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Julio Borges: Populist proposals have no legs

By John Sweeney

10.09.05 | Primero Justicia’s presidential candidate Julio Borges said recently in San Bernardino’s “barrio” of Los Anaucos that if he is elected president he would distribute directly to all Venezuelan citizens 25 percent of the country’s oil revenue. Borges said his proposal would place the equivalent of Bs. 2 million annually in the hands of every “family nucleus” in Venezuela.

Millions of Venezuelans barely survive on one dollar a day, he said, and giving these poor Venezuelans the lump sum of Bs. 2 million apiece to pay for goods and services that they need would help them build a better future for themselves and their families. Lacking the numbers that Borges used to arrive at these figures, we can’t double-check his arithmetic. However, the proposal is pure populism, and bad policy. Bad policy proposals driven by populism never yield beneficial results.

At the current official exchange rate, Bs. 2 million isn’t even $1,000. Spread out over one year this would raise the income of those earning one dollar a day to slightly less than four dollars a day, or Bs. 10,000 a day at an exchange rate of Bs. 2,500 per dollar. An extra Bs. 10,000 per day per family might put slightly more food on the table at dinnertime, but it isn’t going to help anyone build a better future.

Borges denied that his proposal is paternalistic. He said it would “democratize” Venezuela’s oil revenues and let all Venezuelans share in their country’s oil wealth. Respectfully, we disagree. President Hugo Chavez already transfers cash directly to the poor through his various missions, where millions of Venezuelans participate because they receive a stipend. When the money stops, popular participation in the missions also will drop.

Borges does make an interesting point. He argues that transferring 25 percent of Venezuela’s annual oil income directly to Venezuelan families would eliminate the huge financial losses incurred each year by the state due to corruption, inefficiency and waste. This is because there would be 25 percent less oil income for corrupt Bolivarian bureaucrats to steal. That said, however, it wouldn’t have any lasting impact in reducing corruption because Venezuela’s judicial institutions don’t function, particularly in cases involving corruption allegations against government officials.

Borges’ proposal suggests that he is a presidential candidate in search of an effective message that voters will find appealing. His campaign in many respects is quixotic. Recent polls show that up to 70 percent of Venezuelan voters approve of Chavez, thanks to high oil prices that have generated a huge inflow of revenues for Venezuela. High oil prices have allowed Chavez to hugely increase public spending while amassing over $32 billion in foreign exchange reserves at the Central Bank. High oil prices (and politically prejudiced electoral authorities) also make Chavez a very tough candidate to defeat in the 2006 presidential elections.

Borges’ proposed cash giveaway to all Venezuelans doesn’t address Venezuela’s core development needs starting with education. It’s just a populist trial balloon floated by someone who apparently lacks a focused, appealing message and is becoming more desperate as a result. The message Borges sends is “vote for me and I’ll pay you Bs. 2 million a year.” This isn’t a proposal one can seriously build a nation with. Voters whose loyalty is purchased with cash giveaways are the first to desert their leaders when the money is gone. Borges isn’t going to win points against Chavez with populist proposals.

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