The dismal state of the Cuban economic model succinctly depicted by the old Soviet joke that described their centrally planned economic system as one in which “We pretend to work, and they pretend to pay us.” The bankrupt Cuban system cannot even pretend to pay its workers anymore. So, it is now changing its maquillage to make-believe capitalism.
By José Azel l March 6, 2018
The 2011 VI Congress of the Communist Party of Cuba, to ratify General Raul Castro’s economic directives- including the firing of 500,000 state employees- was viewed by some with hope that finally Cuba was moving toward a market economy; by others with substantial skepticism and by Marxists with horror as a betrayal of communist orthodoxy.
So where is Cuba headed? Most likely, nowhere fast.
Ironically, the official announcement of the firings was made by the Cuban Workers Union (CTC) – the Communist Party-controlled labor union. Anywhere but in repressive totalitarian regimes, an announcement dismissing ten percent of the government’s work force would have been met with the massive protests and international indignation usually associated with reforms required by the International Monetary Fund or the World Bank. In Cuba there was nary a peep on the streets.
Add to this, Fidel Castro’s apparent Freudian slip that the “Cuban model doesn’t even work for us anymore” and you have a textbook recipe for ideological bewilderment, bureaucratic paralysis, opportunism, uncertainty, incongruous policymaking, and more.
In the Cuban version of Orwellian doublespeak, the dismissal measures are labeled as an “actualization of socialism,” where the government will grant permits for those fired to seek to make a living “outside the state sector.” It is unspeakable to talk of a private sector.
The firings reveal changes anchored not on a desire for politico-economic reforms to help the Cuban people, but rather, focused on the regime’s survival. In an economy with developed private competitive markets, employees dismissed from one firm have a fighting chance of securing employment in another. But in Cuba’s economic system there is no private sector to absorb the unemployed.
Where will they find employment?
Perhaps most bizarre is that the dismissal measure seems to assume that everyone is temperamentally suited to be an entrepreneur and able to make a living in fields that may be far from their work experience and professional training.
The Cuban government is betting on the resourcefulness and entrepreneurship of the Cuban people to somehow make up for the inefficiencies of the state sector and to do so without access to cash, credit, raw materials, equipment, technology, or any of the inputs necessary to produce goods and services. Ironically, the most likely source for these inputs will be the Cuban Diaspora eager to help their unemployed relatives and friends.
Cubans will somehow make do, but in terms of actual economic development, these measures will not work; they are not designed to. Allowing Cubans to read tarot cards or to make paper flowers -two of the now permitted activities- are not serious economic development measures. But just in case, the government is ready to collect onerous taxes of 25% for social security and up to 40 % on income depending on the economic activity (e.g., food production will be taxed at 40%, artisans at 30%, etc.).
If the intentions of the Cuban government were truly to undertake a major shift towards a market economy, it would not seek to limit the permitted economic actions to some 178 mostly individual activities, (e.g., fruit peeling, shoe shinning, etc.) and then impose stifling regulations and taxes. It requires a vivid dreamer’s imagination to see in this announcement by the Castro government a move towards a free market economy.
One lesson to be learned from the transition history of the former Soviet bloc countries is that the success of reforms hinges on placing individual freedoms and empowerment front-and-center. This is not where Cuba is headed with its “actualization of socialism.”
For now, the firings only highlight the dismal state of the Cuban economic model succinctly depicted by the old Soviet joke that described their centrally planned economic system as one in which “We pretend to work, and they pretend to pay us.” The bankrupt Cuban system cannot even pretend to pay its workers anymore. So, it is now changing its maquillage to make-believe capitalism.
José Azel arrived in the U.S. in 1961 from communist Cuba as a 13-year-old political exile with Operation Pedro Pan, the largest unaccompanied child refugee movement in the history of the Western Hemisphere. Dr. Azel earned a Masters Degree in Business Administration and a Ph.D. in International Affairs from the University of Miami, and is author of Mañana in Cuba: The Legacy of Castroism and Transitional Challenges for Cuba, and Reflections on Freedom. He is also a contributor to SFPPR News & Analysis of the online-conservative-journalism center at the Washington-based Selous Foundation for Public Policy Research.