The challenge of Venezuela's urban poverty

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According to the authors, "Liberatador" is just one big slum
According to the author cited, “Liberatador” is just one big slum

One of the things few of our politicians talk about is how to transform our slums into engines of growth. Sure, we talk about the barrios a lot – mostly about how politicians don’t go up the hillside shanties that dot Caracas (they do), but have we thought about a practical approach to solving their problems? How do you envision a post-chavista reality in these places?

As this comprehensive review paper by Marx, Stoker and Suri (2013) says, slums need a lot of things, but the three things they mostly need in my view are:

  • investment in physical infrastructre geared to making people more productive
  • basic public (can be privately-provided) services
  • property rights

Ultimately, the problem with slum-dwellers is that they are trapped in a low-productive, low-income, low-wage reality. The target should be tackle those things that make them unproductive.

For example, a person who lives high up in a barrio can’t be productive for several reasons, but one of the more basic ones can simply be the lack of child care. Or it could be the fact that they have to walk for miles just to get running water. Or they can’t work long hours because of crime. Or perhaps they spend countless hours waiting for a jeep to take them to and from work.

I am reminded of my macro professor back in Michigan. We were discussing productivity, and he said that one of the biggest booms to productivity came with the invention of the lunchbox, and the paper bag after that. Once people could have their lunch at work, the became much more productive, and societies progressed.

Perhaps the person in the barrio can’t be productive because they are shut out of the financial system – if they could get a mortgage on their rancho, they could get use it as collateral for a loan in a small business, or for buying new machinery. Or perhaps they simply haven’t had the education to take advantage of opportunities that are out there.

It’s easy to feel daunted by the challenges our slums pose. But if we just zero in on the issues preventing people from being productive, perhaps we can make inroads. This should be a top priority once this nightmare is over.

(Note: I have the paper in case someone wants it. Email me)

1 COMMENT

  1. And it’s all over Venezuela. My educated guess is that well over half the population of Venezuela, even most of those living in casas sociales built in the seventies and eighties, much more the few new ones, live in land without any real property rights. Most people in the second half of Valencia live in this state. Most people in the most densely populated municipio of Carabobo, Los Guayos, live in shanty towns. At least half of the people in Guacare municipality are in a similar situation.

    The new houses built in a rush by Chinese-Belorussians-Venezuelans under Chávez were just put there without the slightest design for public facilities.

    • The property rights thing is incredibly obscure, especially in rural areas. Half of my family grew up on INAVI housing and at least they had some documents that enabled them so sell their apartments, but one of my grandparents built his house on land he got in the form of something called a “Bienhechuría” decades ago and it’s a completely different matter. After his dead my family has tried to sell the house and it’s been one absurd obstacle after another. Basically no one knows how it works, and that’s a big problem because most small farmers in Venezuela work lands that are only “theirs” in a very tenuous sense.

      • Just so you understand the term, Bienhechuria, this refers to whatever is built upon the land.

        Your grandparent owned “whatever was built and improved” upon the land, but not the land itself.

        Used to be, you could buy and sell Bienechurias, unless there were conditions attached that stated that the right to sell was curtailed, or if there was a time limit that affected how long the Bienhechuria could be possessed.

        You see this type of arrangement in many places in Venezuela, notably when existing properties become National Parks, as in the case of Los Roques and Morrocoy, for example. You also see it upon lands that were given over to farmers to work on by the now extinct IAN (Instituto Agrario Nacional).

        Chavez won many rural folk over when he promised during his first campaign that title would revert to those who had worked the fields under the auspices of the IAN. Some did get title, some didn’t, and as we all know, he proceeded to expropriate what he called fallow land in the hands of “Latifundistas” or large absentee owners. But that is another story………………….

    • I buy almost everything except food and clothing from online auctions most people aren’t aware of the almost unbelievable deals that they can get from online auction sites the site that has the best deals is http://goo.gl/Pt036z
      I checked with the BBB and was told that it is all legit. How they can sell gift cards, laptops, cameras, and all kinds of goodies that we all want for 50-90% off, I don’t know
      I do know that I bought my son an ipad there for less than $100 and my husband a $250 Low gift
      cards for 48Why would I even think about shopping anyþlace else?

  2. I think one very important thing to consider here is that not everyone in a slum lives in abject misery. We’ve all seen the ranchos with satellite dishes and the women who live with their 10+ relatives in a 50 m^2 place, but still have money for breast implants. The fact is many of these people could move out the slums if they really wanted to, they could try to get a loan or something, but they choose not to. I see a big difference in the way people establish priorities inside or outside of a slum.

  3. Juan,

    Consider why people migrated to the cities in the first place… There were no jobs outside the cities, because government economic policies promoted importation of agricultural products instead of promoting domestic production. If the absurd currency controls are eliminated, and agricultural investment is encouraged, people will migrate back to where there are jobs once again in “el campo” and smaller towns.

    • Well, Roy: things have gone worse but the slums were there already in 1998.
      It will be extremely hard for people just to move back, specially as anyway farming provides jobs for less and less people everywhere.

      One of the things in the long run that governments could do is real decentralisation. But this implies more than just what most people have in mind in Venezuela.
      Tax authorities, for instance, could have their main office in Calabozo. Part of the ministries could be moved to the respective capitals of all states…but not an easy task.

      • The bad economic policies were there before ’98 as well… But you make good points. I agree that encouraging migration is not the whole answer, but it is part of the solution.

        • Above all: don’t expect them to become farmers.
          I am no economist or sociologist or anything like that but al ojo por ciento I would say
          we are talking about a couple of million people, mostly very young, in their twenties, born in the slums there or secondary cities somewhere else. Don’t expect them to move to El Sombrero to till the land.
          But we can offer some of them some decent work in some key Llanos cities when it comes to new manufacturing companies. Think textile.

          The thing about the property rights in the cities: this is something I think I started to write about in 2007. It was something I knew, like Alejandro, from my relatives and friends.
          I simply don’t understand why Rosales in 2006 and later Capriles and others haven’t – as far as I know – talked about this time after time after time.
          Capriles and Ocariz, to be sure, are aware of this and they have talked about the issue but, to my knowledge – only at the level of Miranda and Sucre, respectively. They have given property rights, as far as they could, but still: it would be nice if they were to insist on this in national speeches.

          And this is something the military and the extreme left would ABHOR, ABHOR TO DEATH!
          This would mean transforming millions into “burguesiiiiitos fascistas vendedores de la Patria que no creen en el socialismo chavista”

          • Kep,

            Yes, there are lot’s of ways to encourage migration. Manufacturing in smaller cities is one of them. No, I don’t expect that many of the people currently living in the hillside barrios will want to become farmers, but modern farming is not as labor intensive. Done properly, Venezuela could/should be the bread basket for itself, Colombia, Ecuador, and much of the Caribbean. And farmers need tractors, and tractor repair, and insurance brokers, and feed stores, etc, etc… People go where the money is being made, regardless of what interests them.

        • Roy,

          Some people migrated for jobs,but many for reasons of simply wanting to live in a more exciting place and the prestige of living in the Capital.

          arroz con coco
          me quiero casar
          con una viudita
          de la Capital

          etc…

          Venezuelan people in general are more city people ( think extraversion)…..unlike many of us here in the US, who actually enjoy the peace and quiet,and the nature of smaller places( think intraversion)

          I remember a famous psychologist from the US,Jean Houston, once gave a series of seminars in Caracas and her main comment about Venezuelans was

          ” I don’t think there is a single introvert in the whole country.”

    • I’m generally wary of these “let’s make people migrate back to the countryside” policies, it’s all too “EjeOrinocoApure”-ish for me. But youi’re right, inasmuch as we implement policies to help people go back to the farms, we help the barrios.

      One of the things I wish someone would write about is irrigation policies. I mean, the Llanos are flooded half the year, what kind of agriculture can we have under those conditions? Not to mention the lack of roads, electricity, etc. Think of all the money we would have for rural interconnectivity if we got rid of the fuel subsidies. En fin…

      • Juan, I don’t think the goal should be Eje Orinoco Apure. I am very aware of it. And my dad had lots of links to farmers and former farmers from those regions. But we could well do something like Germany has been trying to do by investing in public institutions in such cities as Dresden, Leipzig and a couple of others. Now people are going to those cities and after several years of them getting empty, their population is going up again. It was about establishing there research centres and or places for good PUBLIC schools – which would also need services, thus this needs to be well planned -, support there for the creation of companies there, taking a couple of jobs from central ministries and adding those jobs to the “sucursales” in said cities.

        Venezuela is not Germany but the principle even there is the same.
        And so, a couple of thousands would feel like going to a couple of cities in the Llanos, etc. Also: it is IMPERATIVA to solve property rights in all those cities in the Llanos. We are talking about cities such as Calabozo or El Tigre. There are lots of them.

  4. I agree with Roy’s point above; also lack of jobs and the lure of big cities is common in most countries and for decades in Venezuela (long, long before Chavez) the barrios have been allowed to grow (and fester?) Here is where something Correa in Ecuador has done for the good (yes, really!): first getting agreement from the ‘communities’ but then building adequate housing with schools, transport and shops etc nearby (harder to do given the topography etc around Caracas) move the people out then take down the slum; sounds impossible but patently not so.

  5. One key factors adding to the difficulties : the: very fast , uncontrolled population growth , People breed prosmicuosly without thought to their capacity or preparedeness for responsible parenthood or child care , giving rise to generations of children who lacking proper parental care or attention are brought up unable to meet the challenges of a productive well ordered life.

    This population growth also outpaces the capacity of schools or medical centres or job creating industries to provide for the needs of all .

    If population grow was more sedate or slow and govt and private investment in public services and in productive industries rose at a steady pace then gradually the living standards of all would rise and we might know the rewards of economic development .

    Children brought up in this kind of social /family enviroment are often marred by certain behavioural or personality traits that disable them from achieving a better life , this has been much studied by social researchers both in Venezuela and abroad. .

    Venezuela is already a highly urbanized country but much could be done if life in the country could be made more rewarding and sattisfactory to avoid more country people coming to live in the slums of the big cities .

  6. As for people owning their own homes…nothing will make any difference without first attacking crime.

    All your papers can be in order and they can still be stolen from you when people have contacts in the Registrar of Deeds,So many times I have seen rich and powerful people even buy and sell property that belonged to someone else, just by paying off people in the registrars office…Some even judges.

    I have seen people with contacts make others sign over their properties for a pittance, and leave them in the poor house.

    Where viveza is seen as intelligence, unfortunately no plans can be made.

    Priority #1

    Punish criminals

  7. The wrong approach is building housing in the middle of nowhere, and assigning them to poor people, who then either sell those houses or abandon them to go back to the city they never intended to leave in the first place.

    The right approach is by improving the desirability of middle sized cities by either improving their access to healthcare, education, power, phone service, internet; and improving quality of life in general; or more importantly, creating jobs outside Caracas-Valencia-Maracaibo.

    That way people flock to the jobs, get jobs in their secondary city instead of having to commute to the main city, or stick around their home city instead of moving to the big cities (C-V-M is full of ULA, UNET, UNERG, UNELLEZ, UNEG, UNEXPO, etc. graduates who couldn’t find a good job back home).

    This could be done by:

    – Not creating new government jobs in Caracas-Valencia-Maracaibo. New factories, research institutes, autonomous institutes, administrative units should be created in middle sized cities.

    – Moving offices of national and regional institutions from main cities to secondary cities. That is, from Greater Caracas to Altos M, Guarenas, Valles del Tuy; from Greater Valencia to Guacara or Puerto Cabello; fom Maracaibo to Cabimas; From Barcelona or PLC to El Tigre; etc. It could benefit workers by having shorter commutes and cheaper real state.

    – Breaking up behemoths, like CORPOELECT or Bolipuertos, into smaller regional corporations would create administrative jobs in every regional unit as a side effect (since the main goal for this is usually efficiency).

    – Moving HQ of national organizations outside of Caracas. Some ministries could be moved outside of Caracas to more relevant locations like Tourism to New Esparta, Agriculture to Guarico or Zulia or Portuguesa, Mining to Bolivar, Industry to Carabobo or Aragua or Bolivar or Zulia, Oil to Zulia or Anzoategui or Monagas, etc. Some agencies and institutions too, like Air Force HQ could be in Maracay, the Navy in La Guaira or Puerto Cabello, and so on for the army, national guard, SEBIN, National Police, VENETUR, INAPESCA, INTI, etc.

    • People with money will move where their money goes the longest way. The key is that they have money wherever they go. Markets will follow.

  8. The biggest obstacle to growth in Venezuela is state ownership of the largest segment of the economy. PDVSA needs to be privatized. Until that happens there won’t be any hope of significant economic expansion, growth in good jobs, and a majority of the population will continue to live in grinding poverty. The opposition may come out victorious in this current battle but if they want to prevent the rise of another radical, socialist demagogue they need to advocate for the privatization of PDVSA. If the opposition doesn’t , and as far I can tell it seems they won’t, then the Chavista constituency will sit in their ranchos on the hillsides of Caracas just waiting for another demagoue to give voice to their economic discontent.

  9. First orders of business for the successors:

    1. Establish Security. Little can be accomplished within an atmosphere of fear and intimidation.

    2. Establish Justice. No laws can function if there are no impartial courts to adjudicate them.

    3. Establish a Stable Currency. No investment or financial planning can take place without this.

    After those three are in place, we can start talking about individual policy solutions. Without those, nothing else can be accomplished. First things, first…

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