Cuba Is Reforming, But Wealth And Success Are Still Frowned Upon

Cuba Is Reforming, But Wealth And Success Are Still Frowned Upon
Nick Miroff, GlobalPost | Sep. 4, 2012, 6:05 PM

HAVANA, Cuba — Let there be no doubt: Cuba's Communist Party has
declared the island's socialist system "irrevocable."

But the nod to market principles at the core of President Raul Castro's
economic reforms has brought a new degree of ideological ambiguity to
Cuba, leaving many to wonder just what model, exactly, the island is
really following.

With Cuban authorities seeming ready to embrace new forms of private
enterprise but not liberal democracy, the comparisons inevitably point
to China and Vietnam. In those countries, a one-party, authoritarian
political system has endured thanks to a dynamic, globalized economy
that delivers steady growth.

The 81-year-old Castro made a rare trip abroad to visit China and
Vietnam in July, adding to speculation that Cuba is eager to adopt the
development model charted by Asia's business-friendly communists.

But Cuba doesn't even come close to emulating those countries, said
University of Havana economist Julio Diaz Vazquez, who was educated in
the Soviet Union and now studies contemporary China and Vietnam.

In Cuba, "there is an acknowledgment that we have to fix the basic
structure of our economy," said Diaz Vazquez. "But the mentality of the
old model is still present: How do we keep [entrepreneurs] under control?"

Three years after Castro announced the reforms — "updates" is the
official euphemism — Cuba has taken significant steps toward creating a
larger role for private business.

Nearly 400,000 Cubans now possess self-employment licenses that allow
them to work independently. The government has attempted to boost food
production by leasing nearly 3 million acres of state-owned land to
private farmers and independent cooperatives on a no-cost, long-term
basis. Thousands of little snack bars and restaurants have transformed
the physical appearance of Cuba's cities and towns. Cubans can buy and
sell their homes and apartments for the first time in a half-century.

All of these measures, and others, have brought significant change and
subtle shifts in the way Cubans perceive their opportunities and their
relationship to the government.

But in other, fundamental ways, Cuba's Communist Party leaders and the
massive government bureaucracy below them remain stuck in the Soviet-era
dogmas that China and Vietnam disposed of decades ago.

The main difference, according economists like Diaz Vazquez, is that
China and Vietnam follow a high-productivity model in which the state
encourages, rather than impedes, the country's entrepreneurs and
professionals. Torrents of foreign investment and booming exports have
made those countries global economic players, raising living standards
and providing political stability. While the state steps in to moderate
the inequalities that result, it does not view individual prosperity
with suspicion.

In contrast, Cuban authorities are a long way from endorsing the Deng
Xiaoping maxim "to get rich is glorious." Making money in Cuba is still
essentially viewed as a crime, as some hapless entrepreneurs have
recently discovered.

Raul Castro's reforms, Diaz Vazquez said, continue to be weighed down by
an old model that keeps entrepreneurs on a tight leash and says: "You
can start a business, but I can take it away from you at any time."

Some 78 percent of the Cuban labor force is still employed by the state.
Workers struggle to survive on salaries that average $20 a month and
fall far short of providing for their basic needs. Many turn to stealing
from their workplaces or selling goods in Cuba's vast black market,
activities that the government wants to curtail by moving workers off
state payrolls.

Cuban officials say their goal is to create millions of new jobs in
private businesses and cooperatives, referred to on the island as the
"non-state" sector. Last year 22 percent of Cubans held non-government
jobs, up from 16 percent in 2010, according to the island's national
statistics office.

But to date Cubans who go to work for themselves must choose from 181
occupations, an astoundingly-circumscribed list that includes jobs like
palm-tree trimmer, birthday clown, mule-driver, knife-sharpener and
funeral flower-arranger.

Such a list would probably be laughed at today just as much by the
market socialists in China or Vietnam as it would be in places like
Miami or Mexico City.

For Cubans who might want to start a software company, architectural
firm or manufacture tractor parts, the only way to do so is leave. And
so many of the island's best and brightest go abroad.

Three years into the reform process, the kinds of small businesses now
permitted in Cuba do not leverage the skills of educated professionals,
or allow them to work on their own. And there is no discernible
recognition that manufacturing and most forms of commerce are more
efficient in private hands, despite China and Vietnam's achievements,
not to mention decades of ample evidence in Cuba to the contrary.

New start-up businesses in Cuba still can't import supplies or equipment
directly from abroad. They continue to face elaborate bureaucratic
obstacles to the most trivial operational needs, like banking services
and advertising. Investment capital from foreign partners can only come
in secret.

Such barriers have deep roots in the Cuban economic model that dates
back to the 1960s and has long equated socialist "perfection" with
maximum state control. Such thinking has measured success according to
the degree to which private property can be eliminated and administered
by the state.

That model has been failing in Cuba for decades, but it's only under
Raul Castro that the government has begun to openly acknowledge that
abysmal economic output cannot sustain the health and educational
systems that are held up as the crowning achievements Fidel Castro's
1959 revolution.

But Cuba continues moving slowly, even as Castro insists the changes
will come "without hurry but without pause."

While Cuba's octogenarian leaders may not have time on their side, they
do have Hugo Chavez. The Venezuelan president provides the island with
billions in hard currency and two-thirds of Cuba's energy needs,
lessening the need for urgent change.

Chavez claims to have beaten cancer with Cuba's help, and he's also
beating rival presidential candidate Henrique Capriles in most polls.

With Chavez's continued financial backing, Cuba's leaders may see little
need to embrace the Chinese model, and stick with their tropical one for
as long as possible.

http://www.businessinsider.com/cubas-economic-transition-2012-9