An Empty Revolution: The Unfulfilled Promises of Hugo Chávez
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. It should not be surprising, then, that in a country where politics was long
dominated by rich elites, he has earned the lasting support of the Venezuelan poor.
That story line may be compelling to many who are rightly outraged by Latin America's deep social and
economic inequalities. Unfortunately, it 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 worryingly, and official estimates indicate that income inequality has increased.
The "Chávez is good for the poor" hypothesis is inconsistent with the facts.
My skepticism of this notion began during my tenure as chief economist of the Venezuelan National Assembly.
In September 2000, I left American academia to take over a research team with functions broadly similar to
those of the U.S. Congressional Budget Office. I had high expectations for Chávez's government and was excited
at the possibility of working in an administration that promised to focus on fighting poverty and inequality. But
I quickly discovered how large the gap was between the government's rhetoric and the reality of its political
priorities.
Soon after joining the National Assembly, I clashed with the administration over underfunding of the
Consolidated Social Fund (known by its Spanish acronym FUS), which had been created by Chávez to
coordinate the distribution of resources to antipoverty programs. The law establishing the fund included a
special provision to ensure that it would benefit from rising oil revenues. But when oil revenues started to go up,
the Finance Ministry ignored the provision, allocating to the fund in the 2001 budget only $295 million -- 15
percent less than the previous year and less than a third of the legally mandated $1.1 billion. When my office
pointed out this inconsistency, the Finance Ministry came up with the creative accounting gimmick of
rearranging the law so that programs not coordinated by the FUS would nevertheless appear to be receiving
resources from it. The effect was to direct resources away from the poor even as oil profits were surging.
(Hard-liners in the government, incensed by my office's criticisms, immediately called for my ouster. When the
last moderates, who understood the need for an independent research team to evaluate policies, left the Chávez
camp in 2004, the government finally disbanded our office.)
Chávez's political success does not stem from the achievements of his social programs or from his effectiveness
at redistributing wealth. Rather, through a combination of luck and manipulation of the political system, Chávez
has faced elections at times of strong economic growth, currently driven by an oil boom bigger than any since
the 1970s. Like voters everywhere, Venezuelans tend to vote their pocketbooks, and until recently, this has
meant voting for Chávez. But now, his mismanagement of the economy and failure to live up to his pro-poor
rhetoric have finally started to catch up with him. With inflation accelerating, basic foodstuffs increasingly
scarce, and pervasive chronic failures in the provision of basic public services, Venezuelans are starting to
glimpse the consequences of Chávez's economic policies -- and they do not like what they see.
...
Views differ on how desirable the consequences of many of these reforms are, but a broad consensus appears to
have emerged around the idea that they have at least brought about a significant redistribution of the country's
wealth to its poor majority. The claim that Chávez has brought tangible benefits to the Venezuelan poor has
indeed by now become commonplace, even among his critics. In a letter addressed to President George W. Bush
on the eve of the 2006 Venezuelan presidential elections, Jesse Jackson, Cornel West, Dolores Huerta, and Tom
Hayden wrote, "Since 1999, the citizens of Venezuela have repeatedly voted for a government that -- unlike
others in the past -- would share their country's oil wealth with millions of poor Venezuelans." The Nobel
laureate economist Joseph Stiglitz has noted, "Venezuelan President Hugo Chávez seems to have succeeded in
bringing education and health services to the barrios of Caracas, which previously had seen little of the benefits
of that country's rich endowment of oil." Even The Economist has written that "Chávez's brand of revolution has
delivered some social gains."
One would expect such a consensus to be backed up by an impressive array of evidence. But in fact, there is
remarkably little data supporting the claim that the Chávez administration has acted any differently from
previous Venezuelan governments -- or, for that matter, from those of other developing and Latin American
nations -- in redistributing the gains from economic growth to the poor. One oft-cited statistic is the decline in
poverty from a peak of 54 percent at the height of the national strike in 2003 to 27.5 percent in the first half of
2007. Although this decline may appear impressive, it is also known that poverty reduction is strongly
associated with economic growth and that Venezuela's per capita GDP grew by nearly 50 percent during the
same time period -- thanks in great part to a tripling of oil prices. The real question is thus not whether poverty
has fallen but whether the Chávez government has been particularly effective at converting this period of
economic growth into poverty reduction. One way to evaluate this is by calculating the reduction in poverty for
every percentage point increase in per capita income -- in economists' lingo, the income elasticity of poverty
reduction. This calculation shows an average reduction of one percentage point in poverty for every percentage
point in per capita GDP growth during this recovery, a ratio that compares unfavorably with those of many
other developing countries, for which studies tend to put the figure at around two percentage points. Similarly,
one would expect pro-poor growth to be accompanied by a marked decrease in income inequality. But according
to the Venezuelan Central Bank, inequality has actually increased during the Chávez administration, with the
Gini coefficient (a measure of economic inequality, with zero indicating perfect equality and one indicating
perfect inequality) increasing from 0.44 to 0.48 between 2000 and 2005.
Poverty and inequality statistics, of course, tell only part of the story. There are many aspects of the well-being
of the poor not captured by measures of money income, and this is where Chávez's supporters claim that the
government has made the most progress -- through its misiones, which have concentrated on the direct
provision of health, education, and other basic public services to poor communities. But again, official statistics
show no signs of a substantial improvement in the well-being of ordinary Venezuelans, and in many cases there
have been worrying deteriorations. The percentage of underweight babies, 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. In Venezuela, one can see the
misiones everywhere: in government posters lining the streets of Caracas, in the ubiquitous red shirts issued to
program participants and worn by government supporters at Chávez rallies, in the bloated government budget
allocations. The only place where one will be hard-pressed to find them is in the human development statistics.
Remarkably, given Chávez's rhetoric and reputation, official figures show no significant change in the priority
given to social spending during his administration. The average share of the budget devoted to health,
education, and housing under Chávez in his first eight years in office 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 "neoliberal" 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.
In a number of recent studies, I have worked with colleagues to look more systematically at the results of
Chávez's health and education misiones. Our findings confirm that Chávez has in fact done little for the poor.
For example, his government often claims that the influx of Cuban doctors under the Barrio Adentro health
program is responsible for a decline in infant mortality in Venezuela. In fact, a careful analysis of trends in
infant and neonatal mortality shows that the rate of decline is not significantly different from that of the
pre-Chávez period, nor from the rate of decline in other Latin American countries. Since 1999, the infant
mortality rate in Venezuela has declined at an annual rate of 3.4 percent, essentially identical to the 3.3 percent
rate at which it had declined during the previous nine-year period and lower than the rates of decline for the
same period in Argentina (5.5 percent), Chile (5.3 percent), and Mexico (5.2 percent).
Even more disappointing are the results of the government's Robinson literacy program. On October 28, 2005,
Chávez declared Venezuela "illiteracy-free territory." His national literacy campaign, he announced, had taught
1.5 million people how to read and write, and the education minister stated that residual illiteracy stood at less
than 0.1 percent of the population. The achievement received considerable international recognition and was
taken at face value by many specialists as well as by casual observers. A recent article in the San Francisco
Chronicle, for example, reported that "illiteracy, formerly at 10 percent of the population, has been completely
eliminated." Spanish President José Luis Rodríguez Zapatero and UNESCO's general director, Koïchiro
Matsuura, sent the Venezuelan government public letters of congratulation for the achievement. (After
Matsuura's statement, the Chávez's administration claimed that its eradication of illiteracy had been
"UNESCO-verified.")
But along with Daniel Ortega of Venezuela's IESA business school, I looked at trends in illiteracy rates based on
responses to the Venezuelan National Institute of Statistics' household surveys. (A full presentation of our study
will appear in the October 2008 issue of the journal Economic Development and Cultural Change.) In contrast
to the government's claim, we found that there were more than one million illiterate Venezuelans by the end of
2005, barely down from the 1.1 million illiterate persons recorded in the first half of 2003, before the start of the
Robinson program. Even this small reduction, moreover, is accounted for by demographic trends rather than
the program itself. In a battery of statistical tests, we found little evidence that the program had had any
statistically distinguishable effect on Venezuelan illiteracy. We also found numerous inconsistencies in the
government's story. For example, it claims to have employed 210,410 trainers in the anti-illiteracy effort
(approximately two percent of the Venezuelan labor force), but there is no evidence in the public employment
data that these people were ever hired or evidence in the government budget statistics that they were ever paid.
