Is This a Good Time for Cubans to Invest?

Erasmo Calzadilla

The Cuban economy is like an airplane that is currently warming up its engine, taking its place on the runway. You’re not going to see that it still hasn’t taken off yet; no, of course not, it’s still warming its engine. However, when our model is Updated and takes off, I think it will just like airplanes do, with a lot of force, upwards. – Francisco Borras, Economy professor at Havana University

HAVANA TIMES — Juan Triana is an intelligent analyst, bold and well educated in his field: the Cuban economy. Moreover, he is a very charismatic communicator; you enjoy reading his work. Thanks to all of these qualities, his articles have great impact and influence, and not only among economists.

Brother, put the money you have saved up to work. Illustration by Carlos
Brother, put the money you have saved up to work.  Illustration by Carlos

However, we couldn’t understand his punch without taking a look at the product he’s selling: the most highly sought-after merchandise on the market which, when only mentioned, is like music to the ears of the most demanding: Development.

Triana has been explaining to us what we should and shouldn’t do in order to achieve it for years now. In his speeches and articles, he criticizes centralism, bureaucracy, the two currencies we have and low rates of investment. He has emphasized the need we have to be able to access the Internet, applauded the boom in private property and called for industrializing agriculture. All of this within the socialist framework of course, or at least what he understands that to be.

However, there is a blind spot in this analyst’s field of view: external factors. He and many others who think about development in Cuba leave out those factors that make development so slow in the entire world: a decline in strategic non-renewable energy sources, environmental degradation and climate change, just to name a few.

Such a slip up will lead the country to commit other mistakes. We’ll discuss one of these mistakes in this post.

In his latest article, the economist puts forward an idea for us “to get out of the situation we currently find ourselves in.” He more or less explains it like this: A lot of money has been deposited in Cuban banks by individuals (25% of Cuba’s GDP). Why don’t we promote the investment of this capital as a way to stimulate the economy?

“All of this money… is a resource which, used well, could also help to stimulate national production and create more supply, both of goods and services. […] the problem lies in converting a part of these savings into an investment or economic incentives (which are the same thing) so that people or businesses can go to the Bank and ask for credit to produce something or to offer a service.

“… in the sense that investment means purchase of goods and creating new jobs, thereby producing an increase in demand while stimulating a virtuous dynamic in the economy.

“Converting savings into investment – this is what Keynes’s theory tells us – is the best way for us to overcome this crisis and put our economy back on the track of economic growth.”

During the first and part of the second half of the last century – the golden age for Keynesianism – we could still put our foot down on the accelarator to leave this economic crisis behind us, encouraging our social metabolism. And it would have been possible because our environment had been almost untouched and we had abundant supplies of raw materials which were in fact considered infinite at the time. However, we’ve destroyed our surroundings and devoured our reserves at an alarming rate which took millions of years to make. Within this bleak landscape, let’s go back to the people’s economist’s concrete proposal.

Investing to get out of the crisis?

A massive investment of capital would immediately translate into a massive increase in demand, which couldn’t be met and wouldn’t stimulate production because of (among other things) the “external factors” I mentioned beforehand aren’t cooperating. Meanwhile, with demand unmet, prices will increase; but we don’t have to go to the future to see this, it is already happening within some sectors of the market. This, of course, affects the ordinary Cuban’s pocket, even if they do support the bid to development thanks to the persuasive work carried out by people like Triana.

Let’s look at another aspect of this issue. From the independent laborer’s viewpoint, the idea of investing at a time of economic crisis doesn’t look too good either, at least the way this economist is painting it.

At the gates of a long recession, it’s healthy to get money moving around (which will quickly lose its value anyway), however, in a more specific sense.

One of the priorities we should have is to secure and repair what we already have (just like we do when a hurricane is on its way). Another thing we should do is try to foresee the profound changes that the market will suffer and adapt ourselves to them: a shift towards local markets and to satisfying basic needs, for example.

Will those who invest believing Triana’s vision of a prosperous Cuba in the future: greater growth, greater globalization, more energy and more technology, be able to get back what they invested?

If the global economy continues to remain at a halt and Venezuela continues to fall into disgrace, it’s most likely that they won’t. I have a friend who is committed to setting up a well-equipped recording studio and he needs and another friend who is in debt up to his neck with a beauty salon. I pray for them.

Well, my dear readers, this is what I wanted to share with you. But, please understand this: I’m not an expert on the subject, I don’t have full access to the internet, I don’t deal with sensitive data, I don’t work for the Association for the Study of the Cuban Economy and OnCuba doesn’t pay for me to write down my speculations. This is why I say: don’t believe, but read. Look for information yourself and don’t let the sirens mislead you again; they don’t even apologize afterwards.

8 thoughts on “Is This a Good Time for Cubans to Invest?

  • I agree as indicated by Ronin, that Cubans after over fifty seven years of imposed communism have lost faith.
    The main characteristic is however that of hope. Hope that they may eventually be released from the oppressive dictatorial Castro family communist ‘faith’ and experience freedom.
    Ronin questions “does ANYONE have hope anymore” and I can assure him that it lies in the hearts and minds of millions of the Cuban people.

  • blah blah blah, blah blah………..
    Jeeeeeezzzzzzzas, does ANYONE have hope anymore????!!!!!!!!!!!!!!!!!
    It is not ALL dark in the world, have faith for God’s sake.

  • Are you celebrating the idea that more people coming from the free world might introduce change in Cuba Gordon or is it the different livery of the different airlines that you like/

  • US planes to Cuba shortly – Si !!!

  • Firstly Steve you are correct in saying that there is a risk in writing in a site like this which undoubtedly is monitored by MININT. Circles Robinson’s contribution is none the less meritorious.
    We have to recognize that the Cuban regime is an oppressive one and that there are those who contribute to this site who are supporters of the regime.
    It is just possible that those adherents to communism have ignorance of the reality, but they are none the less a danger.

  • You miss understood I never did accept any hotels rooms they were offered, but not accepted. The Cuban government was trying to get us to invest in, but we turned it down flat I missed couple words above as I try to be careful. If you google me you will I took Monsanto to court over their gene containing my crop to export to japan. You will 10 years ago that I an other camped out at Queens park for at least 30 days. For that I was awarded the ofa huron farmer of the year. Thankyou for that heads up this email is not used by anybody in Cuba. I am under no illusions about the Castro dictatorship . After listing this email I have got some (interesting ) emails There are many people besides me that are doing much more on the ground that would not risk going on a site like this.

  • In accepting hospitality from the Government of Cuba (Cover name for the Castro dictatorship) which pays a pension of $8 per month to the old, you are playing with fire. Revealing that you have done so, will understandably make others very wary of communicating directly with you.
    You may have noted that Gordon Robinson (who also posts as Cubaking) and is heavily involved with Machado Ventura tutoring his children in pursuit of their political ambitions in Cuba, also publishes his e-mail address. The e-mail addresses of any who respond can in consequence be recorded. Beware!

  • Be very careful in Cuba today when we were last there the Cuba government was wine and dine us to invest in hotel rooms that we could stay when visiting. They offered us joint ventures. I noticed that U.S. was not that well liked but they wanted U.S. money. I am the type of person who spend the night sleeping outside the local bus station( not the one for tourists), while waiting talking to the locals waiting to go into the hills. I see central control and the lack of a plan to pay the investors as a reason to be very careful. I would be happy to on a one on one basis tell how we are getting along and still moving on some very small private projects. You can email me. [email protected] I get the feeling that Cuba will not get better very fast until the government changes the rules to allow private enterprise to operate and allow foreign companies to import and export freely and with security that items will not (go missing or) have duties of more than the value of the item.

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