The Causes & Consequences of Cuba’s Black Market

Fernando Ravsberg*

Black market re-sellers are found at nearly every street corner in Cuba and they operate almost in public.

HAVANA TIMES — The Cuban press is out to get re-sellers, as though their existence were news to anyone, as though they just now realized there is a black market that’s on every street corner in the country, selling just about everything one can sell.

In a news report aired on TV, they went as far as insinuating that some employees at State stores are accomplices of those who hoard and re-sell products. They are now “discovering” that the black market stocks up, in great measure, thanks to the complicity of store clerks.

The reporting remains on the surface, addressing the effects but not daring to go to the root of a problem that has burdened the country for decades as a result of the chronic shortage of products – from screws to floor mops.

During the early years of the revolution, these shortages could be chalked up to the US embargo. Today, however, Cuba maintains trade relations with the entire world and can purchase the products people need in other markets.

Product shortages are the main reason behind the existence of the black market.

It doesn’t even seem to be a financial problem, because the products become available and disappear intermittently. Shaving foam can disappear for a couple of months and reappear at all stores overnight.

These ups and downs are what allow a group of clever folks to hoard up on and later re-sell these products at higher prices. A lack of foresight and planning when importing is what creates these temporary shortages that make the work of hoarders easier.

There is no doubt Cuba has a planned economy. The question is whether it is actually well planned. The truth is that, for decades, the country’s domestic trade system has functioned in a chaotic manner and no one has been able to organize it minimally.

A foreign journalist I know recently noted that, when toilet paper disappeared from all State shops, a supermarket in Havana had a full stock of pickled partridge that no one buys.

Who would decide to buy such a luxury canned product at a time when most store shelves are practically empty? The story brings to mind that anecdote involving a government official who imported a snow-sweeper to Cuba.

The Market and Consumption

People offering the products they hoarded up on days before are found outside nearly every store in the country.

Cuba’s domestic trade system doesn’t require “reforms”, it demands radical change, a new model. Such a change should begin with Cuba’s importers, bureaucratic companies that are ignorant of the interests and needs of consumers and buy products without rhyme or reason.

Many of their employees receive [under the table] commissions from suppliers and therefore prioritize, not the country’s interests, but their own pockets. They are the same people who received money from the corrupt foreign businessmen recently tried and convicted in Cuba.

To plan the country’s economy, the government should start by conducting market studies and getting to know the needs of consumers, in order to decide what to purchase on that basis. It Is a question of buying the products people need and in quantities proportional to the demand.

Planning means being able to organize import cycles such that there is regular supply of products, without any dark holes, like the ones that currently abound in all sectors of Cuba’s domestic trade, from dairy products to wood products.

Sometimes, this chaotic state of affairs has high costs for the country’s economy, such as when buses are put out of circulation because spare pieces were not bought on time, there isn’t enough wood to build the crates needed to store farm products or a sugar refinery is shut down because of lack of foresight.

Even the sale of school uniforms at State subsidized prices experiences these problems owing to a lack of different sizes. This is a problem seamstresses are always willing to fix, charging the parents a little extra money.

Cuba’s entire domestic trade system has been penetrated by the black market.

Cuba’s entire distribution system is rotten. Importers are paid commissions, shopkeepers sell products under the counter, butchers steal and resell poultry, ration-store keepers mix pebbles in with beans, agricultural and livestock markets tamper with weighing scales and bakers take home the flour and oil.

In the midst of this chaos we find the Cuban consumer, who does not even have an office he or she can turn to and demand their rights (when they are sold rotten minced meat, and old pair of shoes or a refrigerator that leaks water, for instance).

Speculation is no doubt a reprehensible activity, but it is not the cause of the black market. The country may launch a new campaign against hoarders, but it will be as unsuccessful as all previous one if an efficient commercial system isn’t created.
(*) Visit Fernando Ravsberg’s blog.

2 thoughts on “The Causes & Consequences of Cuba’s Black Market

  • Fernando Ravsberg makes one initial error. There is NO Cuban press, there is only the information published by the Castro family regime. It is the regime that is deliberately stirring the pot of corruption and dishonesty.
    The question thus posed is: Why is the regime stirring this particular pot – what is their purpose?
    Could it be that the purpose is to direct the attention of the public away from the actual reasons why the economy as reflected in the government shops and inflation and to find “fall guys” to bear responsibility for the economic mess which the Castro family regime has brought upon Cuba?
    It is reasonable to anticipate prosecution of ‘star’ examples of wicked Cubans who have pilfered from their state employers in endeavoring to survive, with ‘open’ courts and full reports in the so called ‘press’. All who live in Cuba are aware that in order to extend their pitiful state controlled earnings it is necessary to pilfer. The people repairing sidewalks reduce the amount of cement included in the concrete in order to sell a couple of bags of cement privately. The cooks working in state restaurants pilfer some cooking oil. What happens to the goods confiscated by the Aduana at the airports?
    There is always a purpose when the Castro family regime publishes information!

  • The first time I went with my wife to Carlos III shopping center to buy shampoo, she opened up the shampoo she wanted to buy and looked inside the plastic bottle. The brand was L’Oreal which in Cuba is a premium brand so I couldn’t imagine why she would do this. She later explained to me how store clerks sometimes pour a little shampoo from every bottle of the premium shampoo into an empty L’Oreal bottle and replace the missing amount with lower quality and cheaper shampoo. Once they get to a full bottle of the shampoo they have pilfered, they can sell that bottle for themselves. A single bottle of this shampoo costs as much as 5 cuc or a week’s salary. The same thing happens with perfume as well. Store employees use a hypodermic needle to extract the expensive perfume and replace the stolen amount with alcohol. Castro’s revolution should be credited with encouraging all sorts of creative ruses to steal from the State for personal gain.

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