epic reading skills....
from the article, which does address what you're talking about.
Rodriguez asserts that this halving of the household poverty rate in four years is not very good:
“The real question is thus not whether poverty has fallen but whether the Chávez government has been particularly effective at converting this period of economic growth into poverty reduction. One way to evaluate this is by calculating the reduction in poverty for every percentage point increase in per capita income -- in economists' lingo, the income elasticity of poverty reduction. This calculation shows an average reduction of one percentage point in poverty for every percentage point in per capita GDP growth during this recovery, a ratio that compares unfavorably with those of many other developing countries, for which studies tend to put the figure at around two percentage points.”
This implies that other countries have had twice as much poverty reduction per unit of economic growth as Venezuela. This is not true, and Rodriguez (2008b) subsequently acknowledged this, listing Venezuela's income elasticity of poverty reduction at 1.67, which is closer to two than one. But an elasticity of two is not the relevant comparison. Table 2 shows country and regional data from the World Bank for thirty-four growth spells of more than forty percent in per capita GDP, over the last two decades. As can be seen from the table, there are only three countries with a better income elasticity of poverty reduction than Venezuela.
And even this comparison understates Venezuela’s success. The World Bank data is for a $2 per day (Purchasing Power Parity dollars) poverty line, whereas Venezuela's poverty line is about 50 percent higher than this. The income elasticity of poverty reduction is much less elastic – that is, there is much less poverty reduction for a given amount of growth -- for higher poverty lines. (Also, the three countries that are above Venezuela – Poland, Latvia, and Chile – have very low levels of poverty by the end of the period, measured at $2 per day; countries with very low levels of absolute poverty tend to have much higher income elasticities of poverty reduction.) And as noted above, we are here only looking at cash income, ignoring gains for the poor in health care and education.
There is no "Table 2" to look at.
I read that. How does that address my posts and questions to you? Chavez has given money and oil away to other countries, even free energy to some of the poor in the US. No wonder the poor in Venezuela are still poor. And yes, the poverty numbers you and your article bring up are manipulated and inaccurate. Here's how Chavez comes up with those numbers:
Critics slam Venezuelan oil windfall spending`Missions' won't have a lasting effect, they say
By Indira A.R. Lakshmanan, Globe Staff | August 13, 2006
CARACAS -- With oil prices at record levels, President Hugo
Chávez of Venezuela has become the world's richest petro-socialist , and has vowed to spend that bounty on the poor.
With the national oil company projecting worldwide revenues of $85 billion this year, Chávez has plenty to spend; Venezuela has doubled the oil money in government coffers since 2004. But controversy has erupted over how wisely that money is being spent.
The government says the oil bonanza is transforming the lives of the poor. But critics, including senior economic officials who have broken ranks with Chávez, say
the money is being frittered on short-term programs that boost Chavez's popularity, rather than being invested in long-term growth. Even planners loyal to Chávez worry that without strict oversight, a good portion of the windfall could be lost to corruption, and that not enough is being saved for the rainy day when oil prices fall.
Two years after oil prices began their dramatic climb and the government started plowing newfound billions into antipoverty programs, Celina Meza and her neighbors still hawk cheap snacks for small change and live in shanties clinging to a hillside in La Vega, one of the city's poorest barrios. But Meza, 68, said without hesitation that she is better off thanks to Chavez's policies and the oil boom that pays for them.
She receives a stipend of about $100 a month for attending Mission Robinson, an adult literacy program started under Chávez that provides financial incentives to the neediest students. Her husband's social security payment has risen with wage and pension hikes mandated by Chávez and paid for with abundant state funds. And the government has used the oil windfall to open subsidized markets in poor neighborhoods that sell staple foods up to 40 percent cheaper than elsewhere.
Meza's story is typical of many of Venezuela's poorest citizens:
Despite the oil boom, she has been unable to find a job and cannot pay for health, education, or decent housing. Yet she is living better due to subsidies that have boosted her household income, decreased her food costs, and given her family access to free schooling and basic medical care.
``There are many needy people still. But at least there's hope," said Sergio Contreras, 34, a volunteer who teaches Meza and 10 other adults to read . They learn in a shabby plywood shack in the sprawling slum not far from downtown Caracas.
Other Chávez-inspired ``missions" offer vocational training, high school equivalent diplomas, distance-learning university degrees via Internet or other off-site methods , aid to needy mothers, soup kitchens, and free eye operations.
A review of government accounts shows the immense scale of the oil money in play for such initiatives.
The state-owned oil company, PDVSA, will pay the government an estimated $30 billion in taxes and royalties this year, nearly $19 billion of which will go to social spending, said Rodrigo Cabezas, president of the National Assembly's finance commission. PDVSA has also set aside $4.5 billion this year for its antipoverty projects.
On top of that, PDVSA is depositing about $100 million a week into a discretionary presidential spending fund that is outside the budget. Last year, Chávez created the so-called Fund for National Development, which -- in addition to the $5.5 billion it will accumulate from PDVSA's weekly deposits -- has drawn $10.2 billion from the Central Bank's reserves, and will draw billions more at year's end. Seventy percent of that money has been earmarked for infrastructure projects, and 25 percent for social spending, Cabezas said.
All told, higher gas prices and steeper royalties have yielded a whopping $50 billion in oil money available for public spending this year.
Critics say there is no oversight to control how the windfall is spent, or evaluate the efficiency of the beneficiary programs.
The Ministry of Finance recently announced that Russian machine guns would be purchased out of the Fund for National Development.``The government didn't establish rules for the use or necessary supervision, control, and auditing of this fund," said Domingo Maza Zavala, a state-appointed central bank director.
As for ``missions," which are the beneficiary of most of Chávez's social spending, ``I have a personal conviction that they are a good thing . . . but there's no method of objective evaluation of what the missions have achieved," he added.
Another troubling aspect of the presidential fund is that its main funding mechanism -- taking ``excess" foreign reserves from the Central Bank -- could lead to inflation, devaluation, or currency instability.
The Bank's foreign reserves are monies that effectively have been spent -- when PDVSA converted its US dollar oil export earnings into local currency, complained economist Orlando Ochoa, a former adviser to the finance commission.
An earlier Chávez creation, the Fund for Economic and Social Development of the Country, amassed $4 billion in oil money in 2004 and 2005, but
government and bank officials interviewed were unable to say how much of that has been spent or on what programs.With so much oil money sloshing around, observers also wonder how efficiently public contracts are being allocated.
Former Army Captain Eliécer Otaiza, a Chávez loyalist appointed to investigate corruption, recently told a government commission that most contracts were awarded without a transparent bid process.José Rojas, Chávez's former minister of finance and former vice president of PDVSA, said he was ``
shocked and disappointed" about the ``irresponsible" way oil profits are being handled.The government should be redistributing wealth through tax policy, while using oil money to ``create real growth via better productivity and higher employment. . . . If you don't do that, you're just spending money," he argued.
Rojas complained that despite feel-good programs, per capita income has declined by 4 percent since Chávez took office, according to Central Bank figures. ``I said poverty was rising and I got fired for telling [Chávez] the truth," he said.Temir Porras, head of Mission Sucre, a program to expand higher education through distance learning, new campuses, and open admission, countered that with 7 to 9 percent projections for GDP growth this year, there's no reason to fear money is being squandered. Investments in education, health, and infrastructure will have a lasting effect on standard of living, he said.
Skeptics say Chávez's antipoverty programs are not sustainable solutions to lift people into the middle class, but rather paternalistic hand-holding that will vanish when the oil money is gone.
Both the government and opposition say the other side is manipulating statistics, making it hard to evaluate how much Chávez's oil-funded programs have helped the poor.
Elias Eljuri, president of the National Statistics Institute, said unemployment has dropped from 16.6 percent when Chávez took office in 1999 to 10.2 percent today.
But critics assail the state for defining informal workers, such as street vendors, as employed, and excluding adults who are studying in missions from unemployment numbers.Last year, Eljuri released figures showing poverty had risen more than 10 points under Chávez, to 53 percent in 2004. But after a stinging critique by the president, who called for a measure of how missions were improving standard of living, the institute created a ``social well-being" index. By year's end, it said poverty -- defined as people who can't afford basic food and services -- had fallen to 40 percent.
Edmond Saade, president of Datos Information Resources, a private Venezuelan research firm, said his surveys show
incomes of the poorest Venezuelans have risen because of subsidies and grants, at the same time that the percentage of people in the worst living conditions has grown.``The poor of Venezuela are living much better lately and have increased their purchasing power . . . [but] without being able to improve their housing, education level, and social mobility," he said. ``Rather than help [the poor] become stakeholders in the economic system, what [the government has] done is distribute as much oil wealth as possible in missions and social programs."
Yet
not even Chávez supporters say all the social programs are working as they should. There are complaints that public housing hasn't materialized, and that Cuban doctors assigned to poor barrios aren't doing their jobs.
Maribel Cedillo, 36, a supervisor of Mission Robinson in La Vega, summed up the mood of many here: ``
There are so many problems in the missions in all the barrios," she sighed. ``But we keep quiet because we want Chávez to stay in power. As long as he's there, we believe things can get better."
http://www.boston.com/news/nation/articles/2006/08/13/critics_slam_venezuelan_oil_windfall_spending/
