Thursday, October 27, 2005
Chavez fights poverty and succeeds - part II
A couple weeks ago I posted on the good news that poverty in Venezuela has fallen over the past couple of year and is now below what the poverty level was when Chavez first came to office. Of course, given that these numbers reflect well on the Chavez administration the opposition and its allies are falling all over themselves trying to discredit the numbers. First, a number of Venezuelan media, opposition blogs, and even commenters on this blog have claimed the way the numbers were calculated had been changed to make them look better. And then today opposition cheerleader and Miami Herald columnist, Andres Oppenheimer, tried to cast aspersions on the good numbers. So first, lets look at what Mr. Oppenheimer said:
First things first. The notion, peddled by some, that the methodology for calculating poverty was changed is dealt with here. Please recall that although a verbatim interview transcript of the INE president in Panorama newspaper and another article in Ultimas Noticias made it clear that the methodology for measuring poverty had NOT changed at all, some, including El Nacional and some very dishonest opposition bloggers insisted that the INE president had said that the poverty measurement had changed.
Well apparently Mr. Oppenheimer is a sufficient bigwig that he can call and get Venezuelan officials on the line. And what did the INE President, Eljuri, tell him Mr. Oppenheimer on the phone? That in fact the poverty figures were calculated “using the same measuring standards as in previous years”. So unsurprisingly, Panorama, Ultimas Noticias, and this blogger were correct on this and the usual opposition blowhards were lying. And just as with the oil production numbers apologies will be accepted.
Nevertheless, Mr. Oppenheimer still claims these numbers are hard to believe. So lets take a closer look at his article and see if we can figure out why. The obvious slanting of information begins right in the first paragraph:
Oppenheimer that the numbers have changed “suddenly”. That is not true at all. The numbers showing poverty going up that he was happy to pounce on when they were released a while back were for 2003 – a full two years ago. The numbers being given now are up through 2005. So the change is over a period of years, not months. Hardly a sudden change.
Then comes this:
To say that poverty increase during Chavez’s first four years in office is another rather obvious attempt to mislead. To see why let me list once again the poverty statistics by year:
1997= 48.1%
1998 = 43.9 %
1999 = 42 % [Chavez takes office]
2000= 40.4 %
2001 = 39 %
2002= 48.6 [coup and strike]
2003 = 55.1
2004 = 47.0
2005 (first semester) 38.5%
2005 (second semester – anticipated) 35%
Looking at this you can see that the number of poor was steadily decreasing until the opposition started with their famous coup attempt and oil strike which threw the economy into a tail spin. From looking at the year by year numbers it is clear that it isn’t Chavez’s policies that contributed to any increase in poverty but rather the concerted effort by the opposition to overthrow the government and trash the economy that did it (could this be why Oppenhiemer never shows the year by year numbers?) And a very cynical strategy it was, damage the economy as much as possible and then blame the results on Chavez. Fortunately, even though some dupes like Oppenheimer buy it the vast majority of Venezuelans know exactly who was responsible for the hard economic times of 2002 and 2003.
But if that weren’t enough here is another one:
About the only thing he gets right here is that Venezuelan oil was selling for about $9 a barrel before Chavez took office. The $60 per barrel number is meaningless – Venezuelan oil has never sold for that price. In fact while oil prices are very high this year they are still averaging $44 per barrel for the year – not $60. More importantly, that is what it is NOW. But in 2002 and 2003, when the poverty levels went up, it was only selling for a little over $20 per barrel. What is more, part of 2003 Venezuela wasn’t getting much money from oil as its oil industry was shut down from a oil strike!! This is standard anti-Chavez propaganda, pretending that he has gotten much more from the oil revenues than he has and conveniently forgetting the billions lost to opposition sabotage.
But he saves the best for last. He can’t believe that poverty could have gone down so much so fast. It would, according to him, take a “miracle” for that to happen. But would it really have taken a miracle? Lets see.
Between 2002 and 2003 the economy contracted 17% and poverty rose from 39.1% to 55.1% or about 16%. So the GNP and poverty were almost exactly inversely proportional – as the economy went down 17% poverty went up 16%. Now lets look at what happened in 2004 and 2005. The economy grew 17% in 2004 and another 10% in 2005 for a total of 27%. And poverty is shown as falling from 55% to 35%, a decrease of 20%. So this time the inverse proportionality is broken somewhat – the economy went up 27% but poverty only decreased 20%. If the same inverse proportion held as when poverty was increasing then poverty should have decreased by about 27% instead of just 20%. In other words, looking at these numbers it isn’t surprising that poverty decreased so much, it is surprising it didn’t go down even more. Wow, so maybe the INE IS making a mistake. Maybe they are UNDERESTIMATING how much poverty went down!! That certainly is what an analysis of these numbers shows.
So there is no miracle here. Only very good and very plausible numbers which reflect how a booming economy has helped lift a significant number of Venezuelans out of poverty. Oppenheimer and his anti-Chavez friends may not like that as it dims their chances of giving Chavez the boot. But arithmetic is arithmetic and that is what the numbers show. So it needs to be said again, congratulations to the people of Venezuela and good work President Chavez.
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A miracle! Venezuela's poverty has suddenly fallen
BY ANDRES OPPENHEIMER
aoppenheimer@herald.com
ANDRES OPPENHEIMER
aoppenheimer@herald.com
How interesting! Just a few months after Venezuela's official statistics institute reported that poverty had increased by 11 percent since President Hugo Chávez took office in 1999, the same institution is now reporting -- after a public scolding by the president -- that poverty has suddenly plummeted to pre-1999 levels.
Before I tell you what explanation I got from the president of Venezuela's government-run National Statistics Institute (INE), let's recap the statistical roller-coaster of Venezuela's official poverty figures.
You may recall that in March I reported in this column that Venezuela's INE had said poverty had risen from 43 percent to 54 percent of the population during Chávez's first four years in office. The report said that extreme poverty -- the poorest of the poor -- had increased from 17 percent to 25 percent of the population.
And you may recall that I made a big fuss about these figures. I noted that Chávez, a self-described champion of the poor, had managed to increase poverty despite the biggest increase in Venezuela's oil-export income in modern history. Oil, which accounts for about 80 percent of Venezuela's foreign income, has risen from $9 a barrel when Chávez took office to more than $60 a barrel today.
Shortly after I wrote about these figures, Chávez criticized the INE's statistics, saying they reflected a ''neo-liberal'' free market way of measuring poverty that did not reflect the reality of a ''socialist'' economy like Venezuela's. He called on the INE to change its methodology.
THE NUMBERS
Well, guess what? A new INE poverty report published this week shows a near miraculous decline in Venezuela's poverty. Overall poverty has suddenly plummeted to 38.5 percent of the population -- 4.5 percent below what it was when Chávez took office.
And the new figures for extreme poverty -- the poorest of the poor -- are even more startling: It has plummeted from 24 percent of the population in the first half of 2004 to 10 percent today.
''This is very suspicious,'' says Luis Pedro España, an economist who heads a poverty studies project at Venezuela's Andrés Bello Catholic University. ``If they had indeed reduced extreme poverty by more than half in a few months, it would be a world record.''
España says that's not likely to be the case. He added that not even Chávez's massive social programs would help explain the dramatic reduction in extreme poverty, because they are most often concentrated in big cities, while the poorest of the poor tend to live in remote rural areas.
VANISHING FIGURES
Ana Julia Jatar, an economist with the Institute of Higher Administration Studies (IESA), noted that some of the figures in previous INE reports that reflected badly on the Chávez government have mysteriously disappeared from the INE website.
''Venezuelan statistics are no longer credible,'' Jatar says. ``They have become an instrument of government propaganda.''
Not true, INE's president Elias Eljuri told me in a telephone interview from Caracas. The new figures result from a dramatic increase in Venezuela's gross domestic product during the past two years. And they were taken using the same measuring standards as in previous years, he said.
'Poverty levels had soared in 2002 and 2003 because of a drop in the GDP caused by the [anti-Chávez] coup d'etat and the oil workers' strike,'' Eljuri said. ``But since then, the economy has grown by 18 percent in 2004, and will grow by near 10 percent in 2005. A recovery of such magnitude brings about a big drop in poverty rates.''
''There is an opposition campaign against the INE,'' he told me. ``When I reported that poverty had risen [during Chávez's first four years in office], I was their hero. Now that the economy has grown and I'm reporting that poverty has dropped, I've suddenly become a liar.''
My conclusion: If Venezuela's INE is right, and wants to maintain its reputation of unbiased economic reporting, it should accept some adult supervision and open its books to independent economists, like most governments do.
Otherwise, I will have to conclude that it is following Cuba's example, and has begun publishing its own happy figures, which nobody can independently corroborate. Miracles may exist, but most of us find it hard to believe in them.
First things first. The notion, peddled by some, that the methodology for calculating poverty was changed is dealt with here. Please recall that although a verbatim interview transcript of the INE president in Panorama newspaper and another article in Ultimas Noticias made it clear that the methodology for measuring poverty had NOT changed at all, some, including El Nacional and some very dishonest opposition bloggers insisted that the INE president had said that the poverty measurement had changed.
Well apparently Mr. Oppenheimer is a sufficient bigwig that he can call and get Venezuelan officials on the line. And what did the INE President, Eljuri, tell him Mr. Oppenheimer on the phone? That in fact the poverty figures were calculated “using the same measuring standards as in previous years”. So unsurprisingly, Panorama, Ultimas Noticias, and this blogger were correct on this and the usual opposition blowhards were lying. And just as with the oil production numbers apologies will be accepted.
Nevertheless, Mr. Oppenheimer still claims these numbers are hard to believe. So lets take a closer look at his article and see if we can figure out why. The obvious slanting of information begins right in the first paragraph:
”Just a few months after Venezuela's official statistics institute reported that poverty had increased by 11 percent since President Hugo Chávez took office in 1999, the same institution is now reporting -- after a public scolding by the president -- that poverty has suddenly plummeted to pre-1999 levels.
Oppenheimer that the numbers have changed “suddenly”. That is not true at all. The numbers showing poverty going up that he was happy to pounce on when they were released a while back were for 2003 – a full two years ago. The numbers being given now are up through 2005. So the change is over a period of years, not months. Hardly a sudden change.
Then comes this:
You may recall that in March I reported in this column that Venezuela's INE had said poverty had risen from 43 percent to 54 percent of the population during Chávez's first four years in office.
To say that poverty increase during Chavez’s first four years in office is another rather obvious attempt to mislead. To see why let me list once again the poverty statistics by year:
1997= 48.1%
1998 = 43.9 %
1999 = 42 % [Chavez takes office]
2000= 40.4 %
2001 = 39 %
2002= 48.6 [coup and strike]
2003 = 55.1
2004 = 47.0
2005 (first semester) 38.5%
2005 (second semester – anticipated) 35%
Looking at this you can see that the number of poor was steadily decreasing until the opposition started with their famous coup attempt and oil strike which threw the economy into a tail spin. From looking at the year by year numbers it is clear that it isn’t Chavez’s policies that contributed to any increase in poverty but rather the concerted effort by the opposition to overthrow the government and trash the economy that did it (could this be why Oppenhiemer never shows the year by year numbers?) And a very cynical strategy it was, damage the economy as much as possible and then blame the results on Chavez. Fortunately, even though some dupes like Oppenheimer buy it the vast majority of Venezuelans know exactly who was responsible for the hard economic times of 2002 and 2003.
But if that weren’t enough here is another one:
I noted that Chávez, a self-described champion of the poor, had managed to increase poverty despite the biggest increase in Venezuela's oil-export income in modern history. Oil, which accounts for about 80 percent of Venezuela's foreign income, has risen from $9 a barrel when Chávez took office to more than $60 a barrel today.
About the only thing he gets right here is that Venezuelan oil was selling for about $9 a barrel before Chavez took office. The $60 per barrel number is meaningless – Venezuelan oil has never sold for that price. In fact while oil prices are very high this year they are still averaging $44 per barrel for the year – not $60. More importantly, that is what it is NOW. But in 2002 and 2003, when the poverty levels went up, it was only selling for a little over $20 per barrel. What is more, part of 2003 Venezuela wasn’t getting much money from oil as its oil industry was shut down from a oil strike!! This is standard anti-Chavez propaganda, pretending that he has gotten much more from the oil revenues than he has and conveniently forgetting the billions lost to opposition sabotage.
But he saves the best for last. He can’t believe that poverty could have gone down so much so fast. It would, according to him, take a “miracle” for that to happen. But would it really have taken a miracle? Lets see.
Between 2002 and 2003 the economy contracted 17% and poverty rose from 39.1% to 55.1% or about 16%. So the GNP and poverty were almost exactly inversely proportional – as the economy went down 17% poverty went up 16%. Now lets look at what happened in 2004 and 2005. The economy grew 17% in 2004 and another 10% in 2005 for a total of 27%. And poverty is shown as falling from 55% to 35%, a decrease of 20%. So this time the inverse proportionality is broken somewhat – the economy went up 27% but poverty only decreased 20%. If the same inverse proportion held as when poverty was increasing then poverty should have decreased by about 27% instead of just 20%. In other words, looking at these numbers it isn’t surprising that poverty decreased so much, it is surprising it didn’t go down even more. Wow, so maybe the INE IS making a mistake. Maybe they are UNDERESTIMATING how much poverty went down!! That certainly is what an analysis of these numbers shows.
So there is no miracle here. Only very good and very plausible numbers which reflect how a booming economy has helped lift a significant number of Venezuelans out of poverty. Oppenheimer and his anti-Chavez friends may not like that as it dims their chances of giving Chavez the boot. But arithmetic is arithmetic and that is what the numbers show. So it needs to be said again, congratulations to the people of Venezuela and good work President Chavez.
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