Tuesday, June 19, 2007

Fidel and economics

I thought I was done commenting on Fidel Castro’s newspaper commentaries, but I guess not. A few things struck me in yesterday’s commentary (English here).

First, Castro began the revolution declaring that he was defending Cuba’s sovereignty, finishing finally the work the Mambises set out to do. Lest anyone had any doubt, he will remain in that role, as President Clinton used to say, “until the last dog dies.”

Second, he discloses that in recent months he “hovered between life and death.”

Third, he reaffirms his views on economics in some brief statements that are peripheral to his main argument, but telling nonetheless.

“The access to convertible currency,” he writes, “greatly harmed our social consciousness, to a greater or a lesser degree, due to the inequalities and ideological weaknesses it created.”

The solution, he goes on, is to raise the standard of living by improving “knowledge, self-esteem and the dignity of people. It will be enough to reduce wastage [despilfarro] and the economy will grow. In spite of everything, we will keep on growing as necessary and as possible.”

Again, these are asides in an essay focused mainly on politics and security. But it’s a narrow and minimal economic vision, a far cry from generating broad-based growth that lifts incomes, enables Cuba to return to a single currency, and eliminates the income gaps that drive Cubans to engage in black market activity to make ends meet.


CUBA ED said...

There is a significant difference between past and present economic goals. In the past, these were mostly in the form of production goals in different sectors or even in general GD growth. Now there is a recognition that the life of the average Cuban has to materially improve. The idea is that this new more practical goal can be achieved by eliminating waste, theft, and inefficiency. Thus the drives for "perfeccionamiento" in state enterprises. The next couple of years will show that not enough can be wrung out of the present system. Then begrudging market oriented change will have to occur, especially in agriculture.

leftside said...

I think Cuba Ed has it right. Lord knows there are still efficiencies to wring out of the state owned enterprises. Things are not in dire shape right now economically.

If I have any criticism of Mr. Peters here, it is that there is a natural contradiction between the twin goals of growing all incomes and preventing income inequalities. The path the regime seems to be taking in the short term won't raise incomes much, but inequality will be kept in check. The market reforms Peters is pushing for would probably raise SOME incomes, and lead to huge inequalities based on who has access to foreign capital to start a business. No revolutionary would want to create a system where those with ties to Miami are those starting all the new businesses. A classic catch 22...

Phil Peters said...

They already have inequality, very sharp inequality. I think everyone knows that to be the cause of 99% of the black market activity that Fidel and others complain about. To lift up the have-nots, they need growth. So far, they are looking to state-led solutions (new projects with Venezuela, etc) and efforts to squeeze more out of the system as it is. We'll see if it gets them where they want to go. I tend to doubt it. Next thing on the horizon is the new salary policy.

leftside said...

Yes, but how do you create market opportunities that the nuevo elite (from black marketeering) and those with money from Miami do not dominate? That I think is what is holding reforms back. The regime would lose its legitimacy fast as those who played by the rules would be shut out of this new economy without adequate controls and subsidies.

CUBA ED said...

LEFTTSIDE: Free up agriculture, for one. Let the farmers plant what they want, when they want, and sell it for what they can get. Then you'll see a flourishing countryside rather than more maceteros.

leftside said...

Sounds good, except for the fact that the Cuban rations aren't going anywhere soon and therefore the Cuban state still needs to subsidize farmers - and demand certain quanities at certain prices. To me, the countryside in Cuba appeared to be doing pretty well... compared to the US with its dying small towns.

In other news:

The Cuban Communist Party has concluded a nationwide survey on how state-run businesses might operate more efficiently, increasing expectations for change under acting Cuban president and party leader Raul Castro.
Party members from factories, hotels, transportation and other sectors were surveyed on the problems they faced in the largely state-run economy, said various government and academic sources who asked not to be identified.

"We were asked how we would solve the problems without raising our budgets," one party member said. "We were told to express our views absolutely freely and that is what we did."