Public Policy Paradoxes in Cuba

Designing public policies is like setting off from the present on a trip to the future. Each decision implemented will set in motion a series of chain reactions that must be carefully planned and monitored to minimize unwanted effects. In Policy Paradox. The Art of Political Decision-Making, Deborah Stone defined policy paradoxes as the contradictory, sometimes unexpected, impacts stemming from the design and implementation of public policies (Stone, 2012). For example, some unemployment protection policies may act as a disincentive to seek new employment quickly. At the same time, wage increases may, in some instances and contexts, impact prices and reduce the purchasing power of real wages, thereby nullifying the initial wage increase.

These paradoxes are common in the design and implementation of public policies and do not necessarily imply that the policies are wrong. Therefore, clarity as to policy objectives and the criteria and indicators for their assessment over a given period of time may be necessary to correct some of these paradoxes.

This article will review some public policy paradoxes present in the design and implementation of socioeconomic policies in Cuba in recent decades.

Cuban social policy has had a traditional socialist egalitarian goal. Egalitarianism, unlike equity, "equalizes" the needs of all, reducing opportunity to an end in itself rather than a means to a social and economic end. In terms of public policies, egalitarianism disadvantages the most vulnerable—those who require differentiated treatment.

Cuban social policy, which aims to help the most vulnerable, has been successful in many areas.  However, recent decades have shown that during periods of economic crisis, women, non-whites, the elderly, and the poor continue to be vulnerable and at-risk, resulting directly from the design of these policies.  This has become one of the central paradoxes of social policies in Cuba: in the long term, they have failed to reduce vulnerability ¹ to poverty or to forestall rising inequalities ².

Traditionally, Cuba has maintained a full employment policy that guaranteed employment to almost everyone who needed it. This is a laudable principle that is not without economic and social costs. Its primary impact has been a substantial growth in underemployment, traditionally reflected in bloated payrolls. This was accompanied by another paradox: employed individuals had no actual work content. Historically, this has impacted productivity, which affects economic efficiency ³ (Mesa-Lago, 2010)

From the 1990s onwards, the government’s employment policy expanded intermittently, although incrementally, the participation of the private sector in the economy. Its express objective has been for self-employment (Trabajo por Cuenta Propia, TCP) to serve as an escape valve for employment problems arising from payroll reductions in the public sector during economic crises and reforms. Global data show that the TCP expansion policy achieved its objective of absorbing a substantial number of unemployed workers in the 90s and during the so-called Update of the Economic Model (2011-2017): “From generating 84% of jobs in 2009, the public sector now generates 71% in 2016. In contrast, the cooperative and private sector has grown, now providing 29% of jobs nationwide (17% in the cooperative sector and 12% in the self-employment sector)” (Bahamonde, 2018).

A closer look, however, reveals contradictory impacts. On repeated occasions, Cuban leaders publicly expressed concern that the accumulation of wealth in private hands would lead to increased inequalities. This effect is inevitable and correctable with an appropriate tax policy. However, this general analysis should have included the differentiated impacts that the expansion of the TCP would have on Cuba's income structure.

Núñez Sarmiento (2015) points out the gender discrimination inherent in the design of the TCP: over more than two decades, the categories most frequently authorized for self-employment were manual and service activities, fields dominated by men (in 2013, these represented almost 84% of all operators and 60% of service workers). Half of employed women are professionals and technicians, activities excluded until recently from the private sector (Núñez Sarmiento, 2015, p. 117).

This design placed women at a clear disadvantage for almost three decades by limiting their access to better incomes and their possibilities of registering to practice their professions on a self-employed basis. By the time legislation was passed in 2022 granting legal entity status  to domestic privately-owned small- and medium-sized enterprises, capital accumulation was already disproportionately in the hands of (white) men.

Cuban women have been disadvantaged by a policy design that does not take into account the peculiarities of their role in society. It ignores the fact that they usually bear the burden of care-related duties and, therefore, spend a significant portion of their income to carry out those activities, as opposed to their male peers (see, for example, Maqueira & Torres, 2021).

In 2002, Cuba closed 70 sugar mills deemed financially unprofitable and relocated and professionally reoriented more than 100,000 workers from that sector. From a short-term perspective, measured in terms of efficiency, this policy met its objective. The paradox is that while trying to save money for the economy in the short term, the lives of the sugar mill workers were sacrificed, as well as some mills with over a hundred years of sugar operational expertise (Álvarez Rodríguez, 2013). In that process, generational knowledge was inevitably lost. Moreover, the Cuban sugar industry disappeared in the long term, with consequential economic and social costs.

The Monetary Adjustment Policy (Tarea Ordenamiento, “TO”) was implemented recently. The main policy objective of this reform was to restructure the country's dual-currency system, reinstating the Cuban peso (CUP) as the only currency. The purpose of the TO was to alleviate the financial strain on Cuban families caused by a dual currency and multiple exchange rates, mainly due to unequal access among Cubans to foreign currency.

Paradoxically, removing the Cuban convertible peso (CUC) from circulation resulted in more serious adverse effects than those caused by its existence.

Even after the CUC’s removal from circulation, Cuba continued to be an economy with multiple currencies—the peso and the convertible peso (moneda libremente convertible, MLC), plus foreign currencies that continue to have purchasing power, for example, in informal markets—, multiple exchange rates, and soaring inflation, all of which have caused the value of the peso to plummet ⁴ The policy has had a more acute impact on Cuban wage earners, pensioners, and those people without access, or with limited access, to foreign currency. In other words, those most impacted were the people the TO pledged to protect.

Public policies yield contradictory results, and it is sometimes difficult to improve some areas without negatively affecting others. It is impossible, a priori, to predict all the potential impacts of policies, and existence of paradoxes do not necessarily indicate that policies are wrong. It means that the public policy design process requires periodic assessments and, more likely, readjustments over time.

The policy evaluation process involves establishing clear objectives, well-defined evaluation criteria and indicators, and time horizons to measure the fulfillment of policy goals. If none or only some of these factors are included in the policymaking process, policymakers will not have mechanisms available to them to know if and to what extent objectives have been achieved, or if other areas of the economy and society have been so negatively affected in the process that the policymakers need to rethink the policy strategy and redesign it.

It appears that in Cuba, there is no known system for regularly assessing public policies — or if there is, it is not disclosed to the public. Public policies affect everyone, directly or indirectly, so people have the right to understand their design and receive feedback and transparent information about how policies are implemented and evaluated. It is essential to know the processes in place for correcting any deviations from the intended purpose of a policy or for addressing any contradictory results to minimize its negative impact as much as possible.

[1] In this context, vulnerability refers to individuals whose socioeconomic conditions place them at greater risk of suffering from poverty. Vulnerability is a term that does not speak of the present condition but rather of future risk. (Valdés Gázquez, 2021).

[2] Mayra Espina estimated that the GINI index—an indicator used to measure inequalities—grew from 0.24 in 1986 to 0.4 in 2013 (Bye, 2020, p. 87).

[3] Mesa-Lago (2010) estimated a 31% drop in productivity between 1989- 1993 and the existence of over 500,000 underemployed workers in Cuba in 1993, a result of continuing to implement a “full employment” labor policy in the crisis years. (Mesa-Lago, 2010, p. 60).

[4] See, for example, Tasas de cambio | elTOQUE.

References

Álvarez Rodríguez, M. (2013). La Callada Molienda | The Quiet Harvest. Ediciones La Memoria - Centro Pablo de la Torriente Brau.

Bahamonde, T. L. (2018). Mercado Laboral Cubano: Distorsiones y Retos. Annual Proceedings of The Association for the Study of the Cuban Economy, 28.

Bye, V. (2020). Cuba, From Fidel to Raúl and Beyond. En Cuba, From Fidel to Raúl and Beyond. Palgrave MacMillan.

Maqueira, A., & Torres, A. (2021). Cuba in the time of COVID-19: Untangling gendered consequences. Agenda, 35(4), 117-128.

Mesa-Lago, C. (2010). El desempleo en Cuba: De oculto a visible. Espacio Laical, 4, 59-66.

Núñez Sarmiento, M. (2015). La cara de género del «cuentapropismo» habanero. En M. Espina Prieto & D. Echevarría León (Eds.), Cuba: Los correlatos socioculturales del cambio económico (pp. 113-127). Ciencias Sociales & Ruth Casa Editorial.

Stone, D. (2012). Policy Paradox: The Art of Political Decision Making. W.W. Norton & Company.

Valdés Gázquez, M. (2021). Vulnerabilidad social, genealogía del concepto. Gazeta de Antropología, 37(1).