Reform in Cuba, or How to Cope with the Age Transition

Cuba has signalled its intention to move away from a totally centralized economy to a more mixed one, along the lines of China and Vietnam. Much is made in the press of the many reasons why this is necessary, but the one missing piece from the discussion is the island's demographics--Cuba is an aging population and lacks the growing younger labor force that is necessary to sustain a strongly socialist economy. Someone has to pay the taxes that are distributed to everyone else and the ratio of taxpayers to tax beneficiaries has been steadily declining in Cuba. Cuba's life expectancy is nearly identical to that in the United States (despite the vastly greater sum per person spent in the US on health care, it might be noted!), and its total fertility rate is well below replacement (1.54), compared to the US rate which is very close to replacement (2.02). As a result, Cuba is aging very quickly in a pattern much closer to Europe and East Asia than to the United States. The United Nations Population Division projects that by the middle of this century almost one in three Cubans will be aged 65 or older, whereas less than one in ten will be moving into the labor force at ages 15-24. Indeed, the UN projects that Cuba will begin to depopulate by 2020. It doesn't take a genius to see that something is going to have to give, and the mixed economy strategy is exactly the response that China and Vietnam have made to cope with their similar demographic futures.