Cuba is Heading Down a Black Hole of Power

Interview with Cuban economist Emilio Morales Part II

News stand with almost nothing to sell. Photo: Juan Suarez

By Vicente Morin Aguado

HAVANA TIMES – After a good while analyzing the model of socialist state-led business and the inefficiency that characterizes the country’s economy, our conversation with economist Emilio Morales turns towards Cuba’s dependency on other countries.

HT: I recall this phrase of yours: “They created an economic system, which is totally incompatible with the international economy.” What do you think about the attitude the new government has adopted to tackle the chronic evils that came to light a year ago? 

EM:  Both the president and the minister of Economy haven’t risen to the occasion, and they won’t. It’s clear that it will be impossible for the Communist Party (PCC) to fill the abyss left behind by the dictator Fidel Castro, and his appointed successor, Raul Castro. In regard to Cuba’s minister of Economy, he is more of a political commissioner than an economist focused on getting the country out of this crisis.  With so many fine economists in the country (whom the government doesn’t seem to listen to), they chose to hand over the reins of the economy to somebody who clearly ignores and has no idea about the law of markets.

HT: Arguments?

EM: Price limits ordered by the government, not only in the dollarized market that the State controls, but also the private sector, is a measure that not only drags down the progress of Cuba’s economy, and its emerging and fenced in private sector, but also creates a landscape of incompatibility with foreign investors. Such a measure constitutes another obstacle on the list of many others that already exist, for those who are losing interest in investing in the island. 

Soft ice cream for sale. Photo: Juan Suarez

HT: We’ve reached a critical point in a country which has always depended on foreign relationships: remittances, investments. What shouldn’t be done? What should be done?

EM: Remittances hold significant importance in the national economy, they are the main source of income for many Cubans. This reality not only proves that abyss that separates prosperity which those sending them live in and the poverty of those who receive them; it goes much further than this simple meaning: on the one hand, it shows the opportunity to generate wealth as a result of the work Cubans find when they emigrate, with the contrasting reality on the island where the government stops its citizens from generating wealth and developing.

The Cuban market desperately needs investment; however, it makes no sense whatsoever that Cuban citizens can’t invest in their own country in the 21st century, nor be owners of companies with a legal status. This economic apartheid is the first wall that needs breaking down. When this happens, remittances will then become a principal source of capital for investments, and it won’t only be liquid capital, there is huge capital in Cuban human resources, who are highly trained, established in the diaspora, ready to help and rebuild the country.

HT: Speaking about money, there’s a question we have to ask when it comes to Cuba: could an attempt be made now to do away with the country’s dual-currency system?

EM: Attempting this right now would be another blunder, the same or even more outlandish than pay rises in the public sector without production levels to back them up and price limits on the commercial activity they have just implemented.

HT: Are we trapped in a vicious cycle?

EM: Ending the dual-currency system isn’t just about unifying these two currencies, it needs political determination and a radical shift in mentality, so they are able to bring about more profound changes in the economy. Up until now, the government hasn’t given any indication that it is walking down this road, the opposite in fact.

Photo: Juan Suarez

HT: We seem to need an Alexander with his sword to cut this Gordian knot, but unthinkable decisions would then need to be made for those who run this country.

EM: Fundamental measures include the implementation of a law which allows free enterprise, getting rid of state-led companies which aren’t bringing in any revenue. This would allow them to expand the private sector and offer opportunities to surplus workers after streamlining state-run companies.  Another measure would be to legalize the black market so this market can become a large network of small and medium-sized enterprises, which could bring in more than 3 billion USD, as well as paying tax.

HT: The Marxism of slogans and manuals implanted in Cuba the idea that economics decides politics and, except for dogma, this isn’t far from the truth. What are your thoughts about the president which the National Assembly just ratified without any real option?

EM: Diaz-Canel seems to be a simple, modest, disciplined man, but this isn’t enough to be a leader of a country. We are facing the debacle of the national economy, prisoner of centralization, paralysis, corruption, the incompetency of state-led companies, a lack of liquidity, dual-currency, a fenced-in independent sector, the decline of exports and tourism, a growing foreign debt, the drop in foreign capital investment and many other evils that would make this list never-ending; it’s impossible to achieve something if you wager on “continuity”. It’s easy to understand that Diaz-Canel’s continuity formula has become the shortest road to this black hole of power.

Vicente Morin Aguado: [email protected]

 



4 thoughts on “Cuba is Heading Down a Black Hole of Power

  • Cuban economist Emilio Morales basically said communism doesn’t work.

    Shocker who would have guessed.

    Reply
  • ‘ Rompe cabesas ‘ no doubt.

    Reply
  • Historically, Cuba has been “saved” by foreign powers. First the Soviets and then later the Venezuelans. Today, neither the Russians nor the Chinese appear to be interested in filling the void left by the Venezuelans. Cuba may actually have to save themselves and in doing so accept the reality that Castro-style socialism has failed.

    Reply
  • They are in s difficult position to do this now as nobody trusts the government of Cuba today outside of Cuba. If Cuba wanted to make a deal to open up and 3 gas drilling rigs from Alberta and 2 oil drilling rigs with Russian and Canadians to run them for a period of 5 years turn some their oil generators over to nature gas as developed. Set up a free trade zones for manufacturing and food processing. A flat 10 percent sales tax basic items ( fridges solar panels construction materials, bikes and hand tools). No tax on farm diesel fuel crop inputs with a 30 percent of the export price returned to the government like detain counter do. ) Bring a minimum wage in the free trade zone of 50 cents per hot for 15 years olds and going up 10 cents each year older until a dollar per hour at 20 years of age to the employee plus a flat 20 cents per hour going to a local free trade zone to provide money for health care and roads and other local improvements. Shake out the corrupt police and military. Then Cuba would have a chance if not it could become as bad as the worst parts of the World.

    Reply

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