September 6, 2004

Alemo, serious planning, and where the hell do you get $60 billion?

One of the most interesting articles I got to write when I lived in Venezuela grew from a meeting I had with five privileged white men who had held positions of some prestige under the old regime. They harshly condemned Chavez's performance in office and called for policy to take a radical new direction. They threw their hands up in frustration as they considered the government's folly, shook their heads gravely as they described their exclusion from the spheres of power, and generally despaired over their powerlessness to influence policy in the slightest.

The group's name is Alemo. It was founded in the early 1980s as a think-tank on Venezuela's urban housing crisis. Staffed by professional architects and urban planners - many are professors at the Universidad Central de Venezuela - the group had spent two decades in in-depth study of the urban planning challenge posed by Venezuela's mushrooming shantytowns, or barrios. With a bureaucrat's fastidiousness for detail, they had documented the scale of the problem, thought through the policy alternatives available to the state to respond to it, costed the various possibilities, and published the lot. In their estimation, the rock-bottom, lowest-imaginable price-tag for bringing all of Venezuela's urban dwellers to a basic standard of safety and comfort would come to...wait for it...$60 billion.

The price-tag is astronomical, ludicrous. It's over 60% of GDP, over twice the government's global yearly spending. Even if, as Alemo urges, the cost is spread over 10 years, a $6 billion/year price tag would require quadrupling the country's housing budget - well in excess of the state's ability to pay.

It's hardly a surprise, since Alemo's study points to a desastrous housing shortage and the need for a major project of infrastructure building to redress it. Just to give you a sense of how dire the housing crisis is, consider this: one-third of the country's housing stock consists of ranchos - shanties. However, fully half of all Venezuelans live in ranchos. Thousands of ranchos need to be bulldozed and replaced - they sit on geologically unstable ground, and could give way at the next rainstorm - while hundreds of thousands require investment to bring them up to minimal standards of safety and crowding. Moreover, hundreds of barrios need major investments to bring in basic urban amenities - from electricity and sanitation to schools, infermeries, playing fields and roads good enough for buses to use.

How did Alemo come to this $60 billion figure? The process was long and involved, but the innitial question was simple enough: what would it take to build a Venezuela where everyone who lives in a city has access to basic urban services, nobody lives at very high-risk areas for flooding or mudslides, nobody lives in extremely crowded or dangerously deteriorated housing, and the housing stock grows quickly enough to absorb the new families looking for places of their own as they hit their 20s?

To keep costs more or less reasonable, Alemo applied deep cost-cutting measures in their calculation, including a radical plan for the state to construct "proto-houses" (with all services, but minimal construction area) that residents would subsequently expand and complete, as well as financing mechanisms that would split costs between the state and beneficiary families. So the $6 billion/year tag is a rock-bottom figure, the very least the state could spend and still hope to meet its goals. Spend much less than that, and the problem deepens rather than receding.

"Normally," I remember them telling me, "you'd need to build at least 100,000 new low-income housing units a year - not to reduce current levels of crowding, but just to keep up with population growth - just to stay even. To start to make some headway against the trully appalling level of crowding in some barrios, you'd be talking about 120,000 houses a year, at least. Since the start of the Chavez era, we've never seen more than 60,000/year. So, in effect, we're going backwards: every house that you come up short from that 100,000 target means another family forced to choose between striking out on their own by squatting on an empty plot of land and building a rancho with their hands, or staying put and living in increasingly intolerable crowding with their relatives."

Serious Planning
Of course, this is just one area of concern: expert NGOs could (and have) come up with similar analyses for hospitals, schools, social security, the fire-fighters, the police, essentially any part of Venezuela's huge, overbloated but underfunded state. As a policy-wonk myself, it warms my heart to see the people of Alemo taking a long, hard, careful, uncompromising look at a policy problem like this and then propose specific, costed solutions. There is something reassuring about the mixture of genuine social concern and hard-headed planning in their work - their conviction that the more urgent a human problem is, the more down-to-earth and meticulous should be the planning for a solution. Alemo's proposals represent a hard-bitten marriage of idealism and pragmatism that eschews magical solutions and urges the state to tackle these matters with eyes wide open. It's a message, an attitude, that I can get 100% behind.

Now, how has the Chavez administration responded to Alemo's calls? The answer goes a long ways towards explaining my despair about the next two (or eight, or fourteen) years. First, the government purged Alemo members from Conavi, Fondur, Inavi, and every other state institute dealing with urban housing - putting the state's housing bureaucracy in the hands of doctrinaire chavistas that would neither produce independent estimates or raise troubling questions. Then, it set out to confuse the issue, making oversized claims for its decidedly undersized achievements.

At no point since 1999 has Venezuela come anywhere near to building the 100,000 low income housing units per year that it would take to keep up with population growth, let alone make headway into the housing crisis. Yet the government, conscious that very few people know this, continues to tout its house-building totals - just 25,000 units last year - as major revolutionary triumphs! Stop and think about what this means: last year alone, 75,000 poor Venezuelan families were forced to either build themselves an illegal shanty or stay on in impossibly cramped quarters...and the revolutionary people's government brags about this as a success!

(For next year, the government and the banks have reached an agreement where the government will pitch in $1.4 billion to build 50,000 low-income homes - watch for the headlines next year about the stunning, 100% growth in revolutionary housebuilding!)

What's the purpose of this detour into the minutiae of the Venezuelan low-income housing crisis?

Chavistas (and, more relevantly, most of the philochavistas who comment on my writing) start from the assumption that the only reason anyone opposes Chavez is class self-interest. This is undoubtedly true for some antichavistas. For many others, however, what's most irksome about Chavez is the magical strain in his government's thinking, its blanket rejection of any kind of independent advice, criticism, or debate. This dogmatism, this deep suspition about the motives of critics, locks the government into stances that not only cannot solve the problems at hand, but, even worse, close down the spaces for genuine debate about those problems.

The results is a politics of social inclusion that remains, largely, confined to the rhetorical realm - Chavez's discourse certainly makes his constituents feel included - while deepening the country's social problems. Point out that Chavez's housing policy will force 50,000 families to squat and build shanties next year and you're condemned as a counter-revolutionary element, an escualido fifth column that needs to be purged from the state. If you know the truth and you have a state job, you learn to keep quiet in order to protect yourself. Debate on a matter as seemingly apolitical as housing policy becomes deeply politicized, and those who criticize the government's policy are dismissed as wreckers or coup-plotters long before their criticisms have been seriously considered.

Put differently, in chavismo politics always takes precedence over policy. Uncomfortable facts are swept under the carpet and those who seek to bring attention to them are portrayed as traitors. So long as they're infused with reverence for the leader, pleasing fictions are always preferable to uncomfortable facts.

So long as criticism is seen as apostasy, so long as critics' voices are ignored as a matter of principle, so long as the worst of motives are automatically abscribed to all who dissent, the government will continue to make policy inside an ideological bubble where loyalty counts for far more than serious planning. Instead of hard-knuckled social policy development, instead of costed estimates and long-term projects, instead of serious plans aimed at grasping and then solving the underlying problem, we'll continue to get what we've been getting: ad hoc measures aimed at short-term political advantaged and divorced from any kind of serious analysis of what needs to be done in the long term.

Or, to say it in a single word, populism.

Where to the hell do you get $60 billion?
What Alemo's study makes clear, first of all, is that real solutions to the country's most pressing social problems will require public spending far in excess of the state's present capacity to pay. Venezuela's government is just too small and underfunded to make a serious stab at solving the housing crisis. And what's true of housing is true of any number of other social problems.

The solution, then, is clear: the public sector will need to grow very considerably to put itself in a position to face up to these expenditures. But after six years of rampant statism, heavy borrowing, and increased taxes, the chavista state has run up against the limits of its ability to extract resources from the economy. The housing crisis cannot be met by expanding the state's share of GDP - because the problem, precisely, is that GDP is too small at the moment to cover the country's basic necessities.

So, taken broadly enough, the lesson behind the Alemo proposal is that only rapid GDP growth, coupled with serious planning on how to use the extra resources that GDP growth makes available to the state, have any possibility of making real headway against the housing shortfall. On its current revenues, the state just cannot afford the expenditure needed, and given its current state, the economy cannot bankroll a state larger than the one we have now. Only a substantitally bigger economy can bankroll a substantially bigger state, and only a substantially bigger state can bankroll the investment needed to face up to the housing crisis.

This is an important point, because regime supporters tend to equate any mention of the need for rapid GDP growth with coded neoliberal speak for a policy of social abandonment. The truth, in fact, is quite the opposite: it's economic stagnation that has put the solution to the country's social problems beyond the reach of the state.

The problem, again, is that the cultural and ideological barriers that prevent chavismo from accepting an analysis like Alemo's also prevent it from accepting the kinds of policy reforms it would take to launch the economy into sustained rapid growth. The same lack of serious, techhnical planning, the same blanket mistrust of opponents, the same disdain for capitalist development, and the same belief in magical solutions have led to a brand of economic management that can produce, at best, ongoing stagnation.

Meanwhile, the revolution continues to build less than half of the homes it would need to build to stay even. Every ten minutes another Venezuelan family is forced to squat and build themselves a rancho just to find a place to live. Facing up to this situation is too difficult, too painful for chavistas. It requires too broad a reconsideration of el comandante's style of leadership. It's far easier, far more comforting, to propagandize about the revolution's great strides in house-building than to have an honest discussion about what's going wrong and how we might fix it.

For all its faults, the opposition is full of organizations like Alemo that are full of people eager to hold such serious debates - and not just on housing, on just about every topic of national relevance. The government, meanwhile, is forced by its ideology to run away from such debates - overstate its accomplishments, slur its opponents and obscure the nature of the challenges it faces. Personally, I can't for the life of me figure out what's "progressive" about this style of governance.

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