The policies of the Castro dictatorship cause Cuba to collapse economically

Since its inception, socialism has produced nothing but misery, poverty and destruction. Nevertheless, the communist Castro regime continues to implement more socialist policies to address the failures of previous socialist policies.

Cuban-American economist Carlos Martinez explains in Cubanomy:

Cuba’s Economic Downfall: Policies That Worsen the Crisis

In this Substack, I’ve repeatedly argued, both implicitly and explicitly, that central planning has failed in Cuba. For example, earlier this month, in the article “Food Production and Distribution in Cuba is a Complete Disaster!” we explored how price controls would exacerbate already critical food shortages and how the Castro regime has rolled back its limited market reforms.

Over the summer, however, the central topic of discussion for many Cuban economists was the economic reforms implemented by the regime in 2021, in addition to their analysis of inflation trends. In particular, there has been much debate about how the much-touted economic measures such as “La Tarea de Ordenamiento” and the push for Bancarization have reversed the meager progress of small and medium-sized enterprises (SMEs).

Rather than addressing the reasons why both economic measures have failed to stabilize Cuba’s macroeconomic balances, I will focus on why the next wave of policies is also doomed to fail in its attempt to correct “distortions” and “stimulate the economy.” These policies are likely to worsen conditions for Cuban consumers, as the supply of goods and services at the margins will continue to shrink.

Given the Cuban government’s track record, they have failed to set realistic expectations for economic growth or achieve their goals. Looking at the past decade, Cuba has exceeded its planned growth in only 2 of the 13 years, often with poor results.

Recently, Reuters published an article titled “Amid Deepening Economic Crisis, Cuba Tightens Rules for Private Sector Startups,” which highlighted how the new regulations will have a major impact on small businesses, retailers, and the self-employed. However, Reuters missed a crucial point: the approval of new businesses is now managed at the municipal level. While this may seem like a step toward decentralization at first, it actually contributes to the already widespread rent-seeking behavior. Businesses are now not only required to maintain a favorable attitude toward the government, but are also required to align themselves with local party members and bureaucrats, paving the way for corruption, bribery, and local mafia practices. This concern is shared by many, including myself.