Chaos Is Lucrative in Cuba

Fernando Ravsberg

The general population pays the bill.

When I finished last week’s article, I was left thinking about my last sentence and later became filled with doubt. How is it that a people so intelligent, creative and educated can produce such an inefficient and empty-headed bureaucracy?  Undoubtedly there was something that didn’t add up.

People told me but I found it difficult to believe that the ministry of Basic Industry had lost millions of dollars due to a simple oversight in the signing of mining contracts.  It surprised me that with so many well-trained specialists such monumental “deficiencies” could have come to play.

It seems that this “misstep” cost Minister Yadira Garcia her job, and that possibly several vice ministers will have to turn in their houses, automobiles and cell phones to the State and return to their home provinces.  Notwithstanding, this will not return the lost money to Cuba.

Trying to understand what’s happening, I went out and intermixed with common people, who in Cuba are always the lighthouses that best shed light on such situations. I spoke with professionals, workers, cuentapropistas (self-employed workers), homemakers, cab drivers, retirees and many younger people.

On my journey I discovered something very important, something vital for understanding what’s going on: the bureaucrats are by no means inept, indeed they’re quite intelligent, so much so that they were able to create tremendous chaos and navigate the situation without running aground.

Bureaucratic hands in the cookie jar

At the handicrafts market, people relayed to me the fact that tax officials are opposed to authorizing artisans to hire employees. Idealistically, I thought perhaps these authorities felt a visceral rejection against “man’s exploitation of man.”

The true reason was more mundane however.  Each time an inspector discovers a paid assistant in a booth, they charge the artisan $5 USD to keep quiet. If hiring personal becomes legal [as announced] these officials will be left without any hard currency revenue.

Likewise, I believed that all Cubans were demanding the end of the dual currency system.  However, in a large food factory I confirmed that this is not always the case. The workers there assured me that their managers are pleased with the system of monetary duality.

They say that thanks to that system, the executive director was able to open personal bank accounts abroad. It seems that paying for raw materials, wages, expenses and services in two currencies  with two exchange rates and double accounting— results in greater profits for these managers.

A similar situation was also said to present an excellent business opportunity for some tourism executives.  A waiter told me that a crisis broke out when the government put an end to providing vacation lodging in domestic currency to “honeymooners” and “outstanding workers.”

At first I didn’t understand how that could affect these manager’s finances, but it was explained to me that the money received in domestic currency is later accounted for as if it were hard currency. In this way the State winds up paying in hard currency for the vacations of those workers, while the managers receive the difference.

The price of similar tourist packages was so high that it would have cost the same amount to send those workers to Cancun on vacation, including the costs of flight and lodging – and at least they would have gotten to see another country.

Elite aspirations

People also explain that the crisis has not reached the executive and managerial level.  Their air conditioning continues working and there’s no shortage of gas for their cars. What’s more, many of the restaurants they oversee continue serving the same amount of food when there’s only half the guests (it’s kind of like the miracle of feeding the multitude with a little bread and fish – but the other way around).

Many will recall the incident in which some administrator here approved the purchase of a snow sweeper (literally), but I’ve confirmed that not all of them are so inane.  Generally the bureaucrats are quite adept at precisely calculating the benefits that each business will generate…for their own pockets.

This occurs in all areas of the economy.  A friend told me that some managers who purchase shoes, for example, always look for the company that will pay them the best commission, without regard for the price or quality of the product.

I myself was surprised to find out that each bribe brings them tens of thousands of dollars since purchases are always in the millions of dollars, this being a highly centralized economy.  All of this made me understand why decentralization has such ferocious enemies.

In the end, I was left thinking about how little ordinary Cuban workers are paid, the ones who have to buy poor quality shoes.  They pay an entire month’s wage for footwear while fully aware that these will fall apart in less than three months.

In that chaos the bureaucratic strata reigns supreme, like lords over what belongs to others.  They are the ones who pull all the strings and work all the levers as the owners of the future.  They are masters at maintaining the status quo.  However, I found one of them who did in fact yearn for change… he dreams that the company he now manages will one day be his own private property.

Havana Times translation of the Spanish original authorized by BBC Mundo.

4 thoughts on “Chaos Is Lucrative in Cuba

  • Sam
    I agree with “Think about it; Greed, should, in theory, undermine Capitalism just as much as Communism ”
    I have written also here about the problem of accountability and transparency in Cuba and in general of any of the prior “socialist” societies.
    Because they lack freedom of the press, and the lack of freedom. People are restricted from making this bureaucrat responsible and accountable for the deeds. The system seems to be designed so that the people have no say into what happens in society but only to be guided by the “wise guys” of the Communist party.
    The end result is never surprising. This that Fernando describes is exactly what you get back in Cuba and every other form of socialism known to man.
    Now let us be clear. Greed is not necessarily a bad thing into itself.
    We can distinguish different types. One that is useful to society. When it produces more jobs and economic activity that improve society thru innovation and productivity and the other kind that produces corruption and no economic activity.
    So is clear you want to stimulate one type and punish the other.
    The mechanisms to do this already exist in capitalism.

    The mechanism is Free press in conjunction with some laws restricting monopoly and financial transparency and accountability of everyone and specially of those that hold governmental position.
    Still my basic assumption about socialist consciousness is true.
    These people whom are supposed to be the best and the communist vanguard of the party seem to be working for their own self interest. Something that in capitalism is not wrong since this enterprises could potentially be their own property.

  • Julio-that is awfully simplistic. There’s the bigger problem of a lack of accountability. Yes, people will be greedy, but normally there are mechanisms to punish greed.

    Think about it; Greed, should, in theory, undermine Capitalism just as much as Communism insofar as a company loses out when its employees steal from it. So a company develops mechanisms to root out and punish overly greedy employees. Likewise, it uses police to protect itself from greedy physical theft and lawsuits to protect itself from greedy “intellectual theft”. Thus there are proper accountability mechanisms.

    As far back as Stalin we see the development of unaccountable bureaucracies in the Socialist system. Now, clearly the workers and other people don’t want these bureaucrats being corrupt, but there’s no way of punishing them for their greed. Therefore, the greedy bureaucrats stay in, and even tend to corrupt the many good but weak willed bureaucrats (who say, “If I’m not corrupt, my family goes hungry while this guy benefits, since there is no punishment against it, what then do I get in a godless world out of unrewarded good?”)

    Which brings me to my big point; any Socialist system needs to introduce democratically enforced means of accountability to perpetuate itself and make itself efficient.

  • Any idea where socialist consciousness has gone?

    This managers are the cream of the cream of the communist party and all mostly looking out for their own self interest!


    Just like I have been explaining.
    That is why socialism will never work.

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    Past is History – Future is Mystery

    September – October, 2010

    Freedom Tower

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