The most commonly cited statistic in defense of the Chávez-helps-the-poor hypothesis is the decrease in poverty rates, from 42.8 percent when he took office in 1999 to 33.9 percent in 2006. But this decrease is neither unprecedented nor surprising, given that the Venezuelan economy is in the midst of an economic expansion fueled by a five-fold increase in global oil prices since his first term began. Historically, drastic declines in poverty in Venezuela are associated with periods of substantial real exchange appreciation similar to the current one. The last such episode, which lasted from 1996 to 1998, coincided with an even larger decline in the poverty rate, from 64.3 percent to 43.9 percent. The fact that Venezuela is presently running a fiscal deficit despite unprecedented global oil prices signals that the current improvement, just like previous ones, will sooner or later be reversed.
A full reading of Venezuela’s health and education statistics shows no signs of the dramatic turnaround in well-being often claimed by the Chávez government and its supporters. For instance, the percentage of newborns who are underweight actually increased from 8.4 to 8.8 percent between 1999 and 2004. The infant mortality rate has declined, but it has been declining steadily since the 1940s. There isn’t even much evidence that the government is trying to do more for the poor. The average share of social spending, excluding social security, has actually decreased during the Chávez administration (29.3 percent for the period from 1999 to 2004, in contrast to 31.5 percent for period from 1990 to 1998 before Chávez was in office).
So why did he win? Easy, it's the economy stupid:
But if Chávez’s social policies are not working, why did he win such a clear victory in the December elections? The explanation lies largely in Venezuela’s economic growth. The country has experienced three straight years of near-double-digit growth, partly because of the recovery from the 2003 national strike and partly because of the dramatic increase in worldwide oil prices. If there is one universal rule of voting behavior, it is that incumbents do well when the economy is growing.
That high economic growth would obviously be a point in favor of Chávez if it weren’t so clearly unsustainable. Despite a five-fold expansion in oil prices, Venezuela is currently running a fiscal deficit projected at 2.3 percent for 2006. A decline in oil prices, or perhaps even something less dramatic, will make this house of cards come tumbling down. When it does, it will be the Venezuelan poor who will pay the heaviest price.
And when that time comes, Venezuelans of all stripes may have no choice but to accept Chávez’s continued rule. He has used his time in office, and his country’s ample resources, to consolidate a formidable political machinery whose power is based not only on its ability to hand out rewards to supporters, but also to punish its opponents by systematically denying them access to employment and public services. Every arm of the state, from the tax collection agency to the judicial system, is being used to ensure that Chávez’s opponents pay a high cost for their political opinions.
