Saturday, July 21, 2012

'Roberto' and other tales of the Cuban economy

'Roberto' and other tales of the Cuban economy

Ask any self-employed Cuban how she came to possess the goods she's
selling, and she might tell you they came from 'Roberto,' a euphemism
indicating the goods are stolen, writes a guest blogger.

By Melissa Lockhart Fortner, Guest blogger / July 20, 2012

Ask a self-employed Cuban how she came to possess the goods she is
selling, and she might tell you that they came from "Roberto."

The euphemism indicates that the goods are stolen, and given the
scarcity of many products and the unreliability of state retail stores
in Cuba, many new entrepreneurs in Cuba are struggling to cobble
together their businesses and turning to alternative – and
under-the-table – economic strategies. In fact, the channel of goods
coming into the country from family, friends, and mules is estimated to
have ballooned recently to more than $1 billion per year. This should be
no surprise to the state, since Cubans lack access to a wholesale market
by design. But these informal imports, currently running under the
radar, are about to face a 100 percent tax that will go into effect in

In the course of the ongoing economic overhaul by the Cuban state, new
challenges are indeed arising every step of the way. The path in this
case is easy to trace.

The Cuban government lays off workers from the public sector in
order to eliminate its inefficiencies and encourage a private sector to
The country does not have the mechanisms to support a new private
sector, however, so those new entrepreneurs are forced to get creative.
They start acquiring more goods through informal channels in order to
maintain their supply.
In this (true) scenario, the Cuban state misses out on any kind of
revenue from those "imports". So the government slaps a 100 percent tax
on this kind of trade, which looks more like an effort to stifle the
informal trade altogether than an attempt to get in on the spoils.

The problem is that Cuban small business owners will be left in a lurch
if this is not coupled with the natural counterweight policy – that is,
creating a clear way for entrepreneurs to get the goods they need
through official channels – which would allow the Cuban state to earn
some revenue from the private sector trade while still generating viable
conditions for small businesses in the private sector to operate.

I suspect that sounds too much like capitalism.

But with 387,000 Cubans now self-employed (out of a total island
population of 11 million) and a state goal to add another 240,000
private-sector jobs this year, policies that make the lives of private
sector entrepreneurs and employees more difficult seem counterintuitive.

The Cuban National Assembly is set to meet on Monday. Here's hoping we
see a good plan.

IN PICTURES: Cuba economy

– Melissa Lockhart Fortner is Senior External Affairs Officer at the
Pacific Council on International Policy and Cuba blogger at the Foreign
Policy Association. Read her blog, and follow her on Twitter

No comments:

Post a Comment