The vanishing mirage


A few years ago, chavista apologists boasted about Venezuela’s vertiginous growth rates, bragging them about as Exhibit #1 when vouching for the success of chavenomics.

Those days are long gone.

Today, the United Nations’ Economic Commission for Latin America published its latest report on the region’s economies. The section on Venezuela, though, reads more like an indictment.

Latin America as a whole will grow 6% in 2010, with political allies such as Paraguay (9.7%), Uruguay (9%), Argentina (8.4%), and Brazil (7.7%) leading the charge. These results are all the more impressive considering the lingering crisis in much of the Western world.

And Venezuela? It’s near the bottom of the class, mired in recession. Our economy will shrink by 1.6% this year.

Look, there is no denying that Venezuela came out of the 2003 oil strike posting remarkable growth rates that did a lot to temporarily alleviate poverty. But the notion that chavenomics was a long-term solution to Venezuela’s ills was a mirage, as some of the more honest pro-Chavez bloggers have discovered.

More importantly, chavistas are left making the very flimsy argument that chavismo is still alleviating poverty in spite of the recession.

That bucket will simply refuse to hold any water. As any economist will tell you, you can’t solve the problem of poverty without growth.

We have no reliable poverty statistics for 2010 yet, but you can be sure that the lingering recession will have a dramatic effect on poverty levels in our country.

It was only a matter of time before the realities of chavenomics caught up with the country. Let’s see chavista apologists try and spin their way out of this one.

Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.


  1. Juan,

    What makes you think they will even try to address it? How does this sound:

    “Hardship and sacrifice are necessary to defeat the Empire and Capitalism”

    “Only when the last Oligarch has been liquidated, can we enjoy the final fruits of the revolution!”

  2. Every bone in my body rebels against writing this but…

    You have to give the government some credit.

    Amid a really harsh recession, the employment picture has remained pretty stable. This is not a mass unemployment recession, for reasons I don’t really understand. Maybe all those regulations did have some upside from the government’s point of view.

    The relatively stable jobs picture probably does a lot to explain the relatively low price the government has paid for this recession, don’t you think?

    • What is employment in Venezuela?
      “empleo informal” has traditionally for 50% of employment. That is: half the Venezuelans are selling Chinese toys and empanadas on the streets or working as pirate taxi drivers. The INE reports from time to time that formal employment has increased to a record 50%, 52%, whatever.
      What criteria are they using? But you are right: as long as millions get some food from Mercal and some bequita, they are at ease. After all: what food did they get from any Mercal when they were 15-25 years-old in 1990 to 1998?
      They don’t know about oil prices and oil cycles and all that.

    • Mmmm….how this stuff sound tou you?

      1.- If you are or have been enroled in a mision in the las six months you are counted as economically non-active population (you are not part of the PEA)
      2.-If you worked for 2 hours last week, even if it was as self-employed or matando un tigre, you are counted as employed

      So there it goes your stability…it’s a fraud, men

    • Why does employment matter?

      If you assume that people who are employed are therefore somewhat closer to being out of poverty, then sure.

      But you can have a lot of people employed by the government, and a lot of them are poor. Or … getting poorer each year, thanks to devaluation.

      That’s the scenario we’re in, don’t you think? Ultimately, what matter is standard of living.

    • “You have to give the government some credit… …Amid a really harsh recession, the employment picture has remained pretty stable… …The relatively stable jobs picture probably does a lot to explain the relatively low price the government has paid for this recession, don’t you think?”

      Whatchoo talkin’ ’bout, Quico?

    • You do have to give the government credit. The key is that it has gotten the poorest/rural populations to feel that they are being helped personally by the government in ways that no previous government ever did and in ways that no current opposition seems promise. Of course, the fraud is in that with the oil windfall the help should be fifty times the amount, but the current tiny amount is better than no amount, in their eyes. The fact that the opposition seems not to realize this poor’s perspective is what seems most nerve wrecking to me regarding the future. A guarantee of cash distribution would be the greatest most personally empowering help that can be offered, say by an AN, while at the same time taking the economic power out of chavez’s hands, regardless of any enabling laws…

  3. Panblanco already spinned it back in september:
    “Now it looks like Venezuela may have emerged from its recession in the second quarter of this year. On a seasonally adjusted annualized basis, the economy grew by 5.2 percent in the second quarter.” […] “Venezuela has adequate foreign exchange reserves, is running a trade and current account surplus, has low levels of foreign public debt and quite a bit of foreign borrowing capacity if needed. This was demonstrated most recently in April with a $20 billion (about 6 percent of Venezuela’s GDP) credit from China. As such, it is extremely unlikely to run up against a foreign exchange shortage. It can therefore use public spending and investment as much as necessary to make sure that the economy grows sufficiently to increase employment and living standards, as it did before the 2009 recession.”

  4. I’d of never thought it but perhaps Chavez needs to follow Lula’s footsteps. I remember when Lula was elected that some of us thought “on no, not another Chavez.” How ironic that nearly the opposite has proven to be true. Say what you want about Lula, Brazil is growing and has reduced poverty and has also picked up a world cup and olympics under his watch. Lula has achieved 10 as much as Chavez in half the time and has alternated power when many thought he wouldn’t.

    • Glenn,
      1) Lula is not a milico.
      2) Brazilians actually have to work to earn most of their dollars.
      Venezuela’s GDP is, as far as I remember, 30% oil, but indirectly it is much more. Over 90% of our exports are in the form of oil.
      3) The previous president had actually set most of the economic policies Lula just followed with a bit of extra social programmes.

      Finally: Brazilians do not have the military obsessions Venezuelans have and Brazilians do not have the pernicious Simón Bolívar disease.

  5. Protective (and more effective) labor laws + the increasing size of the public sector + the endless debate of how they are measuring unemployment, might all explain why this has not been an ‘unemployment’ recession. However, although I am not an economist, I bet salaries have been stagnant while inflation is on the rise. We would still need to assess what socio-economic sector is taking the blunt.

  6. Venezuela imports almost everything! Oil revenues are in decline, and dollar reserves are dwindling fast. Even food production is taking a big hit from because of the floods. Nationalizations so far have been a disaster. Where are the positives signs?

  7. “That bucket will simply refuse to hold any water. As any economist will tell you, you can’t solve the problem of poverty without growth.”

    This isn’t actually true JC. Much can be done by simply redistributing wealth, which may negatively impact growth for a period of time, but can continue to reduce poverty through times of negative growth.

    • More like redistributing, or rather sacking the sources of revenue for the State. Expect to reach the bottom of the barrel and hear the explosion.

    • Distributing what wealth if Venezuela produces nothing? Just less than 20000 of the 100 thousand employees at PDVSA produce over 90% of foreign revenues.
      We import most of the rest. How is the government distributing?
      Why is it murderer Ramírez Chacín owns thousands and thousands of hectares through his daughters (all this can be seen in official records, mind) and how is it the top military caste behave like the worst oligarcs of always and they pretend to be distributing wealth?

    • Chris, and you believe that crap the INE says?
      According to the INE, Venezuela has a lower unemployment rate than the EU. The INE people even spent time writing a whole page with graphs to compare the EU and some isolated countries and the US with Venezuela on unemployment, the chuzpah. The only thing: Chavistas count as “employed” people who are in the “informal sector”, people who have less of a job than unemployed in Greece. Give me a break. In reality unemployment is over 50% in Venezuela…you just don’t count those who get some money by selling Chinese toys (not you, you get it by being an useful idiot), by working as a pirate taxi driver or those who are in some “social programme” being told they are learning something by learning about Ché Guevara, Chávez and a bit about “health technology” (the new “medicine technicians” don’t even know what an esparadrapo is)

      Venezuela is the country with the highest murder rate in South America. That show how “equal” it is. Venezuela has been surpassed by four or five other Latin American countries according to the Human Development Index Chavistas want to quote.
      Please, check out this:
      There you have the direct links to the UN Index. So?
      And Venezuela has the highest inflation rate now when others in America have controlled theirs (yes, it had a higher inflation before, but other countries had even higher, like Brazil and Peru)
      Come on, Chris, you really love that milico or does he pay you so well?

    • “What is laughable, JC, is that you spend your whole life on this pathetic blog about Venezuela, yet still don’t know even the most basic details about what is happening in your country.”

      The blog you keep coming back to for a breath of fresh air? To the folks that don’t write mindless drivel like you do?

      What a moron you are

    • Chris,

      You are free to believe anything you want. Die Gedanken sind frei.
      It is very funny how you repeat a million times “which demonstrates what I said”. You really must have flunked kindergarten’s mathematics. You have no idea what to demonstrate is. I suppose this is also a demonstration for you. Go on trolling, you don’t attain anything

    • The CEPAL reports that you incorrectly “cite” to show Venezuela has not provided poverty statistics in the last couple of years. So yeah, if you only use old data, things look peachy.

    • JC,

      Not only can you apparently not understand Spanish:

      “en el cual presentó los resultados estadísticos comparativos de Venezuela desde el año 1998 hasta el 2010.”

      But you also apparently have a hard time writing in English. Your above comment makes no sense.

    • Chris,

      Let’s not discuss what a newspaper like El Caroní says someone says or what that someone in a sort of diplomatic post on a visit to Venezuela or on a conference with Bolivarianos rojos-rojitos has to say.
      Let’s go to the CEPAL sources.
      Please, provide the link and page of your references. We know the latest GINI – which Chavismo will only accept while they were good – show Venezuela as having the best GINI values in the area, thanks to its greatest oil boom in history. Never mind the GINI does not explain why we have tripled the number of murders per 100 000 inhabitants in 11 years and why Venezuela has seen the greatest exodus in a century.
      If you go to this

      (ECLAC, CEPAL, direct link) you will see on page 16 the references you want. If you really want to be selective as Pravda was in the eighties in the Soviet Union, you will read a title and say “see, the title says UNTIL 2010, which proves my point”).

      Now, if you are a decent person, you will check out what are the latest figures for Venezuela, exactly where.
      You will discover at the bottom something like “figures are the latest available for each country between 2006 and 2009”

      Joder, hombre…vives en un culto.

    • The link yourewrong provides tells us that “Venezuela ocupa el primer lugar en la lista de países latinoamericanos en reducir las desigualdes entre ricos y pobres”, which is not the same thing as reducing poverty. In fact, inequality can decrease while poverty increases. As JC points out, there’s no real information to tell us if that’s happening or not.

      Personally, I’m more concerned about how many people are hungry than about what percentage of upper class income those hungry people have. I’m pretty sure that this without enough to eat don’t give a rat’s ass about the latter. I know I didn’t when I was routinely going to bed hungry.

      In the document Kepler links, Chart 21 on page 52 isn’t very pretty – fewer transfer to the “vulnerable population” than…Colombia. Who are the socialists, again? Chart 23 on page 54 speaks volumes for itself.

    • Oh yourewrong, you’re so full of it. You love my writing and you know it. That’s why you can’t resist visiting this site!

      You also know I’m right. No government press releases can cover up the fact that the ECLAC numbers explicitly say that Venezuela’s numbers go up to 2008.

      So keep the hate coming, because whatever you say, I don’t believe you. I know what you really think.

  8. How long will this stand???

    Ley de Universidades, Leyes del poder comunal, ley de propiedad social, ley de telecomunicaciones, etc, etc, etc…

    So far, Chavez has swiftly gotten whatever he wanted almost in a “bajo la mesa” fashion, cuz stuff was approved, oppo say “we angry” and that’s abotu it, however, this time with that bucnh of laws we’re straight into cuba in a single crushing blow…and people wont notice cuz of christmas

    Where the hell is the MUD calling for marchas? Or the people themselves?

    What will they (us) do when the enabling law is approved for a gazillion months, rendering the new AN useless?

    Inconstitutional? Immoral? Seriously… they dont care about that and there’s not a single institution that we can use to fight against it

    Im getting more pessimistic than usual, so far as to learn about internet anonymity just in case we’re effectively cut off the flow of information, but the point is:

    How far will this go? And, are we at the brink of “El Caracazo 2: because El Caracazo was just for pansies”?

  9. “As any economist will tell you, you can’t solve the problem of poverty without growth.”

    These numbers suck, clearly things are not as good as they could or should be. As long time -returning after a long time- reader of both this and OW blogs, got to admit you were right about some things when OW was posting such things. But also, as has been pointed out… if you are poor, you don’t give a damn about oil prices, dutch disease, international reserves, or blog posts, you care that your life, personally, and that of your families, is better than it was. Gotta give the government some credit.

    As much as the proposed enabling law makes me think, WTF has Chavez been doing for 12 years that there is not yet an actual Bolivarian Republic which can handle rain-crisis without giving El Caudillo a blank check… it also makes me think WTF is the Venezuelan opposition still doing that they didn’t win by more, that they have zero convocatoria to bring people out in self interest other than upper middle classes?

    But forget all that if you like, I post because just today I was reading an essay which refutes the quote:

    Of course growth in over-industrialized nations is different that our America, and oil-based growth without lifting other parts of the economy is really no growth at all. Nevertheless, I believe to say:

    “As any economist will tell you, you can’t solve the problem of poverty without growth.”

    Is factually wrong, ask Herman Daly! And reveals some possible food for thought..

  10. Wow, since when did Oil Wars became critical of Chavez?. I have always had the memory of that blog being highly prochavista/antiUS or whatever, and now scanning the last articles they are all highly critical of Chavez.

  11. Oh, Escualide Arreche,
    You are right indeed. Growth is not everything, even if it is needed. If well-minded, well-paid technocrats try to carry out economic policies to fix things but they are not aware of how the poor really experience those policies as they have no real contact with those poor, they are bound to fail. The 1989 Caracazo was not quite that, as there were extreme leftists who actually managed and provoked many of the riots, but something like that could happen (and would become worse).

  12. If anything, the Venezuelan economy (and hubris) stagflated sooner than I expected. And I am expecting much more to happen. Rather than just bleak, on the ugly side.

  13. Oil prices have been on the way up, many people, including me, expect oil to get to $100/bl and more in 2011.

    I think the future of Venezuela depends on the following dilemma: Are the chavistas intelligent enough to invest the coming oil cash surplus in the lower classes and revive “the chavez mirage” or are they so in love with their own pockets that they will not leave anything for el pueblo meesmo?

    I am inclined to think that they love their pockets too much, by 2012 Venezuela will be ready to explode and from then on, well, anything can happen.

  14. Carlson, its pointless.
    Gini index is the only sector, in which the fachist Government offers figures, which seems to indicate that the country has improved.
    If you are really interested in the development of the country, you would care about the areas that are not so great. And believe me. In the economic statistics of Venezuela its easy to find. Start with housing, investment or real value of the minimum wage, percentage of people working in the informal sector.
    Compare the venezoelean Gini with the spanish, portuguese or german.

    • Lemmy,

      Chris will laugh now and say “this demonstrates” blabla. Of course he will say you can’t compare Venezuela with Germany, the US, etc. He does think the comparison of employment rates that the INE did was not obnoxious, of course (comparing Venezuela where 50% survive from “trabajo informal” considered as job)
      He won’t compare the Human Development Index. I put above a direct link to my post with lists to UNO reports on the index. There he can see, if he wanted, that in Latin America, since the biggest oil boom of Venezuela, 4 or 5 countries have overtaken Venezuela. He won’t say anything about many other things, inflation, etc (inflation comparing also OTHER countries across time, like Brazil and Peru in the eighties and nineties, n ot just Venezuela across the last 20 years).
      There is no point. Chris will find Chavez raping his own mother and will say Chavez was just trying to be friendly.

  15. We need a serious debate about inequality in Venezuela and the rest of the ‘tide-to-the-left’ bandwagon as soon as possible – if it doesn’t exist yet. Can anybody point me to two or three serious academic sources on the matter?

    p.s. I don’t trust the GINI numbers in the CEPAL. They lack face validity. Not only Venezuela. Peru has reduced its inequality in the past 7 years? Really? And Paraguay and Mexico? How did these guys obtain the data???

  16. What a joke this post is a year later. We now know their was no increase in poverty during the recession that all the opposition screamed would bring disaster to Venezuela. The Venezuelan economy is now experiencing greater growth than many other Latin American economies. Just another example of the oppos inability to deal with actual facts. This year poverty continued to decline and living standards continued to improve despite the oppos certainty that imminent disaster and depression loomed.

    • IronyAlert, the growth that you are implying is due to chavismo success is merely a result of oil price going up, not even production of oil, just its price, and that’s not even due to chavismo’s doing. One irony is that despite such a tremendous growth in income from oil, the poverty alleviation is so little, yet you consider that a success. What fail.

      But the real irony is that the money being used to produce this mediocre poverty alleviation is coming mostly from the poor, not the rich. chavez is taxing the poor a greater percentage than what he’s taxing the rich to hardly pull the poor out of poverty. In case you don’t understand how that is so, consider that the oil sales from where chavez is getting the money for this supposed improvement comes from oil that belongs equally to all Venezuelans. That means that the poorest Venezuelan is pitching in the same amount of oil as the richest Venezuelan to get chavez that money. That’s what 100% percent tax on the poorest and 0% on the richest. Nice regressive tax bracket from supposed socialists. And you are supporting that with these Irony Alerts?! Ironic.


Please enter your comment!
Please enter your name here