Hugo Chávez & the Politics of Poverty


President Hugo Chávez’s bid to change Venezuela’s constitution to end the presidential term limit has failed—for the moment. Chávez lost this week’s referendum by 51% of the vote, to 49%, on a low turnout (over 40% of the electorate didn’t vote). The president has had 9 years in power and was re-elected in 2006 with 63% of the vote (with considerable support from the poor). His mandate lasts until 2013. Bret Stephens at the Wall Street Journal and Mark Weisbrot at the Centre for Economic and Policy Research (CEPR) offer contrasting views of Chávez and the referendum.

Poverty was rising before Chávez was elected and by 2000 some 43-48 per cent of Venezuelans were below the poverty line, and the richest 20 per cent of Venezuelans were receiving over half of all income. There are wildly conflicting claims about the trend in poverty under the Chávez administration. The under-five mortality rate has been falling since 2000 according to the World Bank, and CEPR’s Mark Weisbrot argues that poverty had fallen to around 30% by end-2006. In his 2006 Foreign Affairs article, Jorge Castañeda argues that it has risen.

The urban poor appear not to have turned out in support—at least not in the numbers that Chávez hoped. Government price controls on basic goods have capped the cost of living for them, but the (predictable) result is shortages. Chávez may well have to revisit the macroeconomics of ‘21st century socialism’ if it is not to go the way of ‘20th century socialism’.


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