{"id":196091,"date":"2019-04-04T11:00:05","date_gmt":"2019-04-04T15:00:05","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=196091"},"modified":"2019-04-03T21:14:07","modified_gmt":"2019-04-04T01:14:07","slug":"marches-and-countermarches-the-economic-policys-back-and-forths","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/opinion\/columns\/counterbalance\/marches-and-countermarches-the-economic-policys-back-and-forths\/","title":{"rendered":"Marches and countermarches: the economic policy\u2019s back-and-forths"},"content":{"rendered":"

I have written this column driven by the discussions around the papers presented at the Annual Seminar of the Center for Cuban Economy Studies of the University of Havana, which that center has held year after year for more than 20 years and this time with the additional motivation of celebrating its 30 years of being founded. It also coincides with the first 30 years of the beginning of the crisis we call the Special Period. Cuba survived that crisis, heightened by that “small obstacle” that is the U.S. blockade. But surviving the crisis is not developing.<\/span><\/p>\n

They have been 30 tremendous years, of transcendental events, of almost constant marches and countermarches.<\/span><\/p>\n

At the beginning of that Period… changes were introduced that promoted greater decentralization in the state business sector in search of greater efficiency. Foreign investment was identified as a positive \u2015though unwanted\u2015 element for our battered economy; self-employment was given greater openness \u2015it is true that reluctantly; and the dollar was introduced into the national circulation of currencies, to de facto create the exchange and monetary duality in which a generation of Cubans has already been born and lived.<\/span><\/p>\n

Then we witnessed a first countermarch that led to restrictions to self-employment; the slowdown of foreign investment projects, with new demands and requirements for them; the non-renegotiation for the continuity of some and the closing of others together with a strong offensive to reduce the commercial branches of foreign companies in Cuba. In addition, the exit of the dollar from current operations was decreed to be replaced by the CUC and a single account was created that, among other effects, motivated the economy to start undergoing a process of real devaluation of the CUC. This has brought us to the famous CL and the complex financial situation that the country must solve today.<\/span><\/p>\n

As of 2007, President Ra\u00fal Castro took a group of measures that meant an opening that had never been experienced before. In his own words, he recognized the strategic nature of the need to undertake a reform of the state business system, made explicit the support of the political leadership for self-employment, introduced and defended non-agricultural cooperatives and raised the strategic need to attract and use foreign direct investment; a new law and a policy associated with it and the Special Mariel Development Zone were approved. The migration law also changed and for the first time in almost 60 years Cubans could opt for a visa for any country without having to be commended by anyone.<\/span><\/p>\n

But again the countermarches appeared. The creation of the Higher Organization of Corporate Management that, far from achieving more autonomy for the state enterprise, generated greater centralization and bureaucracy, distancing the decisions away from where they should be made, and converting them into dwarf emulators of their own ministries: a parasitic system of the state business system. The policy towards self-employment was also “revised” with more restrictions. And we are still expecting greater facilities for foreign investment that allow the country to reduce the time it takes to approve new businesses and achieve speedier bureaucratic processes that facilitate their establishment. Meanwhile, the approval of new cooperatives seems like a process submerged in some lost glacier in the Himalayas. It is also true that in recent months we have fortunately seen a certain rectification of the August 2018 decrees on self-employment. It must also be said that the recently announced new measures regarding it represent greater openness.<\/span><\/p>\n

\"\"<\/a><\/p>\n

\u2026\u2026\u2026<\/span><\/p>\n

Caption:<\/strong><\/p>\n

GDP growth rates (1997 prices)<\/span><\/p>\n

Annual rates<\/span><\/p>\n

Average 12-18<\/span><\/p>\n

\u2026\u2026\u2026..<\/span><\/p>\n

But <\/span>the list and the money still don\u2019t tally<\/span><\/a>. Although both Ra\u00fal Castro Ruz and Miguel D\u00edaz-Canel Berm\u00fadez have emphasized the need to overcome resistance, to change stagnant minds, to achieve coherence between promulgated policies, reality and the programmatic documents approved by all the Cuban people, including the new Constitution of the Republic that will be proclaimed in just a few days.<\/span><\/p>\n

If we all agree, why is it that what should occur doesn\u2019t happen? My friend Goyo wonders. <\/span><\/p>\n

To reduce those reasons to whims, to ill will, to incompetence, to laziness and indolence of some, would be to adopt a too simplifying position, although we can also find a little of all that. However, I prefer to use other tools to try to understand, at least in part, this great contradiction and the complexity of the processes that Cuba faces.<\/span><\/p>\n

Maybe we can find some answers in the institutional economy.<\/span><\/p>\n

\"\"<\/a><\/p>\n

\u2026\u2026\u2026.<\/span><\/p>\n

Caption:<\/strong><\/p>\n

Politicas = Economic, social policies, etc.<\/span><\/p>\n

Sistema = Political system<\/span><\/p>\n

Cultura = Culture, ideology and informal regulations<\/span><\/p>\n

Estado = State<\/span><\/p>\n

Empresas = Enterprises<\/span><\/p>\n

Familias = Families<\/span><\/p>\n

Sistema judicial = Judicial system<\/span><\/p>\n

Capacidad = Bureaucratic-administrative capacity<\/span><\/p>\n

Naturaleza = Nature and balance of social interests<\/span><\/p>\n

\u2026\u2026\u2026\u2026<\/span><\/p>\n

Assuming a certain international environment, the graph illustrates the basic idea of \u200b\u200bthe institutional economy from which the behavior of the main economic agents of any country (that is, families, the State and enterprises) as well as the policies put into practice, are determined by the quality of the rules of the game (the institutions) and that these in turn are generated and conditioned by and from the political system, culture, ideology, bureaucratic and administrative capacity and the judicial system. They are the ones who generate and at the same time must comply with the policies of all kinds that define the incentives under which these three agents operate.<\/span><\/p>\n

They work within an environment shaped by the conditions of the international economy and politics and by national policies and conditions. On the first little can be done except exercise a good capacity for adaptation and negotiation. On the second you can do almost everything.<\/span><\/p>\n

National policies must allow strategies to be realized at the lowest possible cost, facilitating and encouraging those transactions between the three agents.<\/span><\/p>\n

The coherence of the policies, of the programs, of the plans, will depend greatly on whether these systems are aligned and produce COHERENT rules of the game with the objectives of each country; that is, incentives adapted to those realities and purposes.<\/span><\/p>\n

It occurs, however, that each of these five systems has a relative degree of independence, delay and low capacity for reacting. Hence the great difficulty of achieving the desired coherence.<\/span><\/p>\n

The learned culture, the professed ideology, the political preferences, the created interests, the capacity to facilitate or obstruct laws and decrees that have been issued, have some degree of influence on those rules of the game.<\/span><\/p>\n

It happens in all countries, but the fact that it happens in everyone with a certain degree of greater or lesser impact can\u2019t serve as comfort, but rather only as a reference.<\/span><\/p>\n

I illustrate it with our day-to-day facts:<\/span><\/p>\n