Martes, 18 de Febrero de 2020
Última actualización: 16:13 CET
ECONOMY

Raúl Castro's Autistic Logic

Motorways in Hanoi. (VOV)

The "Special Period II", whose initial phase is already besetting ordinary Cubans, is accompanied by a specter endowing it with a new, dramatic dimension: the socioeconomic crisis, this time, is terminal. There is no solution, unless Stalinist statism is dismantled, which dictator Raúl Castro refuses to do.

There is no longer any paganini (generous benefactor) on the international stage willing to bankroll the world's most parasitic economy, absolutely unable to sustain itself.

The only possible solution is to liberate the country's productive forces, but high-ranking members of the Communist bureaucracy, overseen by Díaz-Canel, far from granting more latitude and freedom to the private sector, so that there is more food, goods and services of all kinds, and an end to poverty (already at African levels), instead beleaguers it with more obstacles, controls and prohibitions.

Price caps and new salary hikeshave beenin effect since August 1.  In Havana and other provinces, caps are in place on the price of beer, soft drinks, malt, juice, nectars and juices, water ... precisely the products accounting for most the income of tens of thousands of self-employed Cubans, like Víctor Manuel, who said: "We won't recover from this."  

Rebeca Monzó believes that the purpose of the price caps is "to do away with private businesses," because "they are more successful than state ones."

The archaic intransigence of the "historical" elite combines with the ineptitude and ignorance of younger bureaucrats. In the mid 20th century the founders of the "Revolution" killed the hen that lays golden eggs: a market economy, and ever since there has reigned an absolute ignorance of economic laws, now forming part of the very DNA of Castroism.

Thus, Díaz-Canel is able to argue that the price caps in the private sector will prevent inflation from rising, after having injected some 7 billion pesos into the economy through wage increases. Because Cuba lacks a genuine economic culture, considered "bourgeois", many believe that raising wages, if accompanied by a price cap, will improve standards of living. A grave mistake. It is, in fact, the other way around: the "Special Period II" will make things worse, aggravating shortages by reducing the supply of everything. And prices, in general, will rise, on the black or underground market, and also on the legitimate one.

Price caps backfire

This was explained very graphically by a private pork producer in Holguín named José Ramón, to DIARIO DE CUBA journalist Osmel Ramírez. He now has price caps on what he sells, but "the animals' feed is still very expensive. If the business doesn't work, how are we going to keep breeding?"  Elementary, if there are no profits for those who produce, there will be less and less pork, so it will become more expensive.

It is simple: private producers of food, or anything else, seeing their profits fall due to the price caps, produce less, or do not produce at all, or place what is produced on the black market, where it is, obviously, more expensive, to cover their costs from paying the state more for supplies and equipment, and the risk they face when engaging in clandestine business, without paying taxes.

That is, the result of the socialist government's "anti-inflation" measure will be inflation. "All products, and particularly food, will be more expensive than before price caps were imposed. This is where it backfires," to put it plainly.

And, even worse, the inevitable gradual rise in prices will not only eat up the salary increases, but will also reduce real family incomes to levels even lower than before they had been raised, as the excess money in circulation, without an increase in production and services, will devalue the currency. Thus, the purchasing power of the CUP and the CUC will fall. Everyone will be even poorer, and we will have to pay more for less.

No one, unless an ideological prisoner of the dogmatic left, can understand why Havana has not emulated Beijing and Hanoi, and embraced so-called "market socialism." In China and Vietnam, the same implacable dictatorships of the of the Communist parties of Mao and Ho Chi Minh rule, but their productive forces were freed there, and hundreds of millions of people proceeded to emerge from poverty.

In Vietnam before the war (1955-1975) all lands belonged to the state, as private property was prohibited. Thus, when the conflict ended, in which three million people died, hunger continued to kill thousands of Vietnamese, as Communist agriculture was unable to feed the country.

The same year that Gorbachev launched his perestroika (1986), in Vietnam the leaders of the old Stalinist guard of Ho Chi Minh times were forced to resign. Economic market reform, termed Doi Moi (renovation), was initiated, and private property was restored.

The first thing that Hanoi's reformers did was, precisely, to eliminate the price caps of which Díaz-Canel boasts. And they gave lands to those who wanted to work them, without regulations. Farmers, cooperatives and tenants began to produce what they wanted, and to sell their crops on the market, to import and export, and to obtain loans from state or private sources, whether domestic or foreign.

The Vietnamese were allowed to accumulate capital and create medium and large private companies in every economic sector, and were authorized to import and export, and to hire their employees. The country opened up to foreign capital.  To give one an idea, in 2018 Vietnam 2018 received $35.46 billion in foreign investments, according to official data, including large investments by Vietnamese expats living abroad, also contributing their valuable know-how.

The military does not let the private sector grow

Outcome? Hunger has been overcome, and Vietnam became a world powerhouse in the exportation of rice and coffee, to the point that it surpassed Colombia, and is today the world's second biggest coffee exporter, after Brazil. Before the capitalist reform, 80% of Vietnamese were very poor, and 70% were hungry. At the beginning of 2016, only 5.7% of Vietnamese people were very poor, and hunger was gone. Today of the 500,000 companies in Vietnam, 96.7% are private, generating 60% of GDP.

Why don't Castro II and his Military Junta do the same thing? One of the main reasons is that the military, owners of the bulk of the Cuban economy, consider independent private businesses to be competitors hampering their plans to monopolize the entire economy, and threats who would advance the state capitalism model for their own benefit alone. They maintain a private sector, but as a very controlled, ancillary complement, suppressing its growth.

"Historical" generals and commanders, already very old, want to leave their children, grandchildren and even great-grandchildren well positioned, wielding economic power. They do not want a growing independent private sector to crush them - which could happen if they allow it to flourish. That is, it is they who thwart every possible developmental opportunity for the private sector.

This is the autistic and anti-national logic of General Castro and his civic-military cadre, which irresponsibly delays, behind the people's backs, what will inevitably happen in Cuba: the resurgence of massive and thriving free enterprise, the only kind that can rescue the country from crisis and poverty, and that will, necessarily, rebuild the devastated Cuban economy.