This one's crazy enough you could pass it off for a Borat skit,
"In US and A, first you go to university and then you become congressman. But in Kazakhstan, first you go to parliament, and then to university!"
Turns out that the Chavez government, shocked by the ignorance of the people they nominated to the National Assembly, has given the nation's legislators marching orders to go back to school. In this case, it'll be the Armed Forces Experimental University (UNEFA) that will in charge of indoctri...erm, teaching the new parliamentarians such cutting edge topics as Marxist Analysis.
Pedro Carreño, we're helpfully told, will go study Law, while Cilia Flores has set her sights on a doctorate.
Now, the questions this poses - to say nothing of the comedic possibilities - are almost endless. Precisely how ignorant do you have to be before Francisco Ameliach thinks, "christ, this guy needs some schooling!"? What criteria did chavismo use to pick its Assembly candidates? If as Chavez keeps saying, Socialism for the XXI Century is nothing to do with old style Marxist socialism, why do A.N. members need instruction in, erm, Marxism? And what exactly happens if an Assembly Member flunks his Marxism course? Do they get to repeat, or is their mandate immediately revoked?
Horrified snickering aside, the serious subtext to this latest bit of revolutionary dadaism is the Nth low point of parliamentary oversight in the Chavez era. The history of the world's Marxist legislatures is not exactly known for the muscular exercise of their watchdog duties, to say nothing of proper debate over legislation. With no exceptions I can think of, Marxist legislatures limit themselves to rubber-stamping executive dictats and convening once a year to shower the leader with applause. Petty bourgeois concerns over the separation of powers and such and such are openly scoffed at.
And so Article 187, Paragraph 3 of the best constitution in the world (The assembly shall exercise oversight functions over the government and the Public Administration...) joins the long list of openly mocked constitutional promises.
Certainly, this has pretty much been the situation in Venezuela for years already. It's just that now National Assembly members will have the diplomas to prove it.
The Venezuelan Central Bank, the National Institute of Statistics and various executive branch agencies are developing new mechanisms to measure the impact of the government's social programs.
Referring to the effects of Mision Mercal on inflation, Minister for Nutrition Erika Farías, said "the current indices and methods are neither ours nor caribbean. They are imported from elsewhere." On that basis, and following the head of state's innitiative, "we have to invent the indices to measure the revolution." She added that this is a very complicated matter, and they will have to take into account variables such as "mathematics and love."
Here's a question I've been mulling: is Mi Negra, Manuel Rosales' plan to hand out a portion of Venezuela's oil rents directly to poor families via a debit card, a populist proposal?
That, certainly, is how Vicepresident José Vicente Rangel, feigning unawareness of the massive glass palace chavismo inhabits on this topic, described it: "pure populism." Is that so?
Petropopulism: as Venezuelan as papelón con limón In Venezuelan political economy, populism has a specific meaning. It describes the quid pro quo whereby politicians dole out oil rents selectively to their supporters in return for, well, political support. This is what I've called the Petrostate Trick: "turning oil money into political power - or, more precisely, turning control of the state’s oil money into control of the state - in a self-perpetuating cycle."
That chavismo's power is based largely on this sort of petropopulist arrangement seems really, really obvious to me. But that's nothing new: every Venezuelan government since at least the Trienio (1945-1948) has sustained its support through some twist on the petrostate trick. Medina and Pérez Jiménez had the Banco Obrero, CAP had Corpomercadeo and Chávez has Mercal. The cronies have changed over the years; the underlying mechanism hasn't.
The system works by distributing oil rents selectively, channeling the money primarily to your own political supporters. In this way, you set up an incentive structure that helps perpetuate the party in power, rewarding support for the official line and punishing dissent.
Mi Negra's sotto voce radicalism By this reckoning, Mi Negra is not a populist proposal. Just the opposite: as billed, it constitutes a radical challenge to the deeply entrenched petropopulist mindset.
If oil rents are distributed following objective rather than political criteria, the incentive structure that underlies the petrostate model crumbles. By delinking recipients' political views from their claim on oil rents, a properly implemented Mi Negra would represent the start of a truly revolutionary change in Venezuela's political economy and political culture.
Under a scheme like Mi Negra, people would stake their claims on the nation's oil rents as citizens, not as political clients. And, all the prickly implementation issues aside, this is its most appealing feature. It would end the indignity too many poor Venezuelans now suffer of having to pimp out their political beliefs for a Mision check. It would end the implicit threat that now hangs over too many transactional chavistas that to Think Different could mean risking your livelihood.
For all of Chavez's revolutionary rhetoric, the fact is that delinking political support from oil rent distribution would constitute a far more radical break with the country's political traditions than anything his government has done in eight years.
Katy says: This has been a hectic week for me here in Caracas, and I will be sharing my impressions with you next week. But this little news item made me want to give you a preview. It is about the Portuguese government's displeasure with the use of its Prime Minister's picture in Chavez's presidential campaign.
Other foreign ministries should take notice of this other sign, since it greets you while driving up from the airport into Caracas. I wonder what the governments of Uruguay, Paraguay or Chile think of their presidents' image being used in signs for Chavez's election paid for with taxpayer money.
PS.- The sign is similar to the one with the Portuguese Prime Minister, and it reads "Breaking the blockade - Venezuela deserves respect!" It's anyone's guess which blockade he is referring to.
While many Americans may have heard President Chavez's extreme rhetoric for the first time last week, William Brownsfield, the U.S. Ambassador to Venezuela, carries a list with him of all the accusations President Chavez has leveled at the United States. The tally exceeds 30, including blame for deadly floods, a local bus driver strike that never occurred and the bombing of a regional Electoral Committee office.
One often-repeated claim of Chavez's is that the United States is about to invade Venezuela. Following the 2005 U.N. General Assembly session, President Chavez, while interviewed on "Nightline," cited as evidence documents referring to an Operation Balboa. But Balboa turned out to be a war-game exercise run by Spain. The original documents were not even in English.
Venezuelan Frieda Lopez, when asked if she supports her president, says, "For now, but my problem is economic." Assessing the threat of a U.S. invasion, she says that, "It is not credible."
If economic relations with the United States were to rupture, President Chavez's supporters would be among the most directly impacted. Many of their social programs are funded directly by oil revenue, and the United States still accounts for 50 percent of Venezuela's oil exports, according to Veneconomia, a Venezuelan economic consultancy.
And Che Guevara T-shirts notwithstanding, Chavez supporters depend on U.S. products as commerce between the two countries has skyrocketed in recent years.
Eduardo Garcia lives in Petare, one of Caracas's largest barrios. When he looks around his neighborhood, Garcia says, he sees many Motorola cell phones and GE televisions. Garcia says his Chavista neighbors, like all good Venezuelans, "like to buy things, especially imported products."
Garcia is positive about the Chavez government. "I like the change it is generating," he says. When asked if he fears a U.S. military invasion, he laughs. "No, you really think the U.S. will invade Venezuela?"
In this New Republic piece, Sacha Feinman has a look at the zanier side of boliparanoia. Great reportage. Great fun.
LA GUAIRA DIARIST Bananas
"It isn't a secret as to who might come. Venezuela is oil-rich, and the imperialist countries have kept an eye on our natural resources for some time now," explained Captain Jose Nuñez of the Bolivarian Naval Police.
It was eight o'clock on a Wednesday morning in June, and I was seated, sweaty and barely awake, along with a group of 20 other journalists at a naval base in La Guaira, Venezuela. Packed into a sparsely furnished conference room, we listened to the captain explain why the government of President Hugo Chávez had decided to invite the press to a week's worth of war games. The military wanted the world to know that Venezuela was ready to greet the "imperialists" should they decide to stop by for a visit.
This day's demonstration had been billed as the largest and most action-packed of those scheduled. A mock invasion was set to take place on the beach, with the government using tanks and companies of "elite amphibious fighters." "Seven hundred and twenty-five professional naval combatants and approximately 2,200 civilians will be involved in the day's activities, and we will show how we have integrated the people with the military," the captain stated.
The Globo journo had to write up five - count them, FIVE - different themes in a five paragraph piece to cover what Rosales had said. So what's a poor voter to make of it? Is this campaign about how much Rosales loves Jesus? Or is it about maintaining the misiones? or opposing the fingerpring scanners? Or about public employees' pay? or is it about poll numbers?
The problem is that Rosales doesn't have an elevator speech - he has six or seven of them, which he mixes and matches in a not-very-coherent way. The guy needs to settle on ONE elevator speech, and he needs to be much, much more focused on it as he campaigns.
Because the torrent of different themes, with no connecting thread running through them, just dillutes his message. It stops him from imposing his vision of what this campaign is about. And it wastes the very narrow window of opportunity he has to win over people outside his already committed base.
Message discipline is as much about what you deliberately don't say - to avoid drawing attention away from your elevator speech - as it is about the elevator speech itself. No doubt many voters will find it heartwarming that he intends to govern under divine guidance, but that is not in his elevator speech so he should not be talking about it.
Staying on message when fielding questions Granted, Rosales was fielding questions at an impromptu press huddle. Still, if he can't wrestle control of the agenda when talking to stenographing journos, what chance does he have against Chávez? A key part of message discipline is learning to answer any question anyone throws at you in a way that brings the discussion back to your elevator speech.
Q: Do you think Bush is the devil? A: I think Chavez said that to distract our attention. After all, he promised to distribute oil rents to everyone's benefit, but he didn't follow through. Too much oil money is going to other countries and to corrupt officials, and common people only get their hands on it if they wear a red t-shirt...
Q: What about collective bargaining for public employees' pay? A: The public employees have been subjected to the same political exclusions everyone else has. In my presidency, we will make sure that oil money is distributed fairly and cleanly, with no exclusions.
Q: What about the fingerprint scanners? A: The government still thinks it can intimidate people into voting the way they want, because no one wants to risk their mision money. They're holding the people's oil money hostage, and that's wrong. Venezuelans are tired of this kind of exclusion, they're tired of having to put on a red t-shirt just to make ends meet. With Mi Negra everyone will get an equal share of the pie: chavistas, non chavistas, and everyone in between.
Q: Will you keep the misiones? A: Of course we will, but they will be better. Everybody knows that too much Mision money is being stolen by corrupt officials, or funding hospitals and housing in other countries. In my presidency, we will make sure that doesn't happen.
Q: How about the polls? A: The polls show that every day, more people agree that Chavez did not keep his promise to spend our oil money for every Venezuelan's benefit...etc.
This is a basic political skill, folks, almost a stereotype. A candidate should never answer the question he's asked; he must always answer the question he wanted to be asked.
Looking at it from Pepe Apolítico's standpoint... Why is this important? Because the vast majority of people - and especially of NiNis - spend far less time thinking about politics than you and me.
The people Rosales needs to win over do not sit down to read the newspaper, much less a political website. When the news comes on the radio, they instinctively reach for the dial to scan for music.
They do not seek out political information, and they do not absorb it in big long chunks. They get it in little shards. A few seconds of news overheard on the radio. A glimpsed headline. A couple of soundbytes from the TV news report. That's your window of opportunity for reaching them. And you can't waste even a second of that, because CNE has limited paid ads on TV to just 4 per day!
Unless you focus on a single storyline, the information such voters get becomes totally muddled.
In today's little shard, Pepe Apolítico hears that guy from Zulia talking about how much he loves Jesus. The day before, he heard him going on about some voting machines. Before that, something about some black girl in his family - didn't understand what that was about. Maybe tomorrow he talks about collective bargaining for public employees - but hell, he's a buhonero, collective bargaining has exactly no meaning for him.
Messages conveyed in this way do not help to build up a narrative, a coherent storyline that answers, in Pepe Apolítico's mind, the question of what this campaign is about.
Only if the message is focused can Pepe Apolítico really take on board the storyline Rosales wants to establish as THE thing that's at stake in this election. And if Rosales can't seize control of the agenda, it'll be very hard for him to win.
This NYTimes piece on the sorry state of the US Army's Third Infantry Division is as good a place to start as any if you're trying to grasp what a swindle Chávez's the-gringos-are-coming scare tactics really are:
The enormous strains on equipment and personnel, because of longer-than-expected deployments, have left active Army units with little combat power in reserve.
Other than the 17 brigades in Iraq and Afghanistan, only two or three combat brigades in the entire Army — perhaps 7,000 to 10,000 troops — are fully trained and sufficiently equipped to respond quickly to crises, said a senior Army general.
Most other units of the active-duty Army, which is growing to 42 brigades, are resting or being refitted at their home bases. But even that cycle, which is supposed to take two years, is being compressed to a year or less because of the need to prepare units quickly to return to Iraq.
The groovy-rebel-lefty ideology chavismo has built treats US military power as essentially inexhaustable - but it only takes a marginally competent reporter to chronicle how silly that view is. So on top of the fact that if Chávez really wants to get invaded that bad he has to wait in line behind bigger threats to US security like Iran, North Korea and Syria, there's the reality that the US military doesn't have the resources to sustain another large-scale offensive right now. Poor Chávez, he'd be so disappointed to hear it...
Electioneering in the television age is really a matter of fixing a series of symbolic associations in voters' minds. Candidates do this by composing a very simple story, a kind of "elevator pitch," designed to answer the question "what is this election about?" The trick is to answer that question using a very simple story that resonates with voters more than your opponent's little story does.
For the Rosales camp, this election is about the best way to redistribute oil rents. His very-simple-narrative goes something like this:
Chávez promised to distribute oil rents to everyone's benefit, but he didn't follow through. Too much oil money is going to other countries and to corrupt officials, and common people only get their hands on it if they sign up for the Chávez cult of personality. Vote for me because I have a plan (Mi Negra) to put the nation's oil money in your pockets in a fair and transparent way, with no political exclusions.
Chávez's elevator speech, on the other hand, goes something like:
I am good and the United States is evil. People who oppose me are U.S. stooges, so voting against me is an anti-patriotic, nearly treasonous act. A vote for Chavez is a vote for multipolarity. Vote for me so, together, we can defeat the US's hegemonic threat to world peace and stability.
Practically every newspaper headline Chávez has generated this year plays on some variation on this theme. The guy seems to think about very little else these days. Foreign Minister Nicolás Maduro's little catch-and-release routine yesterday at JFK, and the diplomatic spat it caused, reinforces once again Chávez's choice of strategic positioning for this election.
Frankly, I'm staggered that Chávez is sticking by this theme. I don't have the research to prove it, but it seems really, really obvious to me that a discourse that's so abstract, so detached from people's day-to-day concerns, so obviously of interest to ideological partisans only, can't possibly get many Venezuelans' blood pumping.
So compared to the situation leading up to the Recall Referendum in August 2004, the roles are almost exactly reversed.
Back then we had an opposition that kept droning on about abstract categories of very limited relevance to poor people's everyday concerns (i.e. "freedom," "tolerance," "checks and balances," "voting conditions," etc.) and a government focused narrowly on the here-and-now of what poor people need (i.e. money, distributed through misiones.)
In the three months leading up to the recall vote, the polls turned around dramatically, as people abandoned an opposition whose discourse just didn't resonate with their concerns in favor of a government whose actions did.
That was then. Today, it's the government that's struck off on some weird, abstract tangent, talking about things that just don't put an arepa on the table. And it's the opposition that has rediscovered the theme that first propelled Chavez into power all those years ago: oil rents, and how to share them out.
Can Rosales pull off some unlikely come-from-behind win? Well, Chávez still has a very comfortable lead, and Rosales has serious shortcomings as a candidate. But there's no question that Chávez is trending down, and Rosales up. If Chávez doesn't snap out of it, if he doesn't realize that his strategic positioning this time around is way off track, anything could happen.
Katy says: One of the main quibbles I have with the “Mi Negra” scheme that Manuel Rosales is proposing (see Quico’s interesting posts on the subject here and here ) has to do with a very un-sexy topic: volatility.
Volatility is just a fancy term for the tendency of Latin American economies to go through repeated boom and bust cycles, with GDP tracking cyclical raw material prices. Volatile economies have volatile inflation rates, and more common currency and banking crises. If all this sounds like the story of your family’s checking account, that’s because Venezuela is an extremely volatile economy.
The problem is that, with Mi Negra, the shocks that originate in international oil markets would be democratised - passed from the trading floors of London and New York straight through to Venezuela's poor households. Is this really a good idea?
A bit of economics This graph is from a working paper by Anoop Singh of the IMF. On the top, you see average GDP growth by region.
As you can see, Latin America lags other regions in terms of GDP growth. The bottom part shows the standard deviation of growth, in other words, volatility. Not only is Latin America the most volatile of the four regions compared, but also the periods where volatility has been the highest coincide with periods where growth has been the lowest.
The intuition linking high volatility to low growth is straightforward. More volatile economies face more uncertainty, and when uncertainty is high, so is risk. High risk makes financing more difficult and expensive to obtain. And when financing becomes more expensive and scarce, investment lags. Which provides the link to growth: economies that don’t invest enough - on roads and schools, say, or to build factories or bring in new technology - see growth stall.
Much of the volatility in Latin America comes from the ups and downs in government spending. Venezuela is a prime example: when oil prices are high, spending usually soars, and when they fall, down goes public spending with them.
It doesn't have to be that way. Governments have the financial tools at their disposal to help make their economies less volatile. Among them are institutionalised savings instruments like the long-forgotten FIEM. Governments also have access to foreign credit to help make it through low commodity price periods. The sheer financial muscle that governments have can help lessen the risks associated with resource-dependent economies.
But only if they pursue sound, counter-cyclical fiscal policies - which, more often than not, they don't.
Case in point: the current oil boom. With oil prices many times higher than what has been budgeted, the Chavez government is running a deficit this year, mostly because there's an election coming. One shudders to think what would happen if oil prices take a big tumble.
Color de hormiga One would like to think Rosales has a better solution on offer. But Mi Negra not only doesn't address the problem of volatility, it could make things worse. By transferring a fixed amount of oil revenues directly to poor families, it buffers the government from a portion of oil-cycle volatility, and shifts the risk into the living rooms of poor Venezuelans.
Think about it: when oil prices are high, Venezuelan families would earn, say, 600,000 bolívars per month. If oil prices were to collapse, those same families could see their “Mi Negra” incomes drop to, say, 100,000 bolívars a month: an 83% drop in their income.
Try explaining that to Doña Juanita and Juan Bimba.
Unlike governments, poor families don't have access to the financial instruments or the know-how you need to deal with the risk of a volatile oil market. By bringing oil market volatility into Venezuelan barrio-dwellers' pocketbooks, Mi Negra could severely undermine its own political viability.
So far, nothing Rosales has said suggests they are even thinking about this problem. But they better start, if they want Mi Negra to be politically and financially sustainable in the medium term.
It's a difficult, but not impossible, task. For example, a fixed portion of Mi Negra incomes could be used to fund a real Stabilization Fund, one linked to medium-term oil price trends and designed to force families to save some of their Mi Negra income for bad times or for retirement. That, however, would mean less money up front for poor families, sort of like a big deduction in your paycheck. And we all kind of resent it when our paychecks come with huge deductions, don’t we?
Mi Negra is, in principle, a fine idea, and if implemented correctly it could truly revolutionize Venezuelan society and bring millions out of poverty. But it seems that by proposing an amount up front, they are putting the cart before the horse and setting themselves up for confusion and anger when, later on, they have to explain that the amounts will not be what they'd first trumpeted.
For sure, it's still early in the campaign, and I'm sure the Rosales camp will publish more details on Mi Negra in the coming weeks. As they draft those, they should realize that, if Mi Negra doesn't incorporate some mechanism to mitigate the oil market's inherent volatility, it could do more harm than good.
Montesinos, you may recall, spent the better part of a year hiding out in Venezuela directly after the Fujimori regime collapsed. With very evident high-level support, Montesinos was personally guarded by two DISIP (intelligence police) agents - Rolando and Otoniel Guevara, now in jail for the murder of Danilo Anderson. Their involvement in the Montesinos cover-up was flushed out by opposition journalist Patricia Poleo, who was later - bizarrely - accused of conspiring with them to murder Anderson. (If you find all this impossibly confusing, you are in, erm, ample company.)
The point? Put him in hands of independent investigators, and JVR's secret buddy - and, one can't help but suspect, role model - it turns out he was arming FARC. (Plus, remember, Montesinos was nominally right-wing.) So, when we fret that Venezuela's Kalashnikov purchases are going to end up in narcoguerrilla hands, are we paranoid, or merely realistic?
Five years ago, when I started writing about Chávez's strategy to "demonize" his political enemies, I never imagined the guy would get literal on my ass.
But today, having seen Chávez take his remarkable ad hominem rant calling Bush, literally, "the devil", to the most public forum on the planet, we can only revisit longstanding questions about the Chavez's democratic bona fides.
Dissent is the work of the devil I've always interpreted Chavez's highly personal attacks on his opponents (whether puntofijistas or gringo imperialists) as part of a broader strategy aimed at delegitimating dissent. His discourse implicitly rejects dissenter's right to vie for power.
Within Chavez's political imagination, the problem with those who disagree with him is not that they are wrong but that they are evil. This is why he has always replied to opposition arguments not with reasoned rebuttals but with personal attacks.
Because, when it comes down to it, I can have a debate with someone I disagree with. I can share the nation's public institutions with someone who is merely wrong. But I cannot allow pure evil a role in public life. I have a duty to stop it, by any means at my disposal.
Satan's minion Now, Chavez has been very explicit in this election cycle. In his fantasy ideology, Manuel Rosales is just George W. Bush's stooge. It's not surprising that Chavez takes this line, since for years his standard operating procedure has been to blame any and every problem he, Venezuela, or the world has to the US, and to dismiss all who disagree with him as US stooges.
The new twist is that, having equated Bush with the devil, Chavez is now arguing that Rosales is, in effect, an agent of Satan. A purveyor of pure evil. Now, lets take this line of argument seriously for a moment, and work through its implications.
If you truly see the world in those terms, don't you have a duty to make absolutely sure that the devil does not get into power? Aren't you duty-bound to do whatever it takes to prevent that? Doesn't election fraud become a patriotic obligation if the alternative is to hand your nation's reins over to beelzebub?
Justified skepticism Unless we dismiss Chavez's rhetoric as mere paja, we have to believe that Chavez sees stealing an election - if need be - as a kind of moral imperative. A dirty job, perhaps a sordid one, but certainly a much lesser evil than the alternative.
In the end, it's Chavez's caricaturish manicheanism that feeds opposition skepticism about whether the guy would ever hand over power if he lost an election. Such skepticism is neither paranoid nor unreasonable: it flows directly from the content of Chavez's discourse. It's the only reasonable conclusion you can come to if you take the guy seriously.
I can alternate in power with my opponents only if I see political differences as normal, as a result of human beings' natural tendency to have different views on any given subject. But I cannot alternate in power if I think that political differences are the result of the fact that I am good and my opponents are Satan spawn.
Which is why even those of us who are convinced that a debate about CNE's rectitude is futile can't help but think twice about it when we hear Chavez talk this way.
Recently, we've found that chavistas are shocked, shocked that somebody who has actually participated in a coup attempt might think he's fit to be president. Will wonders never cease?
Seriously, though, how do Rosales and Chávez stack up in the old coup-o-meter?
Rosales
Chávez
Signed a document to certify he attended a ceremony that went on to endorse a coup against an elected government.
Spent over 10 years leading the planning, organization and promotion of a coup against an elected government.
Sat in an audience lending tacit support to a plan to shut down all of the nation's democratic institutions.
Drafted a plan to shut down all of the nation's democratic institutions.
Apologized for his participation in a coup attempt.
Repeatedly celebrates and brags about his participation in a coup attempt.
Was a bit player in a coup where the army took power without firing a shot.
Organized and led a guns-a-blazin' putsch that left dozens dead.
Katy says: I thought this article from the Jamestown Foundation's Eurasia Group on the arms deals between Chávez and Russia was interesting. According to the author, the planes Chávez is buying are second-hand, overpriced and pretty useless; useless, that is, unless you're trying to buy your way into the UN Security Council and need cash to be re-elected in your own country at the same time.
What astounded me was the figure for the alleged kickbacks in this deal: $600 million is a lot of change.
Hinterlaces, the polling firm run by Caracas political oracle Oscar Schemel, has just released its beginning of September poll, showing Chávez falling below 50% for the first time, Rosales at 30%, and a large chunk of undecideds (20%.)
As always, given Schemel's methodology, Hinterlaces identifies a huge chunk of the electorate as "Ni Nis" - politically unalligned people who tend to have mixed feelings about Chávez but are highly critical of the opposition political class. Schemel places the group at a startling 46% of the electorate just 3 months before the vote.
How does Rosales win over this key group? By engineering his own Sister Souljah moment, to symbolically distance himself from the oppo old guard. Thing is, that's hard to do when you've appointed Sister Souljah to your campaign command...
Yesterday, I dealt with some of the Social Policy questions raised by Rosales' proposal to hand out a debit card to millions of poor families in order to distribute oil rents. Today, I want to deal with some of the development economics of the proposal.
First off, lets be honest here: Mi Negra is basically about electoral politics, not about development strategy. Given the pressures of the moment, that's understandable. But the question still bears asking: Can Mi Negra help foster and sustain economic growth?
To answer that, it's important to get back to basics. Probably the most fundamental choice all economic actors make, day in and day out, is whether to consume now or to consume later. To spend or to save? That is the question...
There is good empirical evidence showing that countries that save more and consume less grow more quickly over the long term. As I've argued before, this is really a tautology: just a fancy way of saying that, on average, countries that choose to consume less now in order to consume more in the future actually do consume more in the future.
So, from a long term growth perspective, the most important question facing Mi Negra is what it will do to Venezuela's savings and investment rates. If Mi Negra leads to more saving and more investment, it will be a net asset to Venezuela's long term growth. If the bulk of the money handed out is consumed right away, it will not help the country grow faster in the long term.
Now, conventional wisdom has it that poor people in Venezuela can't afford to save: they're too economically pressed to favor a little more consumption later over a little less consumption now. Economists would say their "marginal propensity to consume" is very high. Which is neither surprising nor irrational. If I am hungry now, of course I would rather eat 1 arepa today than 1.06 arepas in a year's time.
But the story is more complicated than that. Part of the appeal of Mi Negra is that it would bring a huge mass of new customers into Venezuela's financial system. If you're going to issue people a debit card, you will also have to issue them bank accounts to deposit the money they are going to debit. Mi Negra would vastly expand the client base of Venezuela's banking system. Given that, if clients do nothing, the default option is for money to just accumulate in their accounts, their marginal propensity to consume may be lower under Mi Negra than is usually realized.
This is important because a healthy financial system is a key mechanism linking higher savings rates to faster growth. Economists have good evidence to show that financial deepening leads to faster growth.
But as some recent research indicates, Venezuela's financial sector has shrunk along with the rest of the economy in the last 30 years. Today, it's one of the smallest and weakest in the world relative to the size of the country's economy. UCLA researcher Matías Braun notes that, in Venezuela, "bank credit to the private sector amounts to just around 9% of GDP, ranking the country in position 132 out of the 157 countries where the figure is available for the 2000s." If Mi Negra helps to raise that number, it would brighten Venezuela's long-term growth prospects considerably.
So I think the picture is inconclusive. While handing out money to poor people may seem like an odd way of raising saving and investment rates, handing out bank accounts to poor people is an excellent way of doing so. Certainly, it's a far more promising option than the chavista method, which relies on handing out cash to political supporters without involving the financial sector at all.
Some people surrounding Rosales are already busy trying to include some sort of mandatory savings element into "Mi Negra." From a development strategy standpoint, this is all well and good because, hell, anything that reduces people's marginal propensity to consume is all well and good from a long term growth perspective. But, of course, any such proposal dilutes Mi Negra's vote-getting appeal: it's much harder to pander for votes with some abstract, hard-to-understand pledge that mandatory pension contributions will be made on your behalf than with promises of free money now.
B-"Mi Negra" - a plan to issue lower and middle class people a debit card to distribute 30% of the nation's oil revenues directly into people's pockets, in payments that would range between Bs.600,000 and Bs.1 million per family per month.
One problem is that the relationship between the two pledges is murky - I for one have not seen a detailed proposal - so it's not so clear if the money for A is supposed to come from the same 30% of oil revenues that will fund B.
I have argued elsewhere that Pledge A is just absurd. I don't think I need to spend any more space on it here.
Mi Negra, however, is not absurd. In fact, conceptually, it's very appealing: it would break the petrostate model at the root, by transcending the oil-money-for-political-support quid pro quo that is the crux of petro-populism. Conceptually, I like it a lot.
My problem is that the proposal lacks detail, so I'm reduced to doing back of the envelope calculations to try to say something about its viability. What I find is that the only way Rosales can deliver payouts of Bs.600,000 - Bs.1 million per family is to leave millions of poor families out of the program. But any attempt to make Mi Negra highly selective would bring very serious problems of its own.
Tallying up Mi Negra Granted, everything that follows depends, needless to say, on the assumptions you make. But a quick-and-dirty calculation of Mi Negra's viability might go like this:
Assume Venezuelan oil exports fetch $38/barrel, we export 2.2 million barrels per day, and production costs hover around $8/barrel. Then, 30% of export earnings works out to:
$30 per barrel x 2.2 million export barrels x 365 days x 0.3 = $7.2 billion/year
Now, consider that nearly everyone in Venezuela is either poor or near-poor. The per-capita figure, then, is:
$7.2 billion / 25 million = $289 per person per year.
Assuming a standard 5-person household, the per family per month pay out would be:
$289 x 5 people x 2,150 Bs:$ / 12 months = Bs.258,000 per family per month.
That's less than half the Bs.600,000 Rosales is touting as his bottom-of-the-range estimate. Even if you chose to limit payments to just half of Venezuela's families, you'd still come up short.
Even when oil prices are very high - like now - the numbers don't really seem to work.
In 2006, for instance, VenEconomy estimates that PDVSA's total fiscal contribution will come to Bs.80 trillion, a hefty $37.5 billion.
30% of $37.5 billion comes to $11.2 billion. So at a time of sky-high oil prices, the amount to be handed out via Mi Negra comes to:
$11.2 bn / 5 million families / 12 months x 2,150 Bs:$ = Bs.400,000 per household per month.
Which is still one third short of Rosales's pledge of Bs.600,000 minimum.
The Perils of Selectivity Now, the obvious solution here is to introduce stricter selectivity, giving money out to the poorer half of the population only. Parts of Rosales' website suggest this is the plan. The sum would then be:
$11.2 bn / 2.5 million families / 12 months x 2,150 Bs:$ = Bs.800,000 per family per month.
Selectivity is an intuitively appealing solution, but one with serious practical problems. One is that, these days, the Venezuelan middle class is so small that excluding half the population means shutting millions of poor families out of the system.
A bigger problem is that the moment you introduce selectivity, you introduce perverse incentives.
Families with incomes just below the (by nature arbitrary) threshold would pocket the Mi Negra money and leapfrog ahead of families with incomes just above the threshold. The leapfrogged families will not take this sitting down.
They will have a strong (perverse) incentive to either hide their income from the authorities - easy, given the scale of the informal economy - or to work less so they qualify for Mi Negra. As more and more families do this, the average payout from the system would tend to fall.
What's more, it's easy to foresee that whatever government agency is charged with deciding who is above and who is below the Mi Negra threshold would have a strong tendency to become corrupt. The more selective the program is, the more bureaucrats you need to run it. And bureaucrats given discretion over decisions worth hundreds of dollars to millions of people are very well positioned to pocket a cut.
But isn't Rosales selling Mi Negra as the simple, non-bureaucratic alternative to oil rent redistribution?
In the worst case scenario, Mi Negra could come to be used as a new mechanism for Petrostate populism, where loyal Rosalistas get the subsidy and his opponents do not. And, well, cabra tira pa'l monte - given Rosales' roots in the AD petro-populist system, I don't think it's crazy to think Mi Negra could degenerate along those lines.
So selectivity is costly on a number of levels, and could end up subverting the whole point of the system.
I think Mi Negra is a laudable idea, but the devil is definitely in the detail. A less selective program would be far simpler and cleaner, but it would offer substantially less money to each recipient family. To make the program more generous you have to make it more selective, but then you create layers of perverse incentives and run the risk of creating a bureaucratic monster. Hard choices have to be made here - there is no magic bullet.
Methodological quibbles aside - and I have a few of those - the thing this poll finds is what I'd suspected all along: Rosales has the support of the traditional anti-Chavez block, and that's it. In fact, his 37% is basically not far from the 40% Salas Romer got in 1998, and the 37.5% Arias Cardenas got in 2000.
Rosales has a strategy to target class C and D voters; he understands he has to broaden his support beyond the antichavista heartland to have a fighting chance in December. It is early days, and his plan could imaginably work. But his decision to surround himself with as many visible heads of the oppo political class as he could find rather than making a symbolic break with them seems like an odd way of pandering to NiNis and Transactional Chavistas.
At this stage all I can say is, well, how does that song go?
Por eso aún estoy en el lugar de siempre en la misma ciudad y con la misma gente...
So what do I make of all this?
Note to the Rosales campaign staff who - rumor has it - sometimes read CC: PLEASE prove me wrong.
I think Rosales' chances are not good. Having done the easy part - coalescing the Anyone But Chavez camp around him - he faces the much tougher job of pulling in the Politically Homeless Ni Ni-voters and the Transactional Chavistas who will decide the election. "Mi Negra" is clearly an attempt to do that - but can it work, if he ties himself so closely to an oppo establishment NiNis and Transactionals detest?
If he plays his populism right, I think Rosales could imaginably pull off an upset. Just imaginably. But only if he gets an awful lot of help from Chavez.
How? Well, if Chavez persists on centering his discourse on foreign affairs, keeps talking obsessively about his grand plans to save the human race, then it's possible that even a candidate with Rosales' limitations could win. His discourse, however artlessly delivered, is at least relevant to normal Venezuelans everyday problems - more and more, Chavez's is not.
Chavez's legendary knack for electioneering, his political sixth sense, would have to melt down comprehensibly under the weight of his own megalomania for this to happen, though. The guy has always been, at heart, a pragmatist, and I would be very surprised if he does not pull back from the brink and retreat to tried-and-true populist themes when it becomes clear that his internationalist agenda leaves most Venezuelans cold. That, together with the essentially-bottomless-barrel-of-cash at his disposal, should be enough to put him over the top.
The question, for the Nth time, is: just how crazy is Chavez? Loco es el que come mierda, they say. So is he? We shall find out...
Well, the rumor-mongering about supposed poll numbers is only starting, and it's certain to gather pace in the coming weeks. Reports that a Datanalisis poll started ten days after Rosales was annointed oppo establishment candidate showed him trailing Chavez by over 40 points were quickly followed by this "report" claiming a Gallup poll found Rosales 30 points ahead of Chavez in poor areas of the center of the country. Frankly, if Gallup is polling in Venezuela these days that is news to me. Sounds fishy to me, though...
By now, these little information wars fought through impossibly contrasting poll numbers are almost a tradition in Venezuela. I will do what I can to bring my readers as-reliable-as-manageable numbers as quickly as possible, but I'm only human so...
Well, I've been surfing YouTube for clips of Manuel Rosales campaigning. Basically, the guy seems to have two modes: soporific and hyperventilatory.
Here's an example of soporific:
Now, playing this clip, even those of you who don't understand Spanish will have no trouble grasping why his candidacy, erm, faces an uphill struggle..that tone! Those of you who do understand Spanish really owe it to yourselves to bajarse de esa nube.
In his more meditative mode, Rosales is as boring and vapid as politicians come. Somebody with a discourse that is at once this trite, this technocratic, this platitudinous, this abstract and, to top it all off, utterly devoid of emotional punch just cannot compete with a charismatic, cash-flush Chavez.
And then there's Rosales in rabble-rousing mode:
In this more engaged register, the guy is just a paleo-adeco, a kind of cro-magnon, a living fossil of the political culture Venezuelans overwhelmingly rejected when they voted for Chávez and continue to tell pollsters they reject today. The only connecting thread between the two Rosaleses is how utterly vapid, how ethereal his discourse is in both registers.
We are badly, badly off track if we think this guy can compete with Chávez, folks. Our only hope now is a highly unlikely revival of Rausseoism.
1-Much as I'm drawn to him, and even though he was trying to gently nudge Acción Democrática away from its abstentionist line, this picture of Rausseo getting all buddy-buddy with AD's (nominal) head honcho Henry Ramos Allup is a hard one to stomach. Whatever happened to triangulation?
2-CNE's design for December's tarjetón (ballot paper) tells you all you need to know about its outrageous partiality. Pro-Chávez parties monopolize the highly visible, easy-to-locate upper part of the ballot, while the main opposition parties are consigned to the nether-regions, below a constelation of no-name, 0.0002%-of-the-vote "parties." Rausseo gets the rawest deal of all - just about in the middle, a spot only a forensic investigator could find easily. Yuck.
3-And, just for good measure, chavista tax inspectors have suddenly discovered that Rausseo's theme park is up to no good, and ordered it closed, tossing out the 2,000 vacation makers who were enjoying a day out.
Inflation is up, and may reach 20% by year's end. Finance Minister Merentes is saying that this is a consequence of excessive liquidity and of problems in food production, but that government spending has nothing to do with it. Yet today's El Nacional headline says that spending on Chavez's social programs, "misiones", is 8 times what was budgeted for them. Perhaps if the government allowed the Central Bank to operate more freely there wouldn't be so much money floating around. You can't take away most instruments of monetary or exchange-rate policy from the Central Bank and then wash your hands when inflation shoots up. O lavan, o prestan la batea... But the again, Mr. Merentes is not an economist, so what does he know?
Oil prices continue to fall, and in spite of Venezuela's constant plea to cut production quotas, OPEC decided to keep production steady. So, if according to chavistas, Chávez was responsible for the spike in oil prices, can we pin this drop on him too? I wonder why he's making oil prices fall?
London Mayor Ken something-or-other announcing that poor Venezuelan taxpayers will subsidize wealthy Londoners' transportation needs. In the words of Conservative Angie Bray of the London Assembly, "I'm sure the 35% of Venezuelans who struggle below the poverty line, many of them critically so, would be shocked at the cynical siphoning off of their main asset to provide one of the world's most prosperous cities with cheap oil. "
Brazilian experts seriously questioning the economic, technical and environmental feasability of the gas pipeline across South America. Among other things, they say that it is not certain that Venezuela has the amount of gas it claims to have, that Chávez's price is ridiculously low, that the pipeline would cost much more than what has been said so far, and that supplies would not be assured if Chávez were to leave office. They basically conclude that the project has progressed with more political and less technical objectives. Only one word comes to mind: duh!
Fedeindustria chief (and one of Chavez's favorite businessmen) Pérez Abad says sales from small and medium enterprises are down the latest quarter, perhaps the first sign of the forecasted slowdown in the Venezuelan economy in 2007. Something tells me the opposition will be blamed for this one when it finally materializes.
Katy says: When I asked people to send me pictures of ads for Chávez in government buildings or paid for by government entities, I promised myself that if I got three pictures, I would start a separate blog where I could store them. Well, today I got my third picture.
My goal is for this to be an unsophisticated blog, without many links or trinkets. It will simply be a place where I can put all the pictures I get and provide some context for them. I will not be posting much more than that, since I would rather continue abusing Quico's invitation to be a guest-blogger and post here. I will not be documenting newspaper ads showing the government's abuse, since Bruni is doing a marvelous job at that already.
And remember: pictures should be sent to me, at katycaracas at hotmail dot com. I guarantee strict confidentiality.
Katy says: A few weeks ago I asked the readers of this blog to begin forwarding pictures of electoral ads in government offices or buildings, just like this one. I want to thank the reader who sent me the above picture of an office inside the Labor Ministry in Western Venezuela.
As is clear, the Labor Ministry proudly shows a poster of Chavez with the electoral slogan "10 million", as in 10 million votes, a goal that has now been scaled down. Details on the reader or the exact location of the office shall remain, like the person in the photo, confidential.
I have not recieved any other pictures, but perhaps Hotmail's junk filter has been playing havoc with my CC email without me noticing. If any of you out there have any more pics, please resend them so I can duly post them. If I get enough of these, I will put them in a separate blog, one with only pictures. My address is katycaracas at hotmail dot com.
One last item to add to my Rosales-bashing spree. Looking at his headline proposal, I find it deeply ironic that the guy is being touted as the "serious" oppo candidate here. This is a guy who is running on a promise to give a minimum wage to everyone who is unemployed.
Have you stopped to think through how aggressively irresponsible that is, how impossibly unworkable?
Start with the reality that Venezuela's minimum wage is worth 90% of the average wage in the legal economy. Then realize that 90% of informal sector workers earn less than the minimum wage. Now, as a thought experiment - and this is destined to be no more than a thought experiment, cuz the proposal is so bizarre there's no chance anyone would actually try to implement it - imagine what might happen if you offer Venezuelans a minimum wage to just hang out.
Very obviously, nearly everyone in the informal sector will stop working, claim unemployment, and go rumbearse los reales. What's the point of working 14 hours-a-day, six or seven days a week when the government will pay you more to sit at home and watch telenovelas?
And there's more: the very large majority of Venezuela's legal workers who now earn the minimum wage or just barely above it - would reason in the same way. Working just wouldn't be worth the hassle to them.
So you'd end up with 95% of the country's labor force on unemployment benefits. A back-of-the-envelope calculation suggests oil prices would have to reach roughly umpteen-zillion-dollars per-barrel to sustain the fiscal commitment implied in all this.
The adverse incentives problem inherent in Rosales' proposal are so glaring that what I find remarkable is that serious economist types are lining up behind his candidacy. This is the "serious leader" we're told can redeem the anti-Chavez movement? Gimme a break.
By contrast, Rausseo's line about how "people who want the government to go around handing out cash shouldn't vote for me" makes him look like a paragon of fiscal responsibility. At first I thought it was just a cheap chavista zinger, but it's true: El Conde del Guacharo is the most serious candidate the opposition can come up with!
Don't get me wrong. I'm not above resorting to a bit of populist pandering when appropriate. But the scale of the irresponsibility in Rosales's big headline policy just beggars belief. To my mind, it casts serious doubt on the guy's overall judgment. How is he going to weasel away from this one if he manages to get elected somehow? Or - worse - is he out of it enough to think he can actually implement it?
Yesterday, I argued that Rosales's candidacy is doomed. I still think that. But it could be wrong. And here's one reason why:
Chavez has been an electoral juggernaut since 1998 largely because he's had his finger firmly on the pulse of the Venezuelan electorate all along, intuiting the dynamics that drive public opinion far better than his opponents. Arguably, though, that knack is starting to buckle under the accumulated weight of his megalomania.
For starters, the guy doesn't spend much more time in Venezuela than I do. His interests have shifted more and more to the international arena, which most of his poor supporters couldn't care less about. As Tal Cual pointed out yesterday, Chavez is now trying to tar Rosales as a US lackey, not an old regime holdover. But, of course, while most Venezuelans positively detest the old regime, they have moderate to positive views of the US.
All of which means Chavez may have decided to sling the wrong kind of mud at Rosales. Increasingly out of touch with the people who nominally support him, his support could turn out to be shallower than I figure.
Frankly, I can see the logic to this type of argument, but don't ultimately buy it. Why? Because Chavez still has a few billion dollars worth of oil revenue up his sleeve to patch up his problems with. And petropopulist spending on that scale goes a long way towards soothing the feelings bruised by his globetrotting megalomania.
Quico says: Well, imagine my surprise when I saw Alek Boyd over at vCrisis getting all breathless over Manuel Rosales's candidacy. Calling him Venezuela's next president, Alek is sure Rosales can overcome the dirty-tricks up CNE's sleeve to work his way to Miraflores.
More widely - and here my disagreement is as much with Katy as with Alek - I think it's wrong to laud the "unity of the opposition" behind Rosales' candidacy. The unification of the anti-Chavez political class behind a single contender is just what Chavez needs to pull his tried-and-true mudslinging operation. Because, as JVR and Chavez have noticed - but Alek and Katy fail to see - the opposition political class is wildly unpopular in the country at large.
And, therefore, being backed by the oppo political class as a whole is a net negative for an anti-Chavez candidate, not a net positive.
For my money, the unity of the opposition is an entelechy. The more traditional oppo talking heads line up behind Rosales, the easier it is for Chavez to discredit him as a "widow of puntofijismo."
The one chance the anti-Chavez forces had in this election was to find a credible, charismatic outsider to triangulate the election by running equidistantly from both Chavez and the traditional oppo political class. Only such a candidate could've made progress with the massive block of politically homeless (or Ni-Ni) voters that will decide this election, but who will likely either vote for Chavez or stay home if they perceive the alternative to be a representative of the traditional opposition political class.
Unfortunately, neither of the outsiders who came forward quite fit the bill. Roberto Smith turned out to be credible but not charismatic. Benjamin Rausseo turned out to be charismatic but not credible.
By backing Rosales, the middle class opposition heartland is re-editing the rock-solid "unity" of the first days of the general strike. Once again, we have a "unity" built around a consensus that is universal in the middle class and therefore imagined to be universal in the country at large, because our middle class again and again mistakes itself for the country at large. Unity around the tactical mistake of lining up behind a guy who cannot and will not win over the politically homeless, much less the transactional chavista vote.
My guess is that Chavez is going to win in December without even having to cheat.
Granted, I'm far away, maybe my brain has been cooked solid by the Sicilian sun, imaginably I'm way off base here. (In fact, I really hope so - GOD do I hope so.) But I really don't see this one going well.
Katy says: I regret to inform you that it will be another full week before Quico is back blogging regularly. I spoke to him today and he told me he is in the middle of moving and going to a conference, so his Internet access will be scarce and his ability to post even scarcer.
So all you faithful readers will be stuck reading this friendly ghost-blogger's usual rants and accounts. I apologize for being MIA in recent days as well, but all antihistaminically-challenged members in my family (which pretty much means everyone) have a bug, possibly related to the welcome yet unexpected arrival of the austral Spring. So in between nursing and a heavy workload, I have not found time to post something of interest.
I promise to address something more substantial tomorrow, perhaps something about Chávez's intentions of staying in power indefinitely, the government's continued harrassment of the media, soaring crime rates or the government's "projects" with foreign countries.
The only thing that really moved me today was the untimely death of Steve Irwin. As Billy Joel famously said, only the good die young. Perhaps our regular comments poster Jacques Cousteau can put his death into perspective for us. After all, Irwin died after a sting-ray pierced his heart with its tail while filming a documentary with Phillipe Cousteau, so this is right up his alley.
