Eliminating Subsidies in Cuba
HAVANA TIMES, Sept 5 (IPS) – Over the last 50 years, the Cuban economy has been characterized by a large number of free and subsidized goods and services that have augmented relatively low nominal wages.
Likewise, until the end of the 1980s it was possible for households to purchase several products at “affordable” prices on the parallel regulated market. Moreover, most sporting events, entertainment and cultural performances were offered free of charge.
Consequently, for a long time this situation was not a problem thanks to the existing level of prices of goods and services in the country. In large part, this was the result of the advantageous trade relations that the island sustained with the former socialist countries of Eastern Europe, particularly the ex-Soviet Union.
These were also times in which almost all goods and services could be purchased in Cuban pesos, the basic source of individual income was one wages, and practically the entire working-age population was employed in the state sector.
The economic crisis occurred in Cuba after the collapse of the socialist camp as the country lost its principal trade partner, and with it the revenue the island had obtained from the export of sugar to the USSR.
As a result, the volume of overall supplies in the economy fell considerably. This was due both to the contraction of national production, given Cuba’s dependence on imported raw materials and other inputs, and because of the reduction in imports, owing to the lack of hard currency.
Inflation Battered Workers Buying Power
During those difficult years of the early 1990s, workers continued receiving their wages even though the level of economic activity contracted drastically. Due to the fact that there was a decreasingly smaller supply of goods and services for the same volume of wages, inflationary pressures were induced in the Cuban economy.
In this context, the government undertook a series of reforms that included the reorganization of domestic finance directed at collecting excess money circulating in the country. It decided to put an end to the free provision of some goods and services and to begin to reduce the existing level of subsidies.
In the 1990s, the wages of Cuban workers lost considerable purchasing power, a situation that continues to constitute a problem today. This fact, together with the diversification of sources of income – legal ones (linked to self-employment, family remittances, and others) as well as illegal ones – resulted in significant segments of the population beginning to lose interest in working in the formal sector of the economy.
This past December, the then minister of Economy and Planning, Jose Luis Rodriguez, said that on the island there existed “189,000 people of working-age who neither study nor work; however, they parasitically enjoy all of the country’s social benefits. It will be necessary to face this situation using the appropriate methods to resolutely eliminate that form of exploitation of those who work or are studying by those who contribute nothing to society.”
In 2005, authorities took steps aimed at eliminating some of the existing subsidies. In this way, the prices of goods such as coffee and utilities like electricity were increased.
Generally, when these types of measures are applied across the board, they have a more severe impact on lower-income households. At the same time, discreet salary increases were made, but they did not completely compensate for the price hikes.
This partly negates the effect of the measure, because while nominal wages increased, purchasing power decreased.
Why Eliminate Subsidies If It Increases Cost Of Living
In recent years, one of the issues around which greater attention has been paid is that of workers being unable to cover their expenses based on their wages. Why then eliminate the existing levels of subsidies and make the cost of living for workers even more expensive?
This is a dilemma that must be solved because there clearly exits certain parts of the population who either rely on additional revenue that does not come from formal employment or who live without working and contribute nothing to society, though they enjoy virtually the same benefits as people who work – which is completely unfair.
Naturally all subsidies cannot be eliminated in one fell swoop, which is why it will be necessary to look for gradual solutions.
A first measure which could be pursued is the reduction in subsidies while increasing the incomes by the same amount for working people, retirees and protected sectors of the population.
However, eliminating the subsidy on products and compensating for this change through increased wages or other forms of income might seem to be the same thing, in practice it would not be.
One of the subsidies that most benefits the population – and which dates back to the beginning of the Revolution – is the one on rationed food products. Through these, for at a very moderate price, the island’s population can purchase a number of food products that cover a certain percentage of their daily recommended nutritional needs. Nevertheless, to meet their monthly food requirements, people presently have to go to other higher priced markets as well.
According to several studies, Cuban families dedicate between 60 and 70 percent of the family budget to food. To abruptly eliminate subsidies on food would exacerbate this situation. However, one could continue to gradually reduce the subsidies on certain products while simultaneously increasing the population’s purchasing power, as mentioned.
The following is a graphic example of how this could be implemented. The table below first takes some selected products as references; an estimate is then made of the magnitude of the subsidy that the State grants for each of these products, and from this the total subsidy per person is calculated.
Keeping in mind that some provisions (like baby food, milk or soymilk) are distributed to certain special-case categories of the public, these will not be considered in this analysis. Nor will we consider a number of other subsidies: these include meat products, which are not distributed in a stable or consistent manner; those subsidies on products whose distribution is in function of the composition of the family unit; or those subsidies that are provided to accommodate special medically ordered diets.
Nevertheless, for putting this proposal into practice, consideration must be taken of other products in order to move towards the elimination of the subsidy.
Shown in the table below are a selection of rationed products and their respective prices and subsidies.
Estimated prices of selected products and costs of subsidies (in Cuban pesos)
Source: Author’s research
|
Product |
Unit of measure |
Quantity |
Unit price |
Total price (with subsidy) |
Unit price (in non-rationed markets) |
Price (without subsidy) |
Subsidy |
| Rice | pound | 5 | 0.25 | 1.25 | 4.00 | 20.00 | 18.75 |
| Rice (additional) | pound | 2 | 0.90 | 1.80 | 4.00 | 8.00 | 6.20 |
| Beans | ounce | 20 | 0.02 | 0.40 | 0.50 | 10.00 | 9.60 |
| Beans (additional) | ounce | 10 | 0.02 | 0.80 | 0.50 | 5.00 | 4.20 |
| Cooking oil | pound | 0.5 | 0.40 | 0.20 | 20.00 | 10.00 | 9.80 |
| Sugar | pound | 5 | 0.15 | 0.75 | 2.00 | 10.00 | 9.25 |
| Eggs | per unit | 5 | 0.15 | 0.75 | 1.50 | 7.50 | 6.75 |
| Eggs (additional) | per unit | 5 | 0.90 | 4.50 | 1.50 | 7.50 | 3.00 |
| Total |
67.55 |
According to this table, the State subsidizes 67.55 pesos per person in these products alone. If these subsidies were eliminated each person would have to pay 67.55 more pesos for the products identified.
Taking in consideration the previously mentioned elements relating to the reduced purchasing power of wages, to implement this measure without affecting real wages it would be necessary find a way to increase incomes by 67.55 pesos for each worker, retiree or person belonging to any vulnerable sector (young students and people with disabilities, etc.).
If the level of income of these people were increased by this amount, macroeconomic imbalances would not be expected to take place because it is a mere transfer of resources from subsidies into wages.
To apply this measure it would be necessary to increase all wages and pensions by 67.55 pesos. In addition, the State would have to pay that same amount (through checks, stipends, vouchers or some medium) to the parents or legal guardians of all youth under 17 (children and young people below the working age).
In the case youth 17 or older who are not employed but who are studying in high school (college prep or vocational education), this allowance could be extended until such time they complete the summer vacation of their final academic year.
Once this stage is concluded, these young adults could choose from three alternatives: begin working, in which case they would receive the increase in their wage; enlist for military service, where their pay would be increased by 67.55 pesos; or simply abstain from either studying or working. In this latter instance, those who have made this decision would have to pay higher prices for regulated products, which would not be a concern of the State.
Social Assistance Payments Would Have to Increase Correspondingly
Another group of people who might see themselves affected by the potential harm of this measure are those with physical or mental disabilities that prevent them from working. Currently – thanks to work carried out over the last several years by social workers – practically all of these individuals are beneficiaries of the Cuban social welfare system. Their social assistance payments would therefore automatically increase, just as in the cases of wages and pensions.
Nevertheless, some mechanism would have to be created to identify people in need who are not protected by the existing welfare system. This identification could possibly be performed by those same social workers. People in need could then receive the corresponding assistance to compensate for the price increases.
A measure such as the one proposed here would require a prior study to identify each group of persons and the compensatory measures needed for application.
This proposal would achieve:
- The elimination of subsidies on certain of products whereby the State would cease providing benefits to people who do not work;
- The reinforcement of the role of wages in making one’s living, as well as the bolstering of the socialist role of the State as a force that enforces the principle of distribution in accordance with work, and a reduction in the State’s paternalistic role;
- Their could be a reduction in the demand for products based on people only buying what they will really consume, which would imply a decrease in the demand for rations and, in some cases, a consequent reduction in imports that the country currently makes to fulfill its commitment.
So that one might have an idea of the economic impact that a measure such as this would mean for revenue, a few simple calculations suffice. According to the 2008 Economic Panorama by the Cuban National Statistics Office, 3,950,300 people work in jobs connected to the State sector, while the total economically active population is 5,027,800. This means that 1,077,500 people do not work or are engaged in non-State economic activities (such as self-employment, cooperatives and others).
This segment would not receive the increase in State payment since they are not tied to the State sector. For that reason, supposing that each one of them acquires the products related to paying 67.55 pesos more, the State would collect an additional 72.7 million pesos per month, or an extra 873.4 million pesos a year, which is equal to 1.8 percent of the 2009 budget and is almost a quarter of this year’s projected deficit.
Breaking the Vicious Circle
To gradually eliminate other subsidies, an increase in the real income of workers, retirees, and others is required. It is well known that it is impossible to increase nominal wages without an effective increase in the production of goods and services.
It is here where the situation becomes a vicious circle: greater production is required to increase wages, but there exist multiple factors that work against a growth in production. Among those that can be pointed to are the technological backwardness in some industries, the lack of necessary inputs to carry out specific activities, wage levels that are insufficient to serve as an incentive for greater productivity, and others.
If the contradictions can be overcome it would allow the population’s income to gradually increase, and – at the same time – eliminate existing subsidies for those who contribute nothing while enjoying the same benefits as those who create the country’s wealth.
A Havana Times translation of the original article published in Spanish by IP
Milagros, con todo respeto a tu persona, veo que de acuerdo a la politica oficial , y a tu adhesion a ella ,todo lo resumes en El Embargo , la pura verdad de estos debates al cabo de 50 anos de socialismo es que “NO FUNCIONA” miren el ca mpo socialista , se desmorono por su propia ineficiencia , Cuba puede ser Ejemplo del mundo si se deshace de todas esas teorias , y se abre con libertad , de prensa , propiedad privada , un poder judicial imparcial , elecciones libres , que el Partido participe , todos tenemos distintas idea , y derechos a expresarlas , hagan eso y todas esas teorias se derrumban por peso de el incentivo mas grande que tenemos , CONSTRUIR Y DESARROLLARNOS INDEPENDIENTEMENTE DEL ESTADO , dejen al estado c para lo que sirve, moderar que no haya injusticias , y veran como la Cuba destruida y vapuleada por eso que ni uds saben que es , en la vuelta de 2 anos sera prospera y pujante , para todos sus hijos , no sigan cerrados al cambio , son 50 anos de lo mismo
. . . All of which brings us to an attempt at comic relief:
Q: How many Cuban bureaucrats does it take to change a light bulb?
A: Four. One to hold the light bulb; two to turn the ladder; and one to pretend that this is in line with the Marxian principles of “real” socialism.
. . . means of production to a private entrepreneurial class, yet maintains tight control of society through a state ideology and a hardened, bureaucratic state machine.
If this reasoning is correct, then China and Vietnam–like Fascist Italy and Nazi Germany–are state capitalist. The ideologies are different, to be sure, but the economic mechanism is pretty much the same: state political absolutism plus private ownership of the means of production.
In Cuba, which is not “yet” state capitalist, the socialist state owns the means of production and takes unto itself the profits generated by working employees. It then shares these profits in various ways, including subsidies for such things as basic foodstuffs and workplace cafeterias. This “sharing” is appropriate under state socialism.
Today, the bureaucratic economy is being squeezed by imperialism through galloping prices. The bureaucracy is reacting in part by eliminating subsidies.
Wrong reaction?
Dear Carlos, Regarding this article on eliminating subsidies in Cuba, I said that the Chinese and Vietnamese economic evolutions have been into “state capitalism.” On further thought, this may not be correct. The nature of “state capitalism” should be clarified, as it relates to this question of state subsidies in Cuba.
If we define state capitalism broadly as being where the state bureaucracy and the private entrepreneurial class collaborate closely in running the economy, this would mean every capitalist country in history, even Nazi Germany. This definition then is much too broad to be of any use.
Nor can we define it narrowly as where a state bureaucracy, such as in Cuba, does not legally own the means of production, but has control over them and runs them according to bureaucratic criteria.
State capitalism (China) then needs to be defined in a way to distinguish it from state socialism (Cuba). It must be where the state gives over ownership of the . . .
Dear Carlos Canas, Hi, I think I understand your Spanish-language comment, but am not sure.
You seem to be holding up China and Vietnam as examples of “workable” socialism, because they use the market and link pay to production. If this is accurate, it has positive and negative elements.
Originally, the socialist vision was based on the workers owning the produce of their labor. This theoretically would make socialism more productive than capitalism. The original idea was that under socialism the worker–both blue collar & white–would own the workplace directly through cooperative structures. (This would later be proved a superb formula by the Mondragon cooperatives.)
The bourgeois ideology of Marxism however converted socialism over to a state-owns-everything formula. The results are now clear.
China & Vietnam have given workplace ownership not to cooperative workers, but to private entrepreneurs. This is not “workable” socialism; it is state capitalism.
Hum todo esto huele a CAPITALISMO. Basicamente las premisas son las mismas, el que produce debe de recibir el fruto de su labor, y entre mas se produce mas se gana. Es lo justo, despues de todo, porque un haragan debe de vivir de parasito. esto es lo que han puesto en practica otros paises socialistas como China y Vietnam, ambos paises tienen economias de mercado, vibrantes y de crecimiento acelerado.
Dear carbon, thanks for your comments. I’m truly gratified that someone has actually watched The Mondragon Experiment and reported back to readers of HT.
You know, when I theorized that workable socialism had to be something other than the Marxist bureaucracy failures of the past half-century, I had no idea that workers anywhere had tried something new. Then, I happened upon films like this one, and Democracy in the Workplace. It started me on the road to a new–new to me–concept of socialism. Within a few years our Modern Cooperative Socialist Movement was born in the US.
The problem now is to get some people in Cuba to watch The Mondragon Experiment and Democracy in the Workplace, and to realize they are indeed a template for Cuban advancement–just as you suggest.
What is needed In Cuba is for someone with leadership ability to jettison the bogus Marxist “principles” and put forward a sensible cooperative reform initiative to the Party. Who will do it?
What is an interesting video to watch on google videos, (the mondragon experiment) is a video showing how workers in Spain can control their manufacturing plants etc. and could be a template for Cuban advancement of bottom up control and increased participation of Cuban working people.
Greg Dean, sorry to be so late responding to your comment. I just happened to look back at this “Subsidies” article on an impulse. I’ve ordered the book “Build It Now” by Lebowitz and will try to respond to you in a couple of weeks.
Even so, I do know a thing or two about the history of cooperatives and about Marxism. It will be interesting to read Build It Now. Thanks.
I think it is time that the Cuban people move on to a better type of socialism that would involve more of the people in the control of production. Pedro Campos Santos (Cuban, living in Havana) has some good ideas and should be listened to. Bottom up control not top down control. Read his paper submitted to the Cuban Government and Cuban people for consideration at:- http://www.kaosenlared.net/noticia/cuba-necesita-socialismo-participativo-democratico-propuestas-programaticas
Grady Ross Daugherty …..
According to the CIA World Fact Sheet Cuba spends more of its GDP on educating its citizens than the US does, which probably explains why there are so many uneducated Americans who believe that the US model is better, and who can’t see the irony in bleating on about nanny states whilst their own government hands out billions to the greedy capitalists who caused the current economic crisis. In other words it’s fine to privatise the profits and socialise the losses (except in Cuba of course).
“Farmers/ranchers could own their lands, feed Cuba & export.” A return to the good ol’ days when America companies owned 50% of the sugar industry and most Cubans lived in abject poverty?
Cuba’s infant mortality rate is lower than the US, so if you want your kids to have a longer life and be better educated you now know which country to raise them.
As a Canadian with a Cuban wife, many great friends and relatives (in law) in Cuba, I cannot believe that you all still espouse socialism, marxism, and the prominence of coops and state controlled enterprises for Cuba. You are truly enemies of the Cuban people! Have any of you ever travelled there? Have any of you lived there for months at a time? If so, did the air lines charge a fee for your seeing eye dogs? BECAUSE YOU MUST BE BLIND!
And you Milagros, you are a typical cuban male for certain. A mixture of arrogance and ignorance. Fidel supports the embargo you pinga! The embargo is Fidels scapegoat, he blames the failures of his socialist revolution on it, instead of the socialist economic model the entire world knows is mierde! You all pretend to work and your government pretends to pay you. Your government has turned you all into theiving children. Stop blaming the embargo and take some responsibility, grow a pair!
The first thing that those two brother must do, is eliminate the 2 currency , and have only one. How can you build the economy of any country having 2 currency ,that is absurd , there is no way. They just aplied the same economic rules of socialist countries and where are they now ,none of them exist . China only have from socialsm the name . They are aplying just economics rules where 2 +2 =4 it can’t be 3 .That is what we have in Cuba ,where the only thing that they have developed is theft.
Where’s the Metric measures? Lose these ‘Imperial’ ones!
When it comes to money issues in a socialist country like Cuba, you first have to deal with past, historical practice, whatever that’s been. And AFAIC subsidies should not be dropped on essentials — most importantly first of all because people’s lives depend on these. But also for continuity’s sake: i.e. 2 wrongs don’t make a right, whatever the mistakes of the stalinist past. ‘Luxuries’ are another matter entirely.
However, macroeconomic ‘command economy’ praxis cannot help people directly and daily at the grassroots level: for that you require local councils overseeing the distribution of still-scarce basic resources. And for these to have full access to all necessary resources, they must themselves have control over their distribution. And for that you cannot have top-down control. Control needs to work in the other direction.
However, for the macro-economic planning, councils are too local indeed.
WE can seat down with open minds we can talk and resolve many problems as long as we do notjump to the run conclusion we must think and check what people say and where they get their information with facts then we can realize that we must find a solution; rejecting the individuals that try to divide us and stay on the side line while oher fight with each other. I hope my visa to travel to Cuba will be recieve by October I can not waith to se many friends and help some of the Cubans I have bind with in many different conversations.
Well let me see how I can put some of the things I know. Cuba has always been in the eyes of the USA Government. They have fail to get her on thier paws so he comes a Revolution in 1959 that really change the dinamic of the situation and thinking that the revolution can not stand fopr ever thay have done everything they can to undermine it. Crimes has been commited against Cuba by the Old Guard of Batista’s traitors of the mother land. They have deprive Cuba on many necesity with a cruel Embargo that the only thing that have done is to hurt the people of Cuba. WHY WHY?? Because the USA can not tolerate a revoution that is capable to have many free services Socialist 90 miles away. Is not acceptable to the biggest power of the world. Could you imaging Cuba with out the Embargo??? You can see that now that things are changing amount the young Cubans in Miami and the Old. If there is ever a union of the Cuban in the Islan and the younger generation in Miami things will change. Work at…
A Milagros, estoy trabajando duro para ayudar a Cuba en el principio de solidaridad. Yo regreso a La Habana pronto, si usted quisiera reunirse conmigo estoy muy interesado en ayudar a las cooperativas agrícolas en Cuba, los que ayudará a alimentar nuestra cooperación cubano a la federación, y después exportar a Federados de participación cooperativas todo el mundo. Yo no soy capitalista y no explotador.
Grady, You really need to read Micheal Lebowitz on workers’ socialism through co-ops as was the very concerted attempt in post War II Yugoslavia. It ends up as workers capitalism for some basic structuralist reasons.
Then read the Cooperative Republican history from France and Northern England in the 19th century. I’m sorry, I lost all my citations from the old books I was able to find in our awesome libraries here in Vancouver, and that stuff can be hard to find. But you will see how we’ve already been through your suggestion, and it has failed.
I believe co-ops are an important stepping stone if you know the complete model you’re transitioning to (participatory economics – Michale Albert & Robyn Hahnel) but they are not a revolution and they most certainly don’t get you away from inefficiency and vileness of markets.
Read about participatory economics (‘parecon’) http://www.zcommunications.org.
Yes, u thought and u are correct ..We do have full employment for those who want it and are able not in prison addicted to drugs..or lazy….Short on employees..NOT..Or lets say those who cannot hold a job..!
some are in college or too young or old to work..Like retirement..Entiendes? Things are tuff right now since the US economy fell on its face..the pain is felt all the way to Matanzas.(my home) However, when things were better..it all came down to THE EMBARGOI!!
Come on down..we would love to have u
Hmmmm, I thought Cuba had nearly full employment and that was why they raised the retirement age and are allowing people to hold more than one job. I thought they were short on workers. Do I have this completely wrong?
Hmmmm, I thought Cuba had nearly full employment and that was why they raised the retirement age and are allowing people to hold more than one job. I thought they were short on workers. Do I have this completely wrong?
SECOND POST TO MILAGROS: I apologize if it seemed (or seems) that I am trying to criticize Fidel or Cuban socialism. (My first post trailed off after the word “real” and should have ended with the word “socialism.) It’s not the case. I was trying to make reference to Raul’s recent statement that he, paraphrasing “is trying to perfect “real” socialism, not destroy it.” But, Milagros and Raul, what the heck is “real” socialism? My humble answer is that “real” socialism is “workable” socialism. The Soviet model of socialism inherited and applied in Cuba has done many wondrous things in fields like foreign aid, education, healthcare, etc. But in the field of economic performance and as an example of how much better the U.S. economy might run by the Soviet/Cuban model, the results have not been as spectacular. The beautiful thing about HT is that this dialogue between sincere people can occur. Let’s try however to be civil, or else no dialogue is possible.
To Milagros, Thanks for your reply. You in Cuba have a whole different problem at hand than we in the U.S.–and other monopolist countries. Through Fidel’s leadership you have already gotten rid of capitalism. We are still stuck in the disgusting horrors of the old regime. Although our problems are quite different in form, they have an essential element in common. Both seek to progress to a “workable” form of socialism. The question is: What is this workable form? The answer our nascent movement has come up with is that socialism ought to allow the working employees of national enterprise own these enterprises directly as cooperative corporations. Employees could own an appropriate share of the common (controlling) stock, and the socialist state could own an appropriate share of the preferred (non-controlling) stock. This would give employees workplace democracy and perhaps eliminate choking bureaucracy–that “fish-bone in throat of socialism.” PLZ SEE NEXT POST . . .
Daughtery..where the heck do u come from..and what do u read..Castro has given my family acres of land as with others..Stop listening to FOX racist news and get the facts
Cuba should bring back private property and the market. This would let employees own enterprise cooperatively, with partial co-ownership by the State. Farmers/ranchers could own their lands, feed Cuba & export. Marxism is not “real”…??? This is a Socoalist nation..get your info correct and the state already owns and shares land with people..
Your premise is a bad one, AND late.,its already happeneing…ITS THE EMBARGO !
None of you so called authorities know anything about my country or its politics which have nothing to do with a so called Marxist theory..or anything that cannot be fixed by removing the Embargo..The issue here is really what white men have wanted to do for the lifetime of Cuba, and what many are already doing..trying to ..Colonize my nation and focus on the 3 b’s Bootay, beaches and beauty..Many, could give less than a dayum about what happens in Cuba as long as they can get a piece of th4 bounty.
case in point..As in the US white men have never ever paid a fair wage to the working people, never provided free health care, educ, etc to its citizens and children So cease the fake concern for the welfare of Cubans.
People are biting at the bit to get into our green economy, coal, oil etc..so lets get real Exploiters who believe they can talk Fidel etc into submission..Put your thinking caps on..amd come correct..cease the BS
..ITS THE EMBARGO STUPID.
Gary that is based in the dichotomous red herring of markets vs. central planning – participatory economics is another way. Efficiency comes from consolidated operation of the productive means, the problem is the coordinator class or central planning, which is just as prone to corruption as capitalism. Socialised control of the means which affect wide swaths of people, not private control which corrupts the leveraging of the means towards inefficient market aims, and cycles of hyper-competition than consolidation.
Participatory councils of workers and consumer stake holders can more efficiently plan their sectors than central planners. Say-proportionate-to-stake (SPS) gives us the principled mechanism to apportion constitutional power, within a completely socialized structure. Cuba could have a check on SPS for national defense.
Let’s remember that Yugoslavia’ workers’ coop economy essentially became just as corrupt as U.S. capitalism – worker capitalism instead of corporate.
post #2 to make widespread discourse possible, thereby coming up with better and better solutions, and more streamlined throughput between the departments of aspects of assembly.
Remuneration based on Effort and Sacrifice (RES) makes it in peoples’ interests to work harder and more, because now you pay them according to how hard they work relative to their ability. This brings everyone’s effort up.
Let’s say it’s coal shoveling: A 6’5″ man is going to be able to dig and move more coal with a flick of his wrist more easily than a man who is 5’6″. If you pay them the same or based on amount they dig, then you demoralize the work force. Because even if the 5’6″ man works his best he will still make less than the 6’5″ man who hardly has to excert himself. But if you pay them relative to their ability (RES) than it puts it in both of their interests to do their best.
Those who do the most unrewarding work also get paid more, (Sacrifice) because it is the work no one…
This approach is a piece-meal solution. I believe that food should be the primary socialized good. Cuba should be moving to a participatory model of socialism: with remuneration based on effort and sacrifice (RES), say proportionate to stake decision making tempered by balanced rotation of roles so that there is no coordinator class and thus greater efficiency and involvement.
Often times getting rid of socialized goods and services is thought of as a spur to get people working harder, it makes them more desperate. NO! the best way to make them work harder is to give them agency and a meaningful say in how their work and sector operates. Give workers the governance power over their work place, make sure all workers do a balance of conceptual and menial work and then you will see efficiency. Because now the coordinator class can’t just delegate all the shitty work to others; everyone has to do a little bit of the un-rewarding work and most everyone knows enough conceptual…
Thanks. Our Modern Cooperative Socialist Movement in the U.S. would like to say a few words. The reason you have subsidies is b/c of the Marxist “recipe” for socialist economy put fwd in 1848 in the Com. Manifesto. This calls for abolition of private property in the means of production and of the trading market. The fact that socialists have bought into this “recipe” does not change the fact that it is unworkable. You need to look at eliminating subsidies from the well-spring of the problem: the abolition of private property and the market. When you buy the idea that the State should own everything and employ everyone–and set prices as bureau decisions–you have bought dysfunction. This formula will give rise to economic and social problems. Cuba should bring back private property and the market. This would let employees own enterprise cooperatively, with partial co-ownership by the State. Farmers/ranchers could own their lands, feed Cuba & export. Marxism is not “real”…