The Facts Strike Back for Chavez

There's nothing like a bit of cut and thrust with facts and figures to shake up your prejudices.

In a recent post I cited former economist to the Venezuelan national assembly, Francisco Rodriguez, as casting doubt on the achievements of the Hugo Chavez government, and even suggesting that his image of being oriented towards helping the poor is mostly a public relations coup.

However, I've since discovered a substantive riposte from Mark Weisbrot, economist at US progressive think tank Center for Economic and Policy Research. Weisbrot pulls apart the arguments of Rodriguez, showing how they make distinctly selective use of available data.

These are the specific claims from Rodriguez that Weisbrot disputes:

Inequality has increased under Chavez, with the Gini coefficient going from 0.44 in 200o to 0.48 in 2005

Weisbrot reveals this as cherry picking, with the two figures taken by Rodriguez from different data sources, and no good reason for these two years being chosen. In fact, when the available measures of inequality from various sources (UN Economic Commission for Latin America, the World Bank and Venezuela's National Statistics Institute) are seen over their full periods, there appears to be a decrease in inequality under Chavez. Weisbrot notes that by comparison the Gini index in the US has gone from 40.3 to 46.9 during 1980--2005, a large upward distribution of income.

Other countries have reduced poverty by two percentage points for every percentage point of GDP growth (as opposed to one point in Venezuela)

I did point out in my original post the Rodriguez hadn't named any of these countries. Weisbrot makes the point that if Venzuela had reduced poverty by two percent for every point of GDP growth, it would have completly eradicated poverty -- an implausible achievement in four years.

Chavez has not increased the proportion of government spending on health education and housing

Again, Rodriguez has been selective in his choice of indicators. Weisbrot questions why he only mentions central government spending when there have been large allocations from the National Development Fund run by PDVSA (the state oil company). And the social spending from central government has increased in absolute terms, from 8.2 percent of GDP in 1998 to 13.6 percent in 2006. Overall, social spending is now 20.9 percent of GDP, and in real per capita terms has increased by 314 percent in this period.

Certain indicators such as low birth weight, access to piped water, and number of dwellings with dirt floors have worsened under Chavez

More cherry picking. Showing the full range of social indicators, Weisbrot demonstrates that most have improved over the past few years, with a notable improvement in access to sanitation and a steady decline in infant mortality. Seen alongside the rest of the data, it's possible that the indictators cited by Rodriguez could be measurement anomalies.

There's no evidence that the Robinson literacy programme has had any effect

There's some discussion of the methodology used by Rodriguez to draw this conclusion. Weisbrot says he relies on a survey that wasn't designed to measure literacy. He concludes that there's not enough evidence either way.

Chavez's big spending and the rise in imports threatens to cause a balance of payments crisis

Weisbrot points out that while imports might be increasing, Venezuela still has a very significant balance of payments surplus of around 8% of GDP, which, if it were applied to the United States, would see a surplus f $1.1 trillion rather than their actual $739 billion deficit.

Weisbrot does accept a couple of the Rodriuguez criticisms as reasonable. For one, the exchange rate is over valued, subsidising imports and making non-oil exports too expensive. At 25 percent inflation is also too high, though Weisbrot notes that it was 40 percent when Chavez came to power, and 100 percent in 1996. Finally, there are shortages of basic foods, although Weisbrot sees no reason why Venezuela can't import plenty more, being a very long way from having a balance of payments crisis. He denies that Venezuela is in anything like the situation of previous Latin American governments (Alan Garcia's 80s regime et al) described in The Macroeconomics of Populism.

Weisbrot also argues that social progress would have been a lot better if it hadn't been for the economic crisis caused by the oil company's strike in 2003, at a time when it was controlled by the Venezuelan opposition. The statistical tables show this caused a blip in many indicators, including a temporary leap in poverty. Weisbrot concludes:

"While it is useful to discuss the imbalances in the Venezuelan economy and what might be done to correct them, there is little use in presenting such a grossly exaggerated picture of an economy as if it were on the brink of ruin, and pretending that Venezuela's poor have not benefited from the economy's most rapid economic expansion in decades, and from the government's large increases in social spending and programs."

Against the weight of evidence, it seems clear that Francisco Rodriguez has set out with a pre-formed conclusion about lack of progress under Chavez, and has set out to fit the evidence around that. The reasons may be ideological, or they may date from his personal frustrations in working with the Chavez government, disapproval of its methods, or a belief that the country is headed down the wrong track.

In any case, it's a reminder of how easy it is for basic facts and figures to be politicised. For me, with pre-existing scepticism towards Chavez based on his buffoonery, authoritarian tendencies, and clumsy attempts to interfere in other countries, it's all too easy to just accept claims like those of Rodriguez at face value.

Categories: development, Latin America

The Costs of War

Recently there's been a bit of attention given to Joseph Stiglitz's estimate that the war on Iraq has so far cost $3 trillion. New Zealand blogger No Right Turn has a short post considering the opportunity cost of that amount.

It's not necessarily a point to be made only in hindsight. I thought it was worth posting the text of a letter I wrote to the New Zealand Listener back in the early days of the war in 2003 (even before blogging), when it was possible to imagine a greatly more optimistic combination of cost and outcome:

In the leadup to the war on Iraq, while bad cops Bush and Rumsfeld itchily fingered their holsters, the good cops (Powell and Blair) tried to talk the rest of us round with dire warnings about the ‘clear and present danger’ posed by Saddam Hussein’s supposed weapons of mass destruction. The principal rationale for the unprecedented doctrine of the pre-emptive strike was based on vague but scary scenarios of such weapons exploding in the streets of Tel Aviv, New York or London.

Now, after the crushing military victory within 21 days, coverage alternates between chest-beating triumphalism and worries about how to address the chaos that has been engendered in Iraq. While the Americans have anounced they will unilaterally continue ‘weapons inspections’, this is presented as a mere afterthought. Who now remembers that the war was supposed to be about some kind of perverse form of self-defense?

Clearly, however, if Saddam did possess weapons of mass destruction, he did not have the capacity to deploy them in any meaningful way. In some of the debate around the war, it has been suggested that Saddam refrained from using chemical weapons against the advancing Coalition forces because that would have proved they were justified in invading in the first place. But if this crazed and brutal dictator cared enough about losing the moral high ground to refrain from using his WMD in last ditch defense, with nothing to lose, what makes us believe he would ever have used them aggressively, or even (probably traceably) supplied them to someone else?

Maybe this is churlish semantics, since Iraq has been liberated once and for all of a thuggish despot. Maybe that outweighs the possibly thousands of civilians killed or maimed, the unknown number of Iraqi conscript soldiers slaughtered, the irreparable damage to international law, the chaos, anarchy and looting. Quite plausibly, Iraq will be better off in the long term. And perhaps this was the real motivation all along. Bush, Blair and co. wanted to rid the world of a terrible scourge and better the lot of humanity. They just had to conjure up alternative, more self-interested arguments because they didn’t think everybody else would have the moral courage to accompany them in their venture.

But hang on a minute. If purging scourges of humanity and aiding oppressed peoples was their aim, shouldn’t they, in the spirit of good accountable government, have first conducted some decent cost-effectiveness studies? What would the $75-200 billion spent on the war on Iraq have achieved if used, say, to help address the AIDS epidemic in sub-Saharan Africa?

Lonely Planet Plagiarism

The guys over at Road Junky (see my bio) will be chortling over this. A writer for Lonely Planet called Thomas Kohnstam has admitted making up or plagiarising large chunks of the twelve books he has worked on. Worse still, he didn't even visit Colombia -- the subject of one of his publications, claiming that he 'didn't get paid enough' to go there . Kohnstam said:

"I wrote the book in San Francisco. I got the information from a chick I was dating - an intern in the Colombian Consulate.

"They don't pay enough for what they expect the authors to do."

Sure, so everything is about money these days, and freelance writers are exploited. But man, what has gone wrong with the world? For me and all the twentysomething wannabe Hemingways I met as a backpacker, scrounging around Latin America and jotting down things in a notebook was something we looked for excuses to keep doing as long as possible. The idea of actually getting paid to do so seemed like an impossible dream.

Anyone with a gig as writing for the Lonely Planet must surely have been a better writer, a more intrepid and knowledgeable traveller, and a more determined self-marketer than us, we assumed. What bitter irony to find that they were employing some clown who didn't even want the job.

To add insult to injury the article reports that: "Lonely Planet has conducted a review of all Mr Kohnstamm's guide books, but says it has failed to find any inaccuracies in them". One wonders whether the 'review' involved visiting the countries in question.

[and let's just try and ignore the extra little insult in the AAP article which twice refers to 'Columbia' -- I'm presuming here that they didn't publish a guide to a New York university].