The “Virtuous Circle” of Cuba’s Reforms

Fernando Ravsberg*

A great many State cafeterias are empty and have no products to offer the public.

HAVANA TIMES — The slow implementation of economic reforms in Cuba is justified with the argument that the government does not want to make any mistakes. Every step taken is allegedly preceded by a pilot test used to evaluate the consequences of the change.

This is doubtless a new way of doing things in the country, in which concrete results matter more than inspiration. Many Cubans, however, have grown impatient, because the waiting period is sometimes longer than what they deem necessary.

The food service business is a case in point. It is clear to all Cubans that State cafeterias and restaurants are, generally speaking, disastrous and that the private sector is the one offering the best services today.

But the process of putting this sector in the hands of cooperatives and the self-employed is advancing at a snail’s pace, despite the fact that anyone who walks by a State cafeteria can see the poor quality of the menu themselves, in the event the establishment sells something other than cigarettes and rum.

In my neighborhood, there’s a cafeteria that people have been referring to as the “flies palace” for years, owing to the number of these insects that inhabit it. Curiously, the inspectors who monitor the self-employed so rigorously have never set foot there.

The self-employed have managed to offer better services in the catering business.

I have a friend who set up a very successful cafeteria in the Havana town of Guanabacoa who has been waiting for years to rent one of the most dilapidated facilities in the area from the State, in order to transform it into a prosperous business.

It’s clear that much of the prosperity of these private businesses is owed to the fact supplies are bought at low prices in the black market, which gets its stocks from State warehouses, the products that State cafeterias should be serving.

It’s like a dog chasing after its own tail. This happens, in part, because the government still refuses to create wholesale markets with preferential prices for the self-employed and cooperatives, the kind that exist everywhere in the world.

According to some Cuban economists, these markets, in addition to giving the self-employed advantages, would make the State more efficient in terms of tax collection, as having control over supplies would allow it to calculate what a business’s actual profits are.

What’s certain is that the slowness and indecision that characterizes the application of these policies prevents the self-employed from growing in numbers and limits the State in terms of laying off superfluous personnel at its institutions and ministries.

If the country’s economic plan for the future is to have half or more of the population in non- State jobs (as self-employed, cooperatives or farmers), the government should act in a more determined, coherent and global manner.

A raise in the salaries of teachers depends, in good measure, on the growth of the non-State sector.

The logical course of action upon detecting some form of stagnation should be for authorities to offer greater facilities that will attract new workers to the non-State sector: wholesale markets, tax breaks, bank credits, a greater range of supplies and access to machinery and tools.

A change in mentality is also needed. Cuba must put behind it the economic Stalinism inherited from the Soviet Union, which condemned all private initiative, and move forward towards a range of forms of property than even Marx and Lenin thought compatible with socialism.

Even today, whenever the press or some leaders speak of corruption, they mention only the private sector, all the while concealing the constant destitution of corrupt managers at “socialist State companies.”

The fact of the matter is that the growth of the self-employed sector and cooperatives would increase the incomes of many Cubans, reduce State payrolls and fill the nation’s coffers with tax payments.

This “virtuous circle” could afford the government the financial surplus needed to raise salaries in such indispensable sectors as education, where salaries are still well below the income required to meet basic needs.

Photos: Raquel Perez


11 thoughts on “The “Virtuous Circle” of Cuba’s Reforms

  • December 3, 2014 at 9:24 am
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    Fernando, once you have > a third of the population “believing” that they are independent of the state you will have a counterrevolution on your hands, for better or (in my mind) worse, just as the burgeoning mercantile class wrestled power away from the kings & broke the feudal system apart at the dawn of the renaissance. I still believe that benevolent dictatorship (or participatory communism) is the way to go, to lock in the beneficial ideals of the revolution. Where I live in Canada, p-r-o-f-i-t-a-b-l-e public institutions, entities, & infrastructure are being looted & disposed of shamelessly & control (of information, markets & government) is now in foreign hands.

  • September 21, 2014 at 12:36 pm
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    When you control an entire country the way the Castros control Cuba, there is no real need to acquire wealth. In effect, Fidel’s wallet is the Cuban treasury. Is there a creature comfort that Fidel or Raul could desire or imagine that would not be delivered to their doorstep? They have wisely managed to avoid that stereotypical expression of wealth historically displayed by dictators cut from the same cloth. No gilded palaces for the Castros. Nonetheless, there is no doubt that they have not failed to enjoy every minute of the pillaging they have wrought on the Cuban people.

  • September 21, 2014 at 12:30 pm
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    The US has much less influence in the internal politics of most Latin American countries. So what? When we had more influence it was more of a burden than a benefit. Now we are no longer asked to make loans that are not repaid and resolve internal political differences between different versions of the same tyranny. At the end of the day, everyone in Venezuela who wants and can afford to buy an iPhone 6 will continue to do so. Pitbull, the Miami-based hip-hop megastar, will still sell out concerts throughout Latin America and the Dallas Cowboys merchandise is still the second hottest-selling sports item (#1 Barcelona) in Mexico and Central America. Many times, anti-US commenters parrot comments without really understanding the comment itself. The US loss of political influence in the region has meant very little in the lives of Americans. In the long-term it may likely be a good thing. Watching Argentina, Venezuela and Brazil endure their political growing pains from a distance is less costly to American taxpayers. Moreover, as Cuba continues to circle the drain economically, these recently emerged Latin American organizations will be called to task. Will they, as the EU did for Greece and Portugal, step up to assist Cuba or as the collective of Latin American countries done in the past, stand by and do nothing?Time will tell.

  • September 20, 2014 at 12:13 pm
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    Come come ronrobel777. Are you really suggesting that the US military should be enabled to enter the commercial world and control 80% of the US economy? As is the position in Cuba!
    I found your very careful statement that Fidel’s sons are not involved in politics somewhat entertaining. Fidel was nothing if not prolific in his relationships with mistresses and wives.
    His first wife was Mista Diaz-Balort Gutierrez with whom he had FIdel
    His second wife was Dalia Soto del Valle with whom he had:
    Alexis
    Alejandro
    Antonio
    Angel
    Alain
    Jorge
    There was an un-named mistress by whom he had:
    Jorge Alain
    Way back in 1953 he had Francisca Pupo – as the result of an overnight affair
    Then as the result of an affair with Natalia Revuelta Clews there was:
    Alina
    But although you indicated that none of these multiple offspring
    became involved in politics, you studiously avoided President Raul Castro Ruz’s family. That is where the power lies!
    You admire the fact that GAESA controls 80% of Cuba’s economy, who controls GAESA? Why none other than General Luis Alberta Rodriguez Lopez-Callejas son-in-law of Raul, being married to Deborah Castro Espin, Raul’s daughter. Who controls the Intelligence Service? Why none other than Alejandro Castro Espin, Raul’s son who is also a member of the Committee of the Communist Party of Cuba and within the past year met with the Russian Intelligence Service in Moscow. Where does Alejandro Castro Espin get his power? Why through the Committee for the Defence of the Revolution. What is the purpose of the CDR? When formed by Fidel Castro Ruz on September 28, 1960, he said that the purpose was:
    “so that everybody knows who lives on every block, what they do on every block, what relations they had with the tyranny (previous governments of Cuba) in what activities are they involved and with whom they meet.”
    CDR officials monitor the activities of every person on their block. The State keeps an individual file on each resident some of which reveal the internal dynamics of each household.
    By chance, I happened to have sight of the file on my wife – it was four pages long and not only contained a photograph of her, but also the date of our marriage.
    And, you in your innocence of the reality of Cuba and the power of the Castro family dictatorship regime think that their role will be much reduced when BIG and little brothers leave the scene?

  • September 20, 2014 at 10:25 am
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    The military industrial complex in the US controls much of our economy and produces weapons of war. At least in the case of Cuba the military is involved in business enterprises similar to the military in Turkey and Indonesia to cite two examples. The role of the Castro family will be much reduced once the brothers leave the scene. Fidel’s sons are not involved in politics. It should be noted that Cuba now has excellent relations with most Latin American countries and is a member of new organizations which reject the US embargo. Because of this the OAS no longer has influence in Latin America. Until the US ends the embargo it will become more and more irrelevant in Latin America as the other countries form their own organizations all of which include Cuba. Under the Bush administration plans were being made on how to end the chaos coming to Cuba once Fidel relinquished power. However the transition has proceeded smoothly and our Cuba experts have only excuses as a response.

  • September 19, 2014 at 3:28 pm
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    RAFIN SA (Raul & Fidel) paid $709 miillion for the Italian owned 27% of ETECSA.
    I agree that unfortunately neither of the brothers will go into exile. The Castro family regime will continue to control the economy through General Luis Alberto Rodriguez Lopez-Callejas CEO of GAESA the holding company for the Cuban Defense Ministry which currently controls 80% of Cuba’s economy. It will control Cuba’s Intelligence Service (much of the internal intelligence being derived from the CDR system) through Alejandro Castro Espin. They are respectively the son-in-law and son of Raul Castro Ruz. Diaz-Canel as President appointed by Raul Castro Ruz and Murilla and Rodriguez as hencemen, will be political puppets serving as a face for the Castro family regime which will retain el poder (the power). It is power not palaces that the Castro Ruz brothers covet. Whereas they have wisely kept their personal waelth in Cuba, they endeavored to extend their power by military activity in 13 other countries.
    Under their dictatorship the Castro Ruz family cannot be guilty of corruption – for them, it is entitlement. It is all other Cubans who are eligible for charges of corruption be their political masters.
    Regarding Dr. Ernesto Guevara, I have written elsewhere in these columns that he was a genuine revolutionary. He could coldly execute prisoners without trial by the hundred, and as a medical doctor insisted on examinig the brain of the first person he personally shot to see the effects of the bullet.(In the Sierra Maestra). It is my view that he would have deplored that ridiculous mausoleum that Fidel Castro Ruz had constructed at Santa Clara, preferring that the money be spent on the people. When it came to his own execution he accepted it without struggle as the price of being a revolutionary.

  • September 19, 2014 at 11:34 am
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    I agree with most of what you say except that the Castro’s have millions of dollars in a kitty bank. Fidel and Raul have no accounts or property abroad and will never go into exile as have many of the dictators we supported in Latin America. In addition their personal residences are not mansions on the scale of so many in Latin America and in the US. The most pure revolutionary was Che who had no ambition to accumulate wealth. These leaders have made many mistakes and the result has been poor economic performance and denial of individual liberty but personal corruption is not one of their faults.

  • September 18, 2014 at 3:05 pm
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    In case there are readers who don’t know, that neighbourhood committee is the CDR (Committee for the Defense of the Revolution). It’s purpose is to be the eyes and ears of the Communist Party of Cuba. That is why when at home in Cuba and if discussing politics, I only do so one on one as the walls have ears and criticism of the State is an offence. The CDR has a similar role to that of the Stasi in Eastern Germany. Each block or neighbourhood in Cuba has a President of the CDR and you may note the small poster on their door saying so.
    The State will not give incentives to private enterprises as they are in competition with GAESA and GAVIOTA SA controlled operations and which are managed by General Rodriguez son-in-law of Raul Castro Ruz.

  • September 18, 2014 at 11:33 am
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    i met an owner of a “casa particular” in cienfuegos. he is a hard working man who had a successful bodega until the state took it from him in 1968 when it outlawed all private enterprise. now he is prospering again but understands the necessity of paying off the head of his neighborhood commitee every month to avoid problems. cuba will only prosper once it decides to give free reign to the private sector. the private restaurants i have eaten at are head and shoulders above state owned establishments and should be given incentives to expand/

  • September 18, 2014 at 11:22 am
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    All one must do is look across the Florida Straits to see that despite our “problems” the United States is wealthy and prosperous and innovative. That is because we have a regulated free market, the basic right of human existance to life, LIBERTY, and the pursuit of happiness. We reward work with monetary gain, and love the basic tenant of the RIGHT to own property.

    Until Cuba allows democracy any attempt at a free market is doomed to fail. The cuban people are a people I admire greatly and once the sad chapter of a communist dictatorship is closed and a new era of democracy and basic human rights is established in your country you will once again prosper.

  • September 18, 2014 at 10:43 am
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    Private initiative and enterprises initiated by individuals run counter to the Castro family’s regime believe in their “Socialismo”. In the free capitalist countries there is belief in the rights of citizens, not just the rights of the State. Those countries have a certain set of ideals:
    Liberty and the rule of law.
    Naturally people put more thought and energy into businesses which they have created rather than those owned by the State or in Cuba, the masters of the State.
    The future of Cuba’s children and grandchildren will be greater and far more properous if the current generation is liberated to develop their ideas and to use their initiative. Until the Castro family regime as masters of the State and its heirs and successors realise one basic economic fact, Cuba will continue to sink into ever increasing levels of poverty and with it depression.
    That fact is simply that the wealth of a nation comes not from what it consumes, but from what it produces.
    Under fifty five dreary years of State controlled economics, Cuba has produced less and less. All those grandiose socialist plans have totally failed. The mainstay of agricultural production is beyond recall under socialism. All those tens of thousands of acres of good agricultural land lying fallow while the people are subjected to food rationing.
    The State “restaurant” at Jose Marti International Airport offers one item to tourists. A processed ham and flacid cheese sandwich (3.60 CUC). If sublet to a private business, there would be variation in the menu and better quality. There would be pride by those serving the tourists rather than abject resignation.
    Maybe one day the Castro family regime will waken up to reality and address it or better still, take their tens of millions of dollars out of their kitty bank and follow Batista the previous dictator into oblivion. That would allow Cubans emerge from the dark tunnel that is Socialismo to enter what for them would be a brave new world where they could pursue their interests with their abilities.

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