Dispatches from Cuba (Part 1): On Negotiation and Supply Markets

Cuba Delphotostock/Adobe Stock

Ginny Smith presents live science shows to schools, science festivals and other groups, and is also an author, journalist, radio and film presenter. As well as science, travel is another love, and as a neuroscientist by training, she is interested in the psychology of negotiation — hence this article which combines those two aspects of her work.

In a country where you can earn more handing out pieces of toilet paper outside a toilet in a tourist cafe than by being a neurosurgeon, the Cuban economy is certainly a strange one. After decades of strict regulations, the system has begun to relax, and the country has opened up more to tourists, and my partner and I were among them on our self-organised three-week trip at the end of 2016.

Rather than the only available hotels and restaurants being state-run, locals are now allowed (within certain regulations) to open their homes to visitors. This has certainly led to more choice for tourists, and has hugely improved the standard of living for many Cubans, but it has also led to some issues.

For one, the double currency system (“convertibles” or “dollars” for tourists and “pesos” for locals) has begun to feel outdated. Occasionally, you see remnants of the old system — museum entry, for instance, which costs 3 pesos for locals (roughly $0.15) or $3 for tourists. But this is the exception now, not the norm. While some essentials are still heavily subsidised and so remarkably cheap, luxuries, from dinners out to fashionable clothes, are priced in dollars, and cost the same whoever you are.

Often it is possible to pay in pesos, but if you are on the state wage, dinner out at a restaurant could easily cost a month’s salary! And some places even inflate their peso price above the standard exchange rate — presumably to make themselves even less appealing to locals (or at least those without access to tourist dollars). This means that a new class system is developing, with those who can find a way to make a quick buck from the tourists flooding in having access to a much wider range of goods and services than those reliant on their state pay.

As a visitor, this divide makes it a strange place to attempt to navigate. There is the constant feeling of being exploited — it is clear that locals would never be expected to pay $5 for a short hop across town in a cab or bici-taxi (bicycle), but that is standard for visitors. So this is where negotiation skills come in. We found that most taxis have two prices: their “chancing their arm” price, which they will tell you when you first ask, “Cuantos?,” and the real (tourist) price that it rapidly drops to when you laugh and make it clear you are aware the trip is worth a lot less. Usually, the price will drop by half pretty rapidly.

But unlike many other countries we have visited, bartering hard doesn't seem to be the norm here — push too far and your taxi driver is likely to shrug and drive off, confident he can find another tourist who is willing to pay his price. And when you think about it, you can't blame them. As was pointed out to us by one driver (an astrophysics professor who drove a cab on the weekends to pay for his daughter’s medical training), we earn the same in a couple of hours as he earns in a month!

We were also unsuccessful with another common tactic: playing drivers off against each other. Even when surrounded by a multitude of taxi drivers, vying for your attention, it seemed that once you begin bargaining with one, that was it — you were off limits to the others. It left us wondering if the drivers have agreed the system works better for everyone if they form a cartel and agree not to drop their price below a certain limit. Or is it simply that the dog-eat-dog capitalism of the Western world hasn't quite filtered into the communist mindset yet?

It also seemed that, rather than being driven by supply and demand, prices were driven by the effort needed from the taxi driver. Of course, the beautifully done up classic cars charged more than the beaten up old Russian Ladas, but sometimes a bici-taxi would be pricier than a car, particularly if the journey was uphill. It often felt like you were interrupting the driver’s relaxation by asking for a ride, and it was up to you to make it worth their while. And if they didn’t feel it was worth it, well, they simply wouldn’t take you!

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