Archive for September 6th, 2006

Chavez’ 30% illusion

September 6, 2006

On Sunday,
President Hugo Chavez said in his variety show Alo Presidente that poverty
under his Government had dropped by 30%, leaving speechless both opposition as
well as Government analysts. Where did the President get that number? Is it
possible? Who told him that?

In order
to explore the President illusory number we decided to look at poverty numbers
as accounted for by both the Government, via the National Institute for Statistics
(INE), as well as the Institute for Social Studies of the Catholic University

As you can
see, no matter which numbers you take it is impossible for a 30% difference to
have occurred at anytime during the
almost eight years Chavez has been in power, since the level of poverty never
went above 60.2% in the Government statistics and 55.6% in the UCAB numbers. Moreover,
changes in the poverty numbers of both INE and UCAB were quite similar until

Even if
you use today’s
of 33.9% by INE, the 30% figure used by Chavez never materializes. This
is much like the myth created by Chavez in his 1998 Presidential campaign that
80% of Venezuelans lived in poverty, a number never measured by any internal,
external, official or private institution, but which Chavez popularized to such
an extent that it is regularly quoted, as shown in an
earlier post
. A lie told a thousand times does indeed become the truth.

But what
makes it intriguing is how the INE and UCAB numbers have begun to deviate from
each other, showing today the biggest difference in the last eight years. The
differences have always been methodological and it is difficult to prove or
show that one methodology is better than the other, the only questions is then
whether they are both honest or not. In 1999, the National Institute for Statistics
(INE) began using its own CPI measure, while UCAB has continued to use the numbers
given by the Venezuelan Central Bank. INE on the other hand, calculates its CPI
by multiplying by a factor of two the increase in the price of foodstuffs according to their poll, thus
imposing a very different measure from the Central Bank CPI which includes all goods. Given
that the Central Bank numbers are not exactly “independent” then the same
trends should be seen in both sets of data even if the absolute numbers differ.

But none
of this explains the “miracle in 2005”, when poverty went miraculously down by
14.6%, according to INE, while remaining essentially the same in the UCAB

But we can
look back at the origins of this magical improvement. The current head of INE,
Elias Eljuri, was named to his position by Hugo Chavez when his predecessor was
fired for giving out “bad” numbers for poverty. Chavez, in his usual
know-it-all style, said something like what follows, during one of his Alo
Presidentes in early 2005:

“I have no doubts that the methods
used by INE to measure poverty are not right. They measure our reality using
neo-liberal ideas, as if no revolution was taking place”
(or something very similar)

The order
was quite clear: Reduce poverty using revolutionary methodology or else!

Now, given
that the INE number is based on only the increase of the price of foodstuffs, it is
essentially impossible for that number to have dropped so fast, while the UCAB
number has stayed flat. You see, the overall inflation measured by the Central
Bank in the last twelve months, which is what UCAB uses, or any other time period in the last year and a
half, has
been lower and even much lower than that of foodstuffs
for essentially any
period you may choose. For example, so far this year, inflation for foodstuffs is
up 17.4% and for the last twelve months it is up a whooping 26.7%, while the CPI
is up only 10.4% and 14.9% for the same two periods. Thus, if anything, the INE
numbers should be running higher than those of UCAB’s which is very far from
what is being reported. In fact, in the last four months, inflation for foodstuffs
has been up a scary 4.7%, 5.5%, 5.1% and 4.3%, which is twice what has been
seen in the overall CPI of 1.6%, 1.9%, 2.4% and 2.2%. So, guess who should be
showing worse numbers according to their methodology? You guessed it, INE
should be, but who knows how their numbers are being manipulated.

In fact,
you should have it clear that even if the absolute numbers in the last eight years
have been different, the trends have always been the same up to 2005. This
makes sense, because both the INE numbers and the UCAB numbers measure poverty
on the basis of comparing income to inflation and the ability to purchase a
basic basket of stuff and services with that income. Thus, the current INE
numbers do not make any sense. But in any case, there is no 30% difference to
any previous number reported by either group.

Like much
of what Chavez says or does, it is simply an illusion, in this case a 30%
illusion, with no basis or reality other than the wishful thinking of Chavez
and his administration.

Mision Borrachos con Chavez

September 6, 2006

Last Sunday, Hugo Chavez blasted the Mayors of the country for allowing people to drink openly on the streets, even going as far as praising Muslim countries for banning drinking. But somehow he failed to say anything at all during the rally welcoming him back last Friday, where drinks were not only widely distributed by the Chavista organizers to those in attendance, but we also saw the spectacle of this drunk cavorting around the fountains of Plaza O’Leary where the rally was held and entertaining the crowd. Maybe he is the leader of Mision “Borrachos con Chavez” (Drunks with Chavez) and the autocrat did not want to upset or annoy him! What a BS artist Chavez is!

Thanks M. and Yahoo for the pics!