Fooling everyone, all the time?
General Raúl Castro’s government is lying when it claims that in 2015 the Cuban economy grew 4%, which would be eight times more than the 0.3% to 0.5% that the ECLAC estimates for average growth in the Latin American nations this year.
But this should not come as any surprise. This has happened every year since 1960, when Che Guevara, then president of the National Bank of Cuba, was outraged to learn that in 1959 the GDP had grown by only 1%, so he ordered the inflation of these statistics to transmit a "good image" of the Revolution.
Economy Minister Colonel Marino Murillo did not tell the truth when he announced a 4% increase in the GDP. And the newspaper Granma also deceived the population by publishing the same figure. But that was only logical. The Economy Minister could not admit - without being instantly removed from office - that Cuba employs an unheard-of method to calculate its GDP, one that is fraudulent to the core.
Neither could he recognize that Cuba's gross fixed capital formation is only 9% of GDP (in Latin America it ranges from 20% to 32% of GDP) and that an undercapitalized economy cannot grow. It is impossible. Nor could he indicate that on the Island there are no independent entities that can verify the official figures, so fraud is inevitable.
And now, with the process for the normalization of relations with Washington, the regime has even more reasons to lie. It is simple: a "robust" socialist economy, growing by 4% or more, is a great excuse to refuse Cubans total economic freedom and to suppress the emergence of a large and vibrant private sector, both in industry and in services. What for? According to the Government the centralized, state-owned system is working great, with a growth rate that would be the envy of Latin America, the United States, Canada, the European Union, Australia or Japan.
It is unconscionable that the Government talks about economic growth when half of its arable land lays idle, overrun with sicklebush, making it necessary to import 80% of the food consumed in the country, including fresh fruits and vegetables for its hotels, and when it produces less milk, meat and coffee than it did in 1958. To give one an idea, in 1958 Cuba produced 960 million liters of milk, and in 2014 the figure was 497 million; that is, about half of the figure from nearly 60 years ago.
It is equally shameful that the country has to import the vast majority of its non-food consumer products because its feeble domestic industry is unable to do so, when 57 years ago it produced most of it. And that real unemployment in the country is easily over 20% of the total workforce, and another, much higher percentage has to rob the State to feed the black market - the only thing that works, and thanks to which Cubans are able to eat and clothe themselves.
Neither will any leader forming part of the Communist nomenklatura admit that if there really was a spike in GDP in 2015 off 2014 (though not 4%) a key factor was the substantial increase in tourism, particularly from the US, family remittances, and many other advantages obtained by the regime as a result of the "thaw" between Havana and Washington. And also due to the abusive increase of the prices charged by the State at "shopping" establishments, which sometimes exceed 700% of the import cost, which is unique worldwide.
Expenses as if they were revenue
How is the fraudulent GDP calculated? The dictatorship's bureaucrats record, in an unwarranted maneuver, certain social costs as if they were value-adding assets. That is, they count unpaid expenditures as if they had been collected and represented revenue. In the field of Public Health, for example, the regime arbitrarily calculates how much surgeries performed in hospitals in Cuba for one year, and blood tests, X-rays, etc. would cost in capitalist countries.
In Education, the same thing is done with reference to the costs of university studies and other types of training in countries with market economies. All these calculations are placed on the books as revenue and new assets created by the Cuban economy, as if they had been collected. And then they are added to the GDP calculation.
Moreover, the Government also records the subsidies corresponding to the salaries of the thousands of Cuban doctors in Venezuela, as if these were exported services, which is not exactly true. Revenues obtained by nationals abroad cannot be rolled into the GDP. What happens is that the regime retains those doctors' wages as if these professionals were state-owned slaves.
The funds generated by the doctors' work in Venezuela, Brazil and 64 additional countries do not belong to the State, but rather to them and other professionals working in foreign territories. Therefore, it should not be added to the GDP, which only includes the (collected) goods and services generated on national soil.
This accounting fiction, all together, amounts to billions of dollars, registered as revenue and add newly created assets. That is, Castroism counts fictitious assets from services offered for free as if they had generated revenue from private institutions. Or collected abroad by professionals whose earnings are retained. All this based on another egregious fraud, by placing the CUC’s value equal to the US dollar, when in fact it is worth far less.
But this dirty game of statistical manipulation, played to a point of madness, ultimately doesn´t matter unless it is discovered and proven. And it does not look like that is going to happen, at least in the short term. After all, the UN, ECLAC, FAO, OAS, European Union and all the governments and bodies around the world accept Cuba's consistent statistical fraud without even batting an eyelash.
The international community's complacency, which ultimately may go down in history as complicity, whether unintended or not, explains why, despite the ostensible disaster that is the Cuban economy, the dictatorship never has never admitted a contraction in its GDP - except when there was an end of subsidies from Moscow in 1991.
That is why the Castro brothers are the only politicians who have thus far defied Abraham Lincoln's famous phrase: "You can fool all the people some of the time. And you can fool some of the people all the time. But you cannot fool all of the people all the time."
Of course, we all know that Lincoln’s axiom will ultimately be proved correct. Hopefully sooner than later.