Ted Henken appeared on he Maria Elvira Salazar television show in Miami discussing our new book Entrepreneurial Cuba: the Changing Policy landscape.
The full discussion can be seen here: https://www.youtube.com/watch?v=BvKS3tb8_Ds&feature=youtu.be
Maria Elvira Salazar
Ted and Maria Elvira
Ted Henken
Maria Elvira
TED A. HENKEN Y ARCHIBALD R.M. RITTER*
Source: Abajo con el bloqueo en contra de los emprendedores cubanos, tanto en La Habana como en Washington, 14 y medio, Diciembre 13, 2014
Original article here: Abajo con el bloqueo
En docenas de entrevistas que hicimos a empresarios cubanos durante los últimos 15 años solíamos oír dos refranes: “El ojo del amo engorda el caballo” y “el que tenga tienda que la atienda, o si no, que la venda”. El primero indica que la calidad de un bien o un servicio mejora (o “engorda”) cuando la persona que lo presta goza de autonomía y obtiene una ganancia económica. El segundo exige que el Gobierno entregue al sector privado las actividades económicas (o “tiendas”) que no ha logrado operar con efectividad, muchas de las cuales ya se practican en la economía sumergida cubana.
En otras palabras, el embargo norteamericano, que ha sido criticado mucho últimamente, no es el “bloqueo” principal que está obstaculizando la revitalización de la economía cubana. Aunque el embargo ha sido condenado constantemente (y creemos correctamente) tanto por el Gobierno cubano como por los editores de The New York Times, en la Isla es mucho más común oír críticas al “auto-bloqueo” (embargo interno) impuesto por el mismo Gobierno cubano en contra del ingenio empresarial de su propio
pueblo.
Entre 1996 y 2006, Fidel Castro dio una gradual marcha atrás a las aperturas económicas que él mismo había implementado durante el llamado Período Especial a principios de los años noventa, demostrando que estaba más preocupado por los riesgos políticos que la iniciativa empresarial popular tendría para su control centralizado que en los beneficios económicos que estos traerían a Cuba. Por eso no estuvo dispuesto a transferir más que una porción simbólica de la “tienda” estatal a los emprendedores privados.
En cambio, durante la presidencia de Raúl Castro, aunque se declara que el objetivo de los cambios económicos sigue siendo “preservar y perfeccionar el socialismo,” él ha empezado a hacerle caso a la sabiduría popular de los refranes citados arriba reduciendo el tamaño de la “tienda” estatal al transferir la producción de últiples bienes y servicios a las cooperativas y pequeñas empresas privadas. De hecho, el número de los trabajadores por cuenta propia ha aumentado de menos de 150.000 en 2010 a casi medio millón hoy.
No obstante, hace falta hacer mucho más para que los empresarios cubanos puedan contribuir plenamente al crecimiento económico. Por ejemplo, el 70% de los nuevos trabajadores por cuenta propia vienen de las filas de los “desempleados”, una cifra que indica que simplemente legalizaron sus empresas informales ya existentes, por lo que no están creando empleos que absorban a los 1,8 millones trabajadores del sector estatal despedidos por el Gobierno.
Solamente un 7% de los trabajadores por cuenta propia son universitarios y la mayoría trabajan en actividades de bajo nivel porque casi todos los empleos por cuenta propia profesionales están prohibidos. Esta prohibición resulta ser un “bloqueo” bastante eficaz que obstaculiza el uso productivo de la fuerza de trabajo cubano altamente calificada.
Para “acabar con el bloqueo” contra los empresarios cubanos y así facilitar el surgimiento de un sector privado de empresas cooperativas y de pequeña y mediana escala hay que emprender reformas más profundas y audaces. Entre estas, una apertura de las profesiones a la empresa privada; la implementación de mercados mayoristas y crédito asequibles; acabar con el fuertemente custodiado monopolio de estado sobre las importaciones, las exportaciones y la inversión; permitiendo el establecimiento de empresas de venta al detalle; y relajar la presión fiscal sobre la pequeña empresa, que actualmente discrimina a las empresas nacionales a favor de las extranjeras.
¿Tiene Raúl Castro la voluntad política para profundizar sus reformas?
La prohibición de las actividades que el Gobierno prefiere monopolizar le permite ejercer un control sobre las ciudadanos cubanos e imponer un orden aparente sobre la sociedad. Sin embargo, esto se alcanza al precio de empujar toda la actividad económica prohibida (y toda ganancia impositiva) nuevamente al mercado negro donde se desarrollaba antes del 2010.
Por el otro lado, la legalización y regulación de las muchas actividades creadas y puestas a prueba en el mercado por el creativo sector empresarial cubano crearía más puestos de trabajo, una mayor calidad y variedad de bienes y servicios a precios más bajos, al tiempo que aumenta los ingresos fiscales. Pero estos beneficios vendrían a costa de permitir una mayor autonomía económica, la concentración de riqueza y propiedad en manos privadas y abrir la competencia contra los monopolios de estado por mucho tiempo protegidos.
La viabilidad de estas reformas depende también de cambios en la política norteamericana hacia Cuba y de la política cubana hacia su diáspora, la cual ya juega un papel importante en la economía cubana como proveedores de capital inicial a través de los miles de millones de dólares que mandan cada año en remesas. Otro fenómeno cada vez más importante es el amplio coro de voces en Estados Unidos, incluyendo a muchos prominentes miembros de la comunidad cubana-americana, que reclaman una nueva política norteamericana hacia Cuba.
Al reclamar reformas económicas más profundas dentro de Cuba, también creemos que unos cambios calibrados en la política norteamericana podrían estimular la apertura del mercado al permitir más apoyo material y técnico a los nuevos empresarios cubanos. Este acercamiento responsable al cada vez más robusto sector de las pequeñas empresas independientes de Cuba, puede y de hecho debe ser permitido, para estimular la expansión de las reformas económicas de Cuba y por tanto potenciar la autonomía económica del pueblo cubano.
Si el Gobierno cubano insiste en mantener un embargo a su propio pueblo, no debemos nosotros ayudarlo con nuestro propio embargo externo. Por el contrario, deberíamos hacer lo opuesto trabajando directamente con los florecientes empresarios de Cuba.
*Ted A. Henken es Jefe del Departamento de Sociología y Antropología de Baruch College, City University of New York. Archibald R.M. Ritter es Profesor de Investigación Distinguido Emérito de Economía y Asuntos Internacionales de Carleton University, Ottawa, Canadá. Su nuevo libro, Entrepreneurial Cuba: The Changing Policy Landscape, se publica en enero de 2015.
By Mimi Whitefield, Miami Herald
12/14/2014
Read more here: New Economy
Just a couple years ago, tourists who wanted to sample one of Cuba’s paladares were on their own. A bus from state tour operator Havantur wouldn’t think of stopping to allow visitors to dine on roast pork or grilled red snapper at one of these small private restaurants.
No more. Now, government tourism companies are doing business with them, booking reservations for tour groups at both paladares and casa particulares — private bed-and-breakfasts. “A few of our casas have been block-booked by Havanatur and Transtur,” said Matthew Sellar, who runs Scotland-based CubaCasa, an online booking site for private accommodations.
Call such co-existence the inevitable advance of market forces as the hemisphere’s only communist nation reforms its creaking state-owned, centrally planned economy. But entering the fifth year of a process that ultimately led to the economic reforms, the changes are still very much a work in progress with daunting challenges ahead.
MUCH UNFINISHED WORK REMAINS AS CUBA REFORMS ITS ECONOMY
The reforms are not nearly as fast or as profound as many — inside and outside the country — would hope. Cuban leader Raúl Castro has often said the process will continue “sin prisa pero sin pausa” (without haste but without pause).
Since the economic guidelines — or lineamientos — were approved, Cuba has allowed limited self-employment and worker-owned cooperatives, revamped its foreign investment law and agriculture system, allowed the private sale of homes and cars, changed rules so Cubans can more freely travel abroad and begun to phase out the ration book.
“The biggest change is that the government and the party have now accepted the idea of a larger private sector,” said Phil Peters, president of the Cuban Research Center and a regular traveler to Cuba. “You see it in every town in Cuba — and it’s being discussed around every family table in Cuba. It’s a huge ideological shift, and it’s not something you would have seen under Fidel Castro.”
But when Spanish Foreign Minister Jose Manuel Garcia-Margallo visited Cuba in November, he urged the government to pick up the pace. “Spain would like to see a more rapid pace to the economic reforms that give more space for private initiative and foreign investment,” he said.
The changes extend beyond the purely economic.
In 2013, Cuba removed the bureaucratic barriers that made it so hard for Cubans to take foreign trips and also allowed its people to stay abroad for up to two years without losing citizenship rights. That meant Cubans seeking an economic solution no longer had to leave their homeland definitively to take part in the global economy or seek new opportunities.
The reforms also have laid bare Cuba’s racial divide. But unlike in the past, the government has now sanctioned discussion about the economic inequities between blacks and whites.
“The population generally speaking wants change. There is a thirst for change,” said Arch Ritter, an economist and Cuba scholar at Carleton University in Ottawa. “The economic changes are real.” But the government “could prevent the reforms from going much further if they threaten the political control of the [Communist] Party,” he added.
Already some targets have slipped. The government initially said it wanted to move 500,000 Cubans off state payrolls into self-employment by 2011. Then the target was revised to 1.8million workers by 2015. Early this year, state payrolls had been reduced by 596,500 workers through layoffs and by converting workplaces to co-ops. Some 476,000 self-employed workers were registered at the end of September.
But analysts say significantly speeding up dismissals from state enterprises is risky for the Cuban government because it could cause social problems.
So far, the government has made reforms only around the edges. Castro talks of perfecting or updating the current socialist system instead of doing away with it. But it’s also clear Havana wants a smaller government, a more vibrant economy and citizens who don’t look at emigration as the only solution to economic problems.
Though the government has blown hot and cold on foreign investment, officials now say foreign investors are essential to spurring the type of growth Cuba needs to develop. This fall, it released a wish list of 246 projects for which foreign money is welcome.
And the 800-pound gorilla — unifying Cuba’s dual monetary system and fixing its haphazard pricing system — has yet to be dealt with, although the government says it is preparing conditions for elimination of the two-tiered system.
What all the reforms will add up to is something of a mystery. “The Cuban government hasn’t set out clearly what the desired end state should be. They haven’t laid out a clear development model,” said Richard Feinberg, a professor of international political economy at University of California, San Diego and a senior fellow at the Brookings Institution.
Castro — who officially became Cuba’s leader in 2008, two years after he took the reins from his ailing brother — has made it clear he won’t be rushed. He “likes to experiment before moving forward and measure the results and the repercussions,” said Domingo Amuchastegui, a former Cuban intelligence analyst who now lives in South Florida.
“That’s reasonable, but Raúl just doesn’t have the time,” said Carmelo Mesa-Lago, a Cuba expert and economics professor emeritus at the University of Pittsburgh.
FAILED STATUS QUO
The reforms were fueled not so much because Cuban leaders truly embraced them but because they had little choice as the world shifted, support from traditional allies came into question, and the economic status quo became unsustainable.
Cuba has previously flirted with economic reforms and pulled back when its economy has improved. But Amuchastegui said “reversing the process is now out of the question, and everyone knows that.”
So far, the results have been mixed and economic growth has remained sluggish.
The Cuban economy is expected to grow by only 1.3 percent this year, according to government estimates. The 2014 target was 2.2 percent. The merchandise trade deficit in 2013 topped $9billion — the second-highest ever.
At a recent Cabinet meeting, Economy Minister Marino Murillo Jorge said 2015 growth was expected to come in at just over 4 percent. The U.N. Economic Commission for Latin America and the Caribbean estimates 2015 growth at 3 percent. Mesa-Lago finds both estimates optimistic.
The problem in gauging the reforms’ success or failure, said Peters, is that the process isn’t complete. “There has been substantial progress in many areas, but they’re not done,” he said.
Although self-employment is proceeding more slowly than the government envisioned, it now seems to have moved beyond simply legalizing the shadowy realm of Cuba’s informal economy and black marketeers.
Among the most popular fledgling businesses are those linked to the tourist trade. Both casas and paladares have been legal since the 1990s, when the collapse of the Soviet Union plunged Cuba into an economic crisis. Then the regime seemed to view them grudgingly as competition rather than business partners.
“Now, they’ve begun to integrate them into the broader economy,” said William LeoGrande, an American University professor who specializes in Latin America.
Also spurring the establishment of new paladares is a change in rules that allows them to hire staff rather than just family members. Up to 50 seats are also permitted, compared to 12 previously. Mood lighting, contemporary art, terrace or poolside dining, nouveau cuisine and Cuban fusion dishes are among the features of the most upscale ones.
Sellar recently visited Havana to add more casas particulares to his online booking site. The 20 new ones he liked will bring the total on the site to 120. During the high season in December and January, most have no vacancies, he said. Casa owners also have been busy upgrading with new Chinese bathroom fixtures, air conditioning — even rooftop hot tubs — and adding services. The Artedel Luxury Penthouse in Havana, for example, offers a private driver, a translator and assistant, massage and laundry and will organize salsa and Spanish classes for guests.
In September, the government announced plans to gradually shift Cuba’s 8,984 state-owned restaurants into private hands — although it will still own the land they sit on. And more than three years ago, the government began turning over state-owned beauty salons and barber shops to employees who run them as cooperatives. Murillo said the creation of 498 cooperatives has been approved, and 329 of them are in operation. Another 300 proposals are under evaluation, he said.
“The key now is these non-agriculture cooperatives. If the Cubans do this right, it will create a means to move a large number of small and medium-sized state businesses to the private sector,” Peters said.
But many of the self-employed are hustling to merely get by. During a recent trip to Cuba, LeoGrande found one street-corner cuentapropista whose business was refilling disposable plastic lighters. He’d drill a hole, fill it up with lighter fluid and then cover the hole. Almost all the private ventures he saw — from bicycle repair shops to pizza stalls were tiny. “I got the sense they are open to taking advantage of any opportunity they see,” he said.
When Amuchastegui traveled to Artemisa, a small city west of Havana, in November, he found lots of home building and renovation taking place as well as many small private businesses from cellphone and computer repair shops to carpenters’ workshops. “It’s become business and making money, business and making money,” he said. At the Banco de Crédito y Comercio, said Amuchastegui, lines snaked down the block as people waited to apply for credits, mostly for home improvements.
WEAK AGRICULTURE REFORM
But if self-employment is the most visible of the reforms and among the most popular, agricultural reform may be the least successful.
“For me, agriculture is the key to a successful economic reform, and so far they don’t have the results,” said Mesa-Lago.
In an effort to boost its agricultural output, Cuba announced a new plan for land tenure in 2009 and then further reformed the process in 2012 to allow larger plots and permit small farmers to build homes and barns on the land. Although the state retains ownership of the land, farmers are allowed to cultivate it under 10-year contracts with the state.
“It is not doing the trick,” Mesa-Lago said. Among the problems, he said, is the farmer must be tied to inefficient state farms or cooperatives to get seeds and farm equipment and must market through them. Investments in the land also are restricted by the state.
Other reforms established wholesale markets for farm supplies and eliminated the requirement that 70 percent of the harvest be sold to the state at set prices. But the latter reform applies to only three provinces — Havana, Mayabeque and Artemisa.
“Essentially, they need to provide more incentives for farmers,” Feinberg said.
It’s possible agricultural production will edge up slightly this year, but it will be below 2005 levels and well below the peak year of 1989, said Mesa-Lago. “Cuba is still importing 70 to 90 percent of the food it needs at a cost of around $2 billion annually,” he added. Next year, the government estimates food imports will increase to $2.194 billion.
Since Cuba began allowing its people and permanent residents to freely buy and sell real estate in November 2011, se vende signs have begun to pop up on homes and apartments. Last year, real estate agents, who had long operated illegally, were added to the list of approved self-employment jobs.
Internet sites like Revolico.com and cubisima.com also have sprung up. The cubisima site recently listed a four-bedroom, three-bath colonial home on Miramar’s Fifth Avenue that had been partially renovated for $280,000.
“This is a game changer,” said Antonio R. Zamora, a Miami lawyer who specializes in foreign investment. For the first time since the early days of the revolution, Cubans have been able to unlock the value of their homes and begin building capital, he said. “It’s a big change in the net worth of the Cuban people — and it doesn’t really involve the government” other than making payment through a state bank, recording a sale and paying tax on it, Zamora said.
Despite all the activity, Mesa-Lago said, there are still only pockets of a market economy in Cuba. The changes to date, he said, add up to only a “fraction of the total economy.” He’d like to see the reforms accelerate and deepen — and he believes Castro, who is 83 years old and plans to retire in February 2018, may have the best chance of pushing them through.
That’s because it’s unclear whether Miguel Díaz-Canel, first vice president of Cuba’s Council of State and Castro’s heir apparent, or whoever succeeds Raúl Castro will have the same political clout as he does to carry out reforms that may be unpopular with Communist Party conservatives, Mesa-Lago said. “They are afraid of delegating economic power, and they fear what happened in Eastern Europe,” he said. “They want to avoid the classic example of the snowball that gets bigger and bigger and can’t be stopped.”
SOME PHOTOS OF THE NEW ECONOMY (by Arch Ritter, 2014)
Cooperative Bus, coming up Aguilar St. at Reina
Food Vender in the Street
Private Barber Shop on Agramonte
“Casas Particulares” on Neptuno
Advertising Private Enterprises
Tourists at the Plaza Vieja
Not the New Economy: Old Sugar Mill Locomotive on Display near the Capitolio
MARIO A. GONZÁLEZ-CORZO and ORLANDO JUSTO,
Journal of Devevelopment Entrepreneurship, 19, 1450015 (2014) [26 pages] DOI: 10.1142/S1084946714500150
The complete essay is available here, though access is restricted, unfortunately, unless your University provides automatic access: http://www.worldscientific.com/toc/jde/19/03
Abstract:
This paper examines the evolution of Cuba’s self-employed entrepreneurs since the sector became an officially-recognized alternative to State sector employment in 2010. Despite the expansion of authorized self-employment activities and the implementation of gradual economic reforms to “update” the country’s socialist economic model since 2010, Cuba’s emerging self-employed entrepreneurs still face a series of constraints and limitations, such as an onerous tax system, underdeveloped banking and financial sectors, lack of access to organized input markets and a still hostile business climate that hinder their ability to expand and contribute to the country’s economic growth.
Orlando Justo is in the Department of Economics and Business, City University of New York (CUNY), Lehman College, Carman Hall, 377, 250 Bedford Park Boulevard West, Bronx, NY 10468, USA
Mario Gonzalez Corzo (Ph.D. Rutgers University) is Associate Professor at the Department of Economics at Lehman College (CUNY). He is also Faculty Fellow at the Bildner Center for Western Hemisphere Studies at The Graduate Center, CUNY, and a Research Associate at the Institute for Cuban and Cuban-American Studies at the University of Miami, FL. His research interests and areas of specialization include Cuba’s post-Soviet economic developments, agricultural reforms, entrepreneurship, and financial sector reforms in post-socialist transition economies.
Mario Gonzalez Corzo
.
Crafts Market, on the Malecon
The Barrio Chino
Portrait Photographer, at the Capitolio
Bicitaxis, Central Havana
Crafts Market, by the Plaza de la Catedral
Nora Gámez Torres, EL NUEVO HERALD, 11/30/2014 9:22 PM
Read the full article here: http://www.elnuevoherald.com/noticias/mundo/america-latina/cuba-es/article4213754.html#storylink=cpy
El recién estrenado restaurante La Fontana Miami pretende emular el éxito alcanzado por un paladar del mismo nombre que abrió en 1995 en La Habana, en pleno Período Especial.
En medio de una aguda crisis económica, Horacio Yaikime Reyes-Lovio y Ernesto Blanco decidieron acomodar el patio de la casa de la abuela del primero para embarcarse en la lucrativa pero arriesgada empresa de montar un negocio privado en Cuba.
Tras casi dos décadas trabajando para hacer de La Fontana una de las paladares más exitosas de la isla, Reyes-Lovio decidió liquidar su parte del negocio y radicarse en Miami para realizar su proyecto “sin obstáculos y sin límites”, dijo refiriéndose a las trabas que todavía obstaculizan el despegue del cuentapropismo en la isla.
Situada en un área de Miami Beach conocida como “La Pequeña Buenos Aires”, La Fontana de Miami abrió apenas hace un par de semanas. Hay personas que viven o trabajan en el área que no han notado que un nuevo restaurante y bar cubano se estableció en la zona, pero el viernes 21, una descarga de jazz inauguró el lugar.
Asimismo, el sábado en la noche se presentó en concierto el grupo cubanoamericano Picadillo. Reyes-Lovio dice que La Fontana en La Habana fue pionera en poner a prueba la fórmula de “la cena-concierto” y se hizo habitual que reconocidos músicos hicieran presentaciones en su restaurante.
El lugar todavía no tiene un anuncio que lo distinga de los negocios vecinos y es modesto, comparado con la opulenta casa que es sede del paladar en la capital cubana, en el barrio de Miramar.
“Lo que más me llamó la atención”—destaca el profesor de Baruch College, Ted Henken, quien asistió a la inauguración del restaurante—es que pensé encontrar un lugar lujoso, un ejemplo del paladar que tenía éxito en Cuba, pero es un lugar normal, un espacio pequeño en una calle alejada del movimiento.”
“Se ve que está comenzando como cualquier otro negocio que empieza de cero”, comentó Henken, que acaba de publicar junto al profesor Archibald Ritter el libro ENTREPRENEURIAL CUBA: THE CHANGING POLICY LANDSCAPE, un estudio sobre la iniciativa privada en la isla que compara las políticas desarrolladas durante los gobiernos de Fidel y Raúl Castro al respecto.
La Fontana original comenzó con un capital de $1500 y la experiencia adquirida por Reyes-Lovio como contador de un famoso restaurant estatal para turistas, El Tocororo. Actualmente, aparece en varias guías de turismo internacionales, posee un certificado de excelencia del sitio especializado en viajes TripAdvisor y ha sido visitada por políticos y celebridades, entre ellos, los cantantes Beyoncé y Jay-Z, en un polémico viaje para celebrar su aniversario de matrimonio.
La paladar cuenta también con un bar, El Edén, y oferta platos inusuales en Cuba como “ravioli de camarón en salsa blanca” y “cobo en jengibre, ajo y pepperoni”.
Estos platos no están al alcance del común de los cubanos. La paladar se nutre sobre todo del turismo y extranjeros que viven en la isla, y es de suponer que el éxito económico de ese negocio le permitió a Reyes-Lovio abrir La Fontana Miami.
Pero Reyes-Lovio es enfático en asegurar que él no es el dueño del restaurante y solo está aportando “el concepto y el nombre de la Fontana”, que ha asegurado a partir de crear varias compañías con nombre similares, lo que se conoce como “nombre ficticios”. En los registros del estado de la Florida, la mayoría de estas compañías aparecen asociadas a su propia compañía Yaikime Enterprises, Corp. o están inscritas bajo su nombre.
………………..
La política de la administración del presidente Barack Obama de otorgar más visas de turismo y visas de entradas múltiples hasta de cinco años de duración ha aumentado el flujo de cubanos entre ambas orillas pero existen, no obstante, limitaciones para que cuentapropistas establezcan sus negocios en los Estados Unidos.
Las sanciones codificadas en las Regulaciones para el Control de Activos Cubanos, que datan de 1963, prohíben la mayoría de las transacciones que involucran a ciudadanos cubanos. Bajo las leyes actuales, La Fontana Miami no podría ser una sucursal de la original en La Habana, y Reyes-Lovio niega que lo sea, aunque no descarta que en el futuro, le gustaría trabajar junto a su antiguo socio Blanco en la creación de un proyecto de ese tipo.
Las sanciones del Departamento del Tesoro contra Cuba, administradas por la Oficina de Control de Activos Extranjeros (OFAC, por sus siglas en inglés) establecen además excepciones para las personas nacidas en Cuba que han obtenido residencia permanente en EEUU, se naturalizaron o están en el país de modo legal, en un estatus diferente al de visitante—por ejemplo, con un “parole” o con una aplicación pendiente para ajustar su estatus migratorio. Los cubanos con visas de turismo, según lo establecido por la OFAC, no pueden establecer sus propias compañías.
El cuentapropismo en Cuba
En su investigación sobre las paladares en Cuba, Henken y Ritter documentan también las limitaciones que encuentran estos negocios en la isla y cómo tienen que recurrir a “estrategias de sobrevivencia” que son usualmente ilegales. Desde 1993, las restricciones que han pesado sobre las paladares han incluido el control de los alimentos a ofertar—la carne de res y la langosta estuvieron prohibidas—, el número de sillas y mesas que pueden tener, así como el número de empleados, para citar algunas.
Reyes-Lovio comenta que durante los periodos en que las paladares fueron más perseguidas, él y su socio tomaron la decisión de cerrar para esperar “a que pasara la ola. Aprovechábamos para hacer re-estructuraciones. Así estuvimos cerrados cuatro, cinco y hasta seis meses en reparación”, señala.
En 1994, a solo un año de su legalización, la policía intervino más de 100 paladares y encauzó a sus dueños por enriquecimiento ilícito.
“Nadie es intocable en Cuba”, afirma Henken, quien entrevistó a más de 15 dueños de paladares para el libro. En este se reseñan los casos de restaurantes privados que, pese a su gran éxito o quizá por este, terminaron siendo cerrados por las autoridades y sus dueños encarcelados.
“Las paladares más exitosas son las que tienen que desarrollar muchas estrategias extra-legales para sobrevivir, porque están más vigiladas o las fuentes de sus productos se agotan y tienen que buscar de pronto otros proveedores; o salen en una revista internacional y eso es demasiada publicidad a los ojos del gobierno”, comenta.
Aunque supuestamente legales, los negocios privados fueron estigmatizados por mucho tiempo y fueron vistos con desconfianza si se desarrollaban más allá de una economía de sobrevivencia, escriben Henken y Ritter en su análisis.
“Aunque hay un aumento bastante significativo en el número de licencias expedidas para el cuentapropismo, la mayoría de las ocupaciones legalizadas son de sobrevivencia, no de crecimiento. No son productivas, no emplean a mucha gente. Hay pocas posibilidades para los profesionales. Tampoco hay acceso a créditos o a insumos”, explica Henken.
………………………
Según cifras oficiales publicadas en julio, el número de personas empleadas en “actividades por cuenta propia” sobrepasó los 471 mil, pero una cifra similar ha entregado sus licencias al constatar que no puede obtener ganancias para cubrir los gastos de operación y los distintos impuestos que deben pagar.
Por otra parte, la mayoría de los nuevos cuentapropistas vinieron del mercado informal y no del sector estatal como planeaba el gobierno, para intentar recortar la fuerza de trabajo empleada por el estado.
“Hasta que no se de un segundo paso, que es técnico pero también político, y se proteja la propiedad privada y se permita la riqueza en manos privadas, no va a existir un cambio de fondo”, considera Henken, quien cree que “el poder en Cuba tiene miedo de la autonomía económica”.
Mientras ese momento llega, Reyes-Lovio quiere establecer su negocio en Miami, “con más tranquilidad” y “libertad”. Henken advierte, no obstante, que “tener éxito en el marco legal en Cuba es una cosa, pero tenerlo en Miami, es otra”.
2014/373 pages
ISBN: 978-1-62637-163-7 hc $79.95 $35
A FirstForumPress Book
Special limited-time offer!Mention e-blast when ordering
“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
Lynne Rienner Publisher’s page on Entrepreneurial Cuba: https://www.rienner.com/title/Entrepreneurial_Cuba_The_Changing_Policy_Landscape
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22 September 2014 – Havana Times
Rogelio Manuel Diaz Moreno
http://www.havanatimes.org/?p=106289
The Cuban government’s reforms continue to make slow, somewhat erratic progress and to evince a series of unique characteristics and tendencies that are food for thought.
Let us recall, first, that Cuban politicians like to refer to this process as the “updating of Cuba’s economic system.” This past Friday, Cuba’s official newspaper, Granma, proudly informed readers about one of the sectors now at the forefront of the process, the food industry. Reading the article, one immediately senses that its author, journalist Lorena Sanchez, suffers from the deeply-rooted shyness that characterizes government propagandists, those who refuse to call the private sector by its name and use the euphemism “non-State” in its place. Perhaps she merely transcribed the message from the Vice-Minister for Domestic Trade Ada Chavez Oviedo: in short, that private or “non-State” forms of ownership will prevail in the sector once it has been fully “modernized.”
In her report, we find out that 68 % of the country’s better known food establishments are still under State management. Over a thousand have been passed on to the self-employed and cooperatives (mostly the former). Here, we run into a fact that is alarming for left-wing forces. If the process of de-nationalization was planned by an allegedly socialist government, why weren’t cooperatives prioritized? Will the same tendency characterize the de-nationalization of the establishments that have yet to be “updated”?
Agriculture and the food industry have experienced the most visible changes, perhaps because they were facing the most severe crises. Farms, cafes and restaurants have been the paradigms of bad and inefficient State management. In both cases, the main solution has been to place the means of production in private hands. In effect, we are now witnessing substantial changes in the activities conducted in these sectors, prosperous fields and quality services where before there was nothing but marabou brush and flies. One cannot help but wonder, however, about the actual potential of these reforms, which are more liberal than anything else, and about who is reaping the actual profits of this.
Another article published by Granma a few days before reported that the largest number of self-employed workers aren’t exactly “self-employed”, but rather the employees of someone else – small or mid-scale private entrepreneurs. In fact, the number of such employees in the country isn’t larger because of how small most businesses are. This data can prove useful for a study of the changes our society is experiencing.
Champions of capitalism say that the market economy and privatizations are good because they increase the number of property owners, of prosperous individuals. Our government’s spokespeople praise the “updating” process, based on liberal and market reforms, because it will lead to prosperity, or so they claim.
I invite readers to go out for a stroll around Cuba’s cities and talk with the people who stand behind the counters of private restaurants and food stands owned by others, to ask these employees whether their working hours abide by the limits established in the recently-approved Labor Code, how many vacation days the owners grant them, and, if they are women of reproductive age, whether they believe that they can have a child and keep their jobs. If you do, don’t ask them whether they can ask for a raise – you wouldn’t want to get them fired on the spot. The owner, see, is sacrosanct, and Cuba’s blessed Labor Code gives them the authority to do just that. We are simply to accept that they’re being generous enough by paying more than the State. Afterwards, take a trip to the countryside and ask the farmhands employed on the ranches of the more fortunate farmers – those with both land and connections – the same questions.
The liberalization of the food industry and other sectors, given the “successes” the government boasts of, is probably representative of what is to come. Both the facts and history suggest that the Cuban State will continue to fail at most of its economic endeavors. Unable to solve these itself, it will have two alternatives: dismantle such production and service centers, or hand them over to the self-employed or cooperatives.
The more liberal option has been the most common implemented to date. With every step taken in this direction, with the expansion of the means of production involved, the exploitation of workers by private entrepreneurs, owners or managers of such means of production, will invariably increase. It is also true that, till now, State exploitation had been the norm.
Will we improve as a society following the privatizations that are presumably to come? It is not an easy question to answer, for we aren’t doing well at all right now. What’s certain is that the path ahead of us is a 180 degree turn from the road towards legitimate socialism, and that, in other parts of the world, this road has led to severe and irreparable damage to the so-called middle classes, to the concentration of property in a handful of individuals and to the extreme polarization of society between wealth and power and poverty and despair.
In short, the path traced by the “updating of Cuba’s economic model” is strewn with contradictions. One day, the authorities create more possibilities for private initiative. A short while later, they restrict these same spaces. They want for the private sector to absorb all who have been laid off or will be by the State sector, but they curtail the basic conditions needed for the development of the sector, such as the opening of wholesale markets and imports through different channels. They want to open the entire country to foreign investment, but they do not allow foreign investors to deal directly with the work force, setting up an onerous and profitable State mechanism that acts as intermediary.
The government also has its ways of dealing with the ideologically restless. One day, the papers expound on philosophical hesitations with pronouncements such as “no one knows for certain how socialism is built.” The next day, they reveal that the Council of Ministers has traced a development plan for the economy, society and politics for 2030 and beyond. The only problem is that they don’t tell you what those plans are. Some time later, they tell us they are going to save socialism through a battle in the field of ideas and culture, ignoring the vital space of society’s material reproduction.
What one discerns from below following a simple class-conscious analysis is a tendency towards the kind of capitalism that the opposition wants – but with the current governing class, the one that speaks of “updating socialism”, at the top, and without opposition. The government and opposition, thus, will continue to quarrel, and each will thwart the concrete progress of the reforms with the same objective that unites them and rifts them apart.
19 September 2014 – AFP
http://www.rawstory.com/rs/author/agencefrance-presse/
The Cuban government announced plans Friday to sell nearly 9,000 state-owned restaurants to private operators, the latest step in the communist island’s economic reforms.
Cubans frequently complain about the country’s 8,984 state-owned restaurants, which are famous for poor quality, bad service and running out of food.
Deputy Trade Minister Aida Chavez said the state would sell them off in a gradual process starting in 2015.
“Cuba will substantially change the structure of its food services in the coming years, with the gradual and orderly transfer of the industry into the hands of the non-state sector,” she said, according to the state-run National Information Agency. Chavez said the government would rent the buildings where the restaurants are located to the new owners but sell off all other assets, from stoves to chairs to utensils.
“The decision… aims to modernize a sector that today demands services with the quality and security the Cuban people, and the tourists who visit us, deserve,” she said.
Cuba currently has 1,261 private restaurants that offer better-quality food and service at a higher price than state establishments. Known as “paladares,” they were first authorized by former president Fidel Castro in the 1990s.
Initially, Castro only allowed family-run restaurants with a maximum of 12 seats, but today they can seat up to 50 guests and hire staff.
That has been a key development for the country’s tourism industry, which draws nearly three million foreigners to the island each year.
Cuba has begun gradually opening its economy since Castro, the 88-year-old father of the island’s communist revolution, ceded power to his younger brother Raul in 2006. But the reforms have so far failed to deliver the hoped-for boost to economic growth.
Paladar in the Barrio Chino, 2011, with a cultural exemption to the old 12w seat restriction.
Barrio Chino
In the State-sector Restaurant of the Hotel Inglatierra
Owners of the Paladar Dona Eutimia,
By Richard Feinberg
Cuba Standard, May 7, 2014
Original Here: Cuba Standard
Among investors focused on Cuban markets, private bars and clubs are the new big thing. Within the last 18 months, enterprising Cuban investors have spiced up an already vibrating Havana night life by opening a variety of chic watering holes.
By all accounts, many investors are achieving their primary goal: rapid returns on risk capital.
And middle-class Cubans — not just tourists and expats — are enjoying the widening diversity of options for evening destinations.
Many fine-dining paladares cater primarily to well-heeled tourists, charging prices that are moderate by international standards but far out of the reach of nearly all Cubans. Most Cubans working for the state receive the miserable wage of $20 per month — roughly the cost of a single paladar meal.
Facing this dual challenge of stiff competition in the restaurant space and the narrow tourism market, innovative Cuban entrepreneurs seized upon nocturnal entertainment as an exciting solution. Havana is not without bars, often featuring Buena Vista Social Club–style bands in Havana Vieja that appeal to middle-age tourists — but not to hip young Cubans or international travelers looking for the latest music video or mixed cocktail creations.
The newly launched bars/clubs feature flat-screen TVs with contemporary sounds. Dancing begins around 10 pm and whirls well into the early morning hours. Some of the bar-hopping crowd may be exiting the paladares, in search of the after-hours fun for which Havana is so famous — but with a contemporary beat.
Significantly, the new upscale bars are also attracting Cubans – by keeping their prices within the range of what could be labeled the Cuban middle or upper-middle classes.
Entrance or cover charges are minimal and local beers sell for the equivalent of $2, tapas for just $2 – $6, heavier fare for $6 -15. These prices still lock out most Cubans, but are within the range of perhaps five percent of the 2 million Habaneros. (Alas, the Cuban government does not publish statistics on income distribution.)
Even if a Cuban couple limits their consumption to two beers each and a few snacks, how can they afford an evening on the town? Where do they find the $20 — the equivalent of a full month’s state salary? The sources of this middle-class purchasing power: profits from their own thriving private businesses, wages and tips earned in the tourist trade, bonuses granted by joint ventures, or remittances sent by generous family and friends living abroad. Cubans who served overseas — as diplomats, military attachés, or medical personnel — can accumulate savings. And privileged offspring of senior government officials are known to enjoy free beverages and bites.
As recently noted by AP correspondent Peter Orsi, the elites of the remarkably large and talented Cuban creative class — painters, dancers, musicians, film makers — also earn a good living; the farándula — the inbreed creative classes — congregate at Café Madrigal, Privé, and Espacios.
In Havana these days, trendy bars are not the only visible indicators of Cuba’s prosperous upper-middle classes and their lucky, beautiful children. Expensive daycare centers and domestic housekeepers, 21st century cars with private license plates replacing the iconic but decrepit 1950s Chevrolets, and expensive cell phones with e-mail service — all signal the emergence of new money.
At the new nocturnal watering holes, successful Cubans mingle comfortably with foreigners: the resident expatriate community of diplomats and business executives as well as tourists — mostly Europeans and Canadians, but also increasingly Americans, permitted to travel legally to Cuba under people-to-people educational programs licensed by the Obama administration.
Two of the hottest Havana bars, Sangri-La and Up-and-Down (their ownership overlaps), are so packed on weekends that their overcrowded dance floors challenge even the most fluid salsa dancers. Intimate but very lively, Up-and-Down exploits the increasing stratification of Cuban society by differentiating the entry fee for the upstairs VIP lounges: a minimum of $20 consumption per person, priced for foreigners and a thin slice of the best-heeled Cubans. The bartender at Up-and-Down is rightly famous for his designer tropical drinks laced with plentiful pours.
A combination restaurant and terraza bar, El Cocinero is a dramatic conversion of an old cooking oil factory into a two-floor industrial entertainment space. The plush first floor dining décor is dominated by a large black-and-white minimalist painting, while the al fresco upstairs features comfortable butterfly lounge chairs and a neon-lite bar. Typically, the denim-clad waitresses are youthful and attractive, and frequently with university degrees in their back pockets.
A theatrical production of a Cuban-authored drama currently running in Havana, Rascacielos (Skyscrapers), is co-sponsored by the embassies of Spain and The Netherlands — and by El Cocinero and StarBien, a plush paladar (co-owned and managed by the gracious son of the minister of the interior). The commercial sponsorships earned product placements — explicit mentions in the text of the play — one dramatic signal of the growing weight and self-confidence of the emerging private sector.
Other trendy Havana dispensaries of alcohol and nocturnal diversion include Fábrica de Arte (featuring avantgarde paintings), Capricho (tasty tapas, serene ambiance), Escencia Havana (pre-revolution nostalgia in an 1880 villa), O’Reilly 304 (in Old Havana, superb vegetarian soup with three varieties of chili peppers), Toke (a mostly gay clientele, next to the Cabaret Las Vegas), and two new dimly lit dance clubs catering to a younger crowd, Melén and Las Piedras.
El Cocinero upstairs; Photos by Richard Feinberg
In many of Havana’s new bars, the décor and the crowd are sophisticated and universal: Their Miami equivalents have similar vibes, albeit with more bling and, as one Cuban male observed, more silicon. Island-bound Cubans have less jewelry to flaunt, and may sense that the Communist government, while more permissive today than during the decades of Fidel Castro’s austere rule, would still look askance at ostentatious displays of new wealth.
Chats with owners and managers of these after-hour establishments suggest initial capital investments of roughly $30,000 – $70,000 (small by international standards). No entrepreneur reported commercial bank backing, which is scarce in Cuba. Rather, funds come from savings of family and friends, and in some cases money transfers from abroad – as donations, loans, or informal equity arrangements. Working within an uncertain business climate, these newly minted Cuban entrepreneurs often seek to recoup their capital in 12-24 months, a potentially feasible goal due to low costs of labor, rent, and utilities, and often interest-free financing.
Paul Sosa at his bar
The award for the most economical opening goes to Mamainé (as in the popular Cuban song, Mamainé, Mamainé, todos los negros tomamos café), a comfortable coffee and cocktail bar constructed by environmentalist and artist Paul Sosa using recycled woods and iron work. Spending less than $5,000 to fashion the 36-seat establishment within his parents’ home, Paul attracts both tourists and locals with strong $1 espresso coffees and $2 made-to-order mojitos.
State-owned beer garden
Not to be outdone by the dynamic private sector, Cuban state companies have recently opened two large bars. Sloppy Joe’s, a revival of a pre-revolutionary saloon with a legendary 59-foot mahogany bar, once again caters mostly to tourists. More original, the government gloriously transformed an old timber and tobacco warehouse on Havana Bay into a large beer garden. The affordable prices and spectacular brightly painted murals attract Cuban families as well as foreigners. On one Sunday afternoon, the author viewed more than one Cuban child watching his parents enjoy the Austrian-made tall tubes of chilled beer.
Old warehouse, new beer garden
Cuban capitalists not only must confront uneven competition from state-run firms, but also face regulatory uncertainty: bars are still not an officially sanctioned category of business, so their owners must register them as restaurants — making them vulnerable to government inspectors. Not surprisingly, in this high-risk business climate, investors seek a quick return on capital. But short of an abrupt shift in government policy, it is a safe bet that bold entrepreneurs will continue to provide Havana’s after-hours revelers with new and exciting entertainment options.
Richard E. Feinberg, professor of international economy at the University of California, San Diego, writes about and travels frequently to Cuba. Three of his recent publications on the Cuban economy, including Safe Landing for Cuba?, can be found at www.brookings.edu
By Archibald Ritter
Cuba’s new Foreign Investment Law was published in the Gaceta Oficialon April 16, 2014. It is available here: Ley de la Inversión Extranjera
The objective of the law is to provide an improved legal, fiscal and regulatory framework for foreign enterprises that decide to operate in Cuba.
Cuba has passed this law because of the perceived benefits that such direct foreign investment can generate for the country, namely technological and managerial transfers, access to foreign markets, higher-productivity employment, higher income levels, financial inflows and increased levels of investment. This last factor is of especial importance in view of the very low levels of investment that Cuba has achieved for the last 20 years. Indeed Cuba’s levels of investment have been the lowest in all of Latin America for the last two decades. In 2011 this rate was 10.2% of GDP vis-a-vis 22.4% for all of Latin America. (UN CEPAL, Balance Preliminary, 2013).
The law certainly seems to have created a more hospitable environment for foreign firms, providing greater security of tenure, greater control over the hiring and compensation of labor, and most of all, through generous tax breaks. Indeed, the tax advantages for foreign investors now seem to me to be overly generous. One might estimate that the new foreign investment regime will be highly successful in promoting foreign investment from a range of sources and perhaps especially from China and Brazil.
However, there is a major element of injustice in the new law, particularly as it relates to taxation. The new tax regime intensifies the discrimination favoring foreign investors operating in “Mixed Enterprises” (Joint Ventures) or “international economic associations” when compared to the tax regime for small enterprises owned by Cuban citizens. This is both unfair and counterproductive. It may also be unsustainable.
The contrast between the tax treatment of foreign enterprises which will usually big private or (in the case of China) state corporations in comparison the tax treatment for small Cuban-owned firms, is summarized in Table 1.
Table 1: Comparison of the Tax Regimes for Cuban Small Enterprise and Foreign Enterprise Operating in Mixed Enterprises after the 2014 Foreign Investment Law
Small Enterprise Sector |
Foreign Investors in Mixed Enterprises or “Economic Associations” |
|
|
Nominal Tax Rates |
Personal Income Tax Rate: 15% rising to 50% of income above CuP 50,000 or $2,000 per year |
Profits Tax: 15% of Net Corporate Income [perhaps 50% for resources]; Personal Taxes Exempt for those earning profits. |
|
Effective Tax Base |
60 to 90% of Gross Revenues; [Maximum of 10% to 40 % allowable d for input costs, depending on activity] |
Net Income after deduction of all production and investment costs from Gross Revenues |
|
Effective Tax Rates |
May approach or even exceed 100% of Net Income |
15% of Net Income; [perhaps 50% for mining and petroleum] |
|
Tax Holiday |
None |
Eight Years Profit Tax Exemption, |
|
Deductibility ofInvestment Costs from Gross Revenues |
Deductible only within the 10% to 40% allowable deduction limits |
Fully deductible from Gross Revenues in determining Taxable Income |
|
Deductibility of Input Costs from Gross Revenues |
Deductible only within the 10% to 40% allowable deduction limits |
Fully deductible from Gross Revenues in determining Taxable Income |
|
Employee Hiring Tax |
Tax exemption for first five employees; Tax required on six or more |
Complete Tax Exemption |
|
Social Security Payments |
Yes |
Yes |
|
Lump-Sum Taxation |
Up-front Cuota Fija Tax Payments Necessary |
None |
|
Input Importation Rights |
Direct Import Purchases Prohibited |
Freedom to Import Directly |
|
Profit Expatriation |
No |
Yes |
The most obvious difference in tax treatment is that Cuban small enterprise operators pay a marginal tax rate of 50% of Gross Revenues (less deductions) on any income exceeding 50,000 pesos per year this being equivalent to about US$2,000.00 per year or about US 166.67 per month. In contrast, the foreign corporations in mixed enterprises pay 15% of Profits in taxes – but only after an eight year tax holiday.
Perhaps more serious, for Cuban small enterprise owners, taxable income is calculated as an arbitrary percentage of Gross Revenues – from 60% to 90% – depending on the nature of the economic activity. The costs of inputs of materials, labor, rent, utilities, etc. and all costs of investment are not deductible from Gross Revenues in determining Taxable Income – only the arbitrary amounts of 40 to 10% or Gross Revenues. To my knowledge, no other country taxes its own enterprise sector in this way.
On the other hand, foreign corporations can deduct all costs of investment and inputs of all sorts from Gross Income in calculating Taxable Income. This indeed is standard international practice.
Or in other words, the effective tax base for foreign firms is Gross Revenues minus all costs of production and investment. In contrast, for micro-enterprise the tax base is gross revenue minus arbitrary and limited maximum allowable levels of input costs ranging from 10 to 40 percent depending on the activity, regardless of true production costs.
The result of this is that the effective tax rates for foreign enterprises are reasonable though generous. But for Cuban small enterprises the effective tax rate can be unreasonable and could reach and exceed 100%. Moreover, investment costs are deductible from future income streams for foreign firms this being the normal international convention.
To add insult to injury, foreign investors receive an eight year tax holiday in which corporate profit taxes are exempt from taxation. Cuban citizens operating small enterprises receive no such tax holiday.
Moreover, under the new legislation, the profits of the foreign enterprises can all be repatriated. In contrast, the infinitely more modest after-tax incomes of Cuban citizens would virtually all be spent within the domestic economy. If their after-tax earnings were to be taken out of the country, they would have to exchange their CUP or Moneda Nacional savings for foreign currency at the rate of about CUP 26= $US1.00 or about CUP 34.5 = Euro 1.00
Small enterprise owners must make payment of a proportion of their taxes at the beginning of each month. Foreign firms certainly do not have to do this.
Small enterprise owners also must pay a tax on the hiring of more than five employees (not a good mechanism for creating jobs.). Foreign firms are exempt from such a tax.
Foreign firms can import their inputs, equipment and machinery as well as personnel directly from abroad. Cuban citizens with small enterprises must make their purchases from the state Tiendas por la Recaudacion de Divisas (formerly ‘Dollar Stores’)
This differential tax treatment for Cuban citizens operating small enterprises and foreign enterprises represents a surprising type of discrimination against Cuban citizens. One might predict that this type of discrimination will generate major dissatisfaction on the part of Cuban nationalists as well as Cuban small enterprise operators. Before long, political pressures and the climate of public opinion should require greater fairness in the character of taxation.
However, given the seemingly insurmountable difficulties that some countries such as the United States face in constructing fairer tax regimes, perhaps I am naively optimistic. (Who can forget the 15% average tax rate paid by Warren Buffett and the 14.3% paid by Mitt Romney in comparison with the 35% paid by Buffet’s secretary as well as the average US citizen?)
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