Lunes, 24 de Octubre de 2016
18:19 CEST.

The failed 'pricing policy'

The high prices of products sold to citizens - without regard to production and transport costs, nor the paltry wages received - have added to the daily burden Cubans must bear.

A week ago, after a "butterfly flapped its wings" at the last session of the National Assembly, and a call went out for ceilings on the prices of products, its negative effects are evident in the empty spaces at agricultural/livestock markets. In response to this situation, some are considering asking producers to turn out more, and suppressing middlemen and distributors, as if via decrees and resolutions they can defy the laws of economics.

In their defense the authorities wield the argument that they are responding to the "pricing policy" already existing in the country, approved by the Party and controlled and regulated by the Ministry of Finance and Prices. And, in the case of farmed products, they lay all the blame on the "intermediaries" between the producer and customer.

During the Republic, no government established "pricing policies." Prices are determined by the relationship between supply and demand: the greater the supply (more production), the lower prices, and vice versa.

There never was a government body responsible for setting prices, from a comfortable office with fans, at first, followed by air conditioning. The closest thing was the creation of a Supply Prices Regulation Office, but this came within the context of World War II, when products like meat, butter, gasoline, tires and other things were lacking, in order to avert, as far as possible, an ever greater dearth of these, and to prevent the cost of living from becoming untenable. And the project only lasted as long as the military conflict.

These government bodies are established, on an interim basis, during times of war, and maintained for some time after conflicts, until production and commerce are stabilized.

Permanent bodies during peacetime that set prices and control them, in order to line the State's coffers at the expense of its citizens, are an eminently totalitarian invention, formerly applied in the now defunct socialist nations.

The most absurd scenarios arose in the former Soviet Union, where products were turned out with the retail price printed or engraved right on them, leading to situations in which things made ten years earlier, though technologically obsolete, continued to have the same prices a decade after their production.

These bureaucratic entities never solved supply problems, but rather actually aggravated them. There are, however, those who still do not want to see - whether out of ignorance, stubbornness or because it clashes with their interests - that only a fully free economy, with producers released from the State's control, can ensure growth in production and the generation of wealth for the benefit of all citizens.

The measures being considered to reduce the prices of some products, mainly agricultural ones, by suppressing intermediaries, prohibiting the existence of so-called "cartmen," and pressuring producers, are more repressive than effective, as they attack the effects, but not the root cause.

For 57 years the "old and inept farmers," transformed into rulers, have been unable to solve the problems they themselves created, and have only spawned bad managers of unproductive state farms, and many other failed monstrosities, principally because they have refused to recognized their ineptitude in the field of Economics, which they aspire to bend to their particular political and ideological interests. As a result, they have nothing new to say or to contribute today, except to get out of the way and make room for new and constructive ideas.