Archive for September 3rd, 2006

The consequences of prosperity by Luis Pedro Espańa in El Nacional

September 3, 2006

Nobody has spent as much time and effor in understaing poverty and its causes in Venezuela as Luis Pedro Espańa form the Catholic University. But the Government does not use his knowledge, the result of careful studies and lots of work over the years. This article says it all, it is the well off in the country that have benefitted most from the current oil windfall. But beware, being in the top 30% of income in Venezuelas does not mean that you are really doing that great.That is part of the tragedy.

The consequences
of prosperity
Luis Pedro Espańa in El Nacional

How do you explain that with so much oil income in the last
three years, the levels of poverty are similar to those of 1999? This is the q
that is made by all external observers that come to explore the social
conditions in Venezuela.
If the above is hard to understand, imagine what it would be explaining that in
these years of revolutionary Government, inequality has actually  increased.

The spokesmen for official figures only show the numbers that are
convenient to them. When in 2004 the numbers showed the collapse that family
income suffered between 2002 and 2003, the Government was looking for different
figures to show the “recovery” of the situation. Today, when the boom of income
makes it such that poverty statistics smile for the Government, that
methodology stopped being neo-liberal and the enemy of the regime, to begin to
be shown in the face of any criticism. The structural variables of IBS have
been left aside, because today, using those, we are in the same place we were in terms of overcoming poverty

As we said before, we are facing growth in income, but not in
production. Families can have a little more real income compared to 2003, but
the collapse of the national economy is such that that private investment, both
local and foreign, has just disappeared.

Without investment, there is no employment and without employment what
you have is poverty. The structural causes of poverty remain intact. There are
no opportunities of good employment, well paid and with other labor benefits
and they are not there because of the lack of investment. But there are no conditions either for
Venezuelans of low income to have access to the few good jobs that there exist
in the country. The whole system for providing social services is as scant and
bad as it was in the past and it is not true that the missions are going to make a

Since in Venezuela
national income has two components, oil and non-oil, what has improved the
real income of families can be attributed to oil and its distribution mechanisms.
The latter takes us to the topic of the distribution of income and inequality.
The new inequality that has actually appeared in Venezuela.

The last accounting that the Institute for Economic Research of UCAB
has, shows that the distribution of income has worsened in the last three years.
Not much, because the structure for distribution does not change overnight, but
it certainly draws your attention that the strata for which it has improved is
for the 30% of the population with the higher income on the country. No matter
how much of a populist discourse you may have, the economic and social policy
of the Government has not managed to favor in a larger measure the status of
the poorest. The income of all strata have improved, but in particular that of
those that belong to the formal economy, to the 30% that has the highest
income, to the 30% that structurally is not poor.

It is not true that the missions are boosting popular sectors. On the
average only 9% of the income of families comes from these transfers and at
most, we estimate, that it may reach 12% in the poor sectors. The boom in
income that the country is experimenting is lived in the barrios not because of
the Government, but because of markets. There is more work, but the barrio is
not very productive. The economy demands more goods and services and the
workers of low of medium qualification are inserted through the informal
workforce or on their own. Thus, the improvement. But it has been the formal
economy the one that has been favored the most. Without programs that that
allow for an increase in the level of productivity of the poor, the demand will
continue to be provided by those that are already productive, that is, those
who are not poor.

It is not only market mechanisms that have increased the inequality as
a result of the absence of progressive social policies, but instead it has been
the social policies themselves that have contributed to the increase in
inequality. The policy of a sustained and compulsive minimum salary is a policy
that favors the bourgeois of the barrio, not the poor. The missions and their
populist mechanisms of selection are such, that it is the better informed and
capable in the barrio that can participate in hustling for the missions and its
grants. Using this mechanism, the waste of the prosperity will at least be the same
as the waste of those in the past. But may God free us from a recession in oil prices; no democracy
will be able to handle the end of the prosperity.

Good news Sunday

September 3, 2006

Yes, sometimes there are news to make us proud:

–The Boston Globe profiles Venezuelan conductor Gustavo Dudamel and indirectly the wonderful otrchestra program of Jose Antonio Abreu, which proves you can make programs and policies for everyone.(Thanks M.)

–The New York Times profiles Charles Brewer Carias, an old fashioned explorer in the XXIst. Century. (He was my dentist when I was young)

–Venezuela Johan Santana will likely win the Amercan League’s Cy Young Award.

–For the first time in history, a woman scientist, micologist Gioconda Cunto de San Blas, will occupy one of the numbered seats at the Venezuelan Academy of Sciences. Well deserved and about time it happened.


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