Monday, January 3rd, 2011

The price of soap

Soap just acquired a price in Cuba. It’s expensive.

Like potatoes and cigarettes, soap has been on the list of goods rationed in Cuba since the 1960s, when the government instituted the ration card as a response to the American embargo, to guarantee all Cubans could satisfy their basic needs.

Under increasing financial stress, however, the government of President Raul Castro has been taking items off the list. On January 1st soap, detergent and toothpaste were evicted from the ration card. Bathroom soap will cost about 4 pesos a bar, about $0.20. A bottle of liquid detergent will cost 25 pesos, and a tube of toothpaste will cost 8 pesos.

This isn’t chump change. A bar of soap in Cuba will cost the equivalent of about 1 percent of the typical monthly wage. In the United States, this would amount to almost $14 per bar.

Yet the price of these changes may be highest for the Cuban regime. They follow similar moves for cigarettes, salt, peas and potatoes –culled from the list of basic staples by a government hard pressed for cash. By pruning the definition of basic necessity, Havana is diluting the 50-year promise of La Revolución: to provide for all Cubans’ fundamental needs.

The pruning of the ration card, however, is indispensable to reinvigorate the Cuban economy in the long run. All the government in Havana must do is allow ordinary Cubans to follow the price signals and invest in soap-making capabilities to try to profit from the exorbitant price of soap. Soap-making jobs would follow. And the price of soap would fall.

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