The inflation of Hugo Chávez

Supporters of Hugo Chávez, the recently deceased Venezuelan president, and even many of his critics, have repeatedly emphasized two supposed achievements that will burnish his legacy. First, the share of people living in poverty plummeted to approximately 28% in 2012, from a peak of 62% in 2003 (though it was 46% three years earlier, at the beginning of Chávez’s first term). Second, he gave to a majority of Venezuelans a sense of identity, pride, and dignity long denied them by a corrupt, elitist, light-skinned oligarchy.Both claims, however, are only partly true, and only partly account for Chávez’s recurrent electoral victories – 13 of 14 popular votes, including referenda. As for the first claim, both The Economist and the Nobel laureate Mario Vargas Llosa were right to put Chávez’s achievement in perspective. Almost every country in Latin America has reduced poverty significantly since the beginning of this century, with the extent of progress depending on baselines and cut-off dates, good years and bad years, the reliability of official data, and other factors.The reasons for this progress are well known: with the exception of 2001 and 2009, these were boom years for commodity-exporting countries like Brazil, Argentina, Peru, Chile, and, of course, Venezuela, as well as for manufacturing-based economies, like Mexico. Furthermore, during these nearly 15 years, most governments have managed their accounts responsibly: small or no fiscal deficits, low inflation, well-targeted anti-poverty programs, and so on.This has helped to lower not only poverty, but also inequality, Latin America’s traditional scourge. According to the economist Nora Lustig, between 2000 and 2010, “income inequality…declined in all 17 Latin American countries for which comparable data exist.” The decline was especially pronounced in the three largest countries – Brazil, Mexico, and Argentina – which comprise nearly 75% of the region’s population.One difference in Venezuela is that Chávez spent more than $1 trillion to achieve the same feat – in a country with a population one-sixth the size of Brazil’s and slightly more than one-quarter the size of Mexico’s. While the long-term viability and effectiveness of conditional cash-transfer programs in Brazil and Mexico is questionable, these anti-poverty initiatives certainly are better designed than Chávez’s massive, blanket subsidies on everything from poultry and flour to housing and gasoline.Then there is the destruction of Venezuelan industry, the spectacular increase in violence, the explosion of foreign debt, and the depletion of foreign-currency reserves that has accompanied Chávez’s so-called “Bolivarian socialism of the twenty-first century.” None of these problems has afflicted the region’s other large countries – or at least not to anywhere near the same extent. If Chávez had not played with the numbers, as demagogues and populist leaders tend to do, the results would be more disheartening.The second argument in defense of Chávez’s legacy is a bit more robust, but not much. True, Venezuela’s immense natural riches have been exploited and often squandered by elites more accustomed to the boulevards of Miami than to the slums of Caracas. But it is equally true that Venezuela enjoyed 40 years of democratic rule before Chávez, under the 1958 Punto Fijo Pact, whereby two parties, one social democratic and the other social Christian, alternated in power peacefully.Venezuela also boasted one of the region’s most vibrant civil societies, with some of its freest and most vigorous media. With the exception of the Caracazo – a wave of protests against free-market reforms in 1989 that resulted in an estimated 3,000 deaths – there were only minor bouts of repression.To be sure, large swaths of Venezuelan society rightly felt excluded from the country’s cozy elite consensus and insular governing arrangements, and resented it immensely; but an aspiring middle class comprised roughly half the population. Chávez exploited – and widened – that division; indeed, as the current campaign to elect his successor shows, the country remains more polarized than ever.It may well be that Chávez’s purported feats and popularity will outlast him. Instead of a simple rotation of elites in power, perhaps what occurred during his time in office was the advent of political leadership that looks, talks, worships, and loves like the people of the country – leadership that identifies with and benefits the millions of Venezuelans who previously were marginalized. In that case, Chávez’s designated successor, Nicolás Maduro, will make short work of opposition candidate Henrique Capriles in the upcoming election. Chavismo will outlive Chávez.But, whatever the outcome, all the mourning and embalming will not alter a simple fact: Venezuela and its people are not clearly better off than they were 14 years ago. And whatever modest improvements they may feel in their lives were also secured elsewhere, at a far lower economic and political cost.