December 30, 2011
Julio De La Yncera
HAVANA TIMES, Dec 30 — A few days ago I read an article in Cubadebate
that caught my attention. The article deals with the production of
toothbrushes in what is apparently the only factory that produces them
in Cuba – and which is, of course, state-run.
The article informs us of the low demand for the factory's product. It
also noted that the price of a toothbrush is high for consumers. A Cuban
must pay 16 pesos, which is equivalent to more than a half day of work.
The article ends by explaining that the Cuban population is not in the
habit of changing toothbrushes regularly and that they don't brush their
teeth four times a day. They add that the high price explains the low
demand. The piece then concludes saying that this situation causes major
expenses in dental services.
I was reviewing comments on the article and many people complained about
the quality of toothbrushes. Supposedly the bristles detach easily,
thereby posing a danger. Some people complained about the high price
while others explained that the toothbrushes are actually inexpensive,
pointing to low wages as the problem.
This article reminded me of the wise English expression, "Never put all
your eggs in one basket," which translated into our context would be
written as "Don't make all your toothbrushes in a single factory."
In this case, the fundamental problem is not the consumers. The
explanation for the low demand is certainly the product's poor quality
and its high price for ordinary Cubans.
One wonders how the price of a toothbrush produced in a Cuban socialist
company is determined, and how do they ensure that the products produced
have the quality necessary to avoid creating greater problems.
I think the problem occurs for several reasons.
The management of the company, like all socialist enterprises, has
nothing personal invested in the company's success. If what occurs is
like what happens in the worst cases, they will be transferred to manage
(or rather de-manage) another company.
This is an example of why a state monopoly is terrible from any
perspective one looks at it.
Let's say that instead of one company, there were at least two companies
producing toothbrushes. And let's say that these two companies were
owned by individuals. It would be in the best interest of these
individuals to make the company work properly.
This means they would produce quality and affordable products, the
opposite of what happens at the socialist enterprise in question.
In addition, these companies would probably pay for television and radio
commercials for their products, explaining and educating the public
about why oral hygiene is necessary and how their product is better than
that of the competition.
From the competition between the two companies, the price would be
optimized to the maximum that consumers were willing to pay and the
companies would price the product at the minimum necessary to trigger
the sale and movement of these so as not to cause them losses.
These individuals would pay taxes to the government on their profits,
and another part of the proceeds could be devoted to research for better
toothbrushes or other methods of cleaning the teeth that are less costly
and more effective.
Meanwhile, with a state monopoly we have a group of workers who might
lose their jobs, and rightly so, because they don't do them well.