Why Venezuela's Middle Class (for the most part) Opposes Chavez

Richard Fidler rfidler at cyberus.ca
Thu Dec 5 14:53:15 MST 2002


A very informative article from ZMag:

Why Venezuela's Middle Class (for the most part) Opposes Chavez

by Gregory Wilpert; October 27, 2002

"Chavez' greatest error was to screw the middle class," says Carlos Escarrá,
a prominent constitutional lawyer and former Venezuelan supreme court judge,
who describes himself as being with the "proceso," but not a Chavista. The
"proceso" is the process of social transformation that was initiated by the
movement which brought President Chavez to power.

When Chavez first got elected, nearly four years ago, it looked like a vast
majority was with the "proceso," but now, large sectors of society that at
first supported Chavez, particularly the middle class, appear to have joined
the opposition. A clear indication of this opposition was the October 10
demonstration against the government, which attracted anywhere between
400,000 (government estimate) and 1,000,000 (opposition estimate) mostly
middle class participants. No matter what the precise number, there is
little doubt that this was probably one of the largest demonstrations in
Venezuelan history, which was matched two days later by a pro-government
demonstration of at least equal size, representing mostly the lower class of
Venezuelan society. Why is the middle class so opposed to Chavez and the
lower class not? The reasons are numerous and have to do with economics,
government policies, the media, and racism.

The Economy

2002 was and still is a difficult year for Venezuela. The currency devalued
50% in the first six months, inflation skyrocketed from 12% in 2001 to 35%
or more in 2002, and unemployment jumped from 13% to 17%. Contrary to what
many people in Venezuela seem to believe, these economic trends have
affected the middle class much more than they affected the poor. That is,
the currency devaluation has a greater negative economic impact on the
middle class because the middle class tends to purchase more products that
are denominated in dollars, whether it is cars, computers, real estate, or
vacations to the U.S. Suddenly they can no longer afford these purchases
because their income is worth half as much as it was before the devaluation.

Also, while the devaluation causes a general inflation of prices, since
Venezuela imports over 70% of its consumer goods, inflation is more acute
among the products that the middle class consumes because they tend to
purchase more imported goods than the poor do. Another reason why inflation
affects the middle class more than the poor is that the middle class depends
on a salary that is fixed at the beginning of the year. The poor, who are by
and large employed in the informal economy, however, can more easily adjust
their income to match inflation, simply by immediately charging more for
their products and services - they do not need to wait for the annual salary
increase. Finally, the poor tend to have more of a social net that softens
the impact of inflation, in the form of larger extended families and
communities that help each other out and in the form of free public
services, such as health care and education. The middle class, however,
tends to rely on private education, and private health care, which is of a
better quality, but which have to be discontinued as soon as the prices for
these service rise too much for their income.

Venezuela's government has a large role in the economy, which means that a
fluctuation in public spending has nearly immediate repercussions for
economic activity in general. In other words, government spending cut-backs
tend to push the economy into recession. Since about a third of government
income comes from oil revenues, any fluctuation in the price of oil is
rapidly felt in the rest of the economy. For example, in late 2001 the price
of Venezuelan oil dropped from $18 to $16 per barrel. This caused a
tremendous shortfall in revenues, so that public sector income declined by
13% in the first quarter of 2002, compared to the same period in the
previous year. Most of this loss was attributable to declining oil revenues,
which dropped by 46% in the first quarter, compared to the previous year's
first quarter. As a result, the state budget for 2002 had to be reduced by
7% relative to what had been planned. At the same time, in late 2001, the
opposition decided to intensify its campaign against the government, by
calling a general strike and organizing large demonstrations. This economic
and political crisis contributed to massive capital flight, which, in turn,
made the political and economic crisis worse. The central bank could no
longer defend the currency against the devaluation pressure that the capital
flight was causing and when it abandoned its efforts to defend the currency,
the currency devalued and inflation shot up.

Full:
http://www.zmag.org/content/showarticle.cfm?SectionID=45&ItemID=2546


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