An excerpt from

Life After The State

Dominic Frisby

Prologue: Why Every Cuban Wanted His Daughter to be a Hooker

In the 1990s, when I was in my twenties, I was mad about Latin America. I loved the people, the tropical weather, the forests, the mountains, the beaches, the language, the ancient history - and I was nuts about the music. All I wanted to do was go there and have adventures. Every year I would catch a cheap Boxing Day flight to somewhere in Latin America, and come back at the beginning of February. I went to all sorts of wonderful places: Colombia, Bolivia, Guatemala, Peru, Honduras and, in 1996, Cuba.

This wasn’t at the height of Cuban repression. Fidel Castro was still president and the very worst of the poverty that followed the collapse of the Soviet Union were now behind it. But the country was still desperately poor.

Havana was an amazing place, full of contrasts. The only cars were either huge American classics – symbols of the booming 1950s USA that looked like something off the set of Back to the Future – or dour and bleak Ladas that had been imported from Russia in the 1970s and 80s, symbolic of the Soviet Union, the Cold War and communism. There were magnificent Art Deco or Art Nouveau buildings, yet there’d be a hole in the roof, or part of it might have fallen down. There were pro-Castro symbols and slogans everywhere you looked, but the walls on which they were painted would be crumbling. The entire city looked like it needed re-rendering.

After one obligatory, over-priced night in a government hotel, I found a room in a Havana apartment belonging to a highly educated Cuban family. Luis was a political economist and a professor, no less; Celia was a doctor. They had three young children: two girls and a boy.

I had gone to Cuba with pre-conceived notions about what an amazing place it was. Any problems it had were entirely due to sanctions and other American punishments, I thought. It had the best health service in the world, the best education in the world and was a shining example to the greedy West on how things could be run. I don’t know where I got those ideas from – conversations at university, probably – but Luis quickly put me right.

‘What is the point of a great hospital, if there is no medicine and no medical equipment?’ he would whisper to me. ‘What is the point of great education when you have no pencils and no paper?’. I didn’t have an answer.

I say whisper. Criticism, even indoors, was always whispered. Many Cubans would loudly declare how wonderful the regime was, surreptitiously look about to check no potential informant was in earshot, then come up close and whisper, ‘I hate Castro’ – or something along those lines. So oppressive was the regime that paranoia, secrets, denial and deception permeated every area of life. People didn’t dare to be honest. They were too scared of what the repercussions might be.

Some Cuban friends of mine in London had told me before I left, ‘You need dollars. You can’t buy anything with pesos.’ I was a pretty intrepid explorer in those days and dismissed this advice. I thought I’d be able to get off the beaten track into the real Cuba, where I could use pesos like real Cubans. But my friends were right. You couldn’t. There was, simply, nothing available to buy with pesos. There were no shops or businesses that accepted pesos, except the odd street stall that sold ice cream or bits of cooked dough, loosely described as pizza. Cubans got their bread and other essentials with ration books and a lot of queuing.

Western goods did exist. Clothing, electrical and hardware goods, and food and drink – Havana Club rum, beer, cheese and cured meats – were sold in grey, colourless supermarkets. The supermarkets were not at all cheap and, despite the fact that they were state-run, would only accept US dollars - one of the many hypocrisies I would encounter.

So the only way anyone could buy anything was with US dollars at a state-run store. However, most people were employed by the government in some way or other, and paid in Cuban pesos. So how did they get dollars?

The answer was: from the tourists.

Luis and Celia got their dollars renting out a room to tourists like me. Most Cubans didn’t have the option of an apartment with three bedrooms. (Luis’s parents had somehow managed to avoid it being expropriated) Some were lucky enough to have the use of a car and could be taxi drivers. But this was another option that was only available to a tiny few – there was no manufacture of cars and no import trade. You, or more likely your parents, would have somehow had to have acquired a car way back when, and kept hold of it. There were a few restaurants and bars scattered about, and a tiny, well-connected elite could become waiters. Where did that leave everyone else? Most turned to prostitution.

As an economist and a doctor, you’d expect Luis and Celia to be a fairly wealthy couple. And by Cuban standards they earned good salaries – about 500 pesos a month each. The official exchange rate was one peso to the dollar, thus they earned the equivalent of $500. The unofficial rate, however – the real market rate - was 20:1, so Luis and Celia's 500 pesos amounted to about $25. A pair of jeans in the supermarket will cost twice that. But, remember, you could hardly buy anything with pesos.

One night’s rent from me was more money than Luis, a PhD, would earn in an entire month. A taxi driver might land that figure in two or three fares. On a good night, a waiter might earn that in tips. But the big money was in selling sex. If she found a generous boyfriend, a prostitute – a ‘jinetera’, as they were called – could earn many times that in one night.

More than any of the other European nations, it was Italy that seemed to have caught the Cuba bug. My flight out was full of Italians. All over Havana there were Italians. They loved Cuba. I naively thought it might have to do with the historical links between Italy and communism, but wandering around Havana I soon saw another reason. The Italian men loved the black Cuban women – and vice versa it seemed. Everywhere you looked you’d see stylish Italian men arm in arm with young Cuban black girls, their paid girlfriends for the two weeks they spent there.

Cuban men were selling their bodies too. A rather plump Greek-English woman I knew in her late-forties married a beautiful (yes, beautiful) man – a ‘jinetero’ – at least 25 years her junior. I had to deliver some money to him for her. I was amazed when I met him. He looked like a young Sidney Poitier. She looked like a chubby, middle-aged Bette Midler. A most unlikely couple.

In some cases, I’ve no doubt, couples fell in love. Marriages and families may have resulted. Cuba is a famously sexual country. I expect that many of the jineteras derived some occasional pleasure from their work. But, in most cases, the reality was rather more dark and sinister. Their economic circumstances meant that these people felt they had no other option but prostitution, if they wanted to improve their lot.

It’s hard to believe just how widespread ‘jineterismo’ was, and probably still is. There has been no formal study, but anecdotally it appears that more than 50% of Cuban women below 50 have practiced prostitution at some stage – if not with a tourist, then with another Cuban.

‘Everyone is jinetera,’ said Luis. ‘Look around. Everyone. Jinetero, jinetera. Look what Fidel has done to our country. Look what he has done to our people.’ We were sitting on the Malecón - the wall which runs along the Havana sea front – watching good-looking jineteros and jineteras attempting to snare a tourist. Of all the Latin American countries I visited, I found I had the most intense conversations in Cuba. This was one of them. I transcribed it into my diary later that night. ‘I don’t want my children to be a doctor like their mother, or a political economist like me. What is the point? MD, PhD, a month’s work and I cannot buy a pair of shoes.’ Luis continued: 'Useless life. A much better life for my son is if he is a taxi driver or a waiter. Then he can get dollars. Maybe he can get a tourist to fall in love with him. And my daughters? I tell you a secret. I pray my daughters will be beautiful. Every father does. So they can have tourist boyfriends, have money, maybe marry a tourist, and get out of here. That is why every Cuban father wants his daughter to be a jinetera. Jinetera – that is the best life you can have here, that is how you survive, that is how you escape. Thank you, Fidel!'

The Four Lessons I Took from Cuba, and How they Apply to Us

I don’t know what the motivation behind Castro’s great revolution was or why he and his cohorts made the economic and political choices they did – lust for power, political idealism, or, maybe, just to get rid of Batista. It seems his decision to ally himself with the Soviet Union was, at least initially, more of a reaction to US aggression and sanctions than any Marxist sentiment. I very much doubt their intention was the eventual consequence: a society so imbalanced and distorted that taxi drivers and uneducated young people could earn, in one night, many times more than a professor, a doctor, a lawyer or an engineer might earn in a month; where the large majority of young girls in Havana were selling their bodies for dollars and where every Cuban father wanted his daughter to be a jinetera.

Cuba was probably my first lesson in the Law of Unintended Consequences. And my story illustrates many of the themes of this book: the power of the state; how it interferes in people’s lives; how political decision, often made out of expediency, can have such grave and unexpected repercussions, even if they are benevolent; how money works (and how it can stop working; how governments make it a political tool; why the freedom to exchange and to trade is so important; and how, if you limit that freedom, you limit people’s possibilities.

The useless peso, moreover, was my first experience of how essential a properly functioning system of money is to a society, and what can happen when politicians start to use money as a political tool.

So what?

I think those lessons could be applied to us here in the UK in 2013. Of course, we’re not at the stage where we want our daughters to be jineteras. But I believe – and I don’t think I’m alone in this – that we’ve gone badly wrong in the developed world.

I’d like to ask you to remember where you were a decade or so ago, in the year 2000. I’m going to list some of the things that have happened since then. Did it cross your mind that we would see…

• Two stock market crashes of 1929 proportions and a financial crisis that almost brought down the entire global banking system.
• Youth unemployment in Greece at 62.5%, Spain at 57%, Portugal at 43%, Italy at 40% and an EU average of 24.4%. Or the Greeks calling Germans Nazis.
• Interest rates in the US at 0.25% and in the UK at 0.5% for years on end, runs on banks as people discover their money isn't safe and the Bank of England actually printing money.
• The average age of the first-time house buyer at almost 40, with an entire generation of people in the UK that believing they will never own a home.
• Obesity rates of 25% in the developed world, yet almost a billion people suffering from chronic undernourishment.
• 36 million people across the globe taking part in 3,000 protests against a war in the Middle East – and UK and US government ignoring them and going ahead with it anyway.
• Healthcare spending more than doubling from £68 billion to £143 billion in the 11 years to 2011, yet ‘basic clinical failings’ being commonplace across the NHS – with one NHS trust found liable for 1,200 people dying while in its care and a further five trusts facing investigation.
• Spending on schools in the UK rising by over 86%, while the Ofsted chief inspector declares ‘standards have stalled’.
• And debt. Oh, my goodness. The UK currently owes, excluding bank bail-out costs, just under £1.2 trillion. That’s almost £40,000 per working person. In just five years the coalition government, on a so-called austerity drive, will add £700 billion to the national debt. That’s more than the combined total of every British government of the past 100 years. For all the talk of ‘fiscal cliffs’ and ‘debt ceilings’ in the US, President Barack Obama has overseen an administration that, in its first term, increased the national debt by 60%, adding $6 trillion. The first 41 presidents only managed $5 trillion combined.

Many of these things were unthinkable ten years ago, yet they are now part of our daily experience. A lot seems to be going wrong. Is this just an inevitable fact of life, or is it something else? I happen to think it’s something else. And that’s what this book is about. Many of our most fundamental institutions, social arrangements, economic policies and political ideas seem to be breaking down. They are either in acute crisis, or close to it. Things that we have taken for granted for decades – that a bank is a safe place to put money, that the NHS looks after its patients, or that European countries have left the conflicts of the Second World War behind them, for example – are now in doubt. If we are coming to some sort of boiling point, it's essential to understand what the fundamental problems actually are and how they came about, otherwise there is the real danger that, misguidedly, we replace what we have with something worse – as happened with Fidel Castro’s great Cuban revolution, Communist Russia and Nazi Germany. 'Only a crisis - actual or perceived,' said economist Milton Friedman, ‘produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.

I subscribe to George Orwell’s view that, ‘on the whole human beings want to be good, but not too good, and not quite all the time.’ The problem, as I see it, is not so much individuals but systems. Accidentally or otherwise, our systems of government, finance and economics have been modified and manipulated and now no longer have the effects their originators intended; they have become entrenched, out of anyone’s control, and seemingly possible to change or remove. It feels like the West is an unstoppable train, hurtling down the tracks; but we are on the wrong tracks, going to the wrong place. Nothing seems to slow this train, let alone reverse it. It’s too big; it's going too fast. But in this book I’m going to show you a simple method whereby the points on the railway – what Americans call ‘the railroad switch’ – can be changed.

Not so Funny: How a Stand-up Comedian came to write about Money

People never stop thinking about ways to make money, but barely a soul questions what money actually is. Children do, but adults seem to forget. What is money? Who invents it? Who controls it? And, most important, what are the consequences?

In this book I discuss our system of money in depth, as I believe that reforming it is the only way we can surreptitiously re-route the unstoppable train. All those people agitating for change should forget marches or demonstrations, or calling for this or that regulation or ruling; if they all just concentrated on one thing – reforming our system of money – then, as I hope to show, freedom, justice, equality of opportunity and everything else they want can follow. We have to separate money and state.

There are many very intelligent and well-intentioned people who think the government needs to ‘take more action to tackle the crisis’. Perhaps you are one of these. Perhaps you think more needs to be spent clamping down on benefit fraud, immigration or tax evasion; on better facilities in schools, better health care or environmental initiatives; on better policing, house-building, increased regulation of the banks or higher taxes for the rich. Different people have different ideas on what needs to be done.

But let me warn you now: the central tenet of this book is that the one big change governments need to make, aside from money reform, is that they do less. Not just a little bit less, but a lot less: almost nothing at all. Government inaction is key. Most of the problems we have are because of governments.

What I am agitating for is a society that is free and fair and content, a society with ‘equality of opportunity’. But I don’t believe the solutions lie in state action. The left wing might have the right goals, but the route is wrong. I believe, you could say, in socialism without the state.

I don’t want to oppress anyone, to kill anyone, to leave anyone starving or without the basic necessities. When I talk about getting rid of state education for all, I don't want illiteracy to increase; I want it to decrease. When I talk about getting rid of state-funded health care, I don't want anybody to go without good medical attention; I want better and cheaper health care for all. When I talk about getting rid of welfare, I don't want people to be penniless or homeless; I want them to be prosperous - and happy. I don’t want the rich and powerful lording it over us, nor tyranny, nor mind control, nor even censorship. But all of these things now flourish.

One final thing: I'm not an economist. I am a comedian.

As soon as you say that, people immediately want to know how funny you are. You can look me up on YouTube and make your own mind up.

I was never taught economics at school, at university or anywhere else. I don't have the ‘right qualifications’ to be writing a book like this. But in 2005 I became infatuated with the subject. I read insatiably. It was clear to me that 'something big' was coming, but mainstream economists, journalists, broadcasters – they all seemed oblivious. I started a podcast as an excuse to meet and talk to some of the minds that had so impressed me in my reading. Then I was asked to write a column for MoneyWeek magazine. Comedy became a second priority.

As a comedian you quickly learn that if they don't understand, they don't laugh. This enforces the discipline of clarity. There is no such discipline in the worlds of finance and economics. Frequently, the language used is unreadable – often, I suspect, deliberately so, the perpetrators using 'long words and exhausted idioms, like a cuttlefish squirting out ink', as George Orwell famously said. The consequence is that many people feel alienated rather than fascinated by these worlds. You won’t find that here, I hope. I am writing about matters that can be complicated, but I have tried to make them simple and accessible to all.

My dad argues that many of the ideas in this book will never happen. They’re too unrealistic. He may be right but, as an internet poster who goes by the name of ‘Injin’ wrote on a HousePriceCrash chatboard: ‘Find the right answer, realise you’ll never see it in your lifetime, and then advocate it anyway, because it’s the right answer.’

If the state is now crumbling under the pressure of its debt and its spending obligations, it may have no future. Should you be afraid? No. A better world awaits, a world that is more just, free, progressive, peaceful and prosperous. It really isn’t so impossible – if we can just re-route that train. It’s time to try something else: Life After the State.