[Marxism] Mark Weisbrot on Venezuela

Eli Stephens elishastephens at hotmail.com
Sun Nov 6 15:36:34 MST 2005


Mark Weisbrot is the co-director of the Center for Economic and Policy 
Research; his latest article, entitled "Economic Growth is a Home Run in 
Venezuela", is here:
<http://www.cepr.net/columns/weisbrot/2005_11_01.htm>
and is reproduced below.

Weisbrot appeared on CNN yesterday and did a good job indicting the U.S. 
government for its role in the coup against Hugo Chavez; I've got a 
transcript (which isn't available elsewhere) here:
<http://lefti.blogspot.com/2005_11_01_lefti_archive.html#113131634071581150>

Eli Stephens
  Left I on the News
  http://lefti.blogspot.com

Economic Growth is a Home Run in Venezuela

By Mark Weisbrot

CARACAS - "Viva Chavez," shouted Chicago White Sox manager Ozzie Guillen, as 
the team celebrated its World Series sweep last week. Guillen is Venezuelan, 
and a national hero in this country of 25 million people who seem to believe 
that they too, along with Chicagoans, have won the World Series.

His cheer for the country's leftist President Hugo Chavez might have caused 
some reaction just a year or two ago. But these days it went largely 
unnoticed, despite the continuing hostility between the Chavez government 
and the Bush administration. Relations between the two governments have been 
sour since the Bush administration supported a military coup against Chavez 
in April 2002, as well as a failed attempt to recall him last year.

But Chavez' popularity is now among the highest of any president in Latin 
America, with a 77 percent approval rating, according to the latest polling.

A few economic statistics go a long way in explaining why the Venezuelan 
government is doing so well and the opposition, which still controls most of 
the media and has most of the country's income, is flagging.

After growing nearly 18 percent last year, the Venezuelan economy has 
expanded 9.3 percent for the first half of this year - the fastest economic 
growth in the hemisphere. Although the government's detractors like to say 
this is just a result of high oil prices, it is not so simple.

Oil prices were even higher and rose much faster in the 1970s. But 
Venezuela's income per person actually fell during the 1970s. In fact, for 
the 28 years that preceded the current government (1970-1998), Venezuela 
suffered one of the worst economic declines in Latin America and the world: 
per capita income fell by 35 percent. This is a worse decline than even 
sub-Saharan Africa suffered during this period, and shows how completely 
dysfunctional the economic policies of the old system had become.

Although Chavez talks about building "21st century socialism," the 
Venezuelan government's economic policies are gradualist reform, more akin 
to a European-style social democracy. The private sector is actually a 
larger share of the Venezuelan economy today than it was before Chavez took 
office.

One important reform, long advocated by the International Monetary Fund, has 
been the improvement of tax collection. By requiring both foreign and 
domestically-owned companies to pay the taxes they owe, the government 
actually increased tax collection even during the deep recession of 2003 -- 
a rare economic feat.

As a result, the government is currently running a budget surplus, despite 
billions of dollars of increased social spending that now provides 
subsidized food to 40 percent of the population, health care for millions of 
poor people, and greatly increased education spending. The official poverty 
rate has fallen to 38.5 percent from its most recent peak of 54 percent 
after the opposition oil strike. But this measures only cash income; if the 
food subsidies and health care were taken into account, it would be well 
under 30 percent.

The government's currency controls have also helped to stem the capital 
flight that had hurt the economy prior to 2003. The country's public debt 
and foreign debt are at moderate levels. With an accumulated $30 billion of 
reserves - perhaps twice what the country needs -- Venezuela is well-poised 
to maintain growth even if oil prices drop unexpectedly.

Of courses Venezuela still faces many of the challenges common to the 
region: the judicial system is weak, crime rates are high, and the rule of 
law is not well established. But the present government, which has had less 
than three years of political stability - attempts to overthrow the 
government through violence and large-scale economic sabotage did not cease 
until the oil strike collapsed in February 2003 -- has set the economy on a 
solid growth path. And it has kept its promise to share the nation's oil 
wealth with the poor.

In short, the vast majority of Venezuelans got what they voted for, and even 
some who voted against the government now seem to be satisfied with the 
result. It's a pretty good start, and whatever the Bush administration 
thinks of Chavez - who calls President Bush "Mr. Danger" - it's the way 
democracy is supposed to work.






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