The Extraordinary Resemblance Between Tourism in Nazi Germany and Communist Cuba

There is a government apartheid so that tourists do not experience the tough conditions of the lives of Cubans. (EFE)

14ymedio bigger14ymedio, Elías Amor Bravo, Valencia, 30 September 2019 — The Spanish newspaper ABC dedicated an interesting report to tourism during the third German Reich, and how Hitler fooled millions of tourists in World War II. All this comes from a book by Julia Boyd entitled Travelers in the Third Reich from the Atico Libros publishing house, filled with letters, documents and testimonies recovered from the summer of 1936, when nothing seemed to indicate that the atmosphere in Nazi Germany was going to be poisoned as much as it would be three years later.

The chronicle allows us to establish a striking parallel between tourism to Nazi Germany in those years and tourists traveling to communist Cuba in recent years. In those years there were no signs of war in Germany, the capital was preparing to host the Olympic Games and the National Socialist Party received massive support from citizens. Thus, tourists arrived in the country without worrying too much about what was already happening, but things were going downhill.

The book makes reference to the testimony of two travelers, Alice and her husband, who were surprised during their honeymoon when they arrived in Frankfurt, to see a woman who stopped their car, in which had a sticker that identified them as foreigners, to ask them a favor. continue reading

After talking with the newlyweds about the persecution of the Jews and the barbarities perpetrated by Hitler, she begged them to take her daughter to Britain. What would you have done? They, despite their perplexity, accepted. The testimony of this couple is one of many included in the book by the author Julia Boyd (aresearcher and member, among many other associations, of the Winston Churchill Memorial Foundation).

Germany under the reins of Adolf Hitler was a destination for tourists from all over Europe who, in many cases, ignored what was happening. it is more or less the same in Cuba, where tourists claim not to know the acts of repression that the authorities maintain over a population subject to the power of the single party, which has no respect for human rights. Two periods distant in time and seemingly different, but not so much.

It is interesting to interview the author of the book, who emphasizes, for example, a “certain solidarity” among tourists arriving in Germany, and a feeling of guilt over the consequences of the Treaty of Versailles and the harsh conditions that had been imposed on Germany.

She says that “believing in the Führer allowed them to avoid remorse.” A feeling shared by tourists who have been traveling to Cuba since Fidel Castro authorized the development of this activity during the Special Period, despite the “embargo or blockade” to which the Castro authorities continually refer, while showing a “solidarity” with the paradise of “the revolution of the poor.”

Similar to what happened in Germany, many types of foreigners, tourists, businessmen, journalists, diplomats arrive every year in Cuba. And each one finds a different type of country based on their preferences and objectives. Above all, because there is a government apartheid so that they do not experience the harsh living conditions of Cubans. A few days ago one could see how the long lines at CUPET gas stations do not include foreigners and diplomats who carry ministerial letters, but only ordinary Cubans.

The information that foreign travelers receive about the situation in Cuba is different as soon as they arrive in the country. They are not worried. There are few tourists and travelers committed to the cause of the freedoms of a people fighting against oppression. Strolling through a street with once-stately buildings, destroyed by neglect in downtown Havana, is even a reason for souvenir photographs.

As with Germany, where the Nazis offered tourists “many things,” the Castro regime tries to do the same, although with notable difficulties because of the absolute, inefficient control exercised by the communist state over this activity over companies dependent on members of the army and police security. In Nazi Germany, onthe contrary, it was the private sector that led tourism.

Tourists arriving in Nazi Germany found newspapers on the left and on the right. The author says that “some emphasized the most horrible aspects of Nazism. Others concentrated on the good and talked about the resurgence that Germany had experienced or the new structures that had been built (for example, the highways).”

In Cuba this situation is impossible, since freedom of the press is outlawed and there is only an authorized public voice, although it is curious that travelers who arrived in Nazi Germany “preferred to believe the official version and ignore the rumors of torture, persecutions or imprisonment without trial. However, one party was simply confused and did not know which version to believe.”

In the interview, reference is made to what the tourists who came to Germany thought about Hitler, something similar to what travelers thought of Fidel Castro, admired and hated in equal parts, and certainly with much more of an image than his brother and, light years from what Díaz-Canel currently represents.

The author says that “some tourists in Germany came to witness unfortunate displays of Nazism such as book burning and policies against Jews and yet, in the book testimonies of the” Führer as if he was Jesus Christ” are collected. Something similar to Fidel Castro, who was granted a prestige and relevance completely alien to the reality of the character, hidden behind the propaganda of the media under state control.

The author refers to the fact that the Nazis even deceived several leaders and African Americans civil rights activists from the United States, who, far from having a negative opinion of Hitler, showed favorable impressions. They admired the “achievements of Nazism” in the education taught in the country, or the music of Wagner. Something similar to what happens with European Democrats who travel to Cuba and end up exalting the advantages of “single party democracy,” or the “Education and Health” of the achievements of the Revolution.

The Nazis came to invite tourists to visit the Dachau concentration camp, “justifying that they were reeducating the worst people in society (murderers, pedophiles …), while in other countries they would have shot them. The propaganda presented a positive approach. Travelers were impressed in a positive way.” However, from 1935 on they stopped those visits.

In Cuba, visits to communist projects of the types such as the “schools in the countryside” have been arranged for tourists, and although the UMAP camps were canceled long ago, they received some attention as instruments of communist reeducation of those disaffected with the regime.

Tourism trips to that rotten Germany continued until a few weeks before the Second World War, as the author says in her book. It is still curious that the newly-defunct Thomas Cook agency organized trips until 1939 to places like Oberammergau, cosidered of religious importance. But after the “night of broken glass” tourism to Germany fell dramatically.

In a special way, the Olympic Games marked a point of reference in that tourist boom of the Third Reich, which took the opportunity to present itself to the world as a kind regime that only sought peace.

Cuba does not emphasize its religious tourist destinations, nor does it have Olympic Games in its tourism offer. Perhaps this is the most important difference with Nazi Germany.

Finally, the author concludes that the income from tourism to Germany was very important and the money received was dedicated to investments in armaments, the absolute priority of Nazism, so that the income of foreign tourism had a vital importance.

In Cuba, tourism has been planned by the authorities with the same objective of serving the communist state: financing a structure of insolvent and unsustainable public spending. There are so many similarities that it makes an impression.

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Note: This text was originally published on the Cubaeconomics blog and is reproduced here with the author’s permission

The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

Of Inaugurations and Authoritarian Regimes: The Case of Tourism in Cuba

Varadero Melia International Hotel (Trivago)

14ymedio biggerElías Amor Bravo, Economist, 16 September 2019 — Each dictator celebrates the inaugurations of what they can, or what they leave. There is a close relationship between authoritarian power and political celebratory openings. In the case of Franco, it was common to see him in the “News and Documentaries” — known as No-Do — inaugurating reservoirs for the production of hydroelectric power and storing water for the areas with the lowest rainfall in southeastern Spain. The reservoirs have been left for posterity and have a much wider use than originally planned. Generally, no one questions them, except for some radical environmental organizations. In the case of Díaz-Canel, another authoritarian leader, he loves to attend the openings of hotels.

On this occasion, the new facility has been named the “Hotel Meliá Internacional Varadero” because although the building belongs to the Diaz-Canel regime, the establishment is managed by the Mallorcan company Sol Meliá. The project is engaged in an open dispute wih the legitimate owners under the protection of Title V of the United States’ Helms Burton Act. So, before a large group of representatives of his government, such as the person in charge of tourism, Marrero, and even the president of Sol Meliá, Díaz-Canel said that the new hotel is intended to “become a hotel of excellence in the main tourist center from the country.” continue reading

The Cuban government’s commitment to tourism is apart of the little it has left to face the current serious crisis situation, but the prospects are not good. The National Statistics Office of Cuba, ONEI published on its website a report of the tourism sector between January and June,and almost simultaneously, another Informative note regarding the period from January to July to show the number of international visitor arrivals.

It is interesting to note that in the first period (from January to June), there was a 2.4% increase in the number of travelers compared to the same period of the previous year. This is the data that has been disseminated in the media and through social networks. On the other hand, the other more recent data in of travelers to the month of July, what really took place is a 1.1% decrease in the number of travelers.

The reason is explained in the second Note to which reference is made. In July, the number of travelers entering the island was only 295,042, with a collapse in that month of 23.6%, the equivalent of 90,992 fewer tourists. Almost 100,000 stopped coming to Cuba in July compared to the same month of the previous year.  A very bad month, very bad prospects. As a result, the collapse in the figures accumulated in the period from January to July, increasingly far from the objectives of the regime.

The Sol Meliá business group has bet on tourism in Cuba since the distant times of the Special Period, accepting the management formula offered by the Castro regime, unique throughout the Caribbean region. A formula that undoubtedly benefits two parties, as has been the occasion to verify since it has been maintained despite the difficulties that have arisen, which are not few. In addition, the effort put into management and organization of facilities in Cuba has not returned the expected results to the Spanish hotel chain. Their annual reports make this clear.

At first, the chain opted for the future, thinking that the Special Period at some point would have to disappear. Then came the “objective” of 5 million travelers which has remained unmet and with levels of occupancy levels much lower than other resort destinations in the Caribbean (The Dominican Republic attracts 11 million a year). Also, how curious, with the passing of the years, the Spanish hotel group is again faced with a similar situation, which is not the same as the Special Period, when it began operations on the island. The feeling of “deja vu” among the chain’s managers must be more than evident. And in the midst of these low levels of tourist activity, this new hotel is launched, in an area that is already relatively congested with hotel rooms, and that has lost much of its international pull.

The Sol Meliá company manages this magnificent establishment, which, however, it may lose at any time given the contractual conditions; but there is the Varadero International, a five-star luxury, with its almost 1,000 rooms in different dimensions and characteristics, modern from the technological point of view, with a commitment to quality and all kinds of installations and facilities for the use of customers. Nothing is known with respect to what the cost has been for the Castro regime, its owner, but it should not be cheap, of course, and in difficult times like today, less still.

The question that always arises in these cases is whether there is another alternative model to tourism in Cuba, other than this state monopoly under the management of international groups. The results of the current model are known. The volume of travelers has stagnated and there are bad prospects for the following months, during which in every year, another hurricane makes an appearance in the Caribbean.

In my opinion, there is an alternative. The world tourism powers, including Spain, the country to which the Mallorcan group belongs, need to rely on the the capabilities and resources of private initiative, and not of the state. To be true, there is some kind of state participation, in Spain, for example Paradores, to exploit emblematic buildings with history and heritage, but recently doubts have been raised as to whether state management should be maintained.

The Castro regime should know that tourism is mostly a private activity, which is carried out by private companies that have a clear orientation to the market and to meeting the needs of customers. Tourism should not be a propaganda device of any authoritarian regime. Fraga Iribarne, in his time as minister of the branch, managed to ensure that tourism in Spain did not take this route. In the United Kingdom it is perfectly possible to tour the country in a wide and extensive network of bed & breakfast accommodations that delight the traveler. The same happens in France and Italy, as in Spain, where the private hotel sector coexists with these establishments that offer high quality services to travelers.

In Cuba, this model must be supported more, because we have already what the state model achieves. And the little route it has. If it is intended to increase tourism, and make it a sector that contributes resources to the national economy, we must advance in the privatization of the sector and let it be privately owned at all levels of accommodations. The state can make cash and devote it to other infrastructure investments that the country needs. There is no other alternative.

The state monopoly in any economic activity, has a limited route, and it is enough to compare tourism data in other areas of the Caribbean, Dominican Republic or Cancun, with Cuba to see that the problem of tourism in Cuba is in who directs it, controls it and is dedicated to the propaganda of authoritarian inaugurations. That’s how it goes.

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

E-Commerce in Cuba with Nothing to Buy

Few Cubans trust the island’s banking system. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, September 11, 2019 — Amazing. We had to wait until the now distant point in time — April 2016, when Guideline #108 of the Economic and Social Policy of the Party and the Revolution was approved — before Cubans could start engaging in e-commerce transactions in accordance with the country’s computerization process. It is curious how one political party’s “guidelines” can still impact Cubans’ living conditions.

It should be noted, however, that e-commerce is an activity that is widespread throughout the world, even in countries whose levels of development are lower than Cuba’s. Nevertheless, Granma believes this activity now merits an article extolling and promoting its virtues on the island.

Given these circumstances, the question that comes to mind is “Electronic commerce. What for?” as Fidel Castro, with full revolutionary fervor, said of elections. E-commerce is widespread where there is something to sell, where people can take advantage of its benefits and the ways it can improve their quality of life. Can anyone explain to me how Cubans, who can seldom find what they want in old, dilapidated bodegas, are now going to do their shopping electronically? With all the obstacles that currently exist and when things are rationed when least expected, how are they going to access this platform? Who is Granma trying to kid? continue reading

The reality is that Cubans have a poor, inefficient, disorganized and antiquated retail system plagued by chronic supply shortages. As a result it is very difficult to exercise the right to free choice for desired goods and services. Commerce, logistics, distribution and “middle-men” were early victims of communist repression. Businesses and companies were violently and unjustly confiscated by militias, condemning many former owners of these once prosperous entities to either a miserable existence on the island or escape into exile to save their lives.

Decisions like this — fervently promoted by Che Guevara, with the approval of Fidel Castro — are at the root of Cuba’s economic failures. And what is even worse are the limited possibilities for overcoming the backwardness and the widespread poverty in which Cubans find themselves.

Granma’s article makes you want to laugh and, along with it, at e-commerce too. This ought to be the guideline’s slogan. But I fear this is a mistake. It is possible that some Cubans might be interested in this formula. But I cannot see how someone could earn thirty dollars a month through e-commerce, especially under current conditions.

And it is not for a lack of experience or interest. Any Cuban who moves abroad, no matter to which country, embraces these technologies and views them positively. The problem is how to do it in the desert that is the Castro economy.

Setting aside the absence of products for sale and the lack of freedom of choice, any Cuban who wants to make an electronic purchase will first need a bank account in which to deposit either his meager monthly salary, which won’t buy much, or  remittances sent by a family member overseas, which have to first be first be processed by a bank.

I also do not see many self-employed businesspeople putting their hard earned money into state-owned Cuban banks. They know that, if they do, that information will be immediately passed along to State Security, which will use it to control their operations. Without opportunities for investment, the best place for hard currency earnings is under the mattress or buried underground, as in colonial times.

Cubans’ confidence in banks is minimal. There are no statistics on the level of banking and financial development in Cuban society but its banking system is one of the most backward and inefficient in the world, owing to the fact that is it wholly owned by the state.

Without a bank account, it will be difficult to make an electronic purchase using a magnetic card at a store’s terminal, as Granma’s communists are encouraging.

But there is another much more complicated problem: How many retail establishments — the old bodegas, for example — have electronic checkout terminals at their points of sale? None. According to Granma’s statistics, there are only 21,462 such terminals, or one for every 950  inhabitants, in the entire country, one of the lowest rates in the world. Most are also concentrated in urban areas, making access limited and complicated for many people.

There may be terminals in hard-currency stores but everyone knows that these establishments represent only a small fraction of overall retail activity in the country. And they are only within reach of those with real money to spend.

In any case, economic inequality, which the Castro regime has so often criticized, is particularly virulent in this area, where the growth of computerization is limited. Many foreign tourists complain about it and about the difficulty of paying by card, something Cubans will not say.

The communist newspaper extolls electronic commerce and defines it “as a method of buying and selling characterized by the distribution, marketing and exchange of products and services in which monetary payments and receipt of funds are made quickly and securely using machines and digital networks, without the need for cash, based on available balances of magnetic cards in both currencies used in Cuba.” A good definition, no doubt, but not applicable in Cuba.

Because few Cubans can afford to engage in e-commerce due to their very limited purchasing power, they do not trust the way it is conducted on the island. Nor, it is clear, should they.

It is surprising that, in spite of offering 8% discounts on purchases made by card, the Cuban Central Bank — one of the tools the state relies on to control its citizens’ financial lives — has had little success convincing people to make purchases using its system. And with good reason. It is telling that the same discount is not needed in Miami or Madrid. On the contrary, banks there charge for this service. The Central Bank’s communist bureaucrats should take note.

The same applies to Transfermóvil, an Android app that supports ETECSA’s infrastructure and network services. This is the same company which many Cubans criticize for the high price of its services.

Though mobile banking is clearly widespread throughout the world, in Cuba it is very underdeveloped. Few Cubans use it to pay their utility and phone bills or to check their account balances. The reasons? The same as before.

To access mobile banking, a customer must have an account linked to a magnetic card issued by a Cuban bank (Popular Savings, Credit and Commerce, Metropolitan) and a Telebanca card. Mistrust in state banks is fully justified.

On the other hand, I do not believe that EnZona, Compra-DTodo or Superfácil platforms are widely used as channels for financial and digital business operations by individuals or and organizations. The fact that they are accessible by internet search engines or through Android apps on Etecsa’s platform does encourage widespread use in private sector businesses, especially given the company’s high prices.

Virtual stores, such as the one in the Commercial Center of 5th Avenue and 42nd Street, offer a home delivery service that allows customers to reserve products and pick them up at their convenience, like any Zara store. But they fail to take off for the reasons mentioned before. In fact, information suggests that store’s products are in short supply and there is little to buy on the shelves.

It is no wonder that Cubans who have spent the last sixty years waiting in line to do anything do not understand the benefits of these virtual stores. The exceptions are young people with financial resources, which highlights once again to the issue of inequality. Transactions must be conducted in hard currency; the local currency is not accepted.

The e-commerce landscape in the era of Diaz-Canel is an example of the absurdity of robbing Peter to pay Paul. It makes no sense to introduce information-based technological solutions when the economic system remains stagnant. The problem boils down to the Cuban people’s limited purchasing power, their low incomes, their mistrust of banks owned by a repressive state and the lack of consumer choice.

Everything else is just beating around the bush. And worst of all, it turns e-commerce into one more arena for increasing social inequalities in communist Cuba. Fidel Castro’s greatest legacy. Without a doubt.

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Editor’s note: This article was originally published in the blog Cubadebate and is reproduced here with the permission of the author.

The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

What’s Going On with Cuba’s Non-Farming Cooperatives?

Passengers getting ready to board one of the new Rutero fixed-route shared taxis operating in Havana as a part of a cooperative. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, September 2, 2019 — After the 2013 launch of an economic initiative described as “experimental,” Cuba’s communist regime has decided, without prior warning, to pull the plug non-agricultural cooperatives.

The experiment showed Cuban leaders that the impact of cooperatives on the economy was clearly asymmetrical, with results that were not the same in all sectors or activities. Cooperatives focused on construction, personal and technical services and the industrial sector registered the most positive results while wholesale markets and related services did not yield similar outcomes.

Officials have pointed to “deviations in the management of some cooperatives, primarily related to irregularities and legal violations, which distort the principles of cooperativism.” continue reading

Examples of such deficiencies included “misappropriation of resources and income; evidence of corruption; materialization of important elements by management of some cooperatives related to the contracting of the salaried labor force and the purchase of services from third parties; deficiencies in accounting practices; differences in pay between members who serve as managers and those who perform work directly related to the cooperatives’ core functions; use of bank funds for purposes other than those indicated; irregularities in the budgets of construction projects, and in their billing and collections; non-compliance with planned changes in the management and image of food service cooperatives; and a tendency to raise prices.” And so on and so on.

It’s the same old story. When a private-sector economic activity flourishes in Cuba, it is cut off at the root if it cannot be otherwise controlled. The 398 existing non-farm cooperatives which operate in ten sectors of the economy, employ about 18,000 members and generate income exceeding six billion pesos will be “frozen” in time. And it does not look like any more will be approved. Economic freedom is once again being infringed, as it has been for sixty years.

Proposals that were under review have been officially returned to their applicants through the Provincial Administrative Councils, the Central State Administration Organisms and the National Entities. Evidence that Communist authorities are hitting the brakes can be seen in data from the period between 2014 and 2017, when the number of cooperative members went from 5,521 to 17,704. In 2018, however, it fell to 17,539. According to official figures, the number of workers hired by cooperatives also declined, from 61,280 in 2014, to 888 in 2017, to 777 in 2018.

Cooperatives are part of the so-called “social economy” and operate in every country in the world, especially in those with market economies. Their workers decide voluntarily, independently and without political interference how to run their businesses or launch collaborative initiatives. Though cooperatives prioritize labor, that does not mean financial considerations such as capital investments and profit are ignored. They run on the democratic principle of one worker one vote yet are managed by highly qualified, experienced professionals who operate on the basis of profitability, business survival and value creation.

Why aren’t there more non-farm cooperatives in Cuba? There are the usual political justifications but recent reforms published in the Official Ordinary Gazette No. 63, which take effect in November, offer other clues as to what may be going on. Two new regulations confirm, for example, that the regime does not want cooperatives to partner with individuals who are not part of their workforce to avoid a situation in which a director or general manager prioritizes the interests of the organization over communist orthodoxy. The regime is also interfering in the operation of cooperatives in other ways such as setting limits on partners’ compensation. It also holds out the possibility of temporarily suspending a cooperative’s operations for up to six months if management problems or irregularities are found.

In fact, the regime does not want cooperatives capable of expanding into nation-wide operations, preferring those that are locally based. Those that do expand to the national level would be strictly regulated and limited to repair and maintenance of textile manufacturing machinery, technological equipment, weight scales, air conditioning and refrigeration equipment, bowling alleys and aluminum fabrication machinery.There are no reasons given for these restrictions, whose aim is to limit the scope of a cooperative’s commercial production and prevent it from achieving the maximum efficiency that economies of scale would provide.

It is an attempt to improve membership training but also a clear interference in these organizations, which should be free to establish their own training programs without being forced to set up a fund to finance them. It is also an attempt to set the terms for electing a cooperative’s president as well as for his or her removal. This violates the principle of collective, democratic decision making by members to organize themselves in an independent manner in order to establish their business.

In its obsessive need for total control, the regime has instituted a probationary period for new members in order to evaluate them before allowing them to join cooperatives. This betrays a clear ignorance of the role members play in a cooperative and a need to insure there are no differences between them.

More obvious are the limits set on the growth of cooperatives and how they disadvantage the largest ones relative to smallest, as outlined below:

Cooperatives with less than ten members will be allowed to grow until the number of members has doubled.

Membership in cooperatives with 11 to 50 members will be allowed to grow no more than 50%.

Membership in cooperatives with 51 to 100 members will be allowed to grow no more than 20%.

Membership in cooperatives with 101 members will be allowed to grow no more than 10%.

The termination and dissolution of cooperatives is another tool the communist bureaucracy uses on these new entities. Regulations allow the administrative body that revokes a cooperative’s license to also settle its debts and liquidate its assets. There is, however, an indefinite right to appeal an administrative decision to dissolve a cooperative. The administrative body is also authorized to negotiate bonuses, exemptions from rental payments for real estate when a cooperative assumes responsibilities for repairs, and the sale of cooperative vehicles to other legal entities.

Property assets owned by individual members may be made available to the cooperative.  In addition to monetary assets and in-kind payments, personal property may also be placed at the cooperative’s disposal, either in exchange for money or at no cost. This is the only instance in which a cooperative, through its general assembly, has authority to approve the corresponding terms, conditions and remuneration of the operation.

To address what authorities see as the most obvious management failures of cooperatives, there are plans to simplify access to supplies as part of recently approved measures to boost the economy. This would be done through the sale of raw materials and consumable goods. But there are no specific details, only talk about a generic authorization for state-owned companies to market any available products they have to cooperatives at set prices, eliminating the subsidy in corresponding cases.

I do not believe that these measures will allow the development of a social economy in Cuba comparable to those other countries. It will not contribute to the development of small and medium size businesses or reduce the state’s suffocating pressure on the economy. It is yet another plan that will end in disaster. And once again the fault will not lie with the embargo or measurees by the Trump’s administration.

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

Are Changes to Central Planning Enough to Fix the Cuban Economy?

A Cuban farmer makes extra money turning the invasive marabou weed into charcoal for export. (14ymedio)

14ymedio biggerElías Amor Bravo, economist, June 18, 2019 — Central planning is the basic tool used by the Castro regime to control the Cuban economy. More specifically, it replaces the market as a tool for allocating resources while at the same time taking private initiative out of the economic decision-making process.

Since the establishment of the Central Planning Board (aka JUCEPLAN) in the 1960s, Cuban economic planning, based on the Stalinist model, has never been able to reach its targets. The sad memories of Che’s failed “industrial plans” and the unsuccessful push to harvest 10 million tons of sugar in 1970 stand as historic paradigms of the inconsistencies and inadequacies of communist central planning.

Now it seems Cuba’s new economics minister, Alejandro Gill, has come up with a new twist. In 2020, he says, “the plan will be based with a new concept: It will be developed without specific directives or limits.” He explains that this is because “it will be predicated the active participation of the workers in each company.” continue reading

But don’t get too excited. As long as central planning rather than the marketplace remains the tool used to allocate financial resources, the economy will still have all the same problems as before. Getting rid of the plan is a necessary condition for opening avenues to economic freedom but not enough to overcome the inertia and inadequacies that characterize the Cuban economy. The central plan is the cause, though not the only one, of the Castro-led disaster.

There is no point in making central planning the responsibility of businesses and workers without allowing them to make other decisions as well. I acknowledge it is a step in the right direction but it is not enough. But at this point, what’s the use in kidding ourselves? Taking economic planning out of the hands of communist bureaucrats — people who see themselves as better than the rest of us mortals at making decisions about what to consume, produce, import and export, and invest in — is not a bad idea. But I have the sense that at the end of the day, Mr. Minister, turning the central plan into some sort of — to use your words — “collective construction” intended to “identify potential opportunities in the nation’s businesses” amounts to more of the same.

In making this decision, the minister acknowledges something important. Basically, formulating a plan based on a global economic model from which the sector-specific directives would later be issued, requests for goods and services would be made, and the level of imports and exports would be predetermined make little sense.

The economy is much more than an isolated exercise in bureaucratic calculus. If you want to set up supply chains, you have to get rid of the so-called straitjacket and introduce objective, realistic and conscious decision-making methods. When it comes to doing this, nothing beats the market. A new mindset is clearly what is needed. Things have not been done this way in Cuba for sixty years but at some point you have discard what you cannot use and get to work.

The minister should know that, before embarking on this process, it is not enough to create a bottom-up plan. As long as certain structural reforms are not carried out, the results achieved from switching from a top-down to bottom-up approach will be negligible. Nor will they provide the efficiency necessary for a functioning economy.

I dare say that, without first carrying out the necessary structural reforms, this change could end up producing results even worse than those we have now. And it could generate numerous organizational problems for the economy. Given the very dramatic conditions in the country at the moment — among them, economic and legal restrictions and the impact of recent measures adopted by the United States — such a change would certainly not be advisable.

Before happily committing to any new bottom-to-top plans, to which President Diaz-Canel seems to have given his blessing, important decisions have to be made to guarantee a successful outcome. Among them are legal decisions involving property rights. I believe sixty years is more than enough time to conclude that the communist state’s monopoly ownership of the means of production has been one of the most negative factors impacting Cuba’s progress and economic prosperity.

It is the factor that most impedes improvements in overall quality of life and societal well-being. Given current conditions, there is no justification for all productive assets to be controlled by the state, or for the private sector to be limited to marginal activities such as small-scale self-employment and the long-term land leases.

The Cuban economy needs structural reforms and so the priority should be on restoring property rights and returning ownership of the nation’s capital and means of production to Cubans themselves. Privatizing the nation’s businesses and productive assets is necessary if the economy is to operate effectively again. There is no point in having bottom-up plans if those on the bottom lack the incentives, motivation and buy-in on the project for which they are working. Otherwise, they know they will never be able to take advantage of the fruits of their labor, or see the earnings from their work rise over time, or freely commit themselves to goals that have meaning for them, because they do not have ownership. It’s that simple.

Why work, why exert themselves, why dedicate time and effort to something that will not benefit them? We have to remove the Castros’ straightjacket and reorient productive capital and business towards the private sector, establishing a stable and respectable legal framework which would allow them to exercise their rights. This can be done quickly, as quickly or faster than the so-called revolutionary law-decrees that nationalized businesses after 1959. A couple of laws should be enough. Just transfer property rights to their owners and stop pretending once and for all that people’s assets should be controlled by the state and all the other communist nonsense.

The solution to the Cuban economy’s problems does not lie in government plans but rather, I strongly believe, in their elimination, or at least in a change to the planning process that will effectively tackle a chaotic technical situation in no one knows what to do. The solution lies in the field of property rights, in the idea that there must be private-sector economic players with decision-making power. They must be autonomous, independent of the state, people who can generate wealth for the benefit for their stakeholders. Modern and efficient individuals dedicated to a single principle: to provide the best possible service to their clients. This step is essential to correcting the badly damaged Castro economy. Without this step, there is nothing that can be done. The Chinese and Vietnamese did it and look at the results. Why not Cuba?

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

Central Planning of the Economy, What For?

Cubans wait in line to buy milk powder. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, June 3, 2019 — The Castrist regime announces the beginning of the process of drawing up the economic plan for 2020, the main instrument to intervene in the state economy. The information in the newspaper “Workers” speaks of the beginning of the analysis meetings with workers for the economic plan preparation and the budget corresponding to the next year. An initiative that claims to make a more participatory and flexible plan, in accordance with the desires of the Minister of Economy and Planning.

The question, paraphrasing Fidel Castro in reference to elections, is: What For? Confidence in the economic planning over six decades is directly responsible for the backwardness and general impoverishment of the Castroist economy. And now, undeterred, they have embarked upon what they call “indentifying internal reserves and strengths in each territory and company, exploiting the potential of productive linking, and exporting more, without limiting productive growth.” Hopefully they achieve it, but I see it as complicated. continue reading

Communism introduced central planning of the economy as an alternative to the market in the allocation of resources that were always scarce for alternative purposes. By substituting the mechanism of supply and demand, and price adjusting, with decisions by planning bureaucrats almost always remote from reality and tangled in dubious calculations of calories, weights, and other evils, the Cuban economic system was turned upside down in a matter of years.

From the first moment, the economists still holding their positions at the head of the companies that had not yet been confiscated to become property of the state, realized that the model was on its way to disaster. And thus it has been. Castroist economic planning has the merit of not having been right in even a single year in its forecasts, and in particular, since 2006, with the opening of small spaces to private activity, the results are even worse.

Why does this happen? Why, despite the insistence of the authorities and the efforts made in its preparation by the administrative management and the workers to improve the results of the planning, are the results worse and worse? Are we facing a demand for real change in the Castroist economy?

One can think what one likes, but in my understanding, yes. On the one hand, the bureaucrats continue buried in their calculations and estimations that never seem to end, with an increasing volume of norms, regulations, and provisions. Before it was easy to “plan,” by listening to a long and boring speech by Fidel Castro, it was already known how the accounts would have to be squared. Now the matter is worse.

For one thing, one has to read a panoply of documents so boring as to be useless, like the new Constitution, or the so-called Conceptualization of the Cuban Economic and Social Model of Socialist Development; even the most optimistic must read the Foundations of the National Plan for Economic and Social Development until 2030, and finally if one still has the desire, the so-called Guidelines for the Economic and Social Policy of the Party and the Revolution for the 2016-2021 period.

As they say in Workers, “to these documents must be added speeches, interventions, directions, and articles referred to the topic, which would serve as a basis to develop proposals with ’all the tools,’ with clear definitions and a strategic character.” With so much reading, and so much iron, economic decisions lose that spontaneity and richness that the market offers them when the objective is to satisfy the consumer.

In the end, the planning is a game that ends in a bad result. Because even if on the one hand they want everyone to participate, and I have my doubts that that would be easy to achieve, on the other hand, from the ministry (previously the communist Junta Central de Planificación [JUCEPLAN], or Central Planning Board) nothing is left to improvisation, and the premises are being established for the plan, so that no one leaves out even a single comma from the framework that really concerns the ruling leadership. This is what we have. Unfortunately the priority of customer service is replaced with some undefined “potentialities to contribute more to the strategies and priorities of the economy,” and end up the same way.

The truly worrying thing is that they are committed to playing this dangerous game, just as things are. The Cuban economy no longer works, and it has exhausted its tail engines, for what will have to be thought about changing on the fly. There have already been several scares like the absence of products in markets, but worse times will come. One doesn’t have to be a strategist to know that things are going to get worse, and that the year 2020 will be characterized by a situation of a lack of cash flow, of unbearable foreign debt that will asphyxiate the impoverished Cuban economy even more, without anyone moving a single finger.

The design of the plan, if they insist on this communist nonsense, would have to be oriented toward promoting to the maximum amount what is working in the Cuban economy, but the ideological priorities and the historical complexes prevent the regime’s authorities from adopting the fundamental decisions to place Cuba on an even plane with the rest of the surrounding countries. That would mean more markets, more property rights, more economic freedoms, more private business sector. A plan that allows the private sector to assume the global operation of the economy, concentrating the largest percentage of resources, and driven by an accelerated privatization of the productive and business capital of the country.

Studies confirm that gains in productivity and creation of value in the Cuban economy are centered in small business deals by self-employed people and entrepreneurial initiatives. It makes no sense to continue restraining these economic agents for the benefit of loss-making state-owned companies and a budgeted sector that is drowning the country. Central planning of the economy must be removed to let the market take its place.

It’s no use to establish priorities like “increasing production or services bound for export and satisfying the demands of export entities; achieving the maximum use of existing capacities, and assuring the processes aimed at satisfying the demands of the internal economy, fundamentally of food, transport, computerization of society, housing, construction materials, renewable energy resources, medicine, and tourism,” if the economic agents involved in them are not capable of driving these objectives and find themselves so limited and conditioned in their operation, that they can barely survive.

Translated by: Sheilagh Herrera

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

What Cuban Business Co-ops Really Need is Private Property

In Cuba, losses during harvest and after collection represent 30% of total production, plus an additional 27% is lost during distribution. (EFE)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 24 May 2019 — Considering that they are essential to introducing fresh air into the rarefied Cuban agricultural system, farming cooperatives need much more than bureaucratic regulations purportedly aimed at “perfecting and updating the economic model.” First of all, little or nothing can be done in the Cuban countryside as long as the communist government resists giving up its claims to the land. Let me explain.

The state currently owns 78% of the country’s arable land. The ability of farming cooperatives to increase the amount of acreage under cultivation and achieve greater economies of scale depend largely on ideological and political considerations rather market conditions based on supply and demand. As long as models of business organization based on legitimate property ownership are not respected or fully integrated into the Cuban economy, land management by farming co-ops will not achieve the desired results.

Currently, 67.8% of farmland is under cooperative management. While this could be considered a success, I would argue that management alone is not enough. Decisive steps towards private ownership of land must be taken so that farming co-ops and all other producers can freely decide for themselves what to produce, and under what conditions, without interference from the state. We cannot pretend these are privately owned businesses under the pretense that they are privately “managed” without taking further action. Sixty years after land was confiscated from its legitimate owners, the state of Cuban agriculture remains far from ideal. And it will not seem like it is headed in the right direction as long as it has to adhere to the kind of rules that keep getting written. continue reading

We find ourselves in the odd situation in which the state acknowledges that it must rely on and support private farming cooperatives, putting them on an equal footing with other actors in the agricultural sector such as livestock and state-run farming operations. But it refuses to adopt the measures necessary for establishing a legal framework to provide institutional recognition of private property rights, without which the agricultural sector cannot prosper or increase its productivity. In this regard, recently adopted measures — Legal Decree #354 and Regulatory Decree #354, published in Official Ordinary Gazette #37 — are of little help when it comes to providing the types of reforms and modernization that cooperatives need.

The primary aim of these rules, in general, is to eliminate existing legislative ambiguity and little else. Don’t expect big changes. The land will still be owned by one entity: the communist state; and the principles that underpin economic activity will remain the same: bureaucracy, inefficiency and control.

Attempts to improve the cooperative system have focused primarily on doing away with some regulations, modifying others that have fallen into disuse and implementing so-called “guidelines” adopted at communist conclaves. These are better left forgotten. If “dissatisfaction with the processes of administrative management, operations, efficiency, hiring, monitoring, accompaniment and control by the companies” have really been detected, what reasons are there for not taking action and adopting, once and for all, a law that restores private enterprise to the Cuban economy, grants it legal rights and makes it the backbone of the economic system?

Cooperatives in other countries, such as Spain and Italy, are private enterprises with a social commitment, not simply managers of assets belonging to others. Here lies their success, in being the true owners of the wealth they generate, which is substantial.

The various measures recently adopted in Cuba seek to “harmonize the operation of cooperatives with the other actors in the productive sphere” and “consolidate the relationship between the cooperative and the agricultural enterprise to which it is associated by giving the latter the responsibility of providing the necessary attention to processes of management, planning, production and contracting of the productions aimed at satisfying the planned demand.” Does anyone really believe this can improve Cuban agricultural production?

In my opinion the only thing this will change will be the bureaucracy, which will tighten its procedures for control over the cooperatives, including consolidating the economic regime through the allocation and distribution of funds from the general assembly, and adopting a ridiculously ideological communist rule that “all cooperatives share common names,” as though fixing every problem boils down to a question of terminology.

The newly approved regulations do include some improvements, particularly for joint venture partners as well as small concessions to silence any possible protests. Cooperatives will be freed from the so-called “socio-cultural fund,” which will no longer be considered part of their assets and will no longer be retained to pay off joint venture partners. Similarly, “areas of collective use,” which are intended to provide services to cooperative members, are hinted at in the new regulations. But in any case, all of this is subject to “the country’s development programs of the country,” without further explanation. These are slim pickings.

In conclusion, Cuba’s cooperative system needs a lot more than a couple of decrees to move forward and become what it is capable of becoming: a real engine of productivity. The “improvements” on which the authorities are relying only mean more bureaucracy and control, without removing the legal, economic, commercial and logistical obstacles that hinder the dynamics of these operations. The road is long and the communist regime refuses to face reality. There will be food shortages and they will blame the embargo/blockade. But the real problem is to found in recently published decrees intended to take control of the cooperatives.

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

The Right to Nationalize vs. the Right to Confiscate

The article written by Lázaro Barredo and published in Cuban government media, was illustrated with this picture with the caption “dos camajanes” (colonialists), referring to U.S. Senators Marco Rubio and Bob Menendez, both of Cuban extraction. (Bohemia)

14ymedio biggerElías Amor Bravo, Economist, 7 May 2019 — In a recent article Lázaro Barredo rails against “camajanes” or colonialists. I cannot think of a more embarrassing epithet to use in discussing Fidel Castro’s nationalizations. From my own personal point of view, I cannot disagree more.

Many lies have been written about the confiscations, which were neither expropriations nor nationalizations, carried out by the Castro regime from 1959 until 1968, when the so-called “revolutionary offensive” came to an end. Rivers of ink were used to create demagogic propaganda which was written to confuse and create a hostile environment for the legitimate owners of financial assets and real estate, who are the real victims in this story.

How does one assess the systematic and organized theft of property — large, medium and small — from all Cubans, which dates back to the start of the Revolution? What rational basis or justification was there for undertaking a structural transformation of the economy, which led to its decline and loss of value, as has been evident for the last 60 years? continue reading

Not even Cuba’s original revolutionary warriors, the Mambisas, behaved this way towards the Spaniards, who controlled all the country’s assets at the start of independence in 1898. Quite the opposite. The young republic was honest and generous with all its children. It had a clear enough vision of the future to respect the existing legal framework of property rights established four centuries earlier. These were the foundations for the development of a great nation that was lost forever in the dark days of the Castro regime.

Respect for private property and property rights are enshrined in the UN’s Declaration of Human Rights, specifically Article 17, which states that “everyone has the right to own property alone as well as in association with others” and that “no one shall be arbitrarily deprived of his property.”

Respect for this right would have provided many advantages and few disadvantages as the Cuban economy evolved after 1959. The violation of this right by the communist regime injured many people, who were not able to recover their losses because the regime never had any intention of compensating them, however much it now tries to say otherwise.

There was no reason for such disproportionate action against the right to property other than communism’s totalitarian ambitions and the desire to plunge Cuba into chaos. Nor was there justification for the confiscation of “embezzled” property or property owned by foreigners and US citizens who had businesses in Cuba. It was the opening of a new  and ultimately unsuccessful front in an ongoing conflict.

Initially, the Argentine ambassador acted as mediator between the Cuban government and the Eisenhower administration in an initial effort to win some sort of compensation for the confiscated properties. In the end, however, it was Cuban citizens —in greater numbers than  Americans and other foreigners — whose properties were confiscated. They were expelled from the country and forced into an impoverished exile by their own government just as many were beginning to enjoy a well-deserved rest after a lifetime of work, effort and dedication.

These are not “frantic attacks stemming from years of pent up frustration with the many policy failures that has led to uncontrolled rage.” What is happening in regards to Cuba with enforcement of Title III the Helms-Burton Act is nothing more and nothing less than a process that has been long anticipated but was delayed for reasons that are now of no interest. It reflects a process born of a desire for justice, not revenge.

Secondly, it has nothing to do with scaring away foreign investors. I would hope they might be able to develop their projects in Cuba with total freedom and in sectors they themselves choose, not in properties that were confiscated. Opportunities exist, but the communist regime does not make them available. Why is that?

I see no need to discuss here the powers governments have to nationalize property. Of course, they exist and are used routinely, but they are based on legal procedures whose main objective is respect for private property whose ownership is to be transferred to the state for the social good and in exceptional circumstances. How else would highways, telecommunications networks, airports, railways, hydro-electric dams, renewable energy plants and the like get built?

A state acquires title to financial assets through expropriations, generally of real estate, which allows it to take on these projects. Because they are essential to national development, the United Nations recognized their legality in 1974 but stipulated a fair price must be paid, in a timely and reasonable manner, for the expropriated property.

However, what was done in Cuba after 1959 in no way complied with international norms. Rather than being examples of nationalization or expropriation, they must correctly be referred to as expropriations. It was a move clearly intended to provoke tensions with the United States with the malevolent intent of transferring all private property to the state at no cost, then managing those assets using Stalinist planning methods and state control of the economy. The results in Cuba are plain to see.

A negotiation with the United States — carried out publicly and with transparency, without ad hoc and unsupportable claims over the costs of a so-called “blockade” or “embargo,” and with payment based properties’ true, current monetary value, duly verified by independent international organizations (unlike the Castro regime’s ludicrous agricultural reform junk bonds paying 4.5% over twenty years, pieces of paper in which no one puts any faith) — would, at the very least, serve as a reasonable starting point towards better relations between the two countries. Had the United States been given such an offer, no one would have been surprised if it had cancelled the sugar quota in 1960. Any other creditor would have done the same.

But, in fact, not only did Fidel Castro have no interest in resolving the conflict, he actually wanted to make it worse in order to build his power base on the pretense of seeking justice. The communist regime falsely claimed it had come up with some proposal which involved real, objective compensation. An example of this approach is the embarrassing negotiation with the socialist government of Felipe Gonzalez in 1986 involving claims over property seized from Spanish citizens, a case better left forgotten.

The implementation of Title III of the Helms-Burton Act represents an exercise in justice, not an attempt to cause embarrassment over the seizure of private property in Cuba after 1959. It is good that this provision is now being enforced because it sends a clear and transparent message to any government, regime or dictatorship of any ideology which believes it has an absolute right to confiscate the financial assets of its citizens. The law establishes not only the permanence of the human right to property, but the primacy of the private over the public when governments behave illegally, as the Cuban communists did after 1959.

There is no justification for what has been done. But history marches on and it is impossible to keep a country sealed in a time capsule, as though it were still in the Cold War. In an era of globalization and the start of a fourth industrial revolution, countries need to demonstrate credibility and confidence to attract investors, capital and talent. None if this is possible in Cuba because its interventionist and totalitarian stance frustrates any efforts at economic freedom, rationality, a better life and prosperity for its citizens, who are the keys to national development. The regime maintains a suicidal position

Even if the confiscations were truly done with the best of intentions — “to give the Cuban people a decent quality of life” — it is quite obvious that the result did not turn out as expected. Despite the promises of “free education and health care” (which are subsidized, and highly subsidized, with tax and non-tax revenues totaling almost 70% of GDP), Cubans who remember what the country was like before 1959 know there few countries in the world whose evolution has been in reverse.

And Cuba is the most significant case of economic regression, one characterized by low salaries, ongoing rationing, lack of choice and decimated real estate. After sixty years, the aspiration of many Cubans is to leave country for a different life abroad based on progress and well-being.

Since that is quite impossible in Cuba, those who oppose Helms-Burton and demand that the Castro government stand firm in the face of legal claims should reflect on whether or not it is worth it to remain fixed in their positions and refuse to change. All they have to do is look around; the conclusion cannot be more obvious. Cuba’s “patriotic and pro-independence” aspirations would fare better in an environment of freedom, choice and property rights. Let’s try it out.

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

May Day in Cuba With Little to Celebrate

Shortages of food have made the daily routine difficult for Cubans who now have to stand in long lines to buy it. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 1 May 2019 — The relationship between Cuba’s communist regime and the world of work has been difficult. Therefore, there is not much to celebrate this May Day, nor has there been on previous ones. This relationship has always referred to, by the Cuban government, as “adverse times, characterized by the resurgence of aggression, threats and lies by Yankee imperialism and its lackeys,” but the reality is quite different.

There is no external reason to explain why Cuban workers have become the great defeated of a regime which, nevertheless, has wanted to present itself to the world as the “workers’ paradise.” Forget all that. Let’s go back to the beginning.

A bit of history can serve to illustrate what is we’re talking about. After the process of revolutionary transformations that upset the Cuban economy and its position in the world, one of the recurring nightmares of Fidel Castro was the low productivity of labor in the economic system that he himself designed. Without understanding that this fact is a direct consequence of the revolutionary structures, the patches that were placed on the system over several generations, far from resolving the situation, made it worse. continue reading

It is worth remembering that it was that distant August 2, 1961 when the fledgling regime announced a change in the labor legislation and the role of the unions. In an attempt to control the “Cuban Workers Center” (CTC) — as the only legal union, totally controlled by the government, was called –the regime adopted in Cuba the labor relations model of the communist countries.

Until then, most of the companies not expropriated or nationalized maintained a labor framework similar to the one before 1959. But this year saw the real start of the disaster when all Cuban workers became, at one stroke, “employees of the state.”

From then on, the problem became how to produce more, despite the absolute control of the economy by the communists. So much so that only one year later, on March 3, 1962, the first “work card” was created to register the work history of each worker, which ultimately resulted in an assessment of their acceptance of the new regime. and willingness to participate in the activities organized by it. Che Guevara did not take long to question the quality of production, while rationing and shortages were extended to all products.

Four years later, at the congress of the CTC, a document was published in which low productivity and absenteeism were noted as the two main ills of the Cuban labor world. And thereafter, the issue began to be increasingly serious and a must-solve for Fidel Castro, who launched the theme, little thought through and hasty, of the “moral stimuli” as a solution to increase productivity.

The 1968 “Revolutionary Offensive” that led to the nationalization of 50,000 small private businesses was of little use, rather it finished poff the economic system, which had barely survived until then.

From then on, the lack of food became an additional concern for the authorities, who did not want to understand the origins of this. In August of that year, the labor minister ended up imposing, compulsorily, the much-criticized “work cards,” which would openly report the behavior and political attitudes of the workers.

Popular trials in the workplace spread all over the country. The failure of the “Ten Million Ton [Sugar] Harvest” was a leap into the void, mobilizing all of the country’s economic resources in a goal that was known to be unattainable, but that would have negative conclusions for the world of Cuban labor.

Nothing in all this could end well, and in May if 1970, taking advantage of the fiesta for May Day, Castro announced a strong attack on the unique union, denouncing the problems of productivity and absenteeism as responsible for the failure  of the zafra (sugar harvest), at the same time announced a reorganization, hidden in the call to “democratize the union.”

A year later, and on the exact same date, Castro announced that from then on wages would be established based on workers’ contribution to production, breaking forever with the revolutionary principle of equality.

In the new tradition of giving each year a name, 1972 was called “The Year of Socialist Emulation” in what was interpreted as an approach to the Soviet institutionality.

However, in July of 1973 Fidel Castro announced in a speech that in Cuba the socialist principle of “to each according to his work, from each according to his needs” would be applied as of that moment, in what was interpreted as a retreat forced by events.

In the CTC congress in November of that year, the regime returned to the idea of material stimuli and the unions recovered part of the lost relevance, with the election of Lazaro Peña as general secretary, but he died only six months later.

From that point forward, things went from bad to worse. The institutionalization of the regime after the approval of the Soviet-inspired 1976 constitution was a failure, and provoked the outbreak of social protest in the Peruvian embassy and the subsequent exit by way of the Port of Mariel of hundreds of thousands of Cubans in the Mariel Boatlift.  This was the first major emigration since the revolutionary times of Camarioca and the “freedom flights.”

In any case, the system created by Fidel Castro continued to expel people from the island, but it was no longer “the rich, the exploiters and collaborators of Batista” who were clinging to the boats leaving from Mariel to flee the country. The arguments were over. The failure of the “workers’ paradise” had been shown clearly before the world.

But the “Special Period” took care of the rest, that time after the collapse of the Soviet Union and the loss of its subsidies plunged the Cuban economy into deep crisis. During those years, Cuban workers found themselves imprisoned by the contradictions of a regime locked in its ideological postulates, which one day said yes, and another sais no, to the same measures and performances.  Now, without Soviet help, the culprit of all evils was the blockade or the embargo, decreed by Kennedy, of which nobody had paid attention to before the collapse of the Berlin Wall.

In its congress of 1990, the CTC, for the first time, had to analyze the problem of unemployment in Cuba, which it tried to explain by the “lack of raw materials,” and only a month later, Instruction 137 of the People’s Supreme Court urged the denouncement of those who had a high standard of living, persecuting and repressing the coleros and macetas, as people who were seen to “line their pockets” were called.

The social outbreak was immediate, and led hundreds of thousands of Cubans to escape the island in rafts, causing another conflict with the US in the waters of the Straits of Florida. There was an attempt to solve the problem by assembling those who fled the island on the US Naval Base in Guantánamo, from which most were eventually allowed to leave for the United States.

This historical record confirms that Cuban workers have not seen a solution to their aspirations in Cuba, and all those who have been able to do so have chosen to leave the country in search of a place where they can make their dreams come true.

In the current situation, in which the regime is paralyzed as a result of the end of aid from Venezuelan, and the failure of the Raulist measures to improve the functioning of the economy, another social explosion is possible. The question is whether there will be a viable way to escape from the country under the current conditions. Castroism remains determined to implement, without democratic support, an economic model different from what they call “savage capitalism,” a model which no longer exists in any country in the world, and so it goes.

If we really want Cuban workers to help promote economic development and improve the quality of life and prosperity of the nation, we must restore a different system of labor relations, because the one that exists does not work. Otherwise, on the 1st of May, the Castro regime will always have little to celebrate.

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

Cuba’s Economic Forecasts for 2019 are Pie in the Sky

José Luis Rodríguez has given an account of the forecasts of the economic plan for 2019, not without first recognizing that “this year the world economy will face a situation even more complex than what was present in 2018.”

14ymedio bigger14ymedio, Elías Amor Bravo, Madrid, 27 March2019 — The The Castro regime’s former minister of the economy, José Luis Rodríguez has reported, in an article published in Cubadebate, on the forecasts for the authorities’ economic plan for 2019. He begins by acknowledging that “this year the world economy will face a more complex situation even than that of 2018.” And he is right. We have already said it several times. The Cuban economy in 2019 could be faced with a very difficult exercise in which anything can happen.

Therefore, and contrary to what Rodriguez says — to wit, “this situation will affect the economic performance of our country, to which is added the foreseeable increase in the negative impact of the US blockade, taking into account the new measures adopted by the government of Donald Trump already in the first months of this year, including the application of Title III of the Helms-Burton Act” — I intend to show in this article that the authorities are the ones to blame for the deficient “planning” for the Cuban economy.

We can orient ourselves with a look at the forecasts. continue reading

For example, for goods exports, growth is estimated to be 6%. A figure clearly excessive, if one takes into account this environment of lower growth of the global economy. And excessive if compared to the evolution experienced in this variable from 2012 to 2017. In those years, and with government data from the National Office of Statistics (ONEI), exports have decreased at an average rate of -3.5%, with some years collapsing -19.7% as happened in 2016. I do not know, therefore, where the planners of the economy invent that 6% for 2019 which, like every year, will end up being unmet, with the negative effects that this has on other variables of the economy.

Another excessively optimistic forecast it that of tourist revenues which, according to the leaders of the regime, should grow by 17.6% Another piece of incongruous data, as the lower growth of the global economy will exert an influence on the demand for tourism trips, and especially sharply so in European countries, which are Cuba’s main markets. Thinking about that 17.6% is pie in the sky to calm the Spanish hoteliers, who know that this can not be achieved. More prudence would have been the right thing to do.

And we continue.

As regards the total investments, so necessary in a decapitalized economy that has a sickly obsession for prioritizing current spending, a growth of 20.1% is planned, reaching 11.3 billion pesos. Once again, the ONEI imposes the number. In none of the 6 years elapsed between 2012 and 2017 has investment exceeded of 10 billion pesos, the average balance being 7.751 billion pesos.

To think that it can reach 11 billion pesos in 2019, with the existing difficulties, is more pie in the sky that undermines the credibility of the design of Castro’s economic policy. Furthermore, this already high level of investment continues to limit the participation of gross capital formation in GDP below 10%, with its negative effects on growth potential.

Forecasts with regards to direct foreign investment are the same thing, with growth estimated at 6.2% of that total, up to 700 million pesos, a far cry, of course, from the goal of two billion pesos that has been pointed out for years to justify the monster known as Law 119. I doubt very much that these figures will be reached with the forecasts of movements of capital at an international level associated with a lower global growth and the limited attraction of investing in Cuba.

The communist planners have established that imports will decline 11.2% compared to what was planned for 2018, with the aim of curbing the country’s foreign debt, which is based on conditions that allow access to financing new credits needed to prevent the economy from going bankrupt. The repossession of foreign currency in hotels that has been practiced since January is only the first step among all the actions that the regime must implement to avoid international bankruptcy.

Cuba’s communist planners remain convinced of the need to replace imports with domestic products, and this it be achieved in an economy that desperately needs technology, intermediate goods and even consumer goods from abroad, because domestic production is unable to meet the demands of the population.

The most curious thing is that this macroeconomic picture is expected to be achieved through the “four basic linkages with foreign investment” and Diaz-Canel talks about nothing else in his habitual meetings to report on progress. Namely, “those related to the growth of production, tourism, exports and the non-state sector, which have been estimated to contribute around 20% of GDP, although in sectors of low productivity, but which already absorb 31% of the workforce.”

With this laundering of figures — absolutely incredible — those responsible for the economy estimate a GDP growth in 2019 of 1.5%, just 4 tenths above what was achieved in 2018, which has little hope of improvement. And they remain so calm, because in Cuba nobody is going to question that scenario, much less offer another alternative that objectively improves the living conditions of the population.

Obviously, I can not trust this design, nor the estimations whose rigor is questionable, let alone give credit to the analysis made by the planners. To think that an increase in exports combined with a decrease of imports can be beneficial in the present conditions of a contracting economy is a serious error. To believe that the recovery of agriculture or tourism can increase the supply and allow the advance of investments is to fail to understand that, for the same reasons as in 2018, these forecasts can fail for meteorological reasons or whatever.

The communist planners’ other “ideas” — for lack of a better word — are to reduce idle inventories by 2%, to support 400 million dollars in the production of goods and services, to reduce the budget deficit of 9% in relation to the GDP in 2018 (predictably higher) to 6.1% this year, with a decrease of 3.06 billion pesos, without affecting the basic social services of public health, education, security and social assistance, something that is simply impossible and the authorities know it, and thus they will further strangle internal liquidity, especially for self-employed workers.

Financing the construction of 32,000 homes in just one year, certainly complicated for economic policy, is more pie in the sky, not to be fulfilled because it begs the question of where they are going to get financing. Lastly, but no less important, reducing the external debt service by 2.8% and the total debt by 1.5%, is an interesting action, but with limited effects because the level of the debt is so high that its sustainability is complicated. Small steps, without commitments or credibility, do not help much.

The Cuban economy can not improve with this design of the Castro regime’s economic policy because it is outdated, obsolete, inefficient and does not go directly to the origin of the problems. Undoubtedly, fundamental actions such as maximum respect for property rights, flexibility and liberalization in matters of production, private companies, investment by Cubans and not only by privileged foreigners, freedom of choice and development of markets and logistics are all lacking.

There are so many things that have to be done, that believing in this design of communist planning is like believing in a fairy tale. What happens is that in Cuba, these Castroite fairy tales always end badly. Very badly.

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Editor’s note: This article was originally published on the blog Cubaeconomía. We reproduce it with the authorization of its author.

The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

Wealth Doesn’t Only Come From Work, There’s More

In their analysis of the economy, Marxists spurn human motivation as an element in the creation of wealth. (Archive)

14ymedio bigger14ymedio, Elías Amor Bravo, Miami, January 6, 2019 — The communist newspaper Granma devotes an article in today’s edition to the economy, and specifically, does it with an untruthful title: “Wealth will come from work.” I have nothing against the journalist who wrote this pamphlet because certainly it will have been dictated to her. But since it commits some very serious errors of elemental economic analysis, this blog will dedicate its first entry of 2019 to commenting on its contents.

To begin, since many years ago, so many that memory doesn’t reach so far back, economic science has known that work, as a factor of production at the macro and micro level, is fundamental for a productive system. But obviously it is not the only factor capable of creating wealth, and with time, economists have stopped speaking of work, homogenous and generic, typical of Marxist teachings, and have started to establish talent as the most adequate measurement of contribution to productivity and wealth.

They are different things. For example, the article assumes a grave error, and I cite from the text: “having more resources, including monetary, for the sake of satisfying growing needs and more quality of life (…) will only come from work, and from individual and collective efforts being directed toward developing the economy.” continue reading

False. This only happens in economies of societies of poverty, of subsistence, in which salary only exists as income, and the population does not have alternative assets that would permit them to generate wealth.

In modern economies, the means that allow people to enjoy a greater standard of living come from work, but not only from work. Above all, of all that can be gained by capitalizing on work, an effort to save, identifying opportunities and risks, and taking positions for the future.

It’s not difficult to observe that in Cuba “activating all the potentials to produce more and with efficiency,” is unthinkable with the current model, because it lacks a fundamental element for that: human motivation.

In their analysis of the economy, Marxists spurn human motivation as an element in the creation of wealth. For them, social uniformity is the priority. Social justice focuses on lowering aspirations, reducing individual motivations in favor of certain collective objectives that are difficult to measure and assess, but scarce and limited. And in this postulate resides the failure of the model. On the other hand, people are driven by incentives that guarantee them the ability to access a better standard of living, to fulfill their dreams, to see realized a better future for their children and grandchildren. That is the motivation.

And so, in addition to the fruits of labor, although only a small part is saved, the fruits of those resources allow access to other goods and services, or supplemented with bank credits they allow investment in one or several homes, in land, buildings, machines, patents, etc, any lawful thing that allows more wealth to be generated.

The capital factor, in Cuba harassed and extinguished by the communist regime for 60 years, hasn’t been used to fulfill its important role in the generation of wealth. Cubans have to flee from Cuba to establish that economic reality, in Miami, Madrid, or wherever destiny takes them.

Economists know that the life cycle of human consumption is conditioned by human wealth, which comes from work throughout one’s life, and non-human wealth, which has to do with the property rights that people have over certain assets, like land, homes, plots, savings, investment and pension plans, etc.

In advanced economies, work is just one factor of the many that generate income and wealth, and governments know that for a country to get out of underdevelopment and firmly direct its evolution toward prosperity, it is necessary not to place obstacles in the way of factors associated with non-human wealth, as happens in Cuba.

Additionally, the article in Granma doesn’t take into account the fact that we live in a global world, in which technologies associated with the fourth industrial revolution are changing the forms of producing, consuming, investing…of working. By now work is not respresented by those gray and uniform human masses of the Europe of the Iron Curtain, Soviet Russia, or the Chinese of Mao’s Cultural Revolution.

Work in this new century is measured in terms of talent and skill, which is nothing other than a measurement of the quality of the work. Fidel Castro once spoke of rewarding work according to its quality, and there is his legacy: Cuban salaries, some 30 dollars per month, are among the lowest in the world. Without skill businesses cannot function, and for that reason they fight over talent and pay elevated wages to those workers who provide that distinguishing element of competence.

Unskilled workers have to make an effort not to miss the train of the future and opt for a strategy of learning throughout life that, in many cases, encourages businesses to be more productive and efficient. Educational and training systems must be reoriented to contribute in a decisive manner to this process, demand less social prominence, and opt for professional skill.

The problem is that the world has changed — a lot — and the communist regime of the Castros has remained in an artificial bubble since the 1950s, and the worst thing is that they want to make us believe that they are right. An absurd disaster.

Translated by: Sheilagh Carey

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The 14ymedio team is committed to serious journalism that reflects the reality of deep Cuba. Thank you for joining us on this long road. We invite you to continue supporting us, but this time by becoming a member of 14ymedio. Together we can continue to transform journalism in Cuba.

Much More Damaging Than a Hurricane: Expropriations Without Compensation

House destroyed in Caibarién by Hurricane Irma. (Pedry Roxana)

The Cuban Economy, Elias Amor Bravo, 27 August 2018 – Someone asks a naive question in Granma today: “Can a policy be more harmful than a hurricane?” The answer is yes, of course a policy can cause irreparable damage to a society by its application.

The most obvious example is the policy practiced by the Cuban communist regime against its people. Don’t look at “the blockade or the US embargo,” because however many measures one can cite of concrete cases of the application of that legislation, the harm caused by communist policies is infinitely worse. One in particular, the worst of them all: expropriations without compensation.

In any case, as has already been pointed out on this blog on numerous occasions, the matter of the embargo has an easy fix: pay what is owed by the Cuban regime. When one of the parties is unwilling to assume its responsibilities in a dispute, normally the other one will not make a move either. continue reading

It has been almost 60 years, certainly, but many more could pass, because I insist that the damage that the poorly-named ’blockade’ causes the Cuban economy is miniscule compared with the waste, lavish spending, nonsense, and accepted bankruptcies over six decades of the Castro regime.

Cuba has done business, received investments, obtained credits and loans over decades, without any limit, but nevertheless, that did not mean an improvement in the living conditions of Cubans, but rather the complete opposite. It’s time that demagogy be set aside once and for all, and that they begin to assume responsibilities for the many votes that they obtain from the countries of the United Nations.

Even a hurricane, as the Cuban residents of south Florida well know, with all its destructive force, can still create economic opportunities in recovery that over the long term end up being positive. To this end, it is the financial sector, savings and insurance, whose development on the island is practically nonexistent. The Castro blockade of an activity essential for the functioning of an economy, in terms of connection to disasters, is an example that confirms the terrible quality of the economic policies implemented on the island.

Playing dominoes in Cuba after Irma.

In Cuba, cyclones are devastating, among other things, because there is no space for private or public savings. Basically, because Cubans scrape by on the lowest salaries in the world, incapable of saving for old age and with a notable suspicion and distrust toward the banks belonging to the state, which on occasions have shown that, when the time comes to defend interests, they never put first those of their depositors, but rather those of the ones in charge. The Cuban economy has neither the rigor nor the confidence necessary for the damages of a hurricane to be fixed as happens in any other country in the world. To that end, the consequences are bigger and it takes much more time to return to the levels of prior to the natural disaster.

History is what it is. After the property confiscations decreed by the communist revolution at the beginning of the 60s and until the “revolutionary offensive” of 1968, the hereditary private capital of Cubans passed to the hands of the state without any compensation.

A hurricane of massive destruction. It’s possible that the Granma columnist doesn’t know it, or that the report that is sparingly made every year for the United Nations doesn’t want to refer to it, but those uncompensated expropriations by the state from their legitimate owners (many of them citizens of the US whose government sees itself as entitled to defend their interests) meant the absolute impossibility of every again reaching their prior levels of income and wealth and, for this reason, they ended their days in the most absolute misery.

Perhaps it doesn’t matter to the communists what could happen to these people, their assets, and their companies, but what they had to endure as a result of these “revolutionary” actions was much more destructive than the worst of hurricanes: exile, rupture, the loss of family ties, or simply fleeing abroad in search of freedom.

What Granma calls “the economic, commercial, and financial blockade imposed by the United States against Cuba” is a joke compared with the harm caused by that communist greed to change the structure of property in the Cuban economy. The impact of this was well over $140 billion. In practical terms, this is the total value of all the homes and savings that were expropriated suddenly in two or three neighborhoods in Havana. If what they want is to compare, let them do so.

I insist again. The “blockade” has an easy fix. Pay. Once done, let’s see if it’s true that the Cuban economy can straighten itself out. I greatly fear that it won’t be possible if one considers the design created in the so-called “constitutional reform.” One step forward, but two steps back. This is the real check on any real advance in the Cuban economy and in the improvement of the population’s living conditions.

For a responsible government, throwing a stone and hiding the hand isn’t the most appropriate conduct. If the communist regime wants to normalize economic, commercial, and financial relations with the United States, it knows well what it has to do.

I don’t see the US government especially interested in maintaining a policy whose sole responsibility belongs to someone else. The recent toughening of sanctions by president Donald Trump in 2017 is a good point in the game to try to put a definitive end to the dispute. Above all because it means not accepting a Castro “snub” from which US citizens and companies never should have suffered.

The United States does well to defend its’ people’s interests. It’s a message that, transferred to the rest of the world, has a very clear and valuable meaning, possibly quite superior to that given by other countries to their citizens who are victims of communist expropriations.

History is there to be told. Frequently, the communist regime in Havana tends to create a history that never existed, or to cut from it scenes that by now turn out to be unviable, like the arguments offered to oppose a democratic and pluralistic multiparty system. This is typical of authoritarianisms, because they only want one culture, one economy, a political system based on one ideology: socialist or communist, it doesn’t make a difference.

If the General Assembly of the United Nations really wanted to help in this matter, it would be easy. Maybe in Havana they are more interested in permanent harassment of their neighbor to the north. Maybe they want it to continue this way for another 60 years.

Translated by: Sheilagh Carey

The Failure Of The Dairy Sector In Cuba: From The Glass Of Milk To The ‘Master’ Cheesemaker / Elias Amor Bravo

Illustration of a cow. (14ymedio)

Elias Amor Bravo (economist), 17 July 2018 – The National Milk Group is one of those inefficient conglomerates that exist in the Cuban state economy to control corporate production, in this case in a fundamental sector such as dairy. To cite just one example, the National Office of Statistics (ONEI) reported the value of wholesale and retail trade in dairy products as 1.3 billion Cuban pesos (roughly $52 million USD) in 2016, representing 10% of total food expenditures. Almost nothing.

An article in the state newspaper Granma alludes to the increase in the investments of the State Group to increase the productive capacity of the dairy industry. The Castro brothers have starred in some unforgettable episodes. One of these was undoubtedly Raul Castro’s “glass of milk” speech.   But Fidel Castro himself, on occasion, acted as a cheese specialist before the master cheese makers of Cuba. Amazing. continue reading

One of the great failures of the Cuban economy established by the so-called Revolution has been cattle ranching and the dairy industry. The confiscations of the private cattle ranches and of the companies of the sector at the very beginning the revolutionary process left these industries, of vital importance for the country, without a strategic direction..

The regime has been trying for 60 years to increase the production of milk and derivatives, but has not been successful. Basically, because the institutional and property rights system is unable to offer products in the conditions of “variety, quality, safety and priority” that is required, and what is even more serious, of quantity. Cubans have been forced to coexist with the rationing of products in great demand. In other words, the collectivist effort has had disastrous consequences for a sector such as dairy. Let’s look at the data.

To mention some examples, the most outstanding and from the official information source, the ONEI, in 2006 the production of pasteurized milk, the highest volume type (in relation to condensed and evaporated) registered 127.8 thousand tons. In 2016, the last published data was 123.1 thousand tons. Only a year earlier it had been 104.8 thousand tons. In the years between 2012 and 2016, the average annual production of pasteurized milk was 110.78 thousand tons, 10% less than that obtained in 2006.

Another dairy product in high demand, yogurt, fell further, from 183.5 thousand tons in 2006 to 146.7 thousand in 2016, a 20% drop. It is even more serious to note that condensed milk, for example, was reduced from 0.9 thousand to 0.4 thousand in the same period, a 55% drop. But in this case, the aggravating factor is that imports of condensed milk, in the face of a limited domestic supply, has gone from 2.3 thousand tons to 2.6 thousand in the same period. The case of milk powder is also significant. Imports in 2016 amounted to 55 million tons, and according to ONEI’s statistics the product “disappeared” between 2012 and 2016, while in 2006 it had reached a total of 21.1 thousand tons. In this case, 141 million pesos are paid for imports, as a consequence of the absence of a domestic product.

These data confirm the backwardness of the industry, the inaction and the productive inability to meet basic needs. The sector calls for “the modernization of the plants with the entry of new equipment and the repair of existing ones,” although I do not believe that this is the solution, no matter how hard those responsible try to justify it.

Granma alludes to the conclusions of a “meeting held between directors, technologists, researchers and master cheesemakers from all over Cuba, recently organized by the Provincial Dairy Products Company of Camagüey.” What I find surprising is that the event still recalled “the extraordinary knowledge that Fidel Castro had” on how to recover the cheese culture in Cuba. True.

However, Castro retired in 2006 and since then, the results of cheese production are those that from before. An absolute collapse. What is more, now that neither Fidel nor his brother are there, the country is confronting the incentive of demand coming from tourism, estimated at 7 thousand tons of cheese. If Fidel really had any responsibility in the reorientation of the sector, and his words and messages meant at some point “the beginning of a new stage of transformations in the sector,” the results leave no doubt. The glass of milk will have to wait.

To recover the dairy sector in Cuba, it is necessary to make advances in the institutional transformation of the economy. This sector, which needs close ties from the milk producers to the final distribution, has numerous options for management, and none of them are state groups or companies belonging to the state.

The state is not good at milking cows, making milk powder or yogurt. This is an activity that has to be contracted out and for which private companies should be held responsible, with autonomy and a stable legal framework. The alternative is to throw money away. Even with investments in equipment (skimmers, clarifiers, presses, molds and pasteurizers, along with substantial improvements in the cooling systems), and the training of workers, the problem still would not be solved because the value chain of the sector remains broken.

The example is in milk production. In 2006, before the partial land reforms were launched, the private producers managed 344.4 thousand tons. These private producers in 2016 delivered 516.1 thousand tons, a growth of 50%. The state, which still retains a very prominent part of the final production, in the same period increased production figures by only 35%.

The answer is obvious. The private sector manages much better and produces more than the state. The solution does not admit questioning: begin by dissolving the State Groups, put the industrial sector in the hands of private entrepreneurs.

But above all, livestock management also needs to be in the hands of the private sector, as it was before 1959, and we will see how everything improves very fast. Then nobody will remember Fidel Castro’s lessons to the Cuban cheese makers, nor Raul’s “little glass of milk.” Put it to the test.

Tourism as a National Development Priority / Elias Amor Bravo

Several tourists take pictures in the Havana’s Plaza Vieja. (EFE)

Elías Amor Bravo, Economist, July 2, 2018 — No one doubts that tourism is a top priority for the Cuban economy. Whether or not the communist authorities are managing it well is another matter. It is no surprise that President Díaz-Canel stresses “the priority of tourism for the country’s development given that it has become one of the main income generating activities in the island’s economy.” The issue, however, is not just about setting priorities but how to execute them and achieve results. As any Cuban peasant knows, it’s one thing to talk but action is something quite different. The distance between the two can be painfully large.

Let’s consider why.

In terms of absolute growth Díaz-Canel considers tourism in Cuba to be a success. In fact, as a Granma article notes, the so-called “government commission to stimulate and manage the tourism sector” can point to “impressive” growth since the 1990s under the direction of Manuel Marrero Cruz. continue reading

Back when the country was in the depths of the “Special Period,” a high-level communist official recognized Cuba’s potential as a tourist destination. With little hard currency and facing insolvency, the regime began to accept — with a certain degree of resignation — the arrival of foreign tourists in the country. It was an activity that, after the triumph of the so-called “Revolution” in 1959, had been largely banned due to its association wth the bourgeoisie and the wealthy, who were considered enemies of the new Cuban regime.

But, in fact, figures back up Díaz-Canel’s claims. The 18,000 rooms available to tourists in all of Cuba had grown to 67,000 by the end of 2016 according to figures from the National Office for Statistical Information. And that may not even include rooms rented out in private homes through social media sites and other online platforms that have begun springing across the island.

The Castro regime did the math. To turn tourism into the locomotive of the Cuban economy, it had to produce hotel rooms. The reality, however, is that the determinist Marxist system, which has done so much damage to countries that embraced it, rarely produces the expected results. And Cuba proved to be no exception. Tourism is still not an engine, much less a locomotive, or anything resembling one. Díaz-Canel himself has recognized this.

The president defends the Cuban tourism sector, citing “the comfort of its hotels, the beauty of its beaches and scenery, the country’s low crime rate.” But at the same time he acknowledges weaknesses, including the fact “that many products which could be produced domestically are still being imported, which raises costs.” His solution is “to further develop agriculture as well as sources of renewable energy and new technologies.” In short, what he calls the “so-called industry without chimneys.”

As a corollary, Díaz-Canel cites challenges to the sector, including “focusing attention on the growing number of visitors, raising the quality of Cuban tourism and finding replacements for imports.”

Developing the tourism industry requires taking all these factors into consideration. But there are many others that Díaz-Canel’s communist regime is not even mentioning. However, he has only to ask his advisers for a brief description of tourism successes in other parts of the world to recognize that “talk and actions are very far apart.” I also have the impression, an admittedly pessimistic one, that they are not willing to do the things it takes to be successful. Let’s look at them one by one.

First, tourism is a private sector activity. Nowhere else in the world does the state own hotels unless there is some concrete reason (national patrimony, cultural significance, historic preservation) to justify it. And even in those cases there is no question that overall operation and management is best left to the private sector.

As a private sector activity, the hospitality industry needs a legal system which respects private property rights and does not create obstacles — other than those related to legal and urban planning issues — to business development. Owners of tourism related businesses respond more quickly to the tastes of their consumers and are much more familiar with their needs. They can more easily direct financial resources to the needs of their businesses and, once those businesses are profitable, are more able to expand or increase their operational bases. If we look at examples from other countries, we see this is nothing new.

Secondly, tourism requires training and expertise. Can anyone tell me in what university or trade school run by that “accomplishment of the revolution,” the Cuban educational system, can someone study gastronomy or learn how to be a professional chef? Where can someone learn how to be a waiter, maitre d’, sommelier, bartender, hotel receptionist, housekeeper… in short, any of the various jobs within the field of hospitality?

Not only must training centers be created as soon as possible, foreign language instruction along with the full range of administration and facilities management must be promoted. Given the country’s backwardness in these areas, companies must be able to rely on funding for employee training.

Third, tourism requires intelligent promotion. Cuba is competing with financially stable, high quality tourist destinations in an area of the world which attracts the most affluent segment of the tourism market. Its competitors have more experience and their promotional campaigns in target markets guarantee them a steady and growing stream of visitors, even when the economic climate becomes difficult, as happened in late 2008.

Tourism promotion in Cuba is controlled, directed and carried out by the state. It does meet its publicly defined objectives because basically it does not adequately support what Cuba has to offer, which are its competitive advantages. All consumer demand from overseas is channeled through package deals arranged by international tour operators. Tourists who want to travel freely to the island must deal with a shortage of information that prevents them from being able to experience the country on a modest budget.

Fourth, as a result of the secular amnesia that began in 1959, Cuba has arrived late to global tourism. Its new importance stems from official statements about being the locomotive of national development, something that upon arrival the tourist does not perceive. I refer to the current state of the country’s abandoned infrastructure, roads, communications media and services in general.

The tourist who wants to experience the reality of Cuba is confronted upon arrival with a backdrop of social devastation, creating feelings of anxiety that one does not associate with the idea of a pleasant vacation. The next year he does not come back. These are the kinds of things of which one should take note.

Mobile Internet and the Right of Cubans to Social Networks

A group of Cuban high school students share audiovisual content through a cell phone. (14ymedio)

Elías Amor Bravo, 3 January 2018 — Cuba’s restrictions on internet access are an example of the types of controls the regime imposes on the population. On 28 December, however, it was announced that in 2018 the island’s inhabitants were expected to have access from their cell phones, something that thus far has not been the case. Good news, no doubt.

Many wonder how, in an era of telecommunications and social networks, it is possible to survive given such backwardness. But the reality is that in Cuba internet access is through satellite, which not only means not only higher service costs but also limitations on its effective development. Alternatives such as the undersea cable that exists around the island are not enough to increase capacity. In the end everything depends on policy decisions by the regime that would allow free use of the internet for all Cubans, a right that continues to be restricted. continue reading

Cubans have certainly shown a special interest in anything having to do with web communication and internet access. Authorities have provided figures on the use of social networks in Cuba and, as of July 2017, the regime claims a growth in social network usage of 346%, though obviously this is starting from very low levels that are not seen in other countries. These figures only make sense after taking into account the fact that almost two million Cubans live overseas and many maintain contact with their families on the island.

The state-owned Telecommunications Company of Cuba (ETECSA), which has a monopoly internet service on the island, is apparently still preparing to offer mobile internet service in 2018 though it has not provided exact dates or deadlines for service to begin. Commitment to customers: zero.

With respect to mobile telephone service on the island, official figures indicate that 600,000 new mobile lines were activated in 2017, serving 4.5 million Cubans out a total population of about eleven million. Despite these seemingly impressive figures, the reality is that Cuba has one of the lowest levels of connectivity in the world and is almost 10 years behind in its the use of mobile technologies.

As in many other areas of family finance, what explains this backwardness are actions of the regime, which is the only authorized provider, and limitations on accessing the internet at home. Access is currently limited to workplaces, state enterprises, universities and schools. Another factor to consider is the high price of the service, with home internet service costing between 15 and 70 convertible pesos (CUC) per month according to official ETECSA figures. This is a price too high for a country where the average salary is around $ 20 a month, with the CUC being at parity with the dollar

Therefore, given the inability to receive internet service at home, Cubans now gather outdoors to use the wireless internet access points in the parks and public thoroughfares, an image that has become emblematic of the population’s desire and need to communicate and obtain information. They have a right to complain.

The internet is undoubtedly one of the challenges facing the generation of Cubans, who hope to take over from the Castro regime after Raúl Castro gives up power next April. And many believe that, as in other undemocratic countries in the world, social protests may begin to emerge in Cuba through platforms such as social networks, mobile communications and home-based internet, which are outside the control of informers and state security of the state, which monitor everything.

The successful modernization of Cuban society — a vital but insufficient condition for the transition to democracy, freedom and the rule of law — may depend on the rise and consolidation of social networks. I do not doubt it. As a result, the regime has laid its cards on the table. It not only openly accepts Cuba’s inexplicable backwardness relative to other countries in the use of the internet, but it keeps costs very high, making it unavailable to a population that day after day struggles to gain access.

Another example of the backwardness of mobile communications in Cuba is the fact that ETECSA is taking advantage of the late arrival of the service to introduce the option of making payments using a mobile phone, an option widely available in many African countries with levels of development much lower than those in Cuba. Characterizing mobile banking as a spectacular step forward to pay for services such as telephone, electricity or water requires Cubans to use the banking system to handle current accounts which they use to deposit their paychecks and pay their bills. Does ETECSA know that the percentage of Cuban workers manage their economic affairs in this way? Let’s hope they find out. It will be a surprise.