Venezuela's empty revolution
By Francisco Rodríguez
Published: Wednesday, February 27, 2008
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Although opinions differ on whether Chávez's rule should be characterized as authoritarian or democratic, just about everyone appears to agree that, in contrast to his predecessors, Chávez has made the welfare of the Venezuelan poor his top priority. His government, the thinking goes, has provided subsidized food to low-income families, redistributed land and wealth, and poured money from Venezuela's booming oil industry into health and education programs. As a result, he has earned the lasting support of the Venezuelan poor.
In fact, the "Chávez is good for the poor" hypothesis is wrong. Neither official statistics nor independent estimates show any evidence that Chávez has reoriented state priorities to benefit the poor. Most health and human development indicators have shown no significant improvement beyond that which is normal in the midst of an oil boom. Indeed, some have deteriorated, and official estimates indicate that income inequality has increased. What last December's voting really showed is that Venezuelans are starting to glimpse the consequences of Chávez's economic policies - and they do not like what they see.
The percentage of underweight babies born in Venezuela, for example, increased from 8.4 percent to 9.1 percent between 1999 and 2006. During the same period, the percentage of households without access to running water rose from 7.2 percent to 9.4 percent, and the percentage of families living in dwellings with earthen floors multiplied almost threefold, from 2.5 percent to 6.8 percent. The average share of the budget devoted to health, education and housing under Chávez in his first eight years in office, meanwhile, was 25.12 percent, essentially identical to the average share (25.08 percent) in the previous eight years. And it is lower today than it was in 1992, the last year in office of the "neo-liberal" administration of Carlos Andrés Pérez - the leader whom Chávez, then a lieutenant colonel in the Venezuelan Army, tried to overthrow in a coup, purportedly on behalf of Venezuela's neglected poor majority.
Most Venezuelans, according to opinion surveys, have given Chávez credit for the nation's strong economic growth. In polls, an overwhelming majority have expressed support for his stewardship of the economy and reported that their personal situation was improving. This is not surprising: Buoyed by surging oil profits, Venezuela had enjoyed three consecutive years of double-digit growth by 2006.
But by late 2007, Chávez's economic model had begun to unravel. For the first time since early 2004, a majority of voters claimed that both their personal situation and the country's situation had worsened during the preceding year. Scarcities in basic foodstuffs, such as milk, black beans, and sardines, were chronic, and the difference between the official and the black-market exchange rate reached 215 percent.
This growing crisis is the predictable result of the gross mismanagement of the economy by Chávez's team. During the past five years, the Venezuelan government has pursued strongly expansionary fiscal and economic policies, increasing real spending by 137 percent and real liquidity by 218 percent. This splurge has outstripped even the expansion in oil revenues: The Chávez administration has managed the admirable feat of running a budget deficit in the midst of an oil boom.
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How has the Venezuelan government been able to convince so many people of the success of its antipoverty efforts despite the complete absence of real evidence of their effectiveness? Partly because of the Chávez administration's high-profile public relations campaigns together with well-placed loans, subsidized oil sales and political contributions. But even more importantly, because so many intellectuals and politicians in developed countries see Latin America's problems as simply the exploitation of the poor masses by wealthy privileged elites. Such stereotypes reinforce the view that Latin American underdevelopment is due to the vices of its predatory governing classes rather than anything more mundane such as misguided policies - and once one buys into them, it is easy to forget about the need to craft real-world initiatives that could actually help Latin America grow.
Francisco Rodríguez, assistant professor of economics and Latin American studies at Wesleyan University, was chief economist of the Venezuelan National Assembly from 2000 to 2004. This article is drawn from an essay in the March/April issue of Foreign Affairs. Distributed by Tribune Media Services.