Why Are Private Businesses Failing in Cuba?

Why Are Private Businesses Failing in Cuba? / Eliecer Avila
Eliecer Avila, Translator: Unstated

A wave of recently implemented layoffs sent an undetermined number of
workers into the streets. Official data on the initial number of people
laid off referred to something around a half million; later there would
be a second round that would lead to a total figure of about a million
jobs lost, to be identified through rigorous State analysis.

If this process had been called by its name — by what the world would
call these "readjustments" — it would have been a scandal; even more so
when the one to blame for the current situation is the State itself. But
as often happens in Cuba, after many long faces and some show of
displeasure, people end up accepting the "package" and venting their
outrage at home, consoling themselves with tears and stored up hatreds.

Among those affected by the mass layoffs have been experienced and
competent professionals. For them, like the rest, the options provided
by the State were farm work or "self-employment" in just the few dozen
trades allowed. Most people "available" — they invent terms here to
avoid universal standards and statistics — have no experience in making
land produce, whether it is vacant or overrun by marabou weed and
available for leasing in usufruct, so most of them opted for
self-employment.

So it was that an army of entrepreneurs (?!) began to take out licenses
to try their luck in the uncertain world of business. The most fortunate
could count on family or friends abroad to provide resources to invest,
or advice and information about the operations of their businesses.

What these excited people didn't know was that there were already some
macabre minds who had planned everything in reverse. The communist gurus
in charge of the necessary accounts had designed a system of taxes and
controls in which the conditions of the country resulted in armed robbery.

This was explained with absolute clarity on several Roundtable TV shows,
but the hopeful and enthusiastic did pay attention. "This is designed in
such a way as to avoid the accumulation of wealth on the part of
individuals," was what they said on these programs.

But if business owners don't accumulate capital, how are they going to
invest, acquire technology, widen their opportunities, improve quality
and increase production, to be able to lower prices so that people
benefit? If they can't accumulate enough money, how are they going to
develop their business and compete?

This means that no matter how much effort and investment they put in, no
one is going to turn their business into a success nor prosper much
beyond what is allowed by decree for any humble Cuban.

A devastated landscape

The current tax system alone is enough to make you throw in the towel
and give up. But things don't stop there. The brave aspirants find
themselves in a country designed from beginning to end to have an
anti-business approach. More than fifty years of building this absurd
philosophy would not be erased by magic, not even when one of its main
promoters said in a speech that a "change of mentality" was needed.

Among other things, the raw materials for food and supplies to provide
basic services continued to come from "illegal" sources, and the
supplies promised by the government in the vast majority of territories
never arrived. Thus, within a few months, the avalanche of tiny
businesses and kiosks that initially flourished began to disappear.
(Some owners keep their licenses to pay their social contribution and so
they won't appear unemployed, thus dodging the surveillance of the
Sector Chief and being able to dedicate themselves to other activities).

Another element that de facto destroys any initiative, especially in
small towns and rural areas, is the total lack of economic capacity
among potential consumers. Thousands of people who have the need and
desire to acquire products are lacking resources. The population is
economically dead, consisting mainly of the unemployed, poor
farmworkers, wage laborers, etc…

On economic issues, first there must be money in the hands of those who
would consume, so that investors are found to take the risks, borrow,
look for alternatives: no one will risk anything to sell to skinny
phantoms and neutral onlookers. At the same time, it's curious that
journalists in the official media who reflect endlessly on the increase
in license applications and the proliferation of small businesses that
are supposedly "going full steam ahead," have not said a word about this.

And the result is always the same: after the failures, exhausted hopes,
and with no sign of any more rabbits to be pulled out of the dark hat of
the government, people look even more desperately than before for ways
to leave the country. Especially the young. The lines at the embassies
are ever longer.

It's a shame that so many prefer to leave rather than to stay and fight
to change things. Although in the end it's understandable: who wouldn't
want to go from being someone who needs help to being someone able to help?

From Diario de Cuba

3 October 2012

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