Friday, October 24, 2014

The Cuban State - Jack of All Trades, Master of None

The Cuban State: Jack of All Trades, Master of None
October 23, 2014
Fernando Ravsberg*

HAVANA TIMES — "People were embezzling money from the State
systematically. We had genuine criminal organizations that conducted
risky, large-scale operations. These involved managers who declared
losses or damages, which were in fact embezzled funds that were being
syphoned to the underground economy. It was common for managers and
salespeople at State stores to set aside the products with the highest
demand in order to get money over and above the legal market price."

Though they appear to be referring to Cuba, these comments are actually
about the Soviet Union shortly before its collapse. They come to us from
Gregory Grossman, one of the most renowned experts on the workings of
the so-called "Second Economy" in the former USSR.

To get a sense of the significance that this parallel economy can have
in a socialist country, suffice it to note that, in 1988, 219 billion
rubles were paid in salaries in the Soviet Union, while the population
spent or saved 718 billion – three times as much (1).

As in the USSR, that underground economy has not been studied in depth
in Cuba, even though its effects are notable – and unacknowledged
problems, far from being solved, usually end up blowing up in one's face.

Cuba's economic difficulties have a variety of ingredients: the island's
status as an underdeveloped nation, the chosen socialist model, the
mistakes made by the government, the US blockade and internal corruption
(whose expression is the black market).

There is very little that can be done to remedy some of these
situations, because they stem from the country's historical reality or
the will of others. However, it is well within the government's power to
mend its ways, change the model and put an end to corruption.

The search for a new economic model and the struggle against corruption
go hand in hand because the current model is what encourages
embezzlement, as does any centralized State that vainly seeks to control
every last economic mechanism in the country.

The ensuing chaos is the breeding ground for corrupt officials that
misappropriate State resources to pocket these. They are the
"wholesalers" who keep the black market, the island's Second Economy,
stocked up.

Thanks to the work of the Comptroller's Office, we know that there are
large numbers of ministers, vice-ministers, foreign entrepreneurs, Cuban
importers, store managers, administrators, company presidents and many
others among the corrupt.

We are dealing with a new social class that amasses its fortunes by
stealing from the country and corrupting all those who have dealings
with them, turning them into their accomplices. It is a parasitical
class that has become the nation's worst enemy.

And they reproduce very quickly: they are sent to prison and, three
months later, their replacements are at it again. What happened to their
predecessors only appears to teach them to be a little bit more astute
and evade State inspections.

Like the former Soviet Union, these officials who become "wholesalers"
in the black market are the result of an economic model that places all
of the country's companies and businesses in their hands, making it
impossible to control their activities rigorously.

Cuba would be well-served if the government defined which means of
production it considered fundamental (which are to be maintained as
public property, that is), in order to open other sectors to
cooperative, private and even foreign management.

The step taken through the authorization of self-employment and
cooperatives in areas such as hair dressing, transportation and, more
recently, cafeterias, points in a direction that could continue to open
up other sectors of the country's economy.

Why continue to keep under State management stores that are constantly
being pillaged by their own managers and clerks, that are always
under-stocked owing to lack of foresight by importers and devoid of
proper sanitary controls?

The State needs to stop frying rissoles in order to focus and properly
manage and control banking, tourism, the energy sector, nickel
production, oil refining, tobacco products and socially important
sectors like education and healthcare.

The Soviets tried to create a society fully controlled by the State and
produced their own undertaker this way: a caste that took hold of all
the means of production the nation had placed in its hands.

Of course, they didn't have a Jose Marti to warn them that "with every
new function, a new caste of functionaries will come," and that, later,
it would be very difficult to "confront these functionaries, tied by
common interests."

Source: The Cuban State: Jack of All Trades, Master of None - Havana -

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