14ymedio, Reinaldo Escobar, Havana, 15 July 2017 – In his most recent public speech before Parliament, General-President Raul Castro offered a self-criticism about “political deviations” under which the private sector and cooperatives are governed. “Mistakes are mistakes, and they are mistakes… they are my mistakes in the first place, because I am a part of this decision,” he emphasized.
In the list of mistakes he didn’t mention, he should have put in first place the absence of a wholesale market to serve these forms of economic management. It that option existed, honest entrepreneurs wouldn’t have to turn to the diversion of state resources to get raw materials and equipment to allow them to produce goods and services in a profitable way.
The greatest advance in this direction has been opening shopping centers were goods are sold “wholesale,” meaning in large volume sacks or boxes, but with the retail price per unit unchanged.
If, in addition, self-employed workers were allowed to legally import and export commercially, with the required customs facilities, then these forms of management would be on an equal footing with the state companies, and be able to perform efficiently.
The underreporting of income to evade taxes is a problem that exists in most countries where citizens must pay tribute to the state treasury. As a rule, evasion of these payments is seen as a dishonest act where taxes are fair, and as an act of self-defense where the state tries to suck the blood out of entrepreneurs.
When governments have the vocation to grow the private sector, they reduce taxes, whose only role is to redistribute wealth and increase the financial capacity for social spending, but not to act as a drag to reduce individuals’ ability to grow and prosper.
Raúl Castro’s most profound mistake, when he decided to expand self-employment and the experiment of non-agricultural cooperatives, has been to do so with the purpose of depriving the state of “non-strategic activities, to generate jobs, deploy initiatives and contribute to the efficiency of the national economy in the interest of the development of our socialism.”
This opportunistic vision, of using an element alien to the economic model as the fuel to advance it, generates insurmountable contradictions. An entrepreneur who starts a business is interested in increasing his profits (according to Karl Marx) and growth. He does not care that hiring workers will reduce unemployment and that their particular efficiency will have repercussions on the country’s economy. Much less, that his good performance contributes to perfecting a system that takes advantage of his success in a circumstantial way.
The entrepreneur dreams that in his country there are laws that protect his freedom to do business, that his money is safe in the banks, and that he has the right to import and export, to receive investments, to open branches, to patent innovations without fear of unappealable seizures or sudden changes in the rules of the game. Without fearing a report will arrive on the president’s desk detailing how many times he has traveled abroad.
The entrepreneur would also like to be able to choose as a member of parliament someone proposing such laws and defending the interests of the private sector, which he does not see as a necessary evil, but as the main engine to advance the country. Not understanding this is Raul Castro’s principal mistake.