Friday, September 19, 2014

The “Virtuous Circle” of Cuba’s Reforms

The "Virtuous Circle" of Cuba's Reforms
September 18, 2014
Fernando Ravsberg*

HAVANA TIMES — The slow implementation of economic reforms in Cuba is justified with the argument that the government does not want to make any mistakes. Every step taken is allegedly preceded by a pilot test used to evaluate the consequences of the change.

This is doubtless a new way of doing things in the country, in which concrete results matter more than inspiration. Many Cubans, however, have grown impatient, because the waiting period is sometimes longer than what they deem necessary.

The food service business is a case in point. It is clear to all Cubans that State cafeterias and restaurants are, generally speaking, disastrous and that the private sector is the one offering the best services today.

But the process of putting this sector in the hands of cooperatives and the self-employed is advancing at a snail's pace, despite the fact that anyone who walks by a State cafeteria can see the poor quality of the menu themselves, in the event the establishment sells something other than cigarettes and rum.

In my neighborhood, there's a cafeteria that people have been referring to as the "flies palace" for years, owing to the number of these insects that inhabit it. Curiously, the inspectors who monitor the self-employed so rigorously have never set foot there.

I have a friend who set up a very successful cafeteria in the Havana town of Guanabacoa who has been waiting for years to rent one of the most dilapidated facilities in the area from the State, in order to transform it into a prosperous business.

It's clear that much of the prosperity of these private businesses is owed to the fact supplies are bought at low prices in the black market, which gets its stocks from State warehouses, the products that State cafeterias should be serving.

It's like a dog chasing after its own tail. This happens, in part, because the government still refuses to create wholesale markets with preferential prices for the self-employed and cooperatives, the kind that exist everywhere in the world.

According to some Cuban economists, these markets, in addition to giving the self-employed advantages, would make the State more efficient in terms of tax collection, as having control over supplies would allow it to calculate what a business's actual profits are.

What's certain is that the slowness and indecision that characterizes the application of these policies prevents the self-employed from growing in numbers and limits the State in terms of laying off superfluous personnel at its institutions and ministries.

If the country's economic plan for the future is to have half or more of the population in non- State jobs (as self-employed, cooperatives or farmers), the government should act in a more determined, coherent and global manner.

The logical course of action upon detecting some form of stagnation should be for authorities to offer greater facilities that will attract new workers to the non-State sector: wholesale markets, tax breaks, bank credits, a greater range of supplies and access to machinery and tools.

A change in mentality is also needed. Cuba must put behind it the economic Stalinism inherited from the Soviet Union, which condemned all private initiative, and move forward towards a range of forms of property than even Marx and Lenin thought compatible with socialism.

Even today, whenever the press or some leaders speak of corruption, they mention only the private sector, all the while concealing the constant destitution of corrupt managers at "socialist State companies."

The fact of the matter is that the growth of the self-employed sector and cooperatives would increase the incomes of many Cubans, reduce State payrolls and fill the nation's coffers with tax payments.

This "virtuous circle" could afford the government the financial surplus needed to raise salaries in such indispensable sectors as education, where salaries are still well below the income required to meet basic needs.

Source: The "Virtuous Circle" of Cuba's Reforms - Havana -

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