of the reason for higher incomes? Perhaps the problem is rather like an earthquake which makes people poorer but increases GDP?

It’s a hard question to answer.

AJ February 26, 2008 at 12:40 pm

@Patrick: “Houston (and Texas in general) is undertaxed…”

You have permission to get out, my man. Anyone who says that ANY place is “undertaxed” may walk off a pier. If that needs explaining, you need help.

Thomas February 26, 2008 at 1:03 pm

The necessary discrimination is not easy. I remember when I moved to Tucson from Omaha in my early 20s and was looking for a place to live. In Omaha you non consciously judge neighborhoods by such factors as lawn care, paint on the houses and rusty cars on the street … none of which applied in Tucson. It took me several months to be able to learn this discernment. (Not including, of course, the obvious … are you on a mountain by a golf course with grass lawns and swimming pools … then you can’t afford it.)

ricardo February 26, 2008 at 1:43 pm

Another vote for Ireland, even within Dublin. I remember (around 2002) crossing the Liffey from the shiny, bustling city centre, walking a block away from the main road and thinking I must have walked through a wormhole. Ramshackle buildings, street deserted except for the obligatory drunk asleep on the corner. There might even have been tumbleweeds.

Carina February 26, 2008 at 2:44 pm

I live in Houston, too. Undertaxed is not the word I’d use. Property taxes and valuations are way out of line with market realities. The use of raising bonds has increased dramatically to fund everything imaginable. In the last election we voted on raising bonds to cure cancer. This is above and beyond the bonds we raise each election to pay for the new courthouse, new schools, new stadiums,and on and on. We pay hospital taxes. I think every city fee has increased.
The two major highways near which I live have been fixed as in completely rebuilt 2 and 3 times respectively in the time I’ve lived in my house. Taxation is not the issue.
Carrie

Steve Sailer February 26, 2008 at 3:26 pm

Castro managed to preserve a slice of Eisenhower-era America — Havana looks like a set for “West Side Story.”

David H. February 26, 2008 at 3:58 pm

A bit off-topic, perhaps, but I find all this berating of Cuba somewhat question-begging. When Cuba finally falls to the west & capitalists are allowed free rein on the island does anyone seriously believe that the first thing done will be to help all the poor, hungry & homeless? Today many like to gnash teeth & wring hands over the deplorable standard of living in Cuba but we all know that when that glorious day comes there will be a mad rush to build up the coastline for vacationing Americans & the plight of those currently poor, hungry & homeless won’t change significantly. In fact, income inequality will probably rise & rise, much like we already have here in the US. The poor will be cared for about as much as they are here. Which is to say not much at all. So why so much pretending to care about them now while still under communist rule?

Don Pedro February 26, 2008 at 5:26 pm

I wrote some reflections based on my own travel to all three places at Economists for Obama:
http://econ4obama.blogspot.com

Bernard Guerrero February 26, 2008 at 5:43 pm

AJ,

Well, I won’t tell him to walk off the pier, but as a recent addition to the DFW area I’ll be happy to state that the reason I moved my family here had quite a bit to do with the low taxes. I got a much better up-front offer from a company in RI, but once you factored in the tax differential and the absolute need to pay for private schools up there….

DougM February 26, 2008 at 8:26 pm

I visited Monterrey for an MBA trip. The running joke about the city was “it’s just like any city in South Texas, only more people speak English.”

I liked Monterrey much more than Mexico City, which I thought was a polluted pit, with a few nice parts (Zona Rosa, etc.) Then again, I am an ugly, suburb-dwelling, car-driving, McDonald’s eating (with 110 cholesterol) ‘merican.

I must admit though, the food in Cuidad de Mexico was much better than Monterrey.

Scott Wood February 26, 2008 at 10:01 pm

“I must admit though, the food in Cuidad de Mexico was much better than Monterrey.”

FWIW, my Mexican wife claims that we can get more authentic Mexican food here in Southern California than in Monterrey.

Paul N February 26, 2008 at 10:21 pm

Look way poorer than they are: Luxembourg, Norway, Silicon Valley

Walter February 27, 2008 at 12:22 am

Oh, look, one of those rare MR threads where I have actual experience to contribute…

Patrick, I just got back from two weeks in Houston, and spent many hours driving there. You have some of the best road conditions in the nation. The traffic volume is So-Cal-like awful. I’m not sure what taxation rates have to do with either of those observations.

Not many US residents have a handle on the conditions in northern Mexico, much less Cuba. The border cities in Mexico (Juarez, Nuevo Laredo, Tijuana, etc)are some of the more dismal places in the country, but Monterey, Mx, is actually much more aesthetically and culturally pleasing than any Texas city south of San Antonio. The same is true with most of the Mexican interior.

Barkley Rosser February 27, 2008 at 3:31 am

Regarding all the tales of woe in Cuba, I do have a warning.
Transition to capitalism may not improve things, indeed, could
easily make them worse, much worse economically, even as we
would hope that there would be a move to democracy and human
rights.

How could this occur? Look at the entire Soviet bloc. All of
the countries in it went downhill economically after the Berlin
Wall fell, at least for a few years. Some bounced back pretty
quickly and are now doing reasonably well, e.g. Poland and Estonia.
Others have yet to get back to a point where their average per
capital real income is as high as it was in 1989. BTW, for all
the glamor and glitz and big money in Moscow and St. Petersburg,
Russia is only now at the point where real per capita income has
gotten back up to where it was back in 1989. Lots of rural poverty.

Could happen in Cuba, if it were to revert to a Batista model
driven by the corrupt Miami crowd running back in and taking over.

Mark Amerman February 27, 2008 at 6:50 am

My brother was in Moscow in, I think it was 1982, for about four or five months. One
day around that time we had a conversation about what things cost in the Soviet Union
from the perspective of a soviet worker. He knew the average salaries of typical
russians and he knew what a lot of things cost because he’d been living there. So
we sat and calculated the time cost of a number of goods: how many weeks, or months,
or hours the average person would have to work to pay for it.

Everything was more expensive in Russia. Even a loaf of bread took two or three times
longer to earn than in America. The reason I say “even a loaf of bread” is because
the Soviet government went to great lengths to keep the price of loaves of bread low.
In fact loaves of bread were about the only thing that was in the same ball park as
american prices. There were a lot of things that were just incredibly, surreally
high. I remember watermelons: it took six months of work to pay for one watermelon.

And then there was a middle band were things just sounded very expensive, like
three weeks for something — which seemed expensive but maybe liveable and then
it would dawn on me. Wait a second, this isn’t three weeks of skimping and saving
your money. This is three weeks of not eating.

At the same time you could go and look it up and according to the United Nations russian
GNP per capita was something like fifty percent of american.

Nor were the UN figures a laughingstock in american circles. Instead the roughly fifty
percent figure was more like the conventional wisdom of the time. At least in the newspapers
I read.

Anonymous February 27, 2008 at 10:51 am

Bethpage, NY.

mik February 27, 2008 at 3:03 pm


There were a lot of things that were just incredibly, surreally
high. I remember watermelons: it took six months of work to pay for one watermelon.

It is a typo or you are seriosly confused.

Average Russian wages at the time were probably around 1500 – 2000 Rubles/year.
I bet there were virtually no watermellons on sale for 700 Rubles.

In summer they were actually reasonably cheap. In winter they could be expensive but no where near 6 months wages.

Barkley Rosser February 27, 2008 at 3:31 pm

Mark,

1992, eh? That was the year of the begining of the transition when Russia had a
full-blown hyperinflation. Big deal.

I shall tell an anecdote from 1992 when I was visiting there in August myself
to attend the International Economic Association conference, a tale I believe I
have recounted previously on this blog, but it is a goody, one I was advised to
submit to the JPE, but never did. So, in the ancien regime it cost two kopeks
to make a public telephone call, a ruble officially worth 100 kopeks, which were
small copper coins resembling their cousin, the US penny in those days. The phones
gave no change, so you needed exact change. By August the hyperinflation had gotten
so bad that the copper in the kopeks had become worth much more than the face value
of the coins, and ethnic Koreans were reputed to have been melting them down for the
copper. Bottom line: when my wife needed to make a call from a public pay phone,
which still had the old payments system in place, she had to pay somebody three
rubles on the streets of Moscow for two kopeks to do so.

BTW, are you the (former?) philosphy professor at the University of Wisconsin-Madison,
or related to him?

graeme February 27, 2008 at 4:48 pm

“I found the most evident signs of Cuban poverty to be the unceasing supply of articulate and sometimes weakly sobbing mendicants, none of whom sounded like con men, all of whom needed money to buy food and clothes for their families. The most shocking part is what small sums of money they would ask for or be made happy by. Or the numerous women — and I mean ordinary women in the streets — who would offer their bodies to a stranger (handsome though I am) for a mere pittance.”

When were you in Cuba Tyler? In the 90′s, or more recently.

Because nowadays, the people asking for things are actually a pretty bad indicator of Cuban poverty. I’ve been here several months, and almost no regular Cubans ask me for money, though they are desperately poor and I am easily recognizable as a foreigner. I only get frequently asked in touristy places such as Old Havana, or the city centers of provincial towns. I’m pretty sure that the ones doing the asking nowadays are actually reasonably better off than the majority of their fellow citizens, particularly if they can speak English. One guy who asked me for money pointed out his wife, a rotund woman with dyed hair.

So, the number of people asking for money underestimates the level of poverty. Because people are rather poor, they just don’t tend to beg. In the 1990′s, in the “special period” it was a different story, when people were even worse off, and things hadn’t stabilized after the fall of the Soviet Union. Then, people had to try all kinds of things just to get by. They still do, but less desperately.

The people who ask for money now generally do it as their living, and most Cubans look down on them.

And yeah, the amounts of money people find valuable are shocking. I guess that’s what happens when the average disposable income from official salaries is 40-80 cents a day.

Oh, and the final point about the top elite isn’t exactly accurate. Given the large tourism sector/remittances, luxury in Cuba isn’t quite as top to bottom as it was in the USSR. People who have a moderate access to hard currency through work in those sectors can eat fairly well, particularly if they can buy some of it through the black market. I’m not saying that there are many people that can afford this, only that now there are several types of elite in Cuba.

People who don’t have any access to hard currency….well, you can figure out how low their standards are when you hear them cry “que rico” to food that a westerner would consider “adequate”.

Graeme (the one who coincidently sent you a facebook message before Fidel made his announcement)

Barkley Rosser February 27, 2008 at 5:56 pm

Mark,

Oh, 1982. OK. The figures were not too off for then,
at least the real income stats. Bread was actually
cheaper than here. So was housing and medical care
and education. OTOH, a lot of other things were much
more expensive, many to the point of complete unavailability.
It is hard to make these real income comparisons.

I realize that the philosophy prof had an extra m
in his last name, although the same first name as you.

Of course you are correct that the internal productivity
of an economy is largely determined by its own system
and character, and by 1982 the Soviet economy was getting
deep into a stagnation mode. OTOH, I find there to be
a rather weird contradiction on this blog discussion.
Most of the people, not necessarily you, who are arguing
that the US embargo on Cuba has little impact are also
folks who do not want to lift the embargo. Most are
also supporters of free trade (see the vitriol directed
at Barack Obama on another thread over his trade views),
meaning they think free trade is very important for
economic good performance.

I do not mind noting that these positions are somewhat
contradictory, to put it mildly.

Mark Amerman February 27, 2008 at 9:53 pm

Barkley,

Yeah, I remember the business about bread being cheaper in the
Soviet Union. It was the conventional wisdom. In fact I think my
brother said that. But when I asked him what an average, ordinary
income would be outside of Moscow (and I made that distinction
because I knew Moscow was the elite city, the one for which
permission to live in was highly sought after) and he gave me
a number and then I asked what a loaf of bread cost, and made
the calculation, the bread was not cheaper.

And then we moved on to other things. I was dumbfounded by
the watermelon thing but he insisted that was the price he’d
seen.

Now I doubt he was wrong on the prices, or maybe he was mistaken
on the watermelon. The more likely error would be the estimate
of average, or ‘typical’ salary. I can’t really evaluate that
from this distance. Whether he hit the exact middle or not, I
don’t know. It certainly would have been a number valid for
a vast number of people.

In any case he could have been off by one hundred percent, which
I doubt very much, and still the results wouldn’t have been remotely
congruent with the UN’s fifty percent.

Thanks for the data on East Germany. Wasn’t East Germany the
leading economy of the East Bloc? Doing better than the Soviet
Union?

One thing I think is worthy of note here is how these calculations
really aren’t that difficult. It’s hard and subjective to try
to boil it down into one number. But it’s not that hard most
places to figure out what people roughly earn and what things
cost, and then fairly readily compare for at least one type
of good one place with another.

All you need really is to know people that live in different
places. It shouldn’t be that difficult to make a rough check
on official figures, even for a communist state.

Barkley Rosser February 27, 2008 at 10:59 pm

Mark,

Regarding the bread question, you were probably
comparing the much better dark bread of Russia
with the crummy white bread of the US.

vanya February 28, 2008 at 12:11 pm

Mark,

Another thing that makes comparison of 1982 Soviet purchasing power difficult is that monetary price was not always a reliable indicator. On the one hand, many goods might be relatively affordable if you could find them, but not be easily available – radios, shoes, Beatle LPs, whatever. On the other hand Soviet citizens were good at getting lots of things for free – like taking food home from work if you were in retail. And you could barter for things as well. Between the lack of consumer goods to buy, and the subsidies on housing and food (lunch was often provided free or at nominal prices in factory or office canteens)even people with low wages could build up surprisingly large stocks of rubles. So even if your brother did see a watermelon for an outrageous price (but I really can’t believe 700 rubles), probably more Soviet citizens could have afforded it than you might guess. That was the paradox – the scarcity of consumer goods probably led most Soviets to believe they were richer than they actually were, because it was rare to feel like you were short of cash.

fjfjfj March 6, 2008 at 8:23 am

Constant,

You probably won’t read this now, but yes, that’s right.

Roberto Barnard Baca November 10, 2008 at 12:56 pm

Having been born and raised in Morelia, and Seattle, I can compare Gringolandia with Mexico with some authority. The US is poor intellectually and morally, as is Mexico. Mexico is richer in some parts than it would appear, though poorer because of it: poor income distribution. The US is over-rated as a society and as a model of urban planning, IN GENERAL. However, its National Parks System is enviable. Neither Mexico nor the US have a monopoly on greed, stupidity and ignorance. American “globe trotters” can be real morons, whether you meet ‘em in Tokyo (I have), in Europe (ditto), or here in Morelia. Mexican globe trotters (what few there are) can be utterly vacuous or extremely discrete-discreet.

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brian August 18, 2010 at 6:13 pm

I have been to Cuba several times.Cuba has suffered from poorly run goverment and people being unable to better themselves by getting a good paying job.There are few new developments going on and high unemployment.I am helping several families there and can get the truth from the locals what they think.They must allow foriegn countries to invest in agriculture,hotel building and contruction jobs as well as allow independent people to sell products.They must turn vacant farm land into crops they can sell to the locals at a low rate.

People are warm and are crying for help…go visit Cuba not the tourist Cuba but the areas where the average person lives.

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