Informacion economica sobre Cuba

Why Are Private Businesses Failing in Cuba? / Eliecer Avila

Eliecer Avila, Translator: Unstated

A wave of recently implemented layoffs sent an undetermined number of

workers into the streets. Official data on the initial number of people

laid off referred to something around a half million; later there would

be a second round that would lead to a total figure of about a million

jobs lost, to be identified through rigorous State analysis.

If this process had been called by its name — by what the world would

call these "readjustments" — it would have been a scandal; even more so

when the one to blame for the current situation is the State itself. But

as often happens in Cuba, after many long faces and some show of

displeasure, people end up accepting the "package" and venting their

outrage at home, consoling themselves with tears and stored up hatreds.

Among those affected by the mass layoffs have been experienced and

competent professionals. For them, like the rest, the options provided

by the State were farm work or "self-employment" in just the few dozen

trades allowed. Most people "available" — they invent terms here to

avoid universal standards and statistics — have no experience in making

land produce, whether it is vacant or overrun by marabou weed and

available for leasing in usufruct, so most of them opted for


So it was that an army of entrepreneurs (?!) began to take out licenses

to try their luck in the uncertain world of business. The most fortunate

could count on family or friends abroad to provide resources to invest,

or advice and information about the operations of their businesses.

What these excited people didn't know was that there were already some

macabre minds who had planned everything in reverse. The communist gurus

in charge of the necessary accounts had designed a system of taxes and

controls in which the conditions of the country resulted in armed robbery.

This was explained with absolute clarity on several Roundtable TV shows,

but the hopeful and enthusiastic did pay attention. "This is designed in

such a way as to avoid the accumulation of wealth on the part of

individuals," was what they said on these programs.

But if business owners don't accumulate capital, how are they going to

invest, acquire technology, widen their opportunities, improve quality

and increase production, to be able to lower prices so that people

benefit? If they can't accumulate enough money, how are they going to

develop their business and compete?

This means that no matter how much effort and investment they put in, no

one is going to turn their business into a success nor prosper much

beyond what is allowed by decree for any humble Cuban.

A devastated landscape

The current tax system alone is enough to make you throw in the towel

and give up. But things don't stop there. The brave aspirants find

themselves in a country designed from beginning to end to have an

anti-business approach. More than fifty years of building this absurd

philosophy would not be erased by magic, not even when one of its main

promoters said in a speech that a "change of mentality" was needed.

Among other things, the raw materials for food and supplies to provide

basic services continued to come from "illegal" sources, and the

supplies promised by the government in the vast majority of territories

never arrived. Thus, within a few months, the avalanche of tiny

businesses and kiosks that initially flourished began to disappear.

(Some owners keep their licenses to pay their social contribution and so

they won't appear unemployed, thus dodging the surveillance of the

Sector Chief and being able to dedicate themselves to other activities).

Another element that de facto destroys any initiative, especially in

small towns and rural areas, is the total lack of economic capacity

among potential consumers. Thousands of people who have the need and

desire to acquire products are lacking resources. The population is

economically dead, consisting mainly of the unemployed, poor

farmworkers, wage laborers, etc…

On economic issues, first there must be money in the hands of those who

would consume, so that investors are found to take the risks, borrow,

look for alternatives: no one will risk anything to sell to skinny

phantoms and neutral onlookers. At the same time, it's curious that

journalists in the official media who reflect endlessly on the increase

in license applications and the proliferation of small businesses that

are supposedly "going full steam ahead," have not said a word about this.

And the result is always the same: after the failures, exhausted hopes,

and with no sign of any more rabbits to be pulled out of the dark hat of

the government, people look even more desperately than before for ways

to leave the country. Especially the young. The lines at the embassies

are ever longer.

It's a shame that so many prefer to leave rather than to stay and fight

to change things. Although in the end it's understandable: who wouldn't

want to go from being someone who needs help to being someone able to help?

From Diario de Cuba

3 October 2012

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