14ymedio, 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.”
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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