Cuba Doesn’t Need More Pessimism, but…

By Fernando Ravsberg

Photo: Raquel Perez Diaz

HAVANA TIMES — The Greek Left-wing economist, Yanis Varoufakis, says that there is an important subjective aspect in the economy: “that our collective efforts achieving their objective as a general rule depends on the level of optimism within the group or society we belong to”.

And the announcement this week in Cuba to suspend self-employment licenses in 30 different fields, including some of the most popular such as cafes, private restaurants or renting out rooms, didn’t exactly provoke optimism.

The Minister of Labor Margarita Gonzalez claimed that this measure is temporary, while activities which “require better order and control” are carried out, making it necessary to suspend new authorizations in some areas.”

By authorizing many fields of private work, the government didn’t realize that these jobs need supplies. Photo: Raquel Perez Diaz

There’s no doubt about the fact that the government didn’t really think about certain details like a blacksmith needing iron to make bars, a carpenter needing wood to make doors and furniture and a body shop worker needing oxygen, acetylene and metal sheets to repair bodywork, when the private sector opened up in Cuba.

It seems that researchers at the Ministry of Labor and Social Security have just discovered in “their latest assessment about the performance of this sector” that independent workers “use raw materials, materials and equipment from illegal sources.”

And Cuban economists – not the ones at Florida University but those at Havana University – are tired of repeating that wholesale markets are needed to provide supplies and equipment to private modes of production and services.

The general impression people have about this is pessimistic, they believe that “they have started going back on changes made, like what they always do.” On the popular comedy program “Vivir del cuento”, one of the characters ironically said that he was feeling worse and worse because he wasn’t doing anything but taking steps backward.

Strangely enough, the only news is that they will give licenses to open bars, which up until now operated with a restaurant license. Photo: Raquel Perez Diaz

The Cubans I have spoken to about this subject tell me that there is a long history of the economy opening and then shutting and they mention farmer markets, craftsmen at the cathedral or self-employed workers in the ‘90s.

Furthermore, no deadline appears on the official resolution of “refining” their work and there’s no reason to be optimistic, given how slow it is to pass legislation on super important issues such as water, family law, film or the media.

The anxiety that these steps backward create can change many people’s lives, especially of young people who are trying not to emigrate or are thinking about returning to Cuba. I know several Cubans who were planning on setting up their lives in Cuba within the private sector.

One of them is a scientist who has been doing research abroad for a major company. He was ready to give everything up and to invest his savings in an independent business and to make his dream of living in Cuba again a reality. What will he do now? Sit and wait for them to finish this “refining” process?

Shoemakers, barbers, home rentals, selling crafts, Cubans have found a way to make enough of an income to live in the private sector. Photo: Raquel Perez Diaz

It was understandable that they would continue to progress slowly, but without stopping, making pilot plans and measuring the repercussions of every action, like the government had proposed. It was precisely not to go back on the steps they had made forward, thereby avoiding the insecurity of “deja vu”.

The news of this temporary suspension of private licenses has been like a bucket of cold water over the Cuban people’s heads, when they were hoping for the economy to open up to small and medium-sized businesses like the President of Cuba had put forward, which had been approved by the population in assemblies.

Cubans are already experiencing external insecurities which they can’t influence, like the volatile situation in Venezuela or Washington taking up a hard-line stance again.

Adding surprise internal ups and downs to this can be extremely stressful socially-speaking.

Maybe that’s why in the rest of the world, refining controls, tax policies and financial regulations is carried out on par with these activities, without stopping new businesses from being created while the government decides what measures to take.

The Greek former finance minister Yanis Varoufaki assures us that pessimism has disastrous effects on the economy: “if we believe something is hard to achieve, then we won’t do everything we need to to achieve it and negative forecasts will become a reality.”

  • Chuck Bailey

    If one wants to screw up anything just put a politician in charge!!!!

  • Brenda

    In most, if not all, countries business owners must pay taxes and purchase their products and infrastructure legitimately. Did they put the cart before the horse, neglecting this detail?

    • Carlyle MacDuff

      Do you understand Brenda that in Cuba, the only source for materials is the State or GAESA the military economic controlling business? We tried to find wooden doors to purchase – none in five months. For eight months it was impossible to find tiles – the previous supply from Vietnam dried up. Our source of paint was a lady who sold it privately from her home, but MININT caught up with her, took her away to jail, and there is no paint in the GAESA subsidiary shops. What appear to be simple daily matters in the free western countries, are extraordinarily complicated in Cuba. An application to the municipality made with architectural drawings and with financing in place, had not been approved 12 months later despite monthly visits to the municipal offices. The reality Branda is that the whole economic system is in disarray and coupled with the fact that nobody cares for there are no incentives to do so, matters progress only at a snails pace and then only if one is fortunate. The Cuban Castro regime cannot get policy right, expecting them to attend to detail is a somewhat pious hope. Cuba is also a cash society, which makes it difficult to assess any taxes which a fortunate few are subjected to. For example, if I sell you my house, we have to register the sale, so we do so. But whereas you paid me 14,000 CUC, we report the sale as being at 11,000 CUC, thus saving the 4% tax on 3,000 CUC – ie; 120 CUC which for a Cuban schoolteacher represents 4 months pay! It is not for naught that Cubans daily sit and discuss ‘resolver’. They live on a pittance, my mother-in-law receives 200 ($8 US) pesos per month, pension. I don’t know how much you know of the reality of Cuba, but you can mull on my comments – made by one whose home and family are there.

      • Diddy Durdle

        Thank you, Carlyle. It is very complicated. I was saying that the government ought to have made arrangements for these things before opening it up for business. So sorry.Sounds like you live there.

        • Carlyle MacDuff

          Yes Diddy Durdle, but I also spend a part of my time outside Cuba, when I am able to partake freely in Havana Times. I do however weary of those ardent supporters of the imposition of “Socialismo” upon others, whilst preferring to shelter in the capitalist world themselves. Some of them have never even visited Cuba and others only for a very brief time when they seem to think of it as the equivalent of a socialist Disneyland, with Cubans as the actors.

      • Terry Downey

        “For example, if I sell you my house, we have to register the sale, so we do so. But whereas you paid me 14,000 CUC, we report the sale as being at 11,000 CUC, thus saving the 4% tax on 3,000 CUC”

        Carlyle, it seems to me that you are promoting breaking the law in Cuba. Do you also promote evading the paying of one’s taxes in Canada? The Cuban government is cracking down on those who are evading paying their taxes by illegally acquiring stolen property, buying from the street to avoid paying tax while also supporting and indirectly promoting the underground economy that is built on theft, and/or under-reporting their incomes and acquisitions to avoid paying their fair share. What part of that lawlessness do you truly have a problem with? And please, don’t give me a run-down as to WHY Cuban private entrepreneurs MUST break the law in order to effectively do business in Cuba. I already know the problems they face without possessing a legal wholesale market for their materials supply. There’s no excuse for any amount of unbridled illegal business activity to prosper anywhere in the world. The Cuban government is simply committed to insuring the continuation of a secure civil society, and subsidizing their social programs with the paying of taxes, to benefit of their entire population.

        • Carlyle MacDuff

          You will notice Terry that I said in response to Brenda “For example”. The practice is possible in Cuba because it is a cash society. There is no means of checking the actual price. I do know of Cubans doing as I described, but didn’t say I approved of it. I have always paid my own taxes and return to Canada each year prior to the end of April to do so.
          As for promoting breaking the law in Cuba, how many residents in Cuba are able to access Havana Times? I wish that they could, but as you know, there is press censorship in addition to no freedom of speech.
          You refer correctly to the numerous loop-holes in Cuban taxation systems which occur because they are unaccustomed to dealing with citizens having decent incomes. Their concentration has been eleswhere.
          The mercado negra has been a key element in Cuba’s economy as you know, for many many years with the regime being well aware of it but apparently incapable of handling it.
          Finally Terry, if you read Oliver Twist and learned of Fagin’s methods of doing “business”, did you consequently endeavour to emulate him?

  • bjmack

    Devastating, Fernando! I think this is a payback to Trump for his recent changes in US Cuban policies.

  • N.J. Marti

    Fear drove the cut backs. It is a mistake by the old timers trying to hang on to power. The disrespect of the state will only grow. It will be viewed as the problem, not the solution.