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Castro's Economy: Cuba's Parasitic Policies

Cuba's failure is not due to having an inept government, but rather one that is, in fact, very effective at implementing policies calculated to achieve its aims.

La Habana
Cubans waiting in line to collect their pensions in Havana.
Cubans waiting in line to collect their pensions in Havana. Diario de Cuba

Many remember the catchphrase "it's the economy, you idiot", with which Clinton won the 1992 elections over a Bush Sr. resting on his laurels after a resounding victory in the First Gulf War. And Mr. Clinton was right: the greatest responsibility of any government is the economy, the cornerstone of a country's well-being. And yet, even in this area the Cuban government is anomalous, as the economy has never been its top priority.

Any economic analysis of Cuba would be incomplete if it failed to recognize that the island's ruinous state is not due to an incompetent government that implements failed policies, but rather one that very effectively implements the policies tailored to the objective it pursues: retaining power, even if it means impoverishing the nation.

In contrast to places where there is democracy, the Cuban government’s survival does not depend on the people's approval, but rather on control exerted over them, which is most readily achieved if Cubans are dependent on the State. Hence, improving the economy is in the government's interest insofar as it legitimizes it, but only provided that this does not risk the citizens’ relationship of subordination to the State, this being the foundation of totalitarianism.

Recurrent identifications of Castroism's economic "mistakes" might lead one to believe that there is a certain overstated bias against it. A reader might reason that, if it were so easy to fix the Cuban economy, the government would do it, and if it does not, it is because it is not as simple as some writers seem to think... or because of the "blockade."

To avoid such a misunderstanding it is necessary to distinguish between well-meaning but ineffective policies, such as the minimum wage, and policies that are effective but vindictive in their very origins, as they pursue pernicious ends, such as the Tarea Ordenamiento.

It must be understood that it is the Cuban government itself that chooses to subordinate economic policy to its own particular political interests; no one is forcing it to do so.

Paradigmatic cases of this self-imposed limitation are its policies on foreign direct investment and entrepreneurial freedom. Both would unfold at breakneck speed, propitiating a substantial leap in the Cuban people’s quality of life if the government did not have a whole institutional plan to prevent this. These are clear cases of policies designed to impede the country's development.

The success achieved by China and Vietnam in their efforts to free up these areas shows that it is feasible to do so, even within a totalitarian socialist framework. If the Cuban government does not follow this path, it is because it knows that doing so would jeopardize its status, as the political and sociological situation in Cuba is different from those in those Eastern nations. The Cuban Communist Party cannot preside over a prosperous people like the Asian tyrannies, the successors of centuries-old despotic regimes, have managed to. Therefore, the PCC chooses poverty for the people.

Moreover, the proximity and natural influence of the United States, home to more than a million Cubans, who together wield more money than Castroism itself, is something that scares the island's current proprietors.

Their fear of a prosperous people is so great that —even now, when the situation is worsening rapidly, exacerbated by a cocktail of adverse circumstances that augur a Special Period 2.0— the government is still reluctant to liberate the country's productive forces, instead implementing the Tarea Ordenamiento to reinforce the Socialist State Enterprise, even if this comes at the expense of the country’s tiny but burgeoning private sector, and the country’s vital agricultural workers, the two most dynamic sectors in the Cuban economy.

When its congenital inefficiency recently forced the government to decide between maintaining the redistributive policies that have characterized Cuban socialism and granting economic freedom to Cubans, it chose to put the screws to the people by imposing outrageous price hikes on them, eliminating what the authorities termed "excessive subsidies and undue gratuities" before allowing people to freely engage in entrepreneurship and economic relations with the rest of the world.

These apparent absurdities of Castroist economic policy would be inexplicable if the government's objective were to improve citizens’ lives. But they make complete sense when one understands their aim: moderate material improvement that legitimizes the government and allows it to sustain - as far as possible- the redistributive machinery that subjugates citizens to the State, but without weakening its political control by ceding individual liberties or private property rights.

Castroism is not an inefficient system that makes constant economic policy blunders. Rather, it is a parasitic system that depends on keeping its host weak. The question is: will it end up killing its victim?

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