Is There Anything that Works Well in the Cuban Economy?

The housing situation in Cuba is one of the biggest problems in the country. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 2 October 2023 — How well a country operates is a reflection of how healthy its economy is. When it stalls, or begins showing signs that something might be amiss, it may be an indication that disaster is imminent. There is a common belief that the way to solve a problem is to try out a lot of different solutions, the more the better. But that is not the solution. The key is to first get the diagnosis right and then take appropriate action.

The Cuban regime, however, spent years doing neither. Its diagnoses are based on a reactionary, communist, ideological position that does not allow for changes or modifications. The measures that do get adopted reflect a poor understanding of how things work in the real world. They do not solve anything; they just end up making the situation worse. The victims In this endless merry-go-round of fatalities are the Cuban people. One gets the impression that they are starting to get tired of so much spinning around. The regime has managed to set off the alarm too many times.

What to make of an article entitled “Council of Ministers Approves Regulations to Be Presented to National Assembly” that appears in a government publication? It mentions “several legislative documents dealing with issues related to Cuba’s social and economic development.” Apparently, these were reviewed and approved at the September meeting of the Council of Ministers. Considering how slowly time has moved in the last 64 years of communist rule in Cuba, this suggests a new sense of urgency.

The council, which meets once a month, has approved a spate of legislative actions that, according to the regime, it “has been in the process of implementing for several years.” Here is a series of reflections on the state of the economy that raises the question, “Is there anything that works well in the Cuban economy?”

They consist of three preliminary projects which, for the umpteenth time and without deviating one iota from Communist ideology, Cuba’s leaders say will bring about “national social and economic development.”

The first is a draft of a proposed public health law to be debated in December.

The First Vice-Minister of Public Health, Tania Margarita Hernandez, pointed out that the proposed legislation defines “public health as a civil right; establishes constitutional rights, guarantees and duties; and proposes services to cover the care, protection and recovery of health.”

In other words, more or less the same old nonsense. This raises the question, “What is the purpose of a law that says the same thing as previous legislation but has no teeth?” It guarantees rights that are still not being granted, or are simply being provided in an inadequate way.

The communists say, “The document updates the obligations of the state and the government to guarantee free, accessible, high-quality services; establishes functions and obligations at the local level; clarifies the meaning health, which was not well-defined in the previous law, and allows for a multi-disciplined approach.”

This simply perpetuates the same old lies about a healthcare system which, though free of charge, offers very little or nothing. A system which is financed with taxes that the state imposes on a population that cannot freely choose the financial system it wants.

It is true that the legislation includes clarifications on end-of-life issues, the principles and purposes of public health, and the operations of the National Health System. But these are bureaucratic issues that would not have required a new law. Its backers also claim it protects a healthcare model that, for years, has left much to be desired. Officials claim, “Multiple consultations were carried out, both with specialists in the healthcare sector and with others closely related to it. International documents and legal instruments of various kinds were also evaluated.” Yet despite all this, Cubans remain dissatified with this system.

The second matter taken up by the Council of Ministers was the policy regarding a special Social Security program for agricultural and forestry workers as well as the preliminary draft of a law that must ultimately be approved by the Council of State. The Minister of Labor, Taniris Hernandez, described this document as “comprehensive and all-encompassing.” It incorporates new subjects into the program, expands and unifies protections for covered risks, and provides varying approaches for determining a worker’s period of employment in agricultural production.

The purported purpose of the regulation is to correct the inequalities created by the three different social security programs that currently exist. They are aimed at businesses in the agricultural and forestry sectors, and deal with financing issues, the scope of protections, the rights they grant and the risks they cover. Differences that are difficult to take into account in a centrally planned economy but are there nonetheless.

The directors have nothing but positive things to say about this piece of legislation. The Minister of Agriculture, Ydael Perez, declared, “The proposals were drafted in consultation with producers and prioritize their work in the field.” Julio Garcia, president of the AzCuba business group, claimed, “[It] will have a very favorable impact, especially for many people in rural areas, since now all types of businesses will be operating on the same playing field.”

The issue is that, although agriculture employs more people than any other sector, it has the lowest productivity. Many workers leave and move to service jobs in urban areas. It seems unlikely that these types of regulations will solve those structural problems.

The third piece of legislation is the System of Protected Areas Law, which must still be approved by the Council of State. The Minister of Science, Technology and the Environment, Elba Rosa Perez, noted, “For] the first time, the areas declared protected are part of the Natural Heritage of the Nation.” The legislation provides other conservation measures for areas that are not officially protected, including biological corridors and the Turquino Plan. Its statutes also take precedence over any possible private property rights.

The regulation creates a new office, the administrator of protected areas, who is tasked with drawing attention to these places and to the fact that some of the protected areas are scenes of illegal activities, notably logging and poaching. These and other such activities have led authorities to strengthen the everlasting systems of surveillance, denunciation and control.

Another topic approved in this session was the proposal to “lessen the current problems of rural Cuba,” an effort which apparently began in February. The objective is to improve living conditions in rural areas, which the regime acknowledges “is a fundamental component of national identity and on which the most important sector of the economy is based.” Inequities between rural and urban areas are just beginning to be questioned by large segments of the population, which has taken the regime by surprise.

Jorge Luis Tapia predicted these actions would create a more favorable environment for rural inhabitants, encouraging them to remain in these areas. He also believes they will increase local food production and self-sufficiency, raise incomes and improve living conditions. But measures like these already have a long track record and none of them have ever managed to boost agricultural productivity. It is not measures like these that provide people with a decent living or encourage them to remain in the countryside. For that, they need property rights to the land they work.

The communists forget this. They think the actions to be taken by various governmental agencies, will insure economic investments are made in rural areas if they are appropriately implemented (even with less than 5% of the total investments going to the agricultural sector); that they will encourage housing development, increase the supply construction materials and equipment, and provide other incentives for professionals who live and work in rural areas; that they will revitalize agricultural communities established after the revolution. Lastly, they believe this legislation will bring students studying agriculture at technical schools and universities closer to the means of production in rural areas. While this means more spending on the agricultural sector, it is indirect. If implemented, it will not have the income multiplier effect that should come from such an investment.

It seems the idea of prioritizing rural areas came from Diaz-Canel Bermudez, who describes it as a matter of “economic, productive and social importance as it relates to demographics, support for farm workers, food production, and many other issues.”

The members of the Castro-appointed Council of Ministers also approved the compliance report on housing policy. It was presented as part of detailed, critical analysis of the program’s delayed implementation. Delays, the U.S. embargo and poor performance by the housing sector explain the weakness in the Cuban economy and its inability to act as a economic driver as it does in other countries.

The Director General of Housing, Vivian Rodriguez, took over the disastrous housing sector in 2019 and began implementing the policy. Since then, 127,345 homes have been completed and 106,332 have been rehabilitated. But here’s the bad news: the country currently has a housing deficit of more than 800,000 units, with the situation being more serious in Havana, Holguín, Santiago de Cuba and Camagüey.

She acknowledged that the biggest problem with housing policy is subsidies. Investments which were supposed to increase the supply of building materials have not materialized, nor has the necessary equipment to expand construction capacity and sustainability. It’s the same old story but with the further aggravation that, as the director admitted, “fulfilling the plan for the current year is at risk.”

Faced with a devastating diagnosis of the Cuban housing situation in 2023, the Council of Ministers could not come up with anything other than “the strategic redesign in each territory of local materiral production, with an increase in [the supply of] local raw materials that will guarantee independence in the production of materials and respond to the needs of the program.” In other words, things are getting worse and worse.

So again I ask, does anything work well in the Cuban economy?

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