Finally! Cutting Government & Encouraging Enterprise … but in Cuba?

September 15, 2010

Finally we are reading about a government laying off half a million government employees and wanting more jobs in the private sector. Has President Obama suddenly had an epiphany and reversed his previous policies?

Well, not exactly. The announcement of seemingly sensible policies comes from ahhh, … this is embarrassing… from communist Cuba:

Havana, Cuba (CNN) — Cuba announced on Monday it would lay off “at least” half a million state workers over the next six months and simultaneously allow more jobs to be created in the private sector as the socialist economy struggles to get back on its feet.

The plan announced in state media confirms that President Raul Castro is following through on his pledge to shed some one million state jobs, a full fifth of the official workforce — but in a shorter timeframe than initially anticipated.

“Our state cannot and should not continue maintaining companies, productive entities and services with inflated payrolls and losses that damage our economy and result counterproductive, create bad habits and distort workers’ conduct,” the CTC, Cuba’s official labor union, said in newspapers.

The last paragraph sounds like something we could say about the businesses the Obama administration has bailed out.

Florida Pundit is featuring this story not because we believe that real reform can take place under the Castro brother tyranny even if Fidel admitted that communism doesn’t work for Cuba. (He has been trying to claim that he didn’t mean it.)

It is just interesting that even the most entrenched communist regime is at least making noises that sound like the direct opposite of what the Obama administration is pursuing.

For a more sobering perspective on what is going on in Cuba read Investor’s Business Daily (via Babalu Blog):

It sounds like a necessary bow to fiscal reality in a state that produces nothing of value. But the incredible thing is, the cutbacks will barely begin to address the government’s issues.

Sixty percent of the Cuban work force is completely unproductive, according to a U.S. State Department report.

So a 12% layoff of the work force would leave about half of the state’s remaining work force still standing around on work sites with nothing to do but collect paychecks.

The Castro brothers are trying to sugarcoat these layoffs as “reforms” to the system — offering to increase private business licenses for tiny outfits such as nail salons, taxis and auto mechanics, as if they would willingly permit a small window of capitalism.

But even that’s unlikely. Only 200,000 extra permits will be issued, leaving most laid-off workers out in the cold. Getting a business permit will soon be a major source of corruption in an already-corrupt state.

What’s more, once these new businesses get profitable, the state will step in to confiscate their “excessive” earnings, negating the entire point of private enterprise — as they did a decade ago.

All this shows is how the ruling Castro oligarchy works. It’s a master at creating a crisis, mitigating it for a time, consolidating its power, then cracking down anew. If that’s not failure, what is?

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