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Venezuela: No Socialism, Just Words

By Tomas Sancio | Venezuelan Politics

21.07.05 | The one conclusion that we can make out of the Social Report, 1st Semester 1997 - 2nd Semester 2003, from the National Institute of Statistics (INE), is that whatever the President calls "Socialism of the 21st Century", is exactly the same as whatever came before it. In other words, there is no revolution whatsoever in terms of redistribution of the social classes, in spite of what the President and his supporters may claim. As a matter of fact, the income distribution remained unchanged in the first 4 1/2 years of Hugo Chávez's government.

The graph above shows the percentage of the income that is occupied by the top 20% of the richest families, the median and the income that is shared among the poorest 20%. The curves are practically flat and show no visible trend of moving anywhere. Since 1997, the top 20% possess approximately 50% of our country's income while the bottom 20% possess 4% of the income, "a factor of 11 to 1, well away from equality" (verbatim from page 11 of the report).

Many people forget that there are important reasons why reducing inequality and increasing everybody's income should be a priority. This article points out that "High inequality threatens a country's political stability because more people are dissatisfied with their economic status, which makes it harder to reach political consensus among population groups with higher and lower incomes." This is pretty much the description of the Venezuela of the past decades: the poor have some interests that are not met by any government and there are policies that may improve the nation's well-being in the mid to long term but are blocked because of potential lack of popularity among the poorest (although mostly lack of imagination of the rulers to push them through). The paralyzation of reforms just continues driving the country downhill towards even more poverty and inequality.

Last time I heard, the Bolivarian Revolution was "making poverty history". Unfortunately anecdotal evidence crashes into the statistics that are compiled by the Venezuelan official institute.

A skeptic might say that Venezuela's performance is comparable internationally (ignoring the fact that other Presidents are not continuously talking about a "revolution" and "Socialism"). This person may defend the government by indicating that the Gini index (a measure of inequality) has increased in most countries in the past years and that Venezuela (in which it increased from 0.46 to 0.49 in the '97-'03 span) is no exception. This argument would be valid if Venezuela's economy had actually grown in this time span, thus lifting all sectors. Unfortunately, according to data from the Venezuelan Central Bank, the economy shrank 15% in that time period. For example, the article linked previously defends left-minded policies as opposed to those promoted by the USA. However, there is no point of criticizing the increase of the inequality in the USA if the income in the lowest rung has increased 14% in a 3-year span.

Hence, in these years, there has been no absolute growth and no redistribution of the wealth. If the President would have promised continuity, then the results would be more fitting. However, he has talked lengths about a "revolution" that doesn't appear in any official statistics. If only people would eat speeches.

Silver Lining: Credit the INE for writing a report with statistics that are actually useful. This is specially important in a time in which the average Venezuelan doesn't know how many bpd of oil we produce. Additionally, a chart in the Social Report indicates that the percentage of workers in the public has actually decreased in the covered time span. This is (surprisingly) good.

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