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Generational Dynamics Web Log for 14-Dec-2018
14-Dec-18 World View -- Cuba eases economic restrictions, continuing on path from Socialism to free markets

Web Log - December, 2018

14-Dec-18 World View -- Cuba eases economic restrictions, continuing on path from Socialism to free markets

The unraveling of Cuba's Socialist economy

by John J. Xenakis

This morning's key headlines from GenerationalDynamics.com

Cuba eases economic restrictions, continuing on path from Socialism to free markets
The unraveling of Cuba's Socialist economy
Cuba rolls out mobile internet services

Cuba eases economic restrictions, continuing on path from Socialism to free markets

Shoes for sale displayed on a shelf inside the home of a small business owner in Havana, Cuba, in 2013. (AP)

Shoes for sale displayed on a shelf inside the home of a small business owner in Havana, Cuba, in 2013. (AP)

In the face of popular demand from artists and entrepreneurs, the government of Cuba has backed down on plans to implement harsh new restrictions on the private sector.

In July, Cuba announced the harsh controls on private businesses, to take effect on December 7, claiming that the opening up of some free markets has fueled wealth inequality, tax evasion and the black market.

Since 2010, when it became legal to run certain small businesses, life has been transformed for many people. Around 13% of Cuba's overall workforce is now self-employed, in areas like tourism and transport.

However, the rapid growth of small businesses was apparently threatening to Cuba, and in 2017, it began freezing issuing licenses for some popular business categories.

It appears that Cuba's government is struggling to avoid a total economic disaster as in Socialist Venezuela, at the same time pretending to maintain a Socialist façade in its economy. Thus the government wants people to earn money self-employed in private businesses, but the government wants forbid a person from making money in two private businesses, since then me might make too much money. Therefore, the government announced in July that it would be illegal for a person to own more than one business license.

So for example, a person renting out a room in his home while driving a private taxi during the day would be making too much money, and would be forced, under the new regulations, to give up one source of income or the other.

So it was a shock that, after years of unyielding authoritarian government under Fidel and Raúl Castro, the new president Miguel Diaz-Canel suddenly reversed some of the worst rules on December 6, just a day before they were to take effect.

The biggest reversal is that Cubans will be permitted to work in two or more self-employment activities simultaneously.

Another abolished rule had set a limit of 50 seats for private bars, restaurants and cafeterias. A law requiring many businesses to maintain bank accounts with a minimum deposit of three months taxes, a requirement that would have put many people out of business, was softened to require only two months taxes.

Artists are applauding the delay in implementing another new law. The law, announced in July, requires prior government approval for artists, musicians, writers and performers who want to present their work in any spaces open to the public, including private homes and businesses. Implementation of the law will be delayed following protests and social media campaigns by many Cuban artists that it was another layer of censorship and control over artistic expression. Miami Herald and Reuters and AP and Miami Herald

The unraveling of Cuba's Socialist economy

There's a certain amusing irony that Xinhua, the official news service the Chinese Communist Party (CCP), in a country that is still officially Socialist (but "with Chinese characteristics"), congratulated Cuba on rolling back some of the restrictions on the private sector: "Cuba's government has taken new regulations that will spur the island's fledgling private sector to ensure it continues to expand and create jobs, local media said on Thursday."

Indeed Cuba is in the process of abandoning its Socialist economy and turning to capitalistic free markets, just as China did decades ago, and just as one Socialist country after another had to do in the last 60 years, in order to avoid catastrophic economic meltdowns. Two Socialist countries -- Venezuela and North Korea -- did NOT make that transition, and the disastrous self-destructive results are there for all to see.

From the point of view of Generation Dynamics, Cuba is in the midst of a generational Unraveling era, when the harsh rules set up after the last generational crisis war, in this case the 1960 Cuban Revolution, unravel because younger generations no longer are willing to tolerate them. America's last generational Unraveling era occurred in the 1990s, when the country dismantled the post-Depression financial regulations and opened its foreign policy to Communist countries like China and Russia.

During the last ten years, the entire Socialist economy has been unraveling, step by step.

In 2010, when Cuba's economy was in shambles, and president Raúl Castro announced the end of the Socialist economy. The government would lay off 500,000 government workers (Socialist bureaucrats) and privatize many businesses.

In particular, Marx's Socialist Principle Of Distribution ("From each according to abilities, to each according to needs") was abandoned at the time, with the announcement: We must reinvigorate the socialist principle of distribution, to pay to each according to the quantity and quality of work provided."

Within two years of the 2010 announcement, the size of the state payroll had been reduced by 20%, and more than 200,000 people had moved into private enterprise. For the first time, Havana was population with street stalls selling everything from pirate DVDs to kitchen implements. There were still many restrictions on private businesses, but these restrictions are being removed, one by one.

Unfortunately, ending a Socialist economy does not mean ending the dictatorship. Like Nazi Germany and China, a dictatorship with free markets is Fascist. Whether Cuba's dictatorship will also unravel and turn into a democratic government remains to be seen. Xinhua and Reuters

Cuba rolls out mobile internet services

Another sign that Cuba's hardline control over business is unraveling is the availability of internet access to mobile phones across the country. Previously, internet access was limited to state-run internet cafes and public wi-fi hot spots.

Cuba will offer packages of data data ranging from 600 MB for 7 convertible Cuban pesos ($7) to 4 GB for 30 Cuban pesos ($30). The average monthly salary for a Cuban is $30 per month, meaning that few Cubans will be able to afford the service. CNBC and Al Jazeera

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(Comments: For reader comments, questions and discussion, see the 14-Dec-18 World View -- Cuba eases economic restrictions, continuing on path from Socialism to free markets thread of the Generational Dynamics forum. Comments may be posted anonymously.) (14-Dec-2018) Permanent Link
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Generational Dynamics Web Log for 14-Dec-2018 14-Dec-18 World View -- Cuba eases economic restrictions, continuing on path from Socialism to free markets

Cuba eases economic restrictions, continuing on path from Socialism to free markets

The unraveling of Cuba's Socialist economy

Cuba rolls out mobile internet services

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Generational Dynamics Web Log for 14-Dec-2018
14-Dec-18 World View -- Cuba eases economic restrictions, continuing on path from Socialism to free markets