The spectacular economic growth and success of social programs in Venezuela

[Peace Patriot]

The Chávez Administration at 10 Years: 
The Economy and Social Indicators  

by Mark Weisbrot, Rebecca Ray and Luis Sandoval 
 
February 2009

Executive Summary 

This paper looks at some of the most important economic and social indicators during the 10 years
of the Chávez administration in Venezuela, as well as the current economic expansion. It also looks
at the current situation and challenges.

Among the highlights:

--The current economic expansion began when the government got control over the national
oil company in the first quarter of 2003. Since then, real (inflation-adjusted) GDP has nearly
doubled, growing by 94.7 percent in 5.25 years, or 13.5 percent annually.

--Most of this growth has been in the non-oil sector of the economy, and the private sector
has grown faster than the public sector.

--During the current economic expansion, the poverty rate has been cut by more than half,
from 54 percent of households in the first half of 2003 to 26 percent at the end of 2008.
Extreme poverty has fallen even more, by 72 percent. These poverty rates measure only cash
income, and do not take into account increased access to health care or education.

--Over the entire decade, the percentage of households in poverty has been reduced by 39
percent, and extreme poverty by more than half.

--Inequality, as measured by the Gini index, has also fallen substantially. The index has fallen
to 41 in 2008, from 48.1 in 2003 and 47 in 1999. This represents a large reduction in
inequality.

--Real (inflation-adjusted) social spending per person more than tripled from 1998-2006.

--From 1998-2006, infant mortality has fallen by more than one-third. The number of primary
care physicians in the public sector increased 12-fold from 1999-2007, providing health care
to millions of Venezuelans who previously did not have access.

--There have been substantial gains in education, especially higher education, where gross
enrollment rates more than doubled from 1999-2000 to 2007-2008.

--The labor market also improved substantially over the last decade, with unemployment
dropping from 11.3 percent to 7.8 percent. During the current expansion it has fallen by
more than half. Other labor market indicators also show substantial gains.

--Over the past decade, the number of social security beneficiaries has more than doubled.

--Over the decade, the government’s total public debt has fallen from 30.7 to 14.3 percent of
GDP. The foreign public debt has fallen even more, from 25.6 to 9.8 percent of GDP.

--Inflation is about where it was 10 years ago, ending the year at 31.4 percent. However it has
been falling over the last half year (as measured by three-month averages) and is likely to
continue declining this year in the face of strong deflationary pressures worldwide.

---------------

The current situation and challenges:

Venezuela’s most important immediate challenge is, as for most countries, the world economic
recession. This affects Venezuela’s economy mainly through oil prices, which have fallen about 70
percent from their July peak last year. At oil prices below $45 per barrel (for Venezuelan oil),
Venezuela would begin to run a current account deficit. However, because Venezuela has an
estimated $82 billion in reserves, it could finance a modest current account deficit for some time –
e.g. even if oil prices were to remain at their current depressed levels for the next two years. But
economists and the futures markets are not predicting oil prices to remain at current levels for that
long: futures markets are pricing oil at above $60 per barrel in December 2010.**

With balance of payments constraints unlikely, Venezuela’s main challenge in the near future will be
to come up with an adequate fiscal stimulus package. Over the intermediate run, it will also want to
adjust its exchange rate to a more a competitive level, in order to diversify its economy away from
oil. However, because of its ample reserves, the government is unlikely to suffer a forced
devaluation**** in the foreseeable future.

(A pdf: ) http://www.cepr.net/documents/publications/venezuela-2009-02.pdf
(my emphasis)
More studies by Mark Weisbrot: http://ideas.repec.org/e/pwe148.html

------------------------

**(The Chavez government budget for 2010 was based on only $40/barrel for oil (it is already higher), projected 0.05% economic growth (it will likely be higher), with the other half of budget revenue based mostly on taxes (the Chavez government has improved the efficiency and fairness of tax collection) and with full funding of social programs.)

****(The Chavez government voluntarily devalued the bolivar recently, in a long needed and expected move. S&P consequently upgraded Venezuela's status on their index, and most analysts consider it a positive move. It is a sign that the government's financial people are confident in their economy which entered the Bushwhack-induced worldwide depression, with low debt, high cash reserves and good credit, following a period of very hot economic growth, 2003-2008.)

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I think that this report points to the best general policy for any government addressing recession/depression, that is, the "New Deal" policy of spending money on the people--the poor, the lower middle class, the workers, children/students, the elderly poor, small farmers, small business people--rather than on the banksters, the rich and the corporate (what FDR called "organized money"). The poor and the lower middle class are the most likely to spend money if you put it in their pockets--which stimulates growth--and spending on education and other social benefits is forward-looking, that is, it prepares an educated work force and a larger professional class who will create the ideas, products, services and prosperity of the future. This is exactly what FDR's "New Deal' was aiming at--and, however you factor WW II into the picture--that is what they accomplished, with liberal spending on the poor/lower middle class and on "the commons" (creating libraries, community centers, schools, hospitals, bridges, roads, etc.)--government job creation with long term benefits. (The Chavez government has funded the building of numerous schools, community health clinics and other infrastructure.)

The prosperity for ordinary people and for the whole society that was thus created by "New Deal" spending on the people lasted to the Reagan regime, at which point it began to be undone--and all the wealth of the U.S. began being shoveled into the pockets of the rich. We are seeing the end result of this dastardly policy now: another Great Depression.

President Obama should be doing what FDR did, and what the Chavez government has been doing--spending on the poor and lower middle class, on job creation and on "the commons." We should also be seeing very tough regulation and taxation of "organized money." And we should be seeing large, multinational, monopolistic corporations put in their place, as being permitted to exist only for the public good, and dismantled, if necessary, to break up monopolies and wrongful power over government policy. This is something else that the Chavez government has been brave in doing. When Exxon Mobil refused to agree to the Chavez government's better deal for Venezuela, in the oil contracts, the Chavez government kissed them goodbye, and other corporations stepped up, who would abide by Venezuela's sovereignty. The government acts for the people. Corporations act for the rich. Government "of, by and for the people" needs to provide a strong balance to the power of the rich.

This is what Weirsbrot is referring to in item #1 of his Executive Summary list: "The current economic expansion began when the government got control over the national oil company in the first quarter of 2003." The Bushwhacks, Exxon Mobil and Venezuela's rich oil elite instigated an oil bosses' lockout, to try to destroy Venezuela's economy. The Chavez government faced them down, and won. And then they faced down Exxon Mobil itself, and also won.

It was actions like these, undertaken on the behalf of the Venezuelan people, and also the influence of this Venezuelan leadership on other governments in the region, in their dealings with U.S. and other multinationals (three notable examples being Bolivia, Brazil and Honduras) that have earned Chavez and his government the undying ire of our corporate rulers and their corporate press. You will not hear of ANY of these amazing accomplishments of the Chavez government, listed above, from our State Department or our corporate media. In addition to demonizing Chavez, they completely "black hole" any positive information about the Chavez government and Venezuela.

Rightwing DUers have criticized me and others for "sanctifying" (i.e., worshiping) Chavez) and describing "a workers' paradise" in Venezuela. Although jobs are up, wages are up and other positive indicators abound, Venezuela is not "a workers' paradise"--partly because the Chavez government started off with a rightwing/corporate/U.S.-ruined economy and then had to overcome several years of attempted further ruination. Though poverty has been cut in half, there is still poverty. Though human and civil rights have been greatly expanded by the Chavez government, there is still inequality. Though Venezuela has one of the most transparent, honest and aboveboard elections systems in the democratic world, problems remain, such as their corpo-fascist press (worse than ours), and U.S. taxpayer money going to rightwing groups with ill intentions (including coup plotting and destabilization efforts). Like us, Venezuela doesn't have a "loyal opposition."

Chavez may be a great and visionary leader, but, like any politician, he needs to be watched. He is not perfect and he is certainly not a "saint." I never criticize him because of the putrid, lying crap that is heaped on him every day by our corpo-fascist press promulgated by rightwingers here at DU. Chavez is a "fool." Chavez is a "clown." Chavez is a "dictator." Chavez is "Idi Amin"! (I saw that yesterday.) This vile propaganda is not only insulting to the people of Venezuela, it is WRONG. It is not true. Whatever faults Chavez may have, he is a good, humane, lawful and legitimately elected leader and he and his government have done very well by Venezuela and its people. And they have also led a leftist democracy movement that is vitally important for the people of the region, if they are ever to prosper from their own resources and labor, and stop being rapaciously exploited by "first world" countries with the U.S. at the head of them.

So, I am offering this thread--and Mark Weisbrot's analysis--as BALANCE. It's time we brought some balance to discussions of Chavez, the Chavez government and Venezuela, starting with the facts that are never reported in the corporate-run press.

[Judi Lynn]

1. Mark Weisbrot has impeccable credentials. It would be impossible to get any traction insulting him.

He only deals with facts, that's why he is widely respected, held in high esteem.

This is a good time to see this material, Peace Patriot.

It looks as if there is going to be an all-out campaign to attack Hugo Chavez daily, until the next election, EVERY DAY. They are getting so desperate they are close to reporting if he's having a bad hair day.

I have NEVER seen a leader under such a heavy barrage from the corporate media and the right-wing employees and ideologues in my life. Astonishing.

We can look for this EVERY DAY until next November sometime. That's why this is a fine time to see a good report from Mark Weisbrot.

Already filed this material for future reference right away. Thanks for taking the time to add your thoughts.

[Peace Patriot]

2. Here is a summary of the stats from Weisbrot's 2008 report.

The OP is from his 2009 report. I posted these stats in comment #52, where there is a lot of discussion of these matters, at
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4217404

From Weisbrot's 2008 report (prior to the Bushwhack-induced worldwide depression):

A 15 to 1 increase in the number of doctors (primary care).

An 8 to 1 increase in primary care centers.

A 30% to 40% reduction in food prices for the poor.

School food programs for 1.8 million children by 2006 (compared to 250,000 in 1999).

45% increases in secondary and higher education enrollment (from 1999 to 2006).

Near quadrupling of growth in the number of public schools (1999 vs 2005)

A 314% increase in social spending overall (since 1998; now 20% of GDP).

The poverty rate cut in half (as to cash income). (Plus new access to education, health care, etc.)

Unemployment cut by 1/3 to 1/2. (Now down to 7%, despite the Bushwhack's worldwide depression).

Employment as a percentage of the labor force increased by 6% to 10%.

An increase of 1.8 million jobs in the private sector (since 1999).

Venezuela's GDP grew nearly 90% between 2003-2007 (vs 30% in the 1970s expansion).

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One stat I want to highlight: 45% increases in secondary and higher education enrollment (from 1999 to 2006).

I've mistakenly reduced it to 40% in other posts. This stat says it all to me. Think what this means about the future of Venezuela--the talent, creativity, intelligent and energy of the next generation are being mobilized to create the ideas, products, services, business enterprise and prosperity of the future. Children rescued from poverty and hopelessness. Young people diverted from cynicism, empty rebellion and even crime. Parents proud of their kids and thinking positively about the future. And a whole new generation of skilled, educated workers and professionals.

The Chavez government's investment in education is almost all you need to say about Venezuela. Here, we have the rich shoveling billions of dollars into their pockets--much of it from us taxpayers--and our universities, high schools and grammar schools suffering severe cutbacks, our libraries closing their doors, public colleges and universities severely cutting back class offerings and furthermore exploiting non-tenured teachers (treating them like "temps") and all of our public colleges and universities constantly raising tuition and fees to meet shortfalls in their budgets, pricing the poor and the middle class out of higher education--and with many of our poorest children feeling utter hopelessness and falling into gangs, drugs, and crime and the "prison-industrial complex" in the supposed richest nation in the world. It is just disgraceful.

Compare that with Venezuela's commitment to education! And tell me which country has the better democracy. Education and democracy go hand in hand. And when you lose your commitment to education, you lose your democracy.

Plenty of money for war. Plenty of money for banksters. Plenty of tax cuts for the rich. And we can't even put books into the hands of our children any more!

It's no wonder that stats like this about Venezuela are never mentioned here. Our people might get the idea that something is wrong with corporate rule.

[The Doctor.]

3. I'm amazed he's still alive.

Why do corporations allow him to bring prosperity to the people?

Imagine if someone tried to do that here.

[bemildred]

4. Probably because, like the Castro brothers, he has the support of his people.

Who still remember perfectly well why they put him in power in the first place.

[EFerrari]

5. I am, too.

[Peace Patriot]

6. The Bolivarian revolution is deep and wide. It cannot be killed by killing Chavez.

In fact, if he were assassinated, the reaction would likely be a great bolstering of this leftist democracy movement in Venezuela and all over the region.

And that may be one reason why he has not been assassinated. Hard to say, with the CIA, global corporate predators and war profiteers. Their machinations are secret.

But probably the main reasons that he is still alive are these: 1) The people of Venezuela support him; tens of thousands of them risked their lives to reverse the 2002 coup; they have voted for him repeatedly, by big margins; they also strongly, adamantly support constitutional government. 2) The Venezuelan military and security forces support him--and keeping a president alive, who is so reviled by the U.S. and attendant corporate predators, takes solid commitment, loyalty and smarts. 3) The many other leftist leaders in the region support him--Lula da Silva, in particular, has had his back--and they all share common goals (Latin American sovereignty, economic/political cooperation social justice). 4) Virtually all Latin American leaders are fed up with U.S. interference and domination. 5) The previous two points likely mean that Venezuela has a lot of cooperation from other Latin American security and military forces on sharing intelligence.

Back a few years, when Bush Jr. visited Mexico (March 2006, I believe), I was astonished to read that the rightwing president of Mexico had publicly lectured Junior on the sovereignty of Latin American countries, using Venezuela as the example.

At that point, there had been the U.S.-supported rightwing coup attempt in Venezuela in 2002, the U.S.-supported oil bosses lockout (trying to destroy the Venezuelan economy) in 2003, and the U.S.-funded recall election in Venezuela in 2004--but perhaps more importantly there was a brewing plot in 2006, involving assassins from Colombia (a U.S. client state), USAID operatives and others, aimed at the Venezuelan presidential election at the end of 2006 (a second coup attempt). Calderon's surprising statement to Bush alerted me to the probability that Latin America's leaders knew a lot more than we did--given our censored press and secretive government--about U.S. plots in Latin America (and in Venezuela in particular), had discussed these things among themselves and were becoming truly fed up with this kind of U.S. bullshit going back for half a century. I thought it was stunning that a rightwing politician said this. It was never reported here, of course. (Can't remember where I read it--but it was a reliable source--a Mexican paper, I think). It also indicated how widespread the feeling likely is, in Latin America.

Things have changed in Latin America. The reaction to the Honduran coup speaks to that--and so much else speaks to that. Assassination of Chavez would, without question, be blamed on the U.S. And that, and/or a U.S. war against Venezuela to get control of its oil, would not be forgiven. They would likely create a permanent breach between the northern and southern halves of the hemisphere. The U.S. would likely lose existing allies like Mexico--and it has few other friends in Latin America that it doesn't bribe, bully and prop up.

It's interesting, too, that the worst leader in Latin America--Alvaro Uribe of Colombia--felt obliged to apologize to Chavez for that Colombian-military hatched assassination plot. Uribe's treachery became apparent later, but at least for public consumption he felt he had to cover his ass. (And he, too, is vulnerable, if his usefulness to the U.S. ever ends.)

For all of these reasons, the U.S. seems to be resorting to sneakier tactics, for the present--as with the coup in Honduras. They are looking to knock out Chavez allies, wherever they can manage it--and "divide and conquer" the leftist leadership of the region. (I think this is why the corpo-fascist press has fawned all over Lula da Silva--calling him "the good left"--and lately over Evo Morales.) Keep in mind that their goals are: a) to re-acquire control of close-to-home oil reserves, and b) to restore corporate rule (re resources, slave labor, looting public services). Their goal is not to kill Chavez. That wouldn't really help them--and maybe they've realized it. They have larger goals, that killing Chavez might be a part of (say, in an invasion scenario) but then they have to deal with the vast support for Chavez and with those who may not support or be allied with Chavez, politically, but who are into Latin American sovereignty. I do think they have a war plan, but they have a lot of preparatory work to do, to get there, with items on the list like securing the U.S. military base in Honduras and installing a pro-U.S., rightwing coup government there--from which to send operatives into the neighboring countries, all with more recently elected leftist governments, to knock them off, one by one (El Salvador, Nicaragua, Guatemala). They need to secure the Central American/Caribbean region, before making a move against Venezuela. And the CIA is probably very active, right now, in countries that could be "turned" by direct or indirect interference in elections (Chile, Argentina, Brazil).

[The Doctor.]

7. Wow.

Thanks for the info. That put my understanding up a peg or two.