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01/23/13 - GlobalPost - Cuba's 'resale' economics

Nick Miroff

HAVANA, Cuba - Cracker Man's cry echoes down the streets of Havana's
Buena Vista neighborhood, trailed by the clatter of his shopping cart over
potholes.

"Crackers! Crackers!" he barks. "Fresh from the oven!"

He's one of roughly 400,000 Cubans now working as state-licensed
entrepreneurs in the communist country's small but growing private sector.

Cracker Man, as he's known in the neighborhood ("el Galletero"), sells his
product for about $1 a bag. He doesn't make the crackers, but buys them
from the state-owned bakery.

He's what Cubans refer to as a "revendedor," a reseller who buys scarce
state-subsidized items from government stores to sell at a mark-up.

That's made many people here angry. Complaints abound in the "letters to
the editor" section of Cuba's Communist Party newspaper Granma, where
resellers are disparaged as parasites and good-for-nothing speculators
whose main contribution to the economy is to make basic products more
expensive for everyone.

They're also entirely the creation of Cuba's new halfway capitalism.

Raul Castro's recent reforms - the government calls them "updates" - have
provided a place for market forces to exist alongside the centrally
planned, state-controlled economy. Cubans have been granted new
opportunities to become tradesman, DVD vendors, pizza makers and licensed
small-scale retailers whose tiny shops and stalls have bloomed along
Cuba's main streets and thoroughfares.

Other entrepreneurs navigate pushcarts through the streets as itinerant
peddlers, hawking goods under the hot Caribbean sun.

The government wants the private commerce to stimulate Cuba's moribund
economy and substitute costly imports. But experts say the authorities
have yet to take the next necessary step: allowing entrepreneurs to
innovate and manufacture their own products.

Cracker Man, for instance, has nowhere to buy the kind of industrial
ovens, bakery equipment and wholesale supplies he'd need to make crackers.
Shipping those items from abroad would trigger steep import duties, never
mind the logistical obstacles.

"We still haven't created the mechanisms for a productive economy," says
economist Julio Diaz Vazquez, a Soviet-trained expert on [2]China and
Vietnam's so-called market socialism. He criticizes the government for
wanting to encourage entrepreneurship while tightly controlling it through
an obtuse bureaucratic regulatory system.

He believes that's a lost cause. "You can't play games with the market,"
he says.

The authorities say they want to sharply reduce the number of Cubans
working in low-paid, unproductive government jobs by moving them into
cooperatives and small-scale private businesses.

They're setting up pilot programs to convert state-run enterprises into
worker-managed cooperatives, and have expanded the range of occupations
for which Cubans are allowed to obtain self-employment licenses.

But the list remains very small, with fewer than 200 officially sanctioned
professions from which Cubans can choose, including obscure jobs such as
"party planner" and "palm-tree pruner."

Not the kind of thing to lift millions out of poverty or free Cuba from
having to import soap, snack foods and other bare necessities on which the
government spends billions of dollars abroad while its own state-run
manufacturing sector withers.

Many of the newly licensed entrepreneurs sell hardware-store items and
household essentials such as bleach and dishwashing detergent. As their
stalls have proliferated, many of the items they sell are disappearing
from state stores because private vendors are rushing to buy up supplies.

The government says it's working to set up wholesale markets to supply the
new businesses, but it has yet to do so, with a few exceptions. The
authorities seem nowhere close to allowing island residents to invest in
the kind of infrastructure that could help give rise to private
manufacturing and industry.

Until that happens, economists say, resale economics will continue to
rule.

In one area of Havana known as the La Copa, private vendors offer plumbing
supplies and other items not available in the state-owned hardware store
next door.

Some of their goods are imported while others - such as crudely fashioned
pipe fittings - are made on the island. Like most everywhere else, the
rest are bought in government-owned stores.

The vendors respond to criticism about selling state-manufactured goods at
higher prices saying that as long as they can show receipts proving they
acquired the items legally, there's nothing illegal about reselling them.

"I'm providing a service to my clients and to the government," says
Yormani Alayu, a plumbing-supply vendor who says he pays taxes and goes to
great lengths to acquire scarce materials. He points to several rolls of
flexible plastic tubing that would be nearly impossible to find in
state-run stores.

"These are from Las Tunas," he says of a city more than 400 miles from
Havana.

One customer, Tania Alvarez, says she appreciates personal attention from
private vendors, in contrast to the poorly paid clerks at government
stores who are often indifferent toward shoppers, if not surly.

"I also appreciate the convenience," she adds. "I don't have to go all
over town to look for these things." She says she doesn't mind paying
slightly more.

Other resellers says they're adding value to products they acquire from
state stores.

A 21-year-old hardware vendor named Moises Amador points to colorful rum
bottles on his table filled with different kinds of paint, each labeled
with instructions. The paint is sold by the gallon in government stores,
he explains, but often clients don't need to buy that much. "And not
everyone can afford a whole gallon," he adds.

"I'm providing a service," he says somewhat defensively. "I make my own
labels and print them. I buy the bottles from a recycler. It's an
investment I make."

More from GlobalPost: [3]Has Cuba joined the 21st century?

Despite the controversy about them, the new business licenses do appear to
be sparking some degree of industriousness.

Vendor Jose Bueno says he's been making and selling shoes for 20 years,
first with a license, then on the black market, and now with a license
again.

"Almost everything you see here was made in Cuba," he said about rows of
leather loafers, brand-less sneakers and elaborately decorated women's
flats.

"These are good shoes, with the right materials for our climate," he
added, holding up a pair of $50 leather wingtips. "Not like those
synthetic ones from China."

Acquiring the leather, fabric and other materials was another matter,
however. Most had to be brought in from abroad or purchased on the black
market.

"But at least I'm still manufacturing something," he says. "There's
nothing speculative about that." 

http://www.globalpost.com/dispatch/news/regions/americas/cuba/130122/cuba-reforms-vendors-private-business-state-economy


Original Source / Fuente Original:
http://www.globalpost.com/dispatch/news/regions/americas/cuba/130122/cuba-reforms-vendors-private-business-state-economy