HAVANA – Though adamant that Cuba is simply fine-tuning socialism, not shifting to capitalism, President Raúl Castro has spearheaded changes that allow Cubans to work for themselves in 178 approved activities, hire employees and rent out rooms and cars. The Cuban leader has said the measures are crucial to rescue the island’s perennially weak economy from the abyss, and he has warned his countrymen that there is no Plan B.
But less than a year into the overhaul, interviews by the Associated Press with Cuban tax authorities, government officials and more than a dozen aspiring new business owners in Havana reveal a darkening landscape for those who took up the free-market challenge. They say they face competitors offering similar products; depend on customers who have little or no disposable income; are cut off from credit or startup capital, and undone by a new tax code they perceive as overly burdensome.
While the government says it has moved boldly to meet these problems, a basic fact of the free market still needs to sink in on this island of 11.2 million people: that most businesses fail, even in developed countries such as the U.S. where startups can get loans, buy wholesale, rent commercial space and conduct market research.
Dog Eat Dog
“Welcome to the wonderful world of dog-eat-dog capitalism,” said Ted Henken, a professor at Baruch College in New York who has extensively studied Cuba’s economy.
“Cuban entrepreneurs have the added obstacle that Cuban capitalism is still quite deformed … and it is still based on a fundamental distrust of business owners,” he said. Cuban leaders, he added, are hung up on the idea that nobody should be getting rich.