I recently won a contest called ideas for Cuba. I decided to post what I send to users of the blog. The publication will be divided into 5 parts. Hope you like.
A specter is haunting Cuba: the specter of change postponed. Much of society has been complicit in the conceptualization of this phenomenon, however it is remarkable the absence of an effective debate in the relevant institutions.
First it is postponed precise description of the phenomenon. Why in Cuba emergela no innovation, creativity, initiative yel talent to generate wealth and prosperity? Directing the question to a multitude surtirían answers like, “low wages”, “For the high prices” and “shortcomings”. Obviously the answers would be more numerous, but the introduction of this work focuses on these three.
Faced with the problem of low personal income, an immediate response might be to raise them in line with the prices of goods and services. But this would not be correct and we must avail ourselves of several economic principles to support this rebuttal. An arbitrary increase in wages, minimum or average say to yourself, would generate only an uncontrollable rise in money supply, increasing demand for goods and services that would not be accompanied by a proportional backup supply, as both variables are independent. Thus accentuating prices continue unchecked over the expansion of nominal income, further compressing reduced purchasing power of consumers. This phenomenon is called inflation.
The story is irrefutable in this regard. A recent case is that of Venezuela, a country that suffers from falling international oil prices above any other exporter, due to the strong dependence of its economy to the sale of fossil. The government’s response has been ineffective Nicolas Maduro multiple times to increase the minimum wage despite the reduced supply of goods and services in a fragile environment. This is how there has been a runaway hyperinflation. It is sad that a country with so many natural resources has fallen into such a shameful situation.
Faced with the situation of high prices, could bring out the suggestion to reduce or toparlos. Both alternatives are called price control, which is another significant error. This is because any attempt to exercise some control of productive activity by some external entity to it, distorts the economy and away from their rationality. Try to reduce the marginal benefits of economic agents outside the framework of competition, falls stimulates production levels. So scarcity and declining quality of goods and services is promoted. This shortage creates long waiting periods when making purchases, setting up a black market in which hoarding and speculation raise prices well above those set out at first.
We can in fact move to the current Cuban situation. Since early 2016 Bumped a pricing system with an emphasis on the provision of food was established. Faced with reducing the marginal benefits of traders in a scenario of permanent inflationary trend, the access of the population to these products continues to fall. That’s why the carters have disappeared, while state agricultural markets remain inhospitable because both producers and sellers are always looking for the most individual benefit and no one can control that.
Overall it could be argued that the Cuban market consumer products ranges from relatively stable supply, but prices beyond the reach of consumers and others with a price that is more in line, but whose devoid offer generalizes its instant shortages. This fulfills a geographical pattern because the former predominates Western enprovincias like Havana and the second in eastern Santiago de Cuba and with the central region as an intermediate case.
The fact that the predominant migration is from East to West, offers a glimpse of the fact that people reject the gaps above the high prices. Then the solution to combat this phenomenon would still produce more, which is absolutely correct. But first he must answer very complex questions. How to produce more? Will there be any genuine response that does not have to re-chewing the voluntarism of the harvest crestfallen 70? Could we learn from our mistakes without having to re-read the speech tear “leader” of a union? Do the Cubans could prosper without having to leave the country?
Of course yes, and that is the issue of the development of this work. So pay attention.
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