Tag Archives: Economic Illegalities

BOOK REVIEW, ENTREPRENEURIAL CUBA: THE CHANGING POLICY LANDSCAPE

Boulder, CO: First Forum Press, 2015. 373 pp.

By Archibald R. M. Ritter and Ted A. Henken

Review by Sergio Díaz-Briquets,

Cuban Studies, Volume 46, 2018, pp. 375-377, University of Pittsburgh Press

The small business sector, under many different guises, often has been, since the 1960s, at the center of Cuban economic policy. In some ways, it has been the canary in the mine. As ideological winds have shifted and economic conditions changed, it has been repressed or encouraged, morphed and gone underground, surviving, if not thriving, as part of the second or underground economy. Along the way, it has helped satisfy consumer needs not fulfilled by the inefficient state economy. This intricate, at times even colorful, trajectory has seen the 1968 Revolutionary Offensive that did away with even the smallest private businesses, modest efforts to legalize self-employment in the 1979s, the Mercados Libres Campesinos experiment of the 1980s, and the late 1980s ideological retrenchment associated with the late 1980s Rectification Process.

Of much consequence—ideologically and increasingly economically—are the policy decisions implemented since the 1990s by the regime, under the leadership of both Castro brothers. Initially as part of Special Period, various emergency measures were introduced to allow Cuba to cope with the economic crisis precipitated by the collapse of the communist bloc and the end of Soviet subsidies. These early, modest entrepreneurial openings were eventually expanded as part of the deeper institutional reforms implemented by Raúl upon assuming power in 2006, at first temporarily, and then permanently upon the resignation of his brother as head of the Cuban government.

In keeping with the historical zigzag policy pattern surrounding small businesses activities—euphemistically labeled these days as the “non-state sector”—while increasingly liberal, they have not been immune to temporary reversals. Among the more significant reforms were the approval of an increasing number of self-employment occupations, gradual expansion of the number of patrons restaurants could serve (as dictated by the allowed number of chairs in privately owned paladares), and the gradual, if uneven, relaxation of regulatory, taxing, and employment regulations. Absent has been the authorization for professionals (with minor exceptions, such as student tutoring) to privately engage in their crafts and the inability to provide wholesale markets where self-employed workers could purchase inputs for their small enterprises.

The authors of this volume, an economist and a sociologist, have combined their talents and carefully documented this ever-changing policy landscape, including the cooperative sector. They have centered their attention on post–Special Period policies and their implications, specifically to “evaluate the effects of these policy changes in terms of the generation of productive employment in the non-state sector, the efficient provision of goods and services by this emergent sector, and the reduction in the size and scope of the underground economy” (297).

While assessing post-1990 changes, Entrepreneurial Cuba also generated a systematic examination of the evolution of the self-employment sector in the early decades of the revolution in light of shifting ideological, political, and economic motivations. Likewise, the contextual setting is enhanced by placing Cuban self-employment within the broader global informal economy framework, particularly in Latin America, and by assessing the overall features of the second economy in socialist economies “neither regulated by the state nor included in its central plan” (41). These historical and contextual factors are of prime importance in assessing the promise and potential pitfalls the small enterprise sector confronts in a changing Cuba.

Rich in its analysis, the book is balanced and comprehensive. It is wide ranging in that it carefully evaluates the many factors impinging on the performance of the small business sector, including their legal and regulatory underpinnings. The authors also evaluate challenges in the Cuban economic model and how they have shaped the proclivity for Cuban entrepreneurs to bend the rules. Present is a treatment of the informal social and trading networks that have sustained the second economy, including the ever-present pilfering of state property and the regulatory and transactional corruption so prevalent in Cuba’s centralized economy.

While none of the above is new to students of the Cuban economy—as documented in previous studies and in countless anecdotal reports—Ritter and Henken make two major contributions. First, they summarize and analyze in a single source a vast amount of historical and contemporary information. The value of the multidisciplinary approach is most evident in the authors’ assessment of how the evolving policy environment has influenced the growth of paladares, the most important and visible segment of the nonstate sector. By focusing on this segment, the authors validate and strengthen their conclusions by drawing from experiences documented in longitudinal, qualitative case studies. The latter provide insights not readily gleaned from documentary and statistical sources by grounding the analysis in realistic appreciations of the challenges and opportunities faced by entrepreneurial Cubans. Most impressive is the capacity of Cuban entrepreneurs to adapt to a policy regime constantly shifting between encouraging and constraining their activities.

Commendable, too, is the authors’ balanced approach regarding the Cuban political environment and how it relates to the non-state sector. Without being bombastic, they are critical of the government when they need to be. One of their analytical premises is that the “growth of private employment and income represents a latent political threat to state power since it erodes the ideals of state ownership of the means of production, the central plan, and especially universal state employment” (275).

This dilemma dominates the concluding discussion of future policy options. Three scenarios are considered possible. The first entails a policy reversal with a return to Fidel’s orthodoxy. This scenario is regarded as unlikely, as Raúl’s policy discourse has discredited this option. A second scenario consists of maintaining the current course while allowing for the gradual but managed growth of the non-state sector. While this might be a viable alternative, it will have limited economic and employment generation effects unless the reform process is deepened by, for example, further liberalizing the tax and regulatory regimes and allowing for the provision of professional services.

The final scenario would be one in which reforms are accelerated, not only allowing for small business growth but also capable of accommodating the emergence of medium and large enterprises in a context where public, private, and cooperative sectors coexist (311). As Ritter and Henken recognize, this scenario is unlikely to come to fruition under the historical revolutionary leadership, it would have to entail the resolution of political antagonisms between Washington and Havana, and a reappraisal by the Cuban government of its relationship with the émigré population. Not mentioned by Ritter and Henken is that eventual political developments—not foreseen today—may facilitate the changes they anticipate under their third scenario.

In short, Entrepreneurial Cuba is a must-read for those interested in the country’s current situation. Its publication is timely not only for what it reveals regarding the country’s economic, social, and political situation but also for its insights regarding the country’s future evolution.

…………………………………………………………………………….

Table of Contents

 Table of Contents,

 List of Charts and Figures

Chapter I Introduction       

Chapter II      Cuba’s Small Enterprise Sector in International and Theoretical Perspective

Chapter III    Revolutionary Trajectories, Strategic Shifts, and Small Enterprise, 1959-1989

Chapter IV    Emergence and Containment During the “Special Period”, 1990-2006

Chapter V        The 2006-2011 Policy Framework for Small Enterprise under the Presidency of    Raul Castro

Chapter VI    The Movement towards Non-Agricultural Cooperatives

Chapter VII  The Underground Economy and Economic Illegalities

Chapter VIII  Ethnographic Case Studies of Microenterprise, 2001 vs. 2011

Chapter IX  Summary and Conclusions

APPENDIX                                                              

GLOSSARY                                                                                                                         

BIBLIOGRAPHY

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CHALLENGES AND REALITIES OF CUBA’S HEALTH CARE SYSTEM

Fernando Ravsberg, enero 25, 2018

Artículos de Fernando Ravsberg, English Version, Política, Salud, Sociales

Last November, “Maria de la Caridad” was admitted into one of the best hospitals in the country, waiting for her knee replacement prosthesis, when she slipped in a puddle of water out in the hospital’s corridor and broke both her arms. Now, she’s back at home in a worse state than before.

It’s hard to explain to someone who isn’t Cuban, how a hospital with such high professional standards and so much modern equipment can be lacking in personnel to collect dirty dishes or keep the floor which orthopedic patients walk along, dry.

It’s just as hard as understanding the fact that pharmaceutical employees are dedicating themselves to counterfeit medicines for children so they can be sold secretly via the illicit pharmacy network, as Cuban press reported a few days ago.

How can there be medicine shortages and a black market in a country with scientists capable of inventing innovative vaccines to treat different types of cancer or medicines that prevent diabetes patients from having to be amputated?

There is so much chaos that you can buy any medicine without needing a medical prescription at many pharmacies, as long as you are willing to pay extra on the side. However, all lines are crossed when medicines for children are tampered with.

During the crisis of the ‘90s, I saw a black market seller offering powdered milk to a mother with two small children. She said that it was top quality because it was stolen from the school for children with disabilities. The mother was appalled and refused to buy it.

There are many Cubans like her who clearly know where their boundaries lie, but even they cross these lines when a son is having an asthma attack or their grandfather needs to monitor their heartrate. So they go looking for the medicines they need wherever they may be and they pay whatever is being asked for them.

The black market in Cuba’s public health sector is a death trap. Let’s remember how thirty patients died of cold and hunger at Havana’s psychiatric hospital, when the people who were responsible for protecting them, stole their food and blankets.

We could spend hours talking about how morally bankrupt those who make a business out people’s health are but we can’t explain how these people, who were once young and had the vocation to protect and help others, a pharmacist, a nurse or a doctor, can stoop so low.

Among the causes for this situation, the chronic shortages of medicines and low wages particularly stand out. The combination of both these factors leads to the black market, which we have all been responsible for, some as sellers and others as buyers.

 A few years ago, the government promised that wages would improve in correlation with an increase in productivity. Today, the health sector brings in 70% of the country’s revenue in hard currency but wages continue to be way below what the basic foods costs.

Public health sector workers aren’t even given any perks that wouldn’t cost the State’s coffers a single cent, such as being able to purchase a property for its cost price and in hard currency or being able to freely import a car, after having completed their mission abroad.

And the reality is that if wages of medical personnel don’t increase, the wages of cleaning staff can’t get any better either. Patients will continue to receive “stem-cell” therapy for free while they continue to slip and fall in puddles of water that nobody is cleaning up.’

Many cleaning and technical employees leave the health system looking for a more dignified income in the private sector, that is to say an income that allows them to get to the end of the month without having to steal. Official press “kick the bucket” blaming self-employment for this exodus.

The real problem lies in stagnant reforms, in using the health sector and pharmaceutical industry’s incredible earnings to finance the State’s shortfall companies instead of using them to feed the “hen that lays the golden eggs.”

There are morally bankrupt criminals in the black market but many other people (maybe most of them) only take part so as to meet their family’s basic needs or are forced to because of pressing needs, like the medicines only available from illicit sources.

Ideology awareness classes aren’t enough to stop this loss of values. The answer could once again lie in Jose Marti’s insightful way of seeing things when he explained that “given human nature, one needs to be prosperous to be good.”

In 2017, Cuba reached its record child mortality rate of only 4 per 1000 newborns. Public health needs the financial resources it brings in so as to keep up these levels of efficiency.

Translation: Havana Times

About Fernando Ravsberg: Nacido en Uruguay, corresponsal de Público en Cuba y profesor del post grado de “Información internacional y países del Sur” de la Universidad Complutense de Madrid. Fue periodista de BBC Mundo, Telemundo de EEUU, Radio Nacional de Suecia y TV Azteca de México. Autor de 3 libros, El Rompecabezas Cubano, Reportajes de Guerra y Retratos.

 

 

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CUBA’S BLACK MARKET THRIVES

[Apologies: I lost this somewhere in the computer last autumn! AR]

Havana (AFP) Carlos Batista, October 17 2014

Original here: Cuba’s black market thrives

ca536627f7ec7ad1d8f6a66bb6b8a8857cee4e2dFrom foreign DVDs to perfume, rum and coffee, Cuba’s shelves are packed with pirated and counterfeit goods, which are sold as authorities turn a blind eye — using the longstanding US embargo as justification.

The more than 50-year US trade freeze with communist-ruled Havana has bred a healthy appetite for smuggled goods, including TV series, films, music and software — all available at a low cost.

“Here, everything costs one CUC,” the Cuban convertible peso equivalent to one US dollar, explains 28-year-old vendor Jorge, standing before three bookcases packed with CDs and DVDs.

In southern Havana’s October 10 neighbourhood, where Jorge peddles his wares, pirated DVDs featuring current American blockbuster films, children’s movies and Latin music are all on sale to delighted crowds. For Jorge, the cost of doing business is affordable. For 60 Cuban pesos ($A2.59) a month, he can buy a vendor’s licence to sell his goods.

He is one of half a million Cubans who work in the 200 or so independent jobs authorised under President Raul Castro’s economic reforms. Though buying and selling pirated goods is technically illegal in Cuba, the trade is widely known and mostly tolerated, even by the Committee for the Defence of the Revolution officers who rarely punish vendors.

“I pay for my licence on time and no one interferes with my work,” said Jorge, who declined to give his full name.

Like many other merchants, Jorge’s stock extends far beyond entertainment DVDs. He also sells “packages,” which feature hundreds of megabytes of data obtained weekly from overseas sources.

The bundles include television series, sports programs, films, anti-virus software and up-to-date listings from the banned classified sites “Revolico” and “Porlalivre”. The online classified listings, which are officially banned in Cuba, offer interested buyers anything from air conditioners to black market tyres, and even empty perfume bottles to be secretly refilled in off-the-grid factories.

With the help of complicit employees, some of the black market fragrances and other items even find their way to the shelves of government-owned stores.

Every so often, the heavily-censored state-run media report on police busting illegal rings producing fake perfume, rum, beer, coffee or toiletries — items rarely found in supermarket aisles — but authorities mostly ignore the contraband sales.

Authorities struggle to contain this Cuban “tradition,” which emerged during the dark days of severe shortages in the early 1990s following the collapse of the Soviet Union, one of Cuba’s staunchest Cold War-era allies.

“The new situation in the 1990s was so sudden, so violent, so unexpected… that people started, with the only means they had, to find ways to fulfill their needs,” said sociologist Mayra Espina in the online newspaper Cuba Contemporanea.

“Certain activities, previously deemed unacceptable or socially negative, started to become legitimate.”

This time of shortages bred a social phenomenon called “la lucha,” or “the struggle,” which has seen Cubans do whatever is necessary to tackle the island nation’s social and economic malaise, Espina said.

Pirated programs have also crept into the state’s sphere, with public media and government-owned cinemas running illegally-obtained shows and films. Some television networks lacking their own means to produce original programming have “resorted for years to carrying shows from American channels without paying for the rights,” Cuban TV director Juan Pin Vilar told AFP.

Indeed, this is one of the fringe benefits of the US embargo — the Cuban TV channels and cinemas could act with virtual impunity, as legal repercussions were unlikely.

“There is a kind of tactical willingness (in the US) not to bother Cuba because culture… is a very effective means of communication,” said Jorge de Armas, a member of a group of Cuban exiles calling for a rapprochement with Washington.

But the flip side, according to Vilar, is that certain stations in Miami — home to most of the Cuban diaspora — air Cuban programs to satisfy their viewers, nostalgic for home. On Miami’s “Calle Ocho,” or 8th Street, in the heart of Little Havana, the Maraka shop sells pirated music, films and television programs brought in from Cuba.

On the other side of the Florida Straits, the international Cuban television network Cubavision offers its signal to satellite suppliers around the world. The idea, said one Cubavision executive, is “to spread our image”.

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ENTREPRENEURIAL CUBA: THE CHANGING POLICY LANDSCAPE

ENTREPRENEURIAL CUBA: THE CHANGING POLICY LANDSCAPE

 Archibald R.M. Ritter and Ted A. Henken

 2014/373 pages
ISBN: 978-1-62637-163-7 hc $79.95 $35

A FirstForumPress Book

New Picture (4)

Special limited-time offer!Mention e-blast when ordering

 CLICK HERE TO READ THE INTRODUCTION:  Cuba’s Chabging Policy Landscape” 

“A provocative, compelling, and essential read. The ethnographic work alone is worth the price of admission.” John W. Cotman, Howard University

“A multifaceted analysis of Cuban economic activity…. Ritter and Henken paint a lively picture of daily life in entrepreneurial Cuba.” Julia Sweig, Council on Foreign Relations

 SUMMARY

During the presidency of Raúl Castro, Cuba has dramatically reformed its policies toward small private enterprises. Archibald Ritter and Ted Henken consider why—and to what effect.

After reviewing the evolution of policy since 1959, the authors contrast the approaches of Fidel and Raúl Castro and explore in depth the responses of Cuban entrepreneurs to the new environment. Their work, rich in ethnographic research and extensive interviews, provides a revealing analysis of Cuba’s fledgling private sector.

THE AUTHORS

 Archibald R.M. Ritter is distinguished research professor of economics and international  affairs at Carleton University.

Ted A. Henken is associate professor of sociology and Latin American studies at Baruch College, CUNY.

TABLE OF CONTENTS

  • Cuba’s Changing Policy Landscape.
  • The Small-Enterprise Sector.
  • Revolutionary Trajectories and Strategic Shifts, 1959–1990.
  • The “Special Period,” 1990–2006.
  • Policy Reform Under Raúl Castro, 2006–2014.
  • The Movement Toward Non-Agricultural Cooperatives.
  • The Underground Economy.
  • The Rise, Fall, and Rebirth of the Paladar, 1993–2013.
  • The Future of Small Enterprise in Cuba.
  • Appendix 1: Timeline of Small Enterprise Under the Revolution.
  • Appendix 2: 201 Legalized Self-Employment Occupations.

Lynne Rienner Publisher’s page on Entrepreneurial Cuba: https://www.rienner.com/title/Entrepreneurial_Cuba_The_Changing_Policy_Landscape

For order and general inquiries, please contact: questions@rienner.com

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The Causes & Consequences of Cuba’s Black Market

21 August 2014 –  Havana Times – Fernando Ravsberg*

http://www.havanatimes.org/?p=105653

HAVANA TIMES — The Cuban press is out to get re-sellers, as though their existence were news to anyone, as though they just now realized there is a black market that’s on every street corner in the country, selling just about everything one can sell.

In a news report aired on TV, they went as far as insinuating that some employees at State stores are accomplices of those who hoard and re-sell products. They are now “discovering” that the black market stocks up, in great measure, thanks to the complicity of store clerks. The reporting remains on the surface, addressing the effects but not daring to go to the root of a problem that has burdened the country for decades as a result of the chronic shortage of products – from screws to floor mops.

During the early years of the revolution, these shortages could be chalked up to the US embargo. Today, however, Cuba maintains trade relations with the entire world and can purchase the products people need in other markets. It doesn’t even seem to be a financial problem, because the products become available and disappear intermittently. Shaving foam can disappear for a couple of months and reappear at all stores overnight.

These ups and downs are what allow a group of clever folks to hoard up on and later re-sell these products at higher prices. A lack of foresight and planning when importing is what creates these temporary shortages that make the work of hoarders easier.

There is no doubt Cuba has a planned economy. The question is whether it is actually well planned. The truth is that, for decades, the country’s domestic trade system has functioned in a chaotic manner and no one has been able to organize it minimally.

A foreign journalist I know recently noted that, when toilet paper disappeared from all State shops, a supermarket in Havana had a full stock of pickled partridge that no one buys.  Who would decide to buy such a luxury canned product at a time when most store shelves are practically empty? The story brings to mind that anecdote involving a government official who imported a snow-sweeper to Cuba.

The Market and Consumption

Cuba’s domestic trade system doesn’t require “reforms”, it demands radical change, a new model. Such a change should begin with Cuba’s importers, bureaucratic companies that are ignorant of the interests and needs of consumers and buy products without rhyme or reason.

Many of their employees receive [under the table] commissions from suppliers and therefore prioritize, not the country’s interests, but their own pockets. They are the same people who received money from the corrupt foreign businessmen recently tried and convicted in Cuba.

To plan the country’s economy, the government should start by conducting market studies and getting to know the needs of consumers, in order to decide what to purchase on that basis. It Is a question of buying the products people need and in quantities proportional to the demand.

Planning means being able to organize import cycles such that there is regular supply of products, without any dark holes, like the ones that currently abound in all sectors of Cuba’s domestic trade, from dairy products to wood products.

Sometimes, this chaotic state of affairs has high costs for the country’s economy, such as when buses are put out of circulation because spare pieces were not bought on time, there isn’t enough wood to build the crates needed to store farm products or a sugar refinery is shut down because of lack of foresight.

Even the sale of school uniforms at State subsidized prices experiences these problems owing to a lack of different sizes. This is a problem seamstresses are always willing to fix, charging the parents a little extra money.

Cuba’s entire distribution system is rotten. Importers are paid commissions, shopkeepers sell products under the counter, butchers steal and resell poultry, ration-store keepers mix pebbles in with beans, agricultural and livestock markets tamper with weighing scales and bakers take home the flour and oil.

In the midst of this chaos we find the Cuban consumer, who does not even have an office he or she can turn to and demand their rights (when they are sold rotten minced meat, and old pair of shoes or a refrigerator that leaks water, for instance).

Speculation is no doubt a reprehensible activity, but it is not the cause of the black market. The country may launch a new campaign against hoarders, but it will be as unsuccessful as all previous one if an efficient commercial system isn’t created.

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