HAVANA — On Aug. 1, a note published in the daily Granma told about the adoption of a group of measures that would be part of the “improvement” process of self-employed entrepreneurship (private business) and cooperatives.
The immediate antecedent had been a paragraph in the news item that told about a meeting of the Council of Ministers in late June and the statement made by the Cuban president at the closing of the Regular Session of the National Assembly in July.
From that moment on, people linked to the sector experienced great disquiet, for obvious reasons. A resolution by the Ministry of Labor and Social Security, published in the Official Gazette that same day, established that no new licenses would be issued for a variety of activities on a temporary basis and said that changes would be made within the framework of the regulations.
To justify that decision, a wide range of reasons was given, among them tax evasion, the use of illegally obtained raw materials, “the imprecision and insufficiency of controls,” and “deficiencies in the contracting for the supply of services or products among legal persons and natural persons.”
In the best of cases, the last two excuses have absolutely nothing to do with private workers and are the exclusive responsibility of the competent bodies, whose shortages should not be paid by others.
The first two require a closer examination. Tax evasion does exist, but we need to go deeper into its essential causes. Academic studies into this matter have detected that it is a phenomenon related to several longstanding dynamics in our society. The solution is not — and should not be — to boost revenues by this means.
It is well known that the only lasting mechanism to increase tax revenues is the broadening of the taxable base, i.e., the number of taxpayers and the economic activity in which they are involved. Anything else leads to asphyxia.
The “rerouting” of resources cannot be exclusively attributed to the self-employed workers. Some private activities find their supplies in the black market and use products of questionable origin. So what? Do Cuban citizens have an inborn preference for the black market or is it an acquired habit?
The answer of a good Marxist is that it is acquired, a reflection of the environment in which people live and work. In what society did they acquire that habit? Well, in our socialist society, where state-owned property predominates. Why do they turn to the black market? Because in the majority of cases it is the only way to acquire goods at a competitive price.
Most interesting is the offer in the black market. It exists and will exist for a long time, so long as wages for most of the public sector are below the minimum needed to cover one’s basic needs. In this sense, it is very disappointing that the reference to determine a “fair” income in private work consists of the wages in the public sector.
The context in which these measures have been announced could not be more challenging. The Cuban economy is going through a recession that began in 2016 and is part of a long trajectory of poor growth. This year does not look very encouraging. The international environment has turned a lot more adverse. Venezuela is going through a crisis of huge proportions, the left is retreating in several Latin American countries and the government of the United States seems a lot less cordial, with consequences that are already visible.
By this time, we might expect measures aimed at stimulating productive domestic activity and to continue expanding and diversifying economic foreign relations.
What has been announced so far in connection with self-employment does not point toward that objective. It’s hard to imagine a motive that would justify halting the issuance of new licenses. Twenty-seven categories (out of the 201 categories currently approved for private enterprise) are the activities in the greatest demand, representing the majority of the licenses already granted. In addition, many new applicants need to lease working space, a process that has also been interrupted.
In addition, the psychological effect is devastating. The start of the 2000s saw a suspension that took a decade to revert. In a sense, both the content and the form of the measures so far announced contradict the content of a “conceptualization” that clearly establishes a recognition of private property and self-employed labor, along with access under similar conditions to the factors and productive resources recognized by all the forms of property.
These procedures cast serious doubt about the way these provisions will be interpreted.
It is hard not to realize the reasons why private labor is so attractive. Self-employment accounts for more than 12 percent of the working people. If you add the cooperatives, the peasant farmers and their families, the self-employed account for more than 30 percent, a proportion of working Cubans that’s not to be sneered at. We cannot continue to insist that they form an exclusive group of privileged people.
Putting the brakes on their development will impact negatively on the living conditions of many Cuban homes.
What these events suggest is even more worrisome: a society that feels ill at ease with private property and everything connected with it. It’s hard to think how this can be reconciled with the objective of progress and equitable economic growth that has been included in the “conceptualization.”