{"id":249173,"date":"2022-02-12T16:27:15","date_gmt":"2022-02-12T21:27:15","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=249173"},"modified":"2022-02-21T12:17:14","modified_gmt":"2022-02-21T17:17:14","slug":"one-year-after-the-task-of-reorganization","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/economy\/cuban-economy\/one-year-after-the-task-of-reorganization\/","title":{"rendered":"One year after the Task of Reorganization"},"content":{"rendered":"

A little over a year has gone by since the beginning of the \u201cTask of ReorganizationTask of Reorganization<\/a>.\u201d Some conclusions can be drawn. Let\u2019s make it clear from the outset: it couldn\u2019t work and it hasn\u2019t.<\/span><\/p>\n

It\u2019s not that it has a few simple design problems. A hotel can have an ugly design or access problems for the handicapped, and still function as a hotel, with greater or lesser success. And a car can have a design that detracts from aerodynamics, but it will function as such. Designing a car and a bicycle coming out is not a design problem, although the bicycle is also a means of transportation.<\/span><\/p>\n

This has happened with the so-called Monetary <\/span>Reorganization<\/span>. The following are its problems.<\/span><\/p>\n

Sequence or priorities<\/b><\/p>\n

As several economists have mentioned, before the exchange unification (I refuse to call it monetary unification) and the disappearance of the CUC, prior to carrying out reforms in the circulation or in the monetary sphere, many modifications had to be made in the productive sphere to increase the production of goods and services.<\/span><\/p>\n

And it is not about eliminating state ownership or social property over the means of production. It is about the enterprises being real enterprises, although in the end the profits would operate in favor of the nation\u2019s budget. For years, countless structures have been tested for state-owned enterprises, be they \u201cconsolidated enterprises\u201d or \u201cUnion of enterprises\u201d or the \u201cBusiness Group\u201d or the Business Management Higher Organization (OSDE). These structures have been tested both with large enterprises and with smaller \u201cbasic business units\u201d without legal status. And there have also been smaller independent enterprises. It has been tested through centralized \u201ctop down\u201d or more decentralized decision making. OSDEs and ministries are intended to control and design procedures, but not direct. Therefore, there can be no complaints about lack of tests with different structures. And yet, the result in production and services does not seem to improve.<\/span><\/p>\n

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Queue at a bakery. Photo: Otmaro Rodriguez<\/figcaption><\/figure>\n

But little has been proven with what is fundamental: business managers\u2019 real independence in decision-making. What to produce or what to stop producing, because it is unprofitable? From whom to acquire raw materials, at what prices and how to pay for them? Who to sell to or who to suspend sales to? What prices to fix to the final production? How to pay employees, and how much? How to freely use the foreign currency obtained from exports or from sales to the domestic market in foreign currency? How to invest to modernize production? Or who should approve the investments to be made with one\u2019s own profits or the amortization fund created by the enterprise itself? What to do with the net profit?<\/span><\/p>\n

They seem like simple questions. In fact, the answers to many of them have been dealt with in multiple courses, diplomas and master\u2019s degrees that have been taught for many years to business and ministerial cadres. These courses were very good to acquire knowledge and general culture, but for practical life they were not always very useful, precisely because of the existing limitations to apply the knowledge acquired. Even multiple marketing positions were created in innumerable work centers, when it is known that in markets with scarcity everything is sold and sold out quickly, even if the quality is not the best, without much marketing.<\/span><\/p>\n

For example, the Reorganization improves the aspect of payment to workers by allowing a part of the profits obtained by the enterprises to be distributed in their favor. But if there are various obstacles to obtaining profits, then that part of the provisions may have a greater or lesser impact on the real life of the employees.<\/span><\/p>\n

It is understood that it is very difficult to change an entire way of running the economy, deeply rooted and with multiple links with other functioning mechanisms of society. But, for that very reason, in 1993, the double monetary circulation and the double exchange rate emerged: in order not to complicate the reforms with measures of much greater scope and depth, to stimulate the capture of family aid from abroad, reducing the maximum possible interference of these funds in the rest of the economy. It is true that it was necessary to move, little by little, from the \u201cless efficient\u201d economy to the most efficient; to gradually extend the economy from the foreign exchange sphere to the rest of the country, until later it would be easier to convert everything to a single currency. It is also true that the double monetary circulation and the double exchange rate took root over time and their pernicious effects were felt more and more. Now one part of the equation has been removed, but if the others are still mostly intact, what could be expected?<\/span><\/p>\n

Cuban government recognizes 6,900% inflation in informal market<\/a><\/p><\/blockquote>\n