Monday, July 30, 2012

Cuban entrepreneurs, by the numbers

The following appears in a publication that I’ll publish here tomorrow; its figures are updated from those that appear in the print version, and I’ll further update them here from time to time:

390,598…the number of Cubans in the entrepreneurial sector May 1, 2012, including 62,747 employees

7.6…their percentage of the Cuban workforce

233,727…the number who joined this sector since October 2010   

15 and 11…the percentages of those working in food service and transportation, respectively, as of July 2012

600,000…the number expected to be working in this sector by 2013 according to government economic plans   

66…the percent of entrepreneurs who had no formal job prior to joining the sector   

18…the percent of those who had been working for the state  

170,000…the planned 2012 reduction in state sector employees   

1,500,000…the planned reduction in state sector employees by 2015   

25…the percent of new entrepreneurs who gave up and turned in their licenses, as of September 2011   


Antonio said...

66…the percent of entrepreneurs who had no formal job prior to joining the sector.

That is the most striking number for me. It illustrates the size and scope of the black market in Cuba, as it is clear that Cubans do want to operate out in the open. A lot of Fidelistas have for years, claimed that Cubans just love the black market and hate taxes. That number proves them wrong.

There is no congenital disposition for black market activity in Cuba. The problem is the draconian business climate.

Anonymous said...

The black market in Cuba is a consequence of repressed inflation.

Given economic inefficiency the supply of money in the hands of the population grows faster than the value of the goods and services in the hands of the population.

Under these conditions price increases are necessary to restablish equilibrium between supply and effective demand.

In a free market economy this occurs spontaneously.

Thus inflation is expressed in an increase in prices that allows the continuation of the balance between supply and demand.

In a centralized planing economy the prices are set by government officials and these are fixed and not allowed to balance supply and demand.

As a result inflation in a centralized plan economy upsets the balance between demand and supply.

Demand is greater than supply. Inventory shortages take place and the general population is willing to pay higher than official prices for access to scarce goods.

Corrupt government officials who control the wholesale and retail distribution system and are in cahoots are able to make excess profits without being detected by accountants by:

1- Selling scarce goods and services at prices that are higher than the fixed prices set by the planning authorities.
2- Paying their retail stores the original price so that the planned sales amount is returned to the government.
3- Pocketing the difference.

There is no solution to this problem under a centralized planning. It is an endemic symptom of a dysfunctional system.

Trying to eliminate the black market under socialism is impossible because it is the only mechanism available to balance demand to existing supply.

The only solution to the black market and the endemic corruption it brings about is a return to capitalism with its producers who set prices independently under competitive market conditions.

This of course is a negation of centralized planning and socialism and the totalitarian authorities will not allow it.

Nor are they motivated to do so since many of them are the beneficiaries of the endemic corruption that the black market brings about.

As a matter of fact the black market will be the means for the primitive process of capital accumulation which the members of the nomenklatura will use to become Cuba's neobourgeoisie.

Centralized planning thus breeds shortages, a black market, corruption, primitive capital accumulation in public officials and eventually a neobourgeoisie.