Thursday, December 24, 2015

Fooling everyone, all the time?

Fooling everyone, all the time?
ROBERTO ÁLVAREZ QUIÑONES | La Habana | 23 Dic 2015 - 4:49 pm.

General Raúl Castro's government is lying when it claims that in 2015
the Cuban economy grew 4%, which would be eight times more than the 0.3%
to 0.5% that the ECLAC estimates for average growth in the Latin
American nations this year.

But this should not come as any surprise. This has happened every year
since 1960, when Che Guevara, then president of the National Bank of
Cuba, was outraged to learn that in 1959 the GDP had grown by only 1%,
so he ordered the inflation of these statistics to transmit a "good
image" of the Revolution.

Economy Minister Colonel Marino Murillo did not tell the truth when he
announced a 4% increase in the GDP. And the newspaper Granma also
deceived the population by publishing the same figure. But that was only
logical. The Economy Minister could not admit - without being instantly
removed from office - that Cuba employs an unheard-of method to
calculate its GDP, one that is fraudulent to the core.

Neither could he recognize that Cuba's gross fixed capital formation is
only 9% of GDP (in Latin America it ranges from 20% to 32% of GDP) and
that an undercapitalized economy cannot grow. It is impossible. Nor
could he indicate that on the Island there are no independent entities
that can verify the official figures, so fraud is inevitable.

And now, with the process for the normalization of relations with
Washington, the regime has even more reasons to lie. It is simple: a
"robust" socialist economy, growing by 4% or more, is a great excuse to
refuse Cubans total economic freedom and to suppress the emergence of a
large and vibrant private sector, both in industry and in services. What
for? According to the Government the centralized, state-owned system is
working great, with a growth rate that would be the envy of Latin
America, the United States, Canada, the European Union, Australia or Japan.

It is unconscionable that the Government talks about economic growth
when half of its arable land lays idle, overrun with sicklebush, making
it necessary to import 80% of the food consumed in the country,
including fresh fruits and vegetables for its hotels, and when it
produces less milk, meat and coffee than it did in 1958. To give one an
idea, in 1958 Cuba produced 960 million liters of milk, and in 2014 the
figure was 497 million; that is, about half of the figure from nearly 60
years ago.

It is equally shameful that the country has to import the vast majority
of its non-food consumer products because its feeble domestic industry
is unable to do so, when 57 years ago it produced most of it. And that
real unemployment in the country is easily over 20% of the total
workforce, and another, much higher percentage has to rob the State to
feed the black market - the only thing that works, and thanks to which
Cubans are able to eat and clothe themselves.

Neither will any leader forming part of the Communist nomenklatura admit
that if there really was a spike in GDP in 2015 off 2014 (though not 4%)
a key factor was the substantial increase in tourism, particularly from
the US, family remittances, and many other advantages obtained by the
regime as a result of the "thaw" between Havana and Washington. And also
due to the abusive increase of the prices charged by the State at
"shopping" establishments, which sometimes exceed 700% of the import
cost, which is unique worldwide.

Expenses as if they were revenue

How is the fraudulent GDP calculated? The dictatorship's bureaucrats
record, in an unwarranted maneuver, certain social costs as if they were
value-adding assets. That is, they count unpaid expenditures as if they
had been collected and represented revenue. In the field of Public
Health, for example, the regime arbitrarily calculates how much
surgeries performed in hospitals in Cuba for one year, and blood tests,
X-rays, etc. would cost in capitalist countries.

In Education, the same thing is done with reference to the costs of
university studies and other types of training in countries with market
economies. All these calculations are placed on the books as revenue and
new assets ​​created by the Cuban economy, as if they had been
collected. And then they are added to the GDP calculation.

Moreover, the Government also records the subsidies corresponding to the
salaries of the thousands of Cuban doctors in Venezuela, as if these
were exported services, which is not exactly true. Revenues obtained by
nationals abroad cannot be rolled into the GDP. What happens is that the
regime retains those doctors' wages as if these professionals were
state-owned slaves.

The funds generated by the doctors' work in Venezuela, Brazil and 64
additional countries do not belong to the State, but rather to them and
other professionals working in foreign territories. Therefore, it should
not be added to the GDP, which only includes the (collected) goods and
services generated on national soil.

This accounting fiction, all together, amounts to billions of dollars,
registered as revenue and add newly created assets. That is, Castroism
counts fictitious assets ​​from services offered for free as if they had
generated revenue from private institutions. Or collected abroad by
professionals whose earnings are retained. All this based on another
egregious fraud, by placing the CUC's value equal to the US dollar, when
in fact it is worth far less.

Accepted manipulation

But this dirty game of statistical manipulation, played to a point of
madness, ultimately doesn´t matter unless it is discovered and proven.
And it does not look like that is going to happen, at least in the short
term. After all, the UN, ECLAC, FAO, OAS, European Union and all the
governments and bodies around the world accept Cuba's consistent
statistical fraud without even batting an eyelash.

The international community's complacency, which ultimately may go down
in history as complicity, whether unintended or not, explains why,
despite the ostensible disaster that is the Cuban economy, the
dictatorship never has never admitted a contraction in its GDP - except
when there was an end of subsidies from Moscow in 1991.

That is why the Castro brothers are the only politicians who have thus
far defied Abraham Lincoln's famous phrase: "You can fool all the people
some of the time. And you can fool some of the people all the time. But
you cannot fool all of the people all the time."

Of course, we all know that Lincoln's axiom will ultimately be proved
correct. Hopefully sooner than later.

Source: Fooling everyone, all the time? | Diario de Cuba -

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