12/28/13 - Boston Globe - Cuba's free market experiment proves to be mostly unprofitable
HAVANA - The dented metal pizza trays are packed away, so too the old
blender that never worked when it was needed. Gone is the sweet smell of
rising dough that infused Julio Cesar Hidalgo's Havana apartment when he
and his girlfriend were in business, churning out cheesy pies for hungry
Two years on the front lines of Cuba's experiment with limited free market
capitalism has left Hidalgo broke, out of work, and facing a possible
crushing fine. But the 33-year-old known for his wide smile and sunny
disposition says the biggest loss is harder to define.
''I feel frustrated and let down,'' Hidalgo said, slumped in a rocking
chair one recent afternoon, shrugging his shoulders as he described the
pizzeria's collapse. ''The business didn't turn out as I had hoped.''
The Associated Press recently checked in with nine small business owners
whose fortunes it first reported on in 2011 as they set up shop amid the
excitement of President Raul Castro's surprising embrace of some free
Among them were restaurant and cafeteria owners, a seamstress and taekwondo
instructor, a bootleg-DVD vendor, and a woman renting rooms out to
Their fates tell a story of divided fortunes.
Of the six ventures that relied on revenue from cash-strapped islanders,
four are now out of business, their owners in more dire financial straits
than when they started. But the three enterprises that cater to well-heeled
foreigners, and to the minority of well-paid Cubans who work for foreign
businesses, are still going and in some cases thriving.
While the sample size is small, the numbers point to a basic problem that
economists who follow Cuba have noted from the start: There simply isn't
enough money to support a thriving private sector on an island where
salaries average $20 a month.
''Clearly, there is a macroeconomic environment that does not favor the
private sector or the expansion of demand that the private sector
requires,'' said Pavel Vidal, a former Cuban Central Bank economist.
Vidal has long called on Communist authorities to adopt a huge stimulus
package or more aggressively seek capital from foreign investors. Now a
professor at Colombia's Javeriana University, he says one has only to look
at the trends since 2011 to see the private sector economy is nearly tapped
out. After a surge of enthusiasm, the number of islanders working for
themselves has stalled for the past two years at about 444,000, or 9
percent of the workforce.
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