Why Chávez Will Win

Francisco Rodríguez, demonstrating what store shelves will not look like in the run-up to next year's election.

So, writing in a Bank of America Merrill Lynch newsletter, Francisco Rodríguez is straightforward about it:

All opinion surveys show Chávez’s popularity increasing over the past few months. Although some analysts attribute this to a sympathy effect, our reading is that this is a consequence of the economic recovery, and in our view is likely to strengthen more over the coming year with the fiscal expansion. As a result, we believe a Chávez victory in 2012 as the most likely scenario.

With the government sitting on $31.9 billion in cash nobody can audit, it’s hard to disagree.

It’s easy to forget that while pundits and bloggers will spend hours upon hours dissecting the minutiae of candidates positioning and self-presentation, economists and political scientists long ago figured out that structural factors that have little to do with the day-to-day horse race have a far stronger impact on election results.

Especially in poor countries, short-term economic trends usually dominate election results. In particular, consumption trends have a hugely outsized impact on the incumbent’s reelection chances.

This is not lost on chavismo. Which is why Giordani has gone to extreme lengths to squirrel money away into a fund where it can all be set loose on the streets in the four months leading up to October’s election, even if that meant having to borrow billions on the side at 14%+ interest to cover the government’s immediate funding needs.

Is this irresponsible to the point of criminality? Yup!

Is it likely to work? You betcha!