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Cuban Small Business: Empowerment Or Exploitation?

In 1968, the Cuban government took over operation of small businesses. Now the government is experimenting with letting some employees take over as owner/operators.

The state has also closed over 100 state-run farms for "inefficiency", and the farmers who are taking over operations are optimistic about the opportunity to farm without intrusive layers of bureaucracy.

A Havana taxi driver named Elio says: "I think this system is also better for the state which is guaranteed a net income with few headaches."

Barbers and beauticians aren't so sure. Now they have to pay rent and taxes, and getting supplies is sometimes a challenge. One hairdresser confided that they sometimes have to buy supplies on the black market, and increase prices to clients accordingly.

But with the majority of Cuban workers earning about $20 a month, there isn't a whole lot of room for them to pay those higher prices. Cubans get free education and health care, and housing and utility costs are minimal. Recent cutbacks have eliminated some staples from the food ration book, eliminated some free lunches for workers, and cut spending on health and education.

Even as debate continues over the best course of action for the retail sector, Raul Castro has insisted there will not be a return to capitalism that his goal is to demonstrate a working model of socialism. Even so, he has warned Cubans that the government can't afford to continue subsidizing life at its current levels. He insists that Cubans must work harder and take more responsibility.

The Roman Catholic Church, in the New Word magazine published by the Havana Archdiocese, wrote: "The economic situation in Cuba has turned rather complicated with signs that it is close to free fall." Economist-Priest Boris Moreno warns that Castro's readjustments can lead to socio-economic collapse.

On the heels of extensive hurricane damage to the island, the global economic crisis has impacted both tourism and commodity prices, dealing a severe blow to the Cuban economy. Cuba imports 80% of its food, spending several billion dollars a year.

Can a small business thrive and prosper-or even survive-as an awkward blend of government-owned facilities, government-run suppliers, and tenant operators who must now rent their space and pay taxes on their earnings? Taxi drivers and farmers are optimistic; barbers and beauty shop owners aren't. Maybe because successful farmers will have a ready market for their food and taxi drivers have a well-heeled tourist clientele, while barbers and beauticians have to depend on their poverty-stricken neighbors for business.

One can only hope that the new system which promises the state more income with less headaches doesn't just transfer those headaches to the workers while taking away what little income they had before.