I reread the comments to an article that appeared in Cubadebate and I remembered that magnificent song by Pablo Milanés, because in a great deal of them it was possible to detect the sadness of a group of people who feel that that tireless traveler that is time is dwindling through their fingers.
Then, my friend and colleague Pedro Monreal reminded me of the importance of time in macroeconomic management. As I’m not going to do better it than him, I will reproduce, with his permission, his comments about it:
There are at least three macroeconomic management concepts related to the “time” variable that should be taken into account:
The “inside lag”: the time elapsed between the economic shock and the economic policy response.
The “outside lag”: the time elapsed between the economic policy response and its impact on the economy.
And perhaps the most important of all, “time inconsistency”: certain policies that seem “optimal” when announced, stop being the appropriate policies when some time goes by.
In fact, one of the possible causes of “time inconsistency” is that the announcement of future policies may affect the progress of the economy in the present, that is, prior to the application of the measures. If the performance of certain actors changes now with the announcement, then the policy announced may no longer be “optimal.”
In terms of economic theory, they are phenomena to which much attention has been devoted, they are associated with the performance of economic agents, their expectations, and have been grouped into two fundamental currents called adaptive expectations, one and the other rational expectations. There are many books and even a Nobel Prize in the middle of this story.
In the first two “lags” the institutional design is key, the intermediations and delays that in both cases occur due to an institutional design that is backward or that despite trying to adapt to the new conditions don’t manage to do so due to “subjective” factors, is very costly, even when it is not possible to measure it.
It is true that all this deep, complicated, complex, convoluted, difficult process of transformation in which the country is engulfed and the population is trapped, has been made under the premise of “without haste, but without pause.” It is also true that haste is not the most advisable in these matters of such much complexity and all the other adjectives I have used above.
However, it should not be understood, at least in economics, that going without haste means taking all the time in the world, ignoring the importance of the time factor in decision making.
We must also pay attention to the political meaning of time, that is, the impact that the indefinite extension of processes has on human beings, of which those same human beings are objects and subjects and from which they expect results that, at least in our case, it seems will continue to delay.
Caution is necessary, but slowness is expensive.
I saw in one of the television features and liked the vehemence with which our young minister of economy and planning called for quick and agile decisions and it was a very strong comparison with other interventions that I also saw, where far from the spirit of the young minister, other people again demanded more time to continue studying something that is already more than studied, and to continue experimenting with something that has already been more than experimented.
For me it’s surprising because these are times of walking with long and firm strides and to not stop being cautious for that reason. And not only because of the threats of the perennial U.S. government and its showman of a president, but because our country has been needing it before Mr. Trump, among other reasons, because a part of our young people unfortunately emigrate, a considerable part of our population lives in a situation of poverty and another part becomes opportunity traders and start forgetting the acquired education, the professional skills gained with years of study and with an enormous sacrifice made by all Cubans.
Time, that variable that is decisive for people, is also important for enterprises and countries where these people live and those enterprises work.
If Cuban enterprises, for whatever reason, fail to respond in time to a market opportunity they will not export.
John Maynard Keynes said a long time ago that you should know better what the future has in store than the market. That is true, but it is not enough, if you want to be successful in exports, for example, in addition to knowing better the future than the market, it will be necessary to anticipate it.
Delaying the response to a shock is as costly as responding inadequately, or with measures that do not attack the root of the problem.
Making almost eternal the implementation of measures announced once and again is just as costly.
Let’s give some examples:
- The announced monetary and exchange unification and its delay over time (since 2013) has allowed some of the holders of foreign currency balances to safely store them, either “exporting” them or converting them into some type of “safer” asset (real estate, works of art, etc.)
- In the same way, this delay in time generates a great uncertainty among foreign investors who have not yet been able to collect their dividends deposited in CUC accounts. In this case, the longer it takes, the more the uncertainty and uncertainty is the worst thing that can happen for a good business environment.
- The delay in assuming an adequate exchange rate has compromised even more the export capacity of our enterprises. Here, although we can’t calculate the cost, but pay attention to the evolution of our exports of goods and we can have an idea.
- The resistance and delay in time to make flexible and take the treatment of foreign investment close to international standards has conspired against the flow of investment received, against materialized businesses, against our export capacity, against our possibilities of substituting imports.
- The delay in implementing new measures that will make it possible to correct the functioning of the business system has compromised the ability of the national economy to grow. Was it necessary to wait almost five years to realize this? And the decentralizing experience of the beginning of the 1990s perhaps doesn’t count?
- The reiterated announcements of policies and procedures for the non-agricultural cooperatives, delayed again and again, has caused many people to become discouraged regarding this form of production and above all greater distrust and much more uncertainty. What would have happened if it had not been delayed so much? How many people would have had a stable job, how much would it have complemented the effort from the state enterprises? Is the experience in the construction at the Castellanos mine perhaps negative? And what about the reconstruction after Irma of the hotels with the participation of the construction cooperatives?
- The inexplicable delay in realizing the long-announced law of small and medium-sized enterprises has encouraged many Cubans to “invest” their resources and their knowledge in other countries. Some agencies estimate that monetary investment at more than 300 million dollars, to which we must add the cost of non-generated employment, of products not produced and perhaps even exported.
- And the systematic loss of professors and doctors of sciences in our universities due a salary policy that everyone recognizes must be radically changed?
They are just some examples of how much the time factor costs even when we can’t put a number next to that account that should be called wasted time (and that by the way is used in sugar production).
I reiterate an idea that I have used before to illustrate this matter of time: my economics students who graduated in 1990 within a year will be celebrating their 30 years of graduation. Their children, who were probably born in the 1990s, will already be graduated. It is time that there is no way to recover. And then one day it happens to us as Pablo says in that beautiful song: “When looking back on our lives we are already leaving and life went by without us realizing it.”