February 19, 2008

Coming soon in Foreign Affairs

Quico says: It's great fun to watch Francisco Rodríguez run an analytical bulldozer through a mountain of chavista bullshit. Choice bit:
One would expect [the consensus abroad that chavismo has been good for the poor] 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 diffrently 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, social 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.
On the whole, the piece is pretty devastating. Look for it in the March/April issue of Foreign Affairs.

Update: Calvin wants to know if I really don't agree that the misiones have had a startling impact on barrio life, thus giving me an entry point into this rant:
Listen, I have no doubt that for some people and some communities some of the time, the misiones have made a huge difference. The question is, looking at the big picture, how many people and how many communities?

I suppose you've been to Venezuela, observed some of those people and places, filtered them through those thick ideological spectacles of yours, and come away certain that what you (thought you) saw was the norm across the country.

But how can you be sure? How can you tell whether you were witnessing the exception or the norm? If you're honest with yourself, what can make you so sure that what you saw wasn't a Potemkin Mission?

There's only one way to be sure, Calvin, and that's to look at the data. There's really no choice, because for every bit of anecdotal evidence you find of a misión going well, I can find one of a misión going poorly. We can play that game all day, but it won't get us any closer to a resolution.

So, on aggregate, the question is whether the government has relieved poverty above and beyond what any petrostate could've done facing a massive oil boom.

Thing is, these days it's hard to find any petrostate that isn't going through a consumption boom. From Russia to the gulf states to Sudan, oil is pouring out, money is pouring in and people are buying stuff. That makes people feel good about the nature of the times, and when people feel good about the nature of the times, governments are popular. That's true whether they have a left wing government, a right wing government, a monarchy, or, hell, even a genocidal regime.

In Venezuela the consumption boom was accompanied by a massive propaganda campaign geared very specifically at getting people to attribute the feel good factor to government actions via the misiones. Until the economic distortions started to build up to intolerable levels, that gambit paid off quite handsomely.

Why? Because the Intentions Heuristic took hold: people in general tend to attribute to governments outcomes that they perceive to be aligned with their intentions. Chávez was widely perceived as very concerned for the poor, the misiones were highly visible, and poverty was falling fast. The inference that poverty was falling because of the misiones and the misiones were happening because of Chavez's intentions is both perfectly natural and just plain wrong.

Or, to put it differently, if you want to say that the misiones' popularity ipso facto demonstrates that they have made a substantial improvement to the lives of the Venezuelan poor, you'd have to accept that the popularity of Putin's government automatically means it has been even better for Russia's poor. After all, Putin wins elections by huge margins. As far as petrostates go, losing an election with oil at $90 a pop is a feat only Chavez has managed to pull off.

In the end, though, what I say isn't interesting. What the data say is interesting. If you have a good explanation for why the income elasticity of poverty reduction has been lower in Venezuela than in the rest of the region, lets have it. Otherwise, all we're doing is contributing to global warming via massive emissions of hot air. Cuz we can sit here and talk out of our bums all day and all night about who feels how about what, but basically all that does is ventilate pre existing prejudices. At some point you have to choose: your anecdotal experience of a handful of misiones filtered through a mountain of propaganda, or the data. Which are you going to believe?

Anyway, Francisco Rodríguez's article is really very good, but way too long to post more than a snippet of it here. Look for it in the magazine, it's well worth a read.