Don't Get Too Excited About Cuban 'Reforms'

Since February’s monarchical succession in Cuba from Fidel Castro to his brother Raul, which was even blessed by the Vatican, press reports of economic reforms and possible economic reforms in that country have been published on an almost daily basis.

The measures that have garnered the most attention from the compliant international media have been the lifting of absurd bans on some consumer goods like cellular phones. The phones, priced at about $200 each, are out of reach for most Cubans who work for the state and earn an average of less than $20 a month.

And speaking of wages, another so-called reform implemented by the substitute tyrant is a modification to Cuba’s rigid salary scale. The communist newspaper Granma trumpeted the remarkable new (for Cuba) concept of "pay in accordance with quality and quantity" of work and the scrapping of salary caps. Now Cubans can theoretically earn more than their counterparts based on their productivity. The only problem, of course, is that productivity is measured by supervisors who know that employees can’t vote with their feet because 90% of the economy is in state hands. There’s no free market for labor in Cuba. As surely as day follows night, this theoretical reform will in practice, no doubt, result in favoritism and even more discontent.

None of the announced reforms tackles the real problem with Cuba’s economy, which is the monopoly the Cuban state exercises over it. Until private business is allowed to exist on a massive scale and competition is the rule rather than the exception, Cuba’s systemic economic problems can be expected to continue indefinitely.

But Raul Castro is between a rock and a hard place. He knows -- as do his economic advisers -- how Cuba’s financial fortunes might change with a significant move toward a market economy, but he also knows that the freedoms the state would have to confer on Cuba’s citizens, to make such a system work, would weaken the control structure of the dictatorship. Long believed to be an admirer of “the Chinese model,” Raul doesn’t dare implement such a model in Cuba. Cubans are not Chinese and would take their newfound freedoms and use them to push for more freedoms in ways the Chinese have been unable to so far. Besides the fear of unleashing the genie of economic independence from the state that’s been trapped in the bottle for close to 50 years, Raul also has an understandable fear of what his dogmatic brother might say or do. Even in his weakened state, Fidel casts a long shadow over the policies which are being implemented on the island.

Only under extreme economic pressure did the Castro regime introduce the most basic of economic reforms in Cuba after the collapse of the Soviet Union and the disappearance of Soviet subsidies. And many of those modest changes were rolled back when the dictatorship found a new patron in Venezuela’s Hugo Chavez. The Castros barter humans such as doctors and military advisers in exchange for vastly more valuable Venezuelan oil.