Saturday, September 20, 2014

How to Break the Chains on Cuba’s Economy

How to Break the Chains on Cuba's Economy
September 19, 2014
Pedro Campos

HAVANA TIMES — The extremely low growth of Cuba's GDP during the first
half of the year (0.6 %), acknowledged by the government, has revealed
that the reform measures aimed at stimulating the economy are inadequate
and prompted more and more criticisms among the country's economists.

In addition, the number of Cubans entering the United States through the
Mexican border or risking their lives in the Strait of Florida to reach
this country is harrowing. According to data from the US Immigration
Service, 14 thousand Cubans have crossed the Mexican border and 2
thousand have been captured in the high seas by the US Coast Guard over
the past 12 months – record figures for this last five-year period.

These facts, coupled with the island's aging and dwindling population,
should be enough to invite those interested in pushing the Cuban economy
forward, particularly those currently responsible for "steering" it, to
think about the need for implementing other types of measures. One
cannot expect to get different results by doing the same things over and
over again.

President Raul Castro, the top figures of the "reform process" and many
Cuban economists have acknowledged the need to unleash the country's
productive forces. If a survey were conducted, the vast majority of
Cuban citizens would probably also be in favor of this. The question,
then, is what is the leadership waiting for.

Freeing up the country's productive forces, however, implies free trade
in the broad sense of the term, and that is something the bureaucracy
does not approve of, because it would undermine its control over the
market. The recent Customs regulations that came into effect, aimed at
preserving the State-military monopoly in the clothing, footwear and
appliances market, made this clear.

The proposals below are a contribution to the current debate surrounding
the poor economic results achieved this year. Were they implemented in
their entirety, they would work to bolster production, increase the
availability of high-demand products in the domestic market, free up
exchange among the country's different forms of production, stimulate
monetary circulation, increase the purchasing power of Cuban pesos and
citizens, lower prices and place the economy under the control of the
general citizenry.

These are fourteen keys needed to open the locks that currently keep
Cuba's productive forces in chains and depress the country's economy.

1. Free the domestic market of all current restrictions, controls and
prices set by ACOPIO (the state farm products purchasers) and other
bureaucratic entities. Let cheese produced in the province of Camaguey
be sold freely in Havana and all types of establishments for the sale of
farm, industrial and craft products, or offering different services, be
set up, applying a basic tax on these. Prices ought to be decided on the
basis of an agreement between sellers and buyers.

2. Lift all restrictions on access to the foreign market, such that any
Cuban wishing to import or export a given product, be it for personal or
commercial reasons, may do so without being subjected to too many
control mechanisms or steep taxes.

3. Modify the current tax policy, which restricts the growth of the
self-employed sector, and limit its application to profits (not to
incomes pure and simple, as is the current practice).

4. Allow all professionals, including medical doctors, architects,
engineers and others, to become self-employed.

5. Lift restrictions on the creation of autonomous cooperatives of every
kind and eliminate bureaucratic hurdles and taxes for these for the
first three years of operations. Those wishing to set up a cooperative
should only be required to submit a letter of incorporation with the
basic information about the company's capital, members and acceptance of
the internationally accepted cooperative principles.

6. Make it possible for international organizations to make loans and
provide machinery and equipment directly to cooperatives, taking as a
starting poing the principle that cooperativism is the soul of socialism.

7. Allow State companies to be managed by workers, with full autonomy to
buy, sell and receive credits, such that worker collectives become
empowered to choose the management, organize and control administrative
mechanisms and distribute part of the profits among members, after
setting aside the sums needed to reproduce the means of production and
pay taxes.

8. Transfer ownership, or offer credit to purchase through installments,
the lands made available to small farmers, such that these feel a degree
of security to make long-term investments in housing, warehouses,
irrigation systems, land improvements, machine purchases and others.
Remove the obligatory requirement of having to join a credit and service
cooperative, which in actuality is a State mechanism for controlling
harvests and the sale of products.

9. Establish regulations for private companies that exploit salaried
labor, with a view to guaranteeing that workers enjoy rights, part of
the company's profits (in addition to their monthly salaries),
collective employment contracts, the right to create free trade unions
that will defend their interests, social security payments, paid
holydays, 40-hour work weeks, overtime payments, transportation and
worker cafeterias offering products at low prices and other facilities
workers may require.

10. Freedom to advertise products, actively search for customers and
sources of raw materials, both in Cuba and abroad (through high-speed
Internet and freedom of a commercial press).

11. Eliminate the two-currency system once and for all and establish
exchange rates that make for a more favorable relationship between the
Cuban pesos and international hard currencies.

12. The State should cease to manage companies, except basic service
providers (such as water and electricity), and these should pay their
employees a part of the profits, in addition to monthly stipends. The
incomes of the State, province and municipality should come from taxes,
to be applied in a transparent fashion at all levels and controlled by
base-level mechanisms and through regular reports to citizens.

13. Health and education should continue to be subsidized by the State,
which is to guarantee health and education for all. Health
professionals, however, should be allowed to create individual or
collective clinics, to be administered by medical collectives, and to
set up practices and even minor surgical hospitals. Groups of teachers
should also be permitted to create schools, to be administered by the
staff that, in addition to teaching the syllabus established by the
Ministry of Education, may incorporate complementary or specialized
programs. Such clinics and schools would charge for their services on
the basis of an agreement with their clients and would pay taxes on
their profits.

14. The decentralization of power, currently concentrated in the State,
from the control of taxes, through the creation and administration of
budgets, to the control of local police forces, justice and others,
strictly necessary for the autonomous functioning of communities.

These and other measures aimed at freeing the economy, socializing it
and bringing it under the control of citizens, with a view to
democratizing society, as freedom of expression and association, the
separation of powers and the direct and democratic election of all
public officials also aim to do, should be implemented without much
delay to avoid a greater catastrophe. A broad, nationwide democratic
debate that can open the way to a new and dearly needed constitution is
also something we no longer postpone.

What of the US blockade/embargo? The direct and indirect contribution of
this policy to Cuba's stagnation have already been expounded on
elsewhere, but, as its lifting does not depend on us Cubans, it is best
to concentrate on those things we can tear down here: the internal
blockade that hinders the development of a people's economy. Perhaps
without this internal blockade, the other will collapse of its own weight.

Source: How to Break the Chains on Cuba's Economy - Havana -

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