Cuban Government cuts 450,000 Jobs, Private Sector Doubles in Growth

Peter Anthony Tariche
Jan 2, 2013 at 10:16 PM

While the U.S. Federal Government continues to expand in size and scope, unemployment continues to increase; new weights are created by the U.S. Bureau of Labor Statistics to control unemployment statistically; our country continues to be in a state of perpetual crisis; and the private sector continues to shrink, a surprising neighbor to the south is taking a play from the Austrian economic playbook

In the past two-years, the Cuban government has cut over 450,000 government jobs. With the lack of capital and liquidity available to Cubans, many economists would argue the reduction of government employment would cause an economic crisis. Meanwhile, the entrepreneurial spirit, or what the most famous Austrian economist, Ludwig von Mises, would call Human Action, continues on, and Cubans have found unique ways to become producers and expand the capital available to their communities:

Clara, a 36-year-old Havana resident, was laid off two years ago from her job as a secretary for a state-run security company, given one month's pay, another month of unemployment benefits and then left to fend for herself.

Instead of looking for another job, she decided to do manicures and hair styling, working under the radar without getting the small-business license required by the state.

Clara said she charged 24 pesos (1 dollar) for a manicure and about the same for hair styling, and brought home maybe 500 pesos, or about $20 per week.

That is considerably more than the $15 a month she earned with the government, but not enough to get legal.

Mises would argue the driving will of an individual's condition is to better one's state. We are now seeing individuals in a country that have been indoctrinated, conditioned, and controlled by central planning unleash their productive abilities. The private sector in Cuba grew by 23% in 2012.

While this is very exciting news for our neighbors to the south, Cuba is still controlled by a one-party system. Everyday human rights and civil liberties are abused and not recognized by the Cuban government. Everyday the Cuban government continues to crack down on freedom-loving political activists.

The free market economist, Milton Friedman, argued economic freedom is a precondition to political freedom. Maybe Cubans will see freedom in their lifetime.