However, they have taken three steps back this week. To counter the rising food prices resulting from hurricane-related shortages, the Cuban government has frozen food prices.
Frozen prices significantly reduce farmer’s incentives to produce more food. These aren’t pristine lands they are taking over; these are lands that have undergone 50 years of abuse and/or neglect. Bringing these lands up to speed will require significant upfront monetary and physical investment. In return, they will receive a fixed, below-market-value price.
An article published today in Inter Press Service conveyed similar messages from economists:
Some economists warn that freezing prices is not necessarily a good solution at a time when the market needs to be supplied with food. "A positive outlook characterised by incentives, rather than uncertainty, ought to be created for producers," said an academic who chose to remain anonymous.
He said that the measures announced by the government fail to provide a stimulus for those who have submitted applications this month to be granted the use of idle lands, in order to make them productive. "Many of these people might now think that farming will not be profitable, because the plots of land they are to receive will require investments, which drive up production costs," the academic said.
In a recent article, economist Pavel Vidal argued that controlling prices in the agricultural markets operated according to supply and demand is "the worst" of all possible options, because it might stimulate the black market and restrict the signals and incentives that prices transmit to producers.
It’s quite obvious that farmers will certainly be hurt by this, but how about the consumers?
Most of the MSM is spinning this as a positive policy change, aimed at helping Cubans afford food. This is not a positive change. Introductory macroeconomics teaches us that price ceilings lead to further shortages. People rush to get the supplies, which quickly run out. Think what would happen if the iPhone was initially released for $100 or $200 – it’s the same economic concept. Supply will never meet demand.
The same Inter Press Service article has found just that in Cuba:
Now they have to get up early. People have been queuing since early morning to buy lettuce and other products. As you can see, nothing is left now," a farmer from outside Havana, who comes to the city on Sundays to tend his stall in one of the agricultural markets, told IPS.
Not only is the government’s economic policy flawed, but remember that Cuba rejected over $6 million in aid from the United States because of “dignity.” By taking the aid, Cuba could have avoided implementing the price ceiling. This goes to show that, once again, the Cuban government will continue to sacrifice the wellbeing of its own people for the sake of the “revolution.” Nothing has changed.
5 comments:
You are right that. I wrote the same in my blog. Regards.
Many groups from the United States are providing aid, from the Catholic Church to Jewish solidarity, and others. They are licensed by the Federal government, but they aren't involved in promoting political trouble-making on the island, as is Washington. That's why the Cuban government rejected their supposed assistance.
Thousands of Cubans are now signing up to use the vacant land. That hasn't stopped. They's probably be grateful if their friends and family in the US could come and help out, or at least send them some money to buy seeds and equipment, but that's still being rejected by the Bush administration.
I look forward to hearing more of this discussion
Walter,
1) What is your source for the number of Cubans signing up to use vacant land post-hurricanes?
2) The U.S. government wanted to ensure that the money it was sending was going to hurricane relief. I think it's perfectly reasonable to send inspectors in to determine areas of most need. I would want to perform similar diligence as well if I were to give several million in aid to a country that has used its money to fund the spread of Communism throughout the world.
3) Don't forget that the Castro regime also restricts donations. I can refer you to several articles that speak about Cubans who cannot accept money except from their closest relatives. And again, this all comes back to the question of where the money is ultimately going. Would you give your child or parents money to buy something that is ultimately going to continue to hurt them? The more money that flows into Cuba, the longer the Castros stay in power, and no one can reasonably suggest that they have been efficient leaders. Don't blame the state of Cuba on the embargo -- it is due to poor government. Nothing will change if we keep sustaining the government, and every dollar goes to the government.
Responding to Monica's questions:
1-The figures come from the Cuban government, as well as AP, Reuters and so on. Do you question their validity?
2-Cuba has a world-renounded disaster response system. Try reading OXFAM-AMERICA'S report on it.
http://www.walterlippmann.com/oxfam-america-cuba-weathering-the-storm.pdf
Cuba doesn't need anyone from the US government inspecting it. Cuba is happy to receive advice and assistance from countries and institutions which are not AT THE SAME TIME, working to overthrow the Cuban government, as Washington is.
Any Cuban can to and collect money from Western Union by wire. Who would stop them? Of course, the Cuban government would know who's getting money, and who sent the money, but why would the Cuban government allow its opposition to be funded from the United States without taking some action to protect the island and its government from such activities?
3-As for overthrowing the Cuban government, that may be what Monica wants, but no everyone wants to see the rightist exiles from Miami back in the saddle again.
There was no complaining about human rights violations during the Batista dictatorship which protected US business interests.
Cuba system, in my opinion, could confront its demons and solve its problems if it didn't have to fight US opposition at every turn.
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