Tag Archives: Special Period

THE CUBAN ECONOMIC CRISIS: ITS CAUSES AND POSSIBLE POLICIES FOR THE TRANSITION

Carmelo Mesa-Lago (University of Pittsburgh) and Jan Svejnar (Columbia University)

Florida International University, School of Public and International Affairs, October 2020.

A definitive 2020 analysis of Cuba’s current economic situation.

Full document available here: The Cuban Economic Crisis: Its Causes and Possible Policies for the Transition

 

 

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CUBA’S CHALLENGE: WHAT DID THE CUBAN REVOLUTION ACCOMPLISH AND WHERE CAN IT GO FROM HERE?

BY SAMUEL FARBER, June 10, 2015

Original Essay from “JACOBIN” Here:  Cuba’s Challenge

Samuel Farber was born and raised in Cuba. He is the author of Cuba Since the Revolution of 1959: A Critical Assessment.

When in the 1950s, along with many of my high school classmates, I became involved in the struggle against Cuban dictator Fulgencio Batista, one of our teachers remarked that we had no real reason to criticize the state of our country because so many other nations in the region — such as Bolivia and Haiti — were much worse off than us.

His description of Cuba’s comparative position was accurate, but incomplete. On the eve of the 1959 Revolution, Cuba had the fourth highest per capita income in Latin America, after Venezuela, Uruguay, and Argentina.

And although average per capita income is an insufficient, and sometimes misleading, indicator of general economic development, other indicators support his picture of the pre-revolutionary Cuban economy: in 1953, Cuba also ranked fourth in Latin America according to an average of twelve indexes covering such items as percentage of labor force employed in mining, manufacturing, and construction, percentage of literate persons, per capita electric power, newsprint, and caloric food consumption.

Yet, at that time the country’s economy was also suffering from stagnation and the pernicious effects of sugar monoculture, including substantial unemployment (partly caused by the short sugar cane season of three or four months). Most importantly, the national indexes of living standards hid dramatic differences between the urban (57 percent of the population in 1953) and rural areas (43 percent), especially between Havana (21 percent of Cuba’s total population) and the rest of the country. The Cuban countryside was plagued by malnutrition, widespread poverty, poor health, and lack of education.

For my teacher, it seems, the fact that other people were worse off made him more accepting of his own life circumstances. But he was the exception. To the extent that Cubans compared themselves with the people of other countries, they preferred to look up to the much higher standard of living of the United States rather than console themselves by looking down at the greater misery of their Latin American brethren.

As a 1956 report of the United States Bureau of Foreign Commerce put it: “the worker in Cuba . . . has wider horizons than most Latin American workers and expects more out of life in material amenities than many European workers . . . His goal is to reach a standard of living comparable with that of the American worker.”

This underlines the fundamental mistake of assuming instead of ascertaining that comparisons of economic performance have any meaning to the people who live in those economies. Taken to an extreme, this mistake leads to an “objectivist” analysis that stands outside history as it is actually lived by its actors and is likely, as in the case of my high school teacher, to result in a conservative commitment to the existing social order, as opposed to a questioning of, or opposition to, the existing social order and its ruling group.

For those who are affected by it, economic development has a meaning that goes beyond economic data and requires an understanding of popular aspirations and expectations, which are based in part on the existing material reality and in part on past history.

In terms of its material reality, the Cuba of the fifties was on the one hand characterized by uneven modernity, fairly advanced means of communication and transportation — especially the high circulation, by Latin American standards, of newspapers and magazines — and the rapid development of television and radio. On the other hand, there were abysmal living conditions in the Cuban countryside.

As far as its history, the Cuba of the 1950s was still living the effects of the frustrated revolution of 1933, a nationalist revolution against dictatorship with an important anti-imperialist component and the participation of an incipient labor movement, then under Communist leadership.

Although this revolution had achieved some significant reforms equivalent in the Cuban context to Franklin Roosevelt’s New Deal, it failed to achieve major structural changes in Cuban society, such as real national political and economic independence from US imperialism (beyond the abolition of the Platt Amendment in 1934) or any meaningful agrarian reform and diversification away from the one-crop sugar economy with all it implied in terms of economic instability, large-scale unemployment, and poverty.

These were the economic issues brandished by the Cuban opposition at that time to struggle for more or less radical reforms to the existing order, instead of pondering and celebrating Cuba’s comparative high rank among Latin American economies. Thus Eduardo Chibás, the leader of the reform Ortodoxo Party, of which Fidel Castro was a secondary leader, proposed in 1948 a series of modest reforms to improve the life of the Cuban rural population.

Five years later, after Batista’s coup against the constitutional government, Castro — in his “History Will Absolve Me” speech at his trial for his failed attack against one of Batista’s military installations — proposed a more radical series of measures, including giving property titles to peasants holding up to 165 acres of land, with compensation granted to landlords on the basis of the average income they would have received over a ten-year period. He also added new elements to his reform agenda, such as his radical plan for the employees of all large industrial, mercantile, or mining concerns, including sugar mills, to receive 30 percent of profits.

Fidel, 1956

Fidel and Rebels, 1956

After 1959

Immediately after the victory of January 1, 1959, in response to many Cubans’ pent-up expectations, Castro’s revolutionary government engaged in a vigorous policy of redistribution. There was an urban reform law to substantially reduce rents, a left-Keynesian policy of public works to combat unemployment, and a radical, albeit not a collectivist, agrarian reform law proclaimed in May 1959.

Then, in late 1960, in part in response to the hostility of US imperialism and in part based on the political inclinations of the revolutionary leaders, the large majority of both urban and rural property was nationalized by the Cuban state.

In April 1961, Castro declared Cuba to be “socialist,” and it became, in structural and institutional terms, a replica of the model in the Soviet Union and Eastern Europe. Although Cuba’s one-party state placed more emphasis on popular participation than its equivalents in the Eastern Bloc, its political control was before long just as absolute.

Like the supporters of the Cuban status quo before the revolution, the supporters of today’s Cuban system assert that it is economically superior to other countries, particularly in Latin America. In terms of GDP — which, as previously mentioned, is not by itself a reliable indicator of economic well-being, although the Cuban government relies on it in a modified form — Cuba has fared poorly in comparison with its neighbors.

Whereas in 1950 Cuba ranked tenth in per capita GDP among the forty-seven countries in Latin America and the Caribbean, almost sixty years later, in 2006, it ranked near the bottom of the list, only ahead of Haiti, Honduras, Nicaragua, Bolivia, El Salvador, and Paraguay. GDP has increased little since then with a 2 percent average rate of growth in the last five years.

The government’s supporters point to Cuba’s achievements in education and health (in particular, its low infant mortality) as conclusive evidence for its more progressive economic policies. And indeed Cuba has performed very well in the Human Development Index (HDI), which combines income, health, and education statistics.

But while this index does a good job of measuring critical aspects of well-being in the less developed capitalist countries, it does not adequately capture the shape of state-socialist economies such as Cuba. It does not quantify the hardships that people suffer in countries where the economic problems of underdevelopment intersect with those particular to Soviet-style societies.

Take income, for example. Unlike capitalist societies, in Cuba, access to many luxury or high-cost goods is often obtained by the ruling groups through extra-economic, in kind, political means, rather than through the expenditure of monetary income. Although this situation has become more complicated since Raúl Castro took office in 2006 and expanded private economic activity to cover approximately 25 percent of the labor force, obtaining high-end goods still depends to an important degree on political access.

One example is traveling abroad. For the majority of Cubans who don’t have sufficiently wealthy relatives overseas, it is political access to state-sponsored travel — for example, officially sanctioned attendance to political, economic, cultural, or academic conferences — rather than private income that remains the principal way to venture outside the island.

A similar situation exists in terms of Internet access. In Cuba — a country with one of the lowest levels of web availability in Latin America and the Caribbean — many people can connect to the Internet only at their workplace or school, but only for strictly work-related purposes. Otherwise, they run the serious risk of being reprimanded or even losing their ability to go online.

Privately, they can get on the Internet by paying rates unaffordable to average Cubans, and only at tourist hotels or at the centers sponsored by the state telephone monopoly. However, free access to the Internet is the norm for those who are well-situated in terms of political power or have connections to those who do.

Besides the issue of monetary income, the HDI ignores other factors that make living conditions in Cuba difficult. These include the irregular supply and quality of food, housing, toiletries, and birth control devices for women and men. The same applies to the poor state of roads, inter-urban bus and railway transport (premium transportation services exist but are costly and therefore out of the reach of most Cubans), and the delivery of basic necessities such as water, electricity, and garbage collection.

The HDI does not quantify the hardships of daily life associated with these inadequacies either — for example, the amount of time people have to spend going from place to place and standing in line to obtain a wide variety of goods. Economic indexes can also be deceptive insofar as they don’t take into account the maintenance and upkeep of systems that deliver key services.

Take water, for example. Viewed in one way, Cuba ranks well in that regard, with 95 percent of its population officially having access to drinking water. But serious water shortages are a normal condition of life in Cuba. This is partially due to seasonal droughts in certain regions, particularly in the eastern half of the island. But the most important cause of that shortage is the deteriorated infrastructure — broken pipes and numerous leaks — going back to well before the collapse of the Soviet bloc.

For these reasons, more than half of the water pumped by the country’s aqueducts is lost, especially in the Havana metropolitan area. This is much of the daily material reality Cubans face, and it shapes their aspirations and expectations.

Strong Thumbs, No Fingers

The Cuban government and its supporters claim that most of these economic problems are the result of the criminal economic blockade of the island imposed, for more than fifty years, by the United States and which remains mostly in force despite the resumption of diplomatic relations between the two countries.

There is no doubt that the embargo has been damaging, particularly in the early years of the revolution, as Cuba was forced to reorient most of its economic activity towards the Eastern Bloc. Repealing the 1996 Helms-Burton Act and ending the blockade would be a very welcome development for both principled and practical reasons. Such a move would also considerably increase economic activity in Cuba, most likely in the fields of tourism and, possibly, biotechnology and the production and export of certain types of agricultural commodities such as citrus.

However, the US blockade did not prevent Cuba from trading with industrialized capitalist countries in Asia and Europe, and particularly with Canada and Spain. The principal obstacle to Cuba’s economic relations with those non-US industrial capitalist countries was Cuba’s own lack of goods to sell and thus its lack of hard currency with which to pay for imports, whether capital or consumer goods. Nevertheless, Cuba received more than $6 billion in credits and loans from many of the industrialized capitalist countries until Cuba suspended the service of these debts several years before the collapse of the Soviet bloc.

More important than the damage caused by the US economic blockade is Cuba’s inadequate capital, as well as other problems typical of economically less developed countries — the export of commodities such as nickel and sugar amid unstable world prices — which in turn interact with the myriad economic shortcomings and contradictions of Soviet-style economies, including the failures of agriculture and the scarcity and poor quality of consumer goods.

In truth, Cuba’s achievements and failures resemble those of the Soviet Union, China, and Vietnam before these countries took the capitalist road, suggesting that systemic similarities are more significant than national idiosyncrasies and variations on the general Soviet model.

Konstantin Chernenko fidel castro cuba ussr Soviet Leonid BrezhnevFidel and Leonid

Cuba shares with the USSR what the political scientist Charles E. Lindblom called “strong thumbs, no fingers.” Having “strong thumbs” allows the government to mobilize large numbers of people to carry out homogeneous, routinized, and repetitive tasks that require little if any variation, initiative, or improvisation to adapt to specific conditions and unexpected circumstances at the local level — precisely the tasks that require subtle fingers rather than undiscriminating thumbs.

This explains how a Soviet-style government can organize a massive vaccination campaign, while at the same time its bureaucratic, centralized administration and lack of “nimble fingers” prevent it from acquiring the necessary precision for timely coordination of complicated production and distribution in all economic sectors — especially agriculture, among the least homogeneous and predictable areas of the economy.

Cuba’s deficiencies, particularly in the production of consumer goods, also stem to a large extent from its principal leaders’ ideological inclinations. While these leaders have clearly favored the production and delivery of certain collective goods like education and health care, they have tended to be indifferent if not hostile to goods normally consumed by individuals or families.

This is rooted in a deeply ascetic strain of some leftist traditions. The most prominent and consistently austere among the revolutionary leaders was Ernesto “Che” Guevara, who as minister of industry in the early days of the revolution shaped many aspects of the Cuban economy.

When serious shortages of consumer goods began to occur in Cuba in the early 1960s, Guevara spoke critically of the comforts that Cubans had surrounded themselves with in the cities, comforts which he attributed to the way of life to which imperialism had accustomed people, and not to a standard of living resulting from the relative economic development of the country and especially to the working class and popular struggles in the pre-revolutionary era.

Guevara argued that countries such as Cuba should invest completely in production for economic development, and that because Cuba was at war, the revolutionary government had to ensure peoples’ access to food, but that soap and similar goods were non-essential. It is clear however, that his hostility to consumer goods was by no means specific to a war economy.

As he put it in his private reflections shortly after he left the Cuban government in the mid-1960s, “in Cuba, a television set that does not work is a big problem but not in Vietnam where there is no television and they are building socialism.” He added that “the development of consciousness allows for the substitution of the secondary comforts which at a given moment had transformed themselves into part of the individual’s life, with the overall education of society allowing for the return to an earlier era that did not have this need.”

Later, after the failure of the grandiose plans for economic growth that Guevara and other revolutionary leaders articulated, these ascetic politics came to be shared by the entire Cuban government leadership. They were soon consecrated in the Cuban revolutionary ideology as hostility to the “consumer society” of the economically developed world, a view that was never part of the ideology of the pre-revolutionary Cuban left, Communist or otherwise.

It was therefore entirely fitting that during the Cuban economic cycles associated with the spirit and politics of Guevara, the emphasis was always on capital accumulation instead of increased consumption. This was the case, for example, with the Guevarist-type economic period of 1966–1970 (shortly after he left the Cuban government).

As the prominent Cuban economist Carmelo Mesa-Lago points out, at this time the national plan called for a sharp increase in national savings that was to be generated by a cut in consumption through the expansion of rationing, the export of products previously assigned for internal consumption, and the reduction of imports considered unnecessary.

Material incentives sharply decreased, and the population was exhorted to work harder, save more, and accept deprivation with revolutionary spirit. Accordingly, the share of state investment going to the sphere of production increased from 78.7% to 85.8% between 1965 and 1970. This was indeed a Cuban high point of what the Hungarian theorists Ferenc Fehér, Agnes Heller, and György Márkus have called the “dictatorship over needs.”

The Special Period

Until the collapse of the Soviet bloc, the Cuban government was able to deliver for the majority of its people an austere standard of living that, on the whole, guaranteed a minimum of economic security and the satisfaction of basic needs, in spite of serious deficiencies in areas such as housing and consumer goods.

Notwithstanding the serious problems and contradictions of a Soviet-style economy, this was made possible by the USSR’s massive economic subsidies, which helped the Cuban government finance a generous welfare state with an extensive education, health services, and social security system. These massive subsidies were the result of Cuba joining the Soviet state as its junior partner in an international alliance that did confront strategic obstacles in Latin America (because the USSR was reluctant to challenge the US in its own sphere of influence), but that ended up being much more viable and successful in Africa despite some tactical differences.

Although overall literacy was at 76.4% before the revolution, it was much lower in the countryside; the government has succeeded in almost entirely wiping out illiteracy. It has also expanded secondary and higher education, promoting a substantial degree of social mobility facilitated by the massive emigration from the island of its upper class and large segments of its middle classes.

The dramatic enlargement of the military also allowed for the rise into officialdom of many Cubans of humble origin. Black Cubans in particular benefited, with the elimination of the informal but substantial racial segregation that had existed in pre-revolutionary Cuba, especially in the area of employment.

Racism was by no means eliminated. The Cuban government, implicitly identifying racism only with its segregationist form, soon declared the problem solved, with policies of “affirmative action” not even considered, in a context where blacks were not allowed to organize independently to defend their interests.

In general, however, Cuba became a more egalitarian society, attaining in the mid-1980s a Gini coefficient of 0.24 (although this measure also suffers from the political access problems discussed above). It was this, along with the growth of a nationalist and anti-imperialist consciousness that ensured a large base of popular support for the government. At the same time, however, critical voices even inside the Castro administration were systematically suppressed, and political dissidents (as well as petty offenders — Cuba has one of the highest imprisonment rates for common crimes) were jailed in large numbers.

The collapse of the Soviet bloc provoked a massive economic crisis, reflected in the quick and sharp 35 percent GDP drop. Cubans went very hungry in the first half of the nineties, the worst years of the crisis, leading to serious nutritional deficiencies that provoked an outbreak of optical neuropathy in 1991 that affected more than fifty thousand people until it was partially controlled in 1993.

Services such as public transportation went into a tailspin, from which they have only partially recuperated. Inequality has grown significantly, particularly between those with and without access to the hard currency provided by remittances from abroad. Real wages in the public sector, which still accounts for at least 75 percent of the labor force, dropped precipitously, and as late as 2013 they had only reached 27 percent of 1989 levels.

The “Special Period” also had a noticeable impact on the health care system, reducing the gains achieved in the previous thirty years. There are shortages of medical supplies and of family doctors and specialists, who are often working abroad as a part of international programs.

Patients have to even bring their own bedding to the hospitals, and “gratuities” to medical personnel have become increasingly common. Teachers have fled the education field in search of higher wages in other sectors such as tourism; at one point the government even tried to replace those educators with television sets and quickly trained high school graduates, with predictably negative results.

The system of social security, which made great advances in the 1960s with universal coverage and the unification of the previously existing patchwork of pension and retirement plans, went into a sharp crisis as the peso-denominated pensions fell to a fraction of their previous purchasing power.

Most importantly, during the quarter century that has elapsed since the fall of the USSR, the support of the regime has fallen quite substantially, particularly among young people. This does not mean that they have begun to openly oppose the government. They are far more likely to look for individual ways to resolve these problems. They would rather leave the island than politically confront a government that despite having released most political prisoners and allowed for a significant degree of social liberalization (for example, in terms of religion and emigration) still maintains a one-party state and an apparatus of repression. (Although it typically employs close monitoring, harassment, and frequent short-term arrests of dissidents instead of the long prison terms that were the norm under Fidel Castro’s rule.)

The Critique from the Left

Supporters of the government, especially abroad, continue to defend the system as if nothing happened during the last twenty-five years, and keep pointing to poor countries such as Haiti — which were worse off than Cuba before the 1959 Revolution — as evidence of how better off Cuba is. But for the most part, the Cuban people are not comparing their standard of living to those of other less developed countries.

Older Cubans are much more likely to compare their current hardships with the greater security and predictability they experienced before the Special Period, and remember nostalgically the early 1980s when the opening of the farmers’ markets, after the mass exodus from the Port of Mariel in spring 1980, allowed Cubans to reach perhaps their highest living standards since the 1960s.

For many Cubans, and particularly for the disenchanted young who are keenly aware of contemporary cultural trends in fashion, music, and dance, the existence of a large Cuban-American community in South Florida has also become a major standard of comparison.

And the nascent critical left in Cuba — like the oppositionists of the 1940s and 1950s — does not celebrate, in the manner of the official Communist party press and foreign supporters, Cuba’s good performance in the HDI. Instead, it is trying to organize under extremely difficult conditions, on behalf of the political liberties necessary to defend the standard of living of the Cuban people and open up the possibility for a popular and democratically self-managed economy and polity.

sam-farberSamuel Farber

 

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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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New Publication, CUBA: PEOPLE, CULTURE, HISTORY

A near-encyclopedic volume on Cuba was recently published by Charles Scribner’s Sons but has received surprisingly limited publicity- at least from my perspective up here in winter-time in the True North. I have not yet seen the volume myself nor have I even seen the Table of Contents. However, the description of the substance of the volume below looks interesting.

If my finances were infinite, I would certainly buy a copy, even though the price ranges from $284.44 to $454.95, depending on the seller.

I contributed two essays on the Cuban economy. These are available here:

Archibald Ritter  “The Cuban Economy, Revolution, 1959-1990”

Archibald Ritter, “Cuba’s Economy During the Special Period, 1990-2010”

Here is a brief description of the volume:

Editor in Chief: Alan West-Durán, Northeastern University

 Associate Editors: Victor Fowler Calzada, Unión de Escritores y Artistas de Cuba (UNEAC); Gladys E. García Pérez, Unión de Escritores y Artistas de Cuba (UNEAC); Louis A Pérez, Jr., University of North Carolina; César Salgado, University of Texas; Maria de los Angeles Torres, University of Illinois, Chicago

Charles Scribner’s Sons,  An Imprint of Gale, Cengage Learning 2011

 INTRODUCTION

In an exceedingly complex and changing global situation,  understanding Cuba is an important and challenging task. The Scribner CUBA: People, Culture, History is a reference work that goes beyond a mere presentation of facts, biographies, and “ready reference” information, which is widely available on the Internet, to offer deep interpretation. The book will offer on the one hand, twenty-one interpretative essays on major topics in Cuban history, culture and society, as well as over one hundred twenty-five shorter essays on artistic, literary, and nonfiction works; major events and places of cultural significance.

The major essays will not only cover Economics, Sugar, Tobacco, Religion, and Food, but also Cuba and its Diasporas, Ecology and Environment, Sexuality, Gender, Race and Ethnicity, the Arts, Language, Sports and Cuban Ways of Knowing and Being, among others.

The short essays will focus on specific literary works, photographs, paintings, political documents, speeches, testimonies, historical dates, key places and cities on the island and abroad. For example:  literary works include “Los Versos sencillos”; “Paradiso”; and “The Mambo Kings Play Songs of Love”; works of nonfiction include: “Cuba: Azúcar y Población”; “Indagación del choteo”; and La historia me absolverá”; works of visual art: “La Jungla”; and “Los Hijos del agua conversando con un pez”; works of music: “Guantanamera”; “Misa cubana”; and “Mambo #5”; cinema: “Lucía”; and “Fresa y chocolate”; events: “Violence and Insurrection in 1912: A Racial Conflict”; and “January 1, 1959”; and places of cultural significance: “Baracoa”; “Holguín”; “Isla de Pinos”; “Spain”; and “New York,” to name a few examples.

By combining longer overview pieces with short and focused descriptive and analytical ones, CUBA  aims to give the curious and interested reader a way to comprehend the country by presenting the major forces that have shaped the island historically and culturally. Rather than overwhelm the reader with thousands of entries and biographies, CUBA offers a close look at major themes that are emblematic to the country’s unique history. CUBA is a reference guide for readers undertaking a journey of comprehension; it is not a work that presumes to have all of the answers.

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Can Cuba Recover from its De-Industrialization? I. Characteristics and Causes

By Arch Ritter

[Note: a subsequent Blog Entry will analyze “Consequences and Courses of Action” ]

Since 1989, Cuba has experienced a disastrous de-industrialization from which it has not recovered. The causes of the collapse are complex and multi-dimensional. Is it likely that the policy proposals of the Lineamientos approved at the VI Congress of the Communist Party of Cuba will lead to a recovery from this collapse? What can be done to reverse this situation?

One of the last Cane-Harvesting Machines Fabricated in Cuba, en route to its Destination, November 1994

Perhaps it should be noted to begin with that the  manufacturing sector of many if not most high income countries have shrunk as a proportion of GDP and especially in terms employment. This has been due to the migration of  labor-intense manufacturing to lower wage countries, most notably China and India, as well as technological change and rising labor productivity in many areas of manufacturing. However, given Cuba’s income levels and its historical record, it could and should be expanding its manufacturing base and perhaps even increasing employment in the sector rather than remaining in melt-down phase

I. Characteristics of Cuba’s De-Industrialization, 1989-2010

The accompanying Charts and Tables, all using data from Cuba’s Oficina Nacional de Estadisticas, indicate the severity of Cuba’s manufacturing situation.

Chart 1 illustrates the almost 60% decline in the physical volume of industrial output – excluding sugar – from 1989 to 1998. By the year 2010, the level of output was at 49.9% of the 1989 level. This does not constitute a recovery.

The physical volume of output by destination is presented in Appendix Table 11.2 below. This Table indicates industrial output including sugar in 2010 was at 43% of its 1989 volume. Products for Consumption were at 81.8% of their 1989 value in 2010. Some product areas had improved, namely manufactures for consumption and “other manufactures” but food drink and tobacco production were at 71.5% of their 1989 volume. Footwear and clothing were at 21.8% of their 1989 volume.  Equipment production had almost totally disappeared and was at 6.6% of their 1989 volume in 2010. Intermediate products were at 34.7% of their 1989 volume, despite a near 50% increase in volumes of mineral extraction. .

Volumes of industrial output by origin or industrial sub-sector are presented in Appendix in Table 11.1 Some manufacturing sub-sectors have virtually disappeared with production at very low levels as a percentage of 1989 levels. For example, for the following sectors, 2010 levels as a percentage of 1989 levels were as follows:

  • Textiles:                                     6.9%
  • Clothing:                                      27.8%
  • Paper and paper products:        6.5%
  • Publications and recordings:   18.0%
  • Wood products:                         12.3%
  • Construction Materials:           27.1%
  • Machinery and Equipment:      0.4%

On the other hand, pharmaceutical production increased dramatically, with 2008 production at 822% of the 1989 level. Tobacco, drinks (presumably alcoholic) and metal products were approximately at the 1989 levels. But almost everything else was around 25% of the levels of 1989 or less.

The collapse of the sugar agro-industrial complex is well known and is illustrated in Chart 2.

II. Causal factors

There are a variety of reasons for the collapse of the industrial sector.

1.      The initial factor was the ending of the special relationship with the Soviet Union that subsidized the Cuban economy generously for the previous 25 years or so. This resulted from the shifting of the Soviet Union to world prices in its trade relations with Cuba rather than the high prices for Cuba’s sugar exports as well as an end to the provision of credits to cover Cuba’s continuing trade deficits with the USSR. The break-up of the Soviet Union and recession in Eastern Europe also damaged Cuba’s exports. These factors reduced Cuba’s imports of all sorts, especially of imported inputs, replacement parts, and new machinery and equipment of all sorts.  The resulting economic melt-down of 1989-1993 reduced investment to disastrous levels and resulted in cannibalization of some plant and equipment for replacement parts. The end result was a severe incapacitation of the manufacturing sector.

2.      The technological inheritance from the Soviet era as of 1989 was also antiquated and uncompetitive, as Became painfully apparent after the opening up of the Soviet economy following Perestroika.

3.      Since 1989, levels of investment have been continuously insufficient. For example, the overall level of investment in Cuba in 2008 was 10.5% of GDP in comparison with 20.6% for all of Latin America, according to UN ECLA, (2011, Table A-4.)

4.      Maintenance and re-investment was also de-emphasized even before 1989. After 1989, maintenance and re-investment were a category of economic activity that could be postponed during the economic melt-down – for a little while. But over a longer period of time, lack of adequate maintenance of the capital stock has resulted in its serious deterioration or near destruction. This can be seen graphically by the casual observer with the dilapidated state of housing in Havana and indeed the frequent “derrumbes” or collapse of houses and abandoned urban areas.

5.      The dual monetary and exchange rate system penalizes traditional and potential new exporters that receive one old (Moneda Nacional) peso for each US dollar earned from exports – while the relevant rate for Cuban citizens is 26 old pesos to US$1.00. This makes it difficult if not impossible for some exporters and was a key contributor to the collapse of the sugar sector.

6.      The blockage of small enterprise for the last 50 years has also prevented entrepreneurial trial and error and the emergence of new manufacturing activities.

7.      Finally, China has played a major role in Cuba’s de-industrialization as it has done with other countries as well. China has major advantages in its manufacturing sector that have permitted its meteoric ascent as a manufacturing power house. These include

  • Low cost labor;
  • An industrious labor force;
  • Past and current emphases on human development and higher education;
  • A relatively new industrial capital stock;
  • Massive economies of scale;
  • Massive “agglomeration economies”;

But of particular significance has been its grossly undervalued exchange rate that has permitted it to incur continuing trade and current account surpluses and amass foreign assets now amounting to around US$ 3 trillion. Indeed, in my view, China has cheated  in the globalization process and captured the lion’s share of its benefits through manipulation of the exchange rate, and has contributed to the generation of major imbalances for the rest of the world, including both the United States and Cuba among other countries. .

China’s undervalued exchange rate has co-existed with Cuba’s grossly overvalued exchange rate that has been partly responsible for pricing potential Cuban exports of manufactures out of the international market. The result is that Cuba is awash with cheap Chinese products that have replaced consumer products that Cuba formerly – in the 1950s as well as the 1970s – produced for itself.

With respect to the sugar sector, there are a number of factors have been responsible for its decline.

1.      Most serious, the sector essentially was a “cash cow” milked to death for its foreign exchange earnings, by insufficient maintenance and by insufficient re-investment preventing productivity improvement.

2.      The monetary and exchange rate regimes under which it labored have also damaged it badly. Earning one “old peso” for each dollar of sugar exports has deprived the sugar sector of the revenues needed to sust4ain its operations.

3.      Finally the decision by former President Fidel Castro to shut down close to half the industrial capacity of the sector and try to convert former sugar lands to other uses sealed its fate.  In view of Cuba’s natural advantages in sugar cultivation, the sophistication and diversity of the whole sugar agro-industrial cluster of activities, the high sugar prices of  recent years and the competitiveness of ethanol derived from sugar cane, this decision was foolish in the extreme.

Next: Part II, The Consequences of Deindustrialization and Possible Future Courses of Action. will be published in the next Blog Entry

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Similar Policies, Different Outcomes: Two Decades of Economic Reforms in North Korea and Cuba

An interesting comparison of Cuba and North Korea has just been published by Dr. José Luis León-Manríquez, a professor of international studies at the Department of Politics and Culture of the Metropolitan Autonomous University-Xochimilco, in Mexico City. It is available here:

Similar Policies, Different Outcomes, Two Decades of Economic Reforms in North Korea and Cuba

Introduction: “This article is aimed at analyzing, in a comparative perspective, the economic reforms undertaken by Democratic People’s Republic of Korea (DPRK, or North Korea) and Cuba since the demise of the Soviet bloc in the late 1980s and the early 1990s.1 The comparison seems pertinent inasmuch as both the DPRK and Cuba are relatively small countries that managed to survive the collapse of real socialism. Although the geographic areas of both countries are roughly the same, the North Korean population is more than double Cuba’s; by contrast, the Cuban GDP per capita is four times bigger than the DPRK’s individual income (Figure 1). Both countries have been ruled by single parties and have undertaken successful dynastic successions, and both countries have tried to maintain, with increasing tribulations, economic systems that advocate central planning and state property.”

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Special Revista TEMAS Panel on the “Special Period”

TEMAS, Ei Periodo Especial veinte anos despues

TEMAS: no. 65: 59-75, enero-marzo de 2011

http://www.temas.cult.cu/revistas/65/059%20Mesa.pdf

A special section of the TEMAS issue of January-March 2011 includes a Panel discussion on the causes, character and consequences of the “Special Period.” This still seems to be the epoch that Cuba is in officially, as there has been no official termination of the epoch nor a declaration of a new label for a new era. The panelists include Mayra Espina, sociologist ath the Centro de Investigaciones Psicológicas y Sociológicas (CIPS). José Luis Rodríguez, once again at the. Centro de Investigaciones de la Economía Mundial (CIEM) but formerly Minister of Finance and Planning,  Juan Triana, an economist at the. Centro de Estudios sobre la Economía Cubana (CEEC) and Rafael Hernández the Director de TEMAS

The questions addressed to the panel by Rafael Hernández include (in paraphrase):

1.      What was the character of the “Special Period” (SP)?

Were its causes essentially external?

Was it predominantly economic in character?

For how long has it continued?

2.      How effective were the policies implemented to deal with ot”

Were the policies based on scientific research?

Were the policies coherent and effective?

Were there unintended consequences?

To what extent did the policies succeed?

3.      Has the SP generated positive or progressive advances?

4.      Questions from the floor.


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English Version of Partido Comunista de Cuba, “Proyecto de Lineamientos de la Politica Economica y Social”: Viable Strategic Economic Re-Orientation and / or Wish List ?

A complete English translation of the “Lineamientos” has just been published by Walter Lippmann, the Editor-in-Chief of CubaNews , the free Yahoo news group on Cuba.

The “Draft Guide for Economic and Social Policy” for the Fifth Congress of the Communist Party is available here: http://www.walterlippmann.com/pcc-draft-economic-and-social-policy-guidelines-2010.html

What follows here is the Blog entry for November 11, 2010 on the “Guidelines”.

I. “Structural Adjustment” on a Major Scale

On Tuesday, November 9, a major document appeared for sale in Cuba entitled “Proyecto de Lineamientos de La Political Economica y Social” or “Draft Guide for Economic and Social Policy.”  The purpose of the “Guide’ presumably is to spark and to shape public discussion and education on the economic matters that will be the focus of the long-postponed Sixth Congress of the Cuban Communist Party to take place in April, 2011. It also provides the essentials of the new approach that will likely be adopted at the Sixth Congress.

It can be found in its entirety, courtesy of the Blog Caf Fuerte. (http://cafefuerte.com/, here: Projecto de Lineamientos de la Politica Economica y Social,

The “Guide” is a broad-reaching and comprehensive document that puts forward 291 propositions for the improvement of the functioning of the Cuban economy. It signals a break in the four years of near inaction that the Cuban economy endured since Raul Castro took over as acting and then actual President – and the ten years of paralysis from about 1995 to 2006 under President Fidel.  It amounts to a major process of “structural adjustment” of the sort that was begun in 1992-1994, but was then stalled when the Cuban economy appeared to rebound after 1994.  The document is also a contradiction and maybe a “slap-in-the-face” for Fidel Castro, as it indeed indicates that the Fidelista-style Cuban model – his life’s work – is not working. (See “Fidel’s No-Good Very Bad Day” and The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did.)

II. General Character of the Proposals

The Table of Contents provides a quick idea of the scope of the document:

Introduction

Contours of Economic and Social Policy

I           Economic Management Model

II          Macroeconomic Policies

III        External Economic Policies

IV        Investment Policy

V         Science, Technology and Innovation Policy

VI        Social Policy

VII       Agroindustrial Policy

VIII     Industrial and Energy Policy ix

IX        Tourism Policy

X           Transport Policy

XI         Construction, Housing, and Hydraulic Resource Policy

xii        Commercial Policy.

The Introduction summarizes the basic objectives required to overcome the principal problems of the economy. These include putting into productive use the unused lands constituting almost 50% of total, raising agricultural yields, developing new mechanisms to reverse the process of industrial and infrastructural de-capitalization, eliminating excess and redundant employment, raising labor productivity, recovery of export capacity in traditional exports, undertake studies in order to eliminate monetary dualism, and provide improved capacities for more decentralized regional development.

The “Contour” section then states that “…only socialism is capable of overcoming the difficulties and preserving the conquests of the Revolution, and the implementation of the economic model prioritizes planification and not the market”. However, the next paragraph states “…socialism is equality of rights and equality of opportunity for all citizens, not egalitarianism.” The latter sounds less like “socialism” and more like “social democrat” if not the common approach of most Western countries. The latter quotation makes the former somewhat hard to interpret if not meaningless.

The document then goes on to list the 291 propositions under the 12 different headings. A few of the more interesting propositions are summarized below:

  • Wholesale markets for supplying state, cooperative and self-employment enterprises will be established. (9)
  • State enterprises will decide themselves how to allocate their investment funds, and normally will not receive budgetary support for this. (13)
  • Insolvent enterprises will face liquidation. (16)
  • Workers incomes in state enterprises will be linked to enterprise performance (# 19)
  • Monetary and exchange rate unification will be “advanced” (54)
  • The taxation system will be advanced in terms of progressivity and coverage, and will be based on generality and equity of its structure. (56 and 57)
  • The centralized character of the determination of the planned level and structure of prices will be maintained. (62)
  • Recover the place of work as the fundamental means of contributing to the development of society and the satisfaction of personal and family needs. (130)
  • Modify the structure of employment, reducing inflated staffing and increasing employment in the non-state sector (158-159)
  • Eliminate the ration book as a means of distributing products. (162)
  • Improve agriculture so that Cuba is no longer a net importer of food, prioritizing import substituting activities, reviving citrus fruit production, augmenting sugar production. (166, 174, 179, 194.)
  • Promote export-oriented industry (197)
  • Develop a range of new industries such as tires, construction materials and metallurgy (213, 215, 216)
  • Restructuring of domestic retailing and wholesaling. (283-291)

III. Preliminary Evaluation

This document will receive a great deal of attention inside and outside Cuba. It provides fodder – along with the recent legislation on self-employment – for analysts and observers of Cuba, who have had little of hard substance on which to base their analyses of Cuban policy under the “Raulista” Presidency for some time.

In some senses, this document is remarkable. It sets out an ambitious reform program for much of the Cuban economy. It may indeed constitute a “Wish List” of all the types of policy improvements and changes that would be nice to have. The question is “can and will they be implemented?”

This document also is a major risk for the Raul Castro Administration. It provides a check-list of tasks that will be difficult to achieve. If future implementation and economic performance is far below the expectations that are now being raised to high levels, there could well be a serious fall-out for the Government and the Party.

The document is also broad and ambitious but does not set any clear priorities and does not propose a sequence of actions. Everything can’t be done at once. How should the policy changes be phased or sequenced?

Some observers are skeptical and perhaps cynical regarding the “Guide” – for good historical reasons. In her Blog Entry entitled The Art of Speaking Without Speaking (http://www.desdecuba.com/generationy/?p=2088) Yoani Sanchez states:

When you grow up decoding each line that appears in the newspapers, you manage to find, among the rhetoric, the nugget of information that motivates, the hidden shreds of the news. We Cubans have become detectives of the unexpressed, experts in discarding the chatter and discovering — deep down — what is really driving things. The Draft Guidelines for the Communist Party’s VI Congress is a good exercise to sharpen our senses, a model example to evaluate the practice of speaking without speaking, which is what state discourse is here.

The Guide undoubtedly could be seen as an economic rescue program designed to rescue also the Communist party of Cuba, which faces steady de-legitimation as the economy deteriorates – even as the official GDP statistics appear to rise steadily.

What is missing from the “Guide”? Here is a first brief listing. Further analysis will be incorporated here later.

1.      Nothing is said regarding labor rights. A vital part of the reform approach if labor is to be used effectively would be freedom of association, collective bargaining and the right to strike. In the absence of these, pressures and insights from the grass roots to improve economic policy and its effectiveness are suppressed.

2.      Nothing is said regarding freedom of expression and the right to criticize the policies and institutions openly, honestly and continuously. The absence of this right leads to economic inefficiency and corruption as argued elsewhere. ( Freedom of Expression, Economic Self-Correction and Self-Renewal)

3.      No further elaboration of how the self-employment or micro-enterprise sector is presented, suggesting that the recent reforms are the end of the journey not a first step.

4.      The dedication to centralized determination of prices is problematic. If maintained strictly, it would make the decentralized decision-making allotted to enterprises for investment, the hiring of resource inputs, etc. meaningless, and the problems of trying to run the economy from a few office towers in Havana would continue.

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CARMELO MESA-LAGO and PAVEL VIDAL-ALEJANDRO, “The Impact of the Global Crisis on Cuba’s Economy and Social Welfare”

Journal of Latin American Studies. 42, 689–717,  Cambridge University Press, 2010

Carmelo Mesa-Lago and Pavel Vidal have teamed up to produce a fine analysis of the impacts of the world recession of 2009-201o on Cuba,  its macro-economy and its social sectors.  It is certainly encouraging to see such cooperation in the economics discipline! The article can be found here: Pavel Vidal and Carmelo Mesa-Lago, Cuba economic social impact crisis-JLAS-11 (2)

Abstract.The mechanisms by which the world economic crisis has been transmitted from developed to developing economies are conditioned by domestic factors that may attenuate or accentuate external economic shocks and their adverse social effects. Cuba is a special case : it is an open economy and hence vulnerable to trade growth transmission mechanisms, but at the same time, it is a socialist economy with universal social services. This article reviews the literature, summarises Cuba’s domestic socio-economic strengths and weaknesses prior to the crisis, evaluates the effects of the crisis on the macro-economic and social services indicators, assesses the government response and suggests alternative socio-economic policies.

Carmelo Mesa-Lago

 

Pavel Vidal

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Carmelo Mesa-Lago: “Cincuenta años de servicios sociales en Cuba”

Carmelo Mesa-Lago. Professor Emeritus, University of Pittsburgh

Hyperlink: Revista TEMAS, no. 64: 45-56, octubre-diciembre de 2010

Revista Temas has published a valuable work by Carmelo Mesa-Lago analysing Cuba’s major social issues, namely health, education, pensions, and housing, and drawing on the work of various analysts from the Centro de Estudios sobre la Economia Cubana. Inclusion of Mesa-Lago’s work in Revista TEMAS is indeed encouraging in my view and contrasts with the situation some 25 years ago when he and other Cuban-American analysts were villified as “Cubanologos.”

Here is the Table of Contents for  followed by its concluding session. Unfortunately an English translation is not available right now.

Introducción

Evolución de los servicios sociales (1959-2000

Costo actual de los servicios sociales en Cuba

Un caso de estudio: el costo creciente de las pensiones

Capacidad económica para sostener los servicios sociales a largo plazo

Cambios necesarios para mejorar y hacer sustentables los servicios sociales

No es posible resolver los problemas que los costosos servicios sociales enfrentan sin un aumento de la producción, la productividad y las exportaciones que permitan, a su vez, reducir las importaciones. Pero para lograrlo, se necesita implementar las reformas estructurales anunciadas por el presidente Raúl Castro y recomendadas por numerosos economistas cubanos.

El tema de la sostenibilidad de los servicios sociales ha sido planteado por varios economistas cubanos. Viviana Togores y Anicia García consideran que

la crisis económica y el proceso de ajuste han mostrado que la preservación de los beneficios sociales debe transitar hacia una nueva etapa donde su sustentabilidad financiera quede asociada al desarrollo de la economía y los cambios estructurales y organizativos [necesarios] […] las decisiones de política social deben tomarse no solo teniendo en cuenta las funciones sociales, sino que debenrespetar los principios de equilibrio económico.34

Por ejemplo, la seguridad y asistencia socials agravan seriamente el déficit fiscal y su carga, hoy solo asumida por el Estado; debe ser compartida por otros contribuyentes (los trabajadores). Mayra Espina agrega:

El primer reto [de la renovación social] es el de la sustentabilidad económica de la política de desarrollo social […] es necesario encontrar fórmulas de reinserción  de la economía cubana en los mercados internacionales que reactiven la producción interna y doten a los programas sociales de los recursos suficientes, sin los cuales siempre estarán enfrentados al déficit.35

Las decisiones cruciales sobre la economía y los servicios sociales competen a los cubanos. Pero a  diferencia de la crisis de los años 90, en que hubo una estrategia para hacerles frente, en la presente esta no se ha definido. El VI Congreso del PCC, anunciado inicialmente para fines de 2008, debe decidir los lineamientos económicos para el próximo quinquenio y también dictar las directrices en materia de servicios sociales. Habiendo dedicado cincuenta años de mi vida al estudio de este tema en toda América Latina, incluida  Cuba, hago unas sugerencias —parte de estas coinciden con las de economistas y académicos cubanos— como aporte para el debate. A mi juicio, sería posible aumentar el ingreso fiscal y reducir el gasto social, mediante mejoras en la asignación y uso de los recursos, con las medidas siguientes:

Educación: En la enseñanza elemental habría que transferir fondos hacia el pago de mejores sueldos a los maestros (en vista de la caída en la fecundidad y de la población en edad primaria) y, en la secundaria,  riorizar la educación vocacional. Respecto a la superior, Juan  Triana propone invertir más en las carreras técnicas y las que contribuyen al conocimiento, aunque son más costosas que las humanidades, la pedagogía y las ciencias sociales.36 Las carreras científicas son esenciales para el desarrollo, incluyendo la administración de negocios y la economía moderna, por lo que habría que transferor recursos de carreras no tan esenciales, imponiéndoles cuotas y estándares de ingreso más estrictos. Ya en 2008-2009 se estaba reduciendo la matrícula en medicina, humanidades y ciencias sociales, pero también en agronomía y ciencias técnicas.37 Además, habría que continuar y expandir las medidas recién iniciadas que  establecen exámenes de ingreso para la educación superior y requisitos más estrictos de admisión, lo cual ayudaría a aumentar la relación de graduados por matriculados; considerar el establecimiento de pago de matrículas en las universidades a los grupos de altos ingresos, y legalizar el trabajo por cuenta propia de los maestros y profesores.

Salud: Sería aconsejable priorizar la infraestructura de agua potable y alcantarillado,38 reasignar los recursos destinados a la continuada reducción de la mortalidad infantil (un problema resuelto hace años) hacia la reparación de la infraestructura deteriorada, la importación de medicinas, la disminución de la mortalidad materna y otras áreas de mayor necesidad; subordinar el número de profesionales de la salud que  trabajan en el extranjero a las necesidades internas, e invertir parte de los ingresos en divisas que generan sus servicios en la mejora de las instalaciones y equipos  internos y el suministro de medicinas; convertir  hospitales de  aternidad y pediatría que tienen bajas tasas de ocupación en hospitales geriátricos y asilos para ancianos; terminar las becas a estudiantes extranjeros y cobrar el costo básico de los servicios que hoy se regalan  a otros países; cargar el costo de cuartos privados al grupo de altos ingresos de la población cubana; autorizar el trabajo por cuenta propia del personal de salud y permitir la organización de cooperativas médicas.

Pensiones de seguridad social: Habría que realizar un studio que determine cuál es la cotización de  quilibrio del sistema; establecer cotizaciones a todos los trabajadores de empresas no estatales con un mínimo de empleados, incorporándolos al sistema; cargar a los trabajadores por cuenta propia y empleados en el sector  rivado el mismo 5% que paga parte de los asalariados (en lugar de 10% y 15%) para promover su afiliación; ajustar las pensiones al costo de la vida, lo que requiere, primero, aumentar la producción y la productividad y, a su vez, avanzar en las reformas estructurales. Medidas más complejas serían cerrar el actual sistema de pensiones, que el Estado se haga responsable de las pensiones en curso de pago, y crear un nuevo sistema público para los asegurados jóvenes y los nuevos trabajadores, con una reserva que se invierta para generar un retorno del capital y ayudar en el financiamiento a largo plazo y mejorar las pensiones.

Vivienda: Rafael Hernández argumenta que la ley originalmente estipuló que la vivienda es propiedad de los ciudadanos, y es lógico que ellos puedan hacer con ella lo que quieran, venderla y también comprarla; además, hay que facilitar que la gente pueda reparar y construir viviendas por medios propios.39 Habría que proporcionar a la población el acceso a materiales de construcción, y otorgar pequeños créditos estatales rembolsables con interés para la construcción y reparación de viviendas; permitir el uso de la casa propia como colateral para obtener  réstamos destinados a su reparación; posibilitar la inversión de remesas externas en esas actividades; eliminar el actual sistema de permutas y autorizar la compraventa con regulaciones adecuadas.

Asistencia social. Para reducir la pobreza, Lía Añé recomienda eliminar la dualidad monetaria,

disminuir la segmentación del mercado, mejorar los salaries más bajos, y consolidar y evaluar la efectividad de los nuevos programas sociales.40 Pedro Campos propone eliminar la libreta de racionamiento, previa concesión de subsidios directos focalizados en las personas de bajos ingresos, y un reajuste salarial para compensar el incremento de precios que ocurriría.41 Alexis Codina agrega que los cuantiosos recursos fiscales asignados a subsidios de precios por la libreta, recibidos por todos, independientemente de sus ingresos, deberían quedar solo para la población más vulnerable y el resto utilizaría el mercado.

En mi opinión, el sistema de racionamiento no debería aliminarse de golpe, pues o bien sería muy  costoso o dejaría parte de los necesitados sin protección. Lo ideal sería hacerlo gradualmente, de manera paralela a los incrementos en la producción y la productividad  que resulten de reformas estructurales, a la par que se focaliza la asistencia social en toda la población pobre y vulnerable, a fin de crear una amplia red mínima de protección. Ello requeriría mecanismos eficientes para determinar el grado de necesidad de la población y una estimación confiable de la incidencia de pobreza. También habría que permitir a iglesias y ONG que establezcan y expandan asilos gratuitos para ancianos pobres con ayuda externa directa.

La Revolución transformó los servicios socials —salvo la vivienda—,  universalizó su cobertura, eliminó desigualdades entre grupos de ingreso y zonas urbanas y rurales, y otorgó servicios gratuitos de calidad. Las crisis de los años 90 y la actual, unidas a deficiencias de las políticas económicas, han afectado severamente esos servicios y agravado su falta de sustentabilidad a largo plazo. Resulta crucial, por tanto, implementar  las reformas estructurales necesarias y los cambios en dichos servicios para restaurar su calidad y garantizarlos a las generaciones futuras.

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