A win for the control freaks

Cuba has legalized the operation of private bars where a maximum of 50 customers can enjoy alcoholic beverages “in their natural state or in cocktails,” and there can be recorded music, or live performances as long as the artists are hired in full compliance with Ministry of Culture regulations.

This is a trivial aspect of Cuba’s new small business regulations, and like many over the years it legalizes something that has been going on already.

But it makes you think back to March 1968 when Fidel Castro railed against private bars and other businesses during his Ofensiva Revolucionaria (see speeches here and here). He professed shock that there were 955 bars in Havana. He disclosed that undercover investigations found that 72 percent of their patrons “maintain an attitude contrary to our revolutionary process” and 66 percent “are anti-social elements.” He didn’t like other private businesses either, nor the people who ran them. His speeches often included the descriptor “lumpen.”

So he closed virtually all Cuba’s remaining private businesses, tens of thousands of them, including all the bars, because of a perception that they weren’t needed and they engendered the wrong kind of thinking.

So if you root for the privados, 1968 is the low point in the Cuban government’s long struggle to figure out how much private property and private enterprise are to be permitted in the socialist system.

And 1968 is why Cuba had just a few thousand private businesses when it opened up trabajo por cuenta propia in 1993, and it’s why when Raul Castro took office a decade later and took a fresh look at the economy, he noted that the government was unnecessarily and badly running state enterprises to provide almost every service: repair services of all kinds, worker cafeterias, beauty and barber shops, etc.

No one ever made a speech that explicitly threw the thinking of 1968 out the window, but that is what happened when small enterprise regulations were significantly liberalized in 2010. Individual entrepreneurship has since quadrupled in Cuba, from about 150,000 to nearly 600,000, now comprising 12 percent of a labor force where about one in three persons is employed outside the state. These entrepreneurs are essential sources of job creation, tax revenue, and services. Their bed-and-breakfasts sustain tourism centers such as Trinidad and Vinales where hotel capacity is minimal. They are in every city and dusty small town, with the common characteristic that they improve family income, usually quite a lot.

The new regulations (linked here), a package of new norms signed by Raul Castro and various ministers between February and July, are advertised as “updating, correcting, and strengthening” trabajo por cuenta propia.

Actually, “controlling” might be a better word.

Odds and ends

• Granma published the text of the foreign investment law today.

• In the Mariel economic zone, as in foreign investment projects in general, workers are hired and paid through an employment agency.  Payment is made in hard currency, the agency keeps most of the money and pays the workers a normal Cuban wage.  Foreign businesses then make side payments to the workers to raise their wages and productivity, which is why jobs with foreign businesses are sought-after.  Trabajadores reports that in the Mariel economic zone, the agency will no longer have a “revenue-collecting” function and will pay workers 80 percent of the wage negotiated between the foreign business and the agency.

• Reuters on Cuba’s new private non-farm cooperatives; more than 450 are now operating in the program’s “experimental” phase.

• Granma: the new labor code makes Good Friday a holiday in Cuba, this week and permanently.

• A granddaughter recounts an interview that her grandfather Clark Hewitt Galloway conducted with Fidel Castro in 1959.

• Dodger phenom Yasiel Puig’s flight from Cuba was harrowing, and still is so, recounted in detail by Los Angeles Magazine in English and Spanish.

Quotable (Updated)

Granma’s recently redesigned website is including comments on articles.  Here are comments from various readers today on two stories: on the foreign investment law, and on a series of discussions of it by members of the National Assembly.  (Each paragraph is a separate reader commment.) Update 3/31: Granma collected reader questions and criticisms, noted them in this article, and says it has arranged for officials to respond to them today from 9:00 a.m. until noon.

  

I would only like to know if there will be some possibility for we Cubans who live in Miami to open a business on the island and help generate employment for family and friends.

Legislators, please eliminate the employment agencies.

It would be very useful for the new legislation to eliminate the excessive bureaucracy around starting an investment in Cuba.  Many foreign businessmen change their minds when they run up against so many cumbersome requirements.

The efficiency of the private sector depends basically on a sense of property and ownership.  The management of human resources should be in the hands of the management that the investor puts in place.

It is very important that there not be discrimination against investors based on any factors that are not purely economic.

My God, what a way of saying nothing, the reporter went out in the weeds and gives us zero information and analysis, it seems he doesn’t want to put forth his opinions and he has left us readers as uninformed as we were before reading his article.

This law is very necessary, but from what has been disclosed and comparing it with what exists internationally, I believe that the taxes are too benign and on the other hand they keep anachronisms such as prohibiting investment on the part of individual Cubans residing in Cuba and the employment agency that only serves to create bureaucracy and corruption.

It would have been nice to have had access to this draft bill, maybe we could have added something, I understand that not all of us understand [this subject matter] – but since the enactment of the law will affect us all, it would have been good to have been able to give immediate feedback.

I have read lots of news about the draft bill – that they are meeting, discussing, analyzing, and many more things – but the main thing, the changes being proposed and the provisions that are being left unchanged, in the end I’m not able to read one single thing about what they are talking about.

I believe that the special sesssion of the Assembly should be broadcast COMPLETELY on television and radio.

Will Cubans, in Cuba and outside, be able to invest in businesses in Cuba, or will only foreigners be permitted to do so?

On the labor front

Granma looks at the ongoing state sector layoffs in this article, where it is argued that the key to the process is for each enterprise to establish fair, transparent criteria for evaluating employee performance.  The article reviews the case of a taxi company where a driver was laid off then reinstated with back pay after the company’s selection process was reviewed.  (After the review, an administrator was fired.)  Among criteria that cannot be included, the article says, are social and union-related factors that have “nothing to do with work performance.”  The article explains how workers can pursue grievances.

And speaking of grievances, this column in Trabajadores discusses the “frequent” complaints the paper receives from workers about failure of state enterprises to pay salaries on time.  Common excuses given by management have to do with “economic difficulties, insolvency, debts, lack of credits, or unpaid receivables.” 

Show me the money

Two recent articles in Trabajadores lament the delay in implementing the incentive pay schemes called for in the Party’s lineamientos last year. 

In restaurants in Santiago, revenues are up but salaries have not been adjusted, and workers are not pleased.  And this survey of Las Tunas province also shows delays in implementing incentive pay.  In one example, an administrator of an organoponico, an urban food growing cooperative, complains that workers receive smaller profit distributions because of the payments that are made to two state enterprises.  He doesn’t like the fact that his workers are helping “to defray the spending of the less productive” in the state sector.  

The articles, and many others like them, seem to show state media being used as a tool to nudge the reform process along, or at least to show the public that there’s official recognition that progress is slow.

Odds and ends

Some catching up to do…

·         A great article on Cuba’s Latin American Medical School from Catherine Porter of the Toronto Star.  The school has 116 Americans enrolled, she reports.

·         Repsol is “almost certain” that it’s done exploring for oil in Cuba; see stories from AP and the Herald.

·         Juventud Rebelde: The “social movement” of 52,000 Venezuelans who have received medical care in Cuba in the past 11 years has joined the coalition that aims to garner ten million votes for President Chavez in the October election.

·         AFP: Secretary Clinton had a meeting with Judy Gross, wife of jailed USAID contractor Alan Gross.

·         The Hill: Senator Rubio makes his first trip to Cuba by visiting the U.S. naval base at Guantanamo.

·         Internet investor Esther Dyson on a recent visit to Cuba.

·         A Cuban jurist intervewed by Trabajadores says that the labor code is being revised in ways that will favor the prívate sector.  Asked about the kinds of labor complaints that are emerging in the new private sector, she said no significant complaints have come about.

·         Radio Rebelde: From January through April, 92,500 homeowners registered the titles to their homes, and 140,000 did so last year according to Cuba’s Ministry of Justice.  That step, the story says, “guarantees greater legal security to property owners.”  If a property’s title is not updated and registered it cannot be sold or otherwise transferred.