Archive for March 20th, 2007

Minister Cabezas on poverty levels: Ignorance or deceit?

March 20, 2007

The other day I wrote a post about how I was starting to get worried about some statements by the new Minister of Finance Rodrigo Cabezas. Essentially he had made a number of statements that implied that the Minister either did not understand the magnitude of his problems managing the economy, or he was simply being cynical about it and trying to put a good face on a very difficult situation.

Well, today’s statements by Cabezas on poverty confirm my concerns, but also introduce the possibility that the Minister is simply incredibly ignorant. Cabezas said, while in Guatemala, that the Chavez Government had managed to lower poverty from 80.1% in 2003 to 39.4% in 2006. Now, so that there is no room for error or believe that he made a mistake, he expanded this by saying that in 2003 poverty was at 55.1% and critical poverty was at 25%, which adds up to 80.1%, while now poverty is at 30.3% and critical poverty stood at 9.1 for a total of 39.4%.

Well, these are either extremely ignorant statements, if I give the Minister of Finance the benefit of the doubt, or they represent a blatant attempt to tell a lie by him. Let’s review the facts:

1) Poverty in Venezuela has never reached 80%. President Hugo Chavez during his 1998 Presidential campaign popularized this number and at some point I found a couple of dozen links that propagated this lie. But the truth as measured by the National Institute for Statistics (INE) is nothing to be proud of either, as poverty levels did reach 70% in 93 and 96, but never as high as the 80% quoted by Chavez so often and which was repeated by Cabezas as shown in the following graph which I plotted earlier:

2) What the Minister seems to be confusing, and I give him the benefit of the doubt on this, is that the total poverty number includes critical poverty. Thus, the 55.1% he quotes includes the 25% of critical poverty in 2003 and does not get added to it as he stated as Cabezas did, poverty includes critical poverty, as shown clearly in the following graph, for data from another graph with official data and that of the Catholic University:

Now, there are two possible interpretations. One, Cabezas does not understand this, which is scary, given that a Minister should have an intimate knowledge of what I think is the country’s most important problem. The second one, is that he is trying to deceive the international media, since the statement was made during a trip to Guatemala. Obviously, neither of the two is satisfactory.

But even worse, the Minister seems to make a mistake with the 2003
number,, adding the two, but not with the data from 2006, a convenient “white lie” to say the
least. If he had “added” it wrongly in the same manner, he would have obtained 49% not 39.4%.

At the same time, and as discussed here, poverty experts, both pro and against Chavez have a hard time understanding the “magical” drop in official poverty levels in 2006, more so given that INE and the Social Studies Center at Catholic University have always differed quantitatively, but tracked each other rather well, since the only difference in the two is how the cost of living is taken into account in their methodology. In fact, the difference should have led to the INE poverty number being higher, rather than lower than that of Catholic University.

But the most remarkable thing is that even if it were true, bringing poverty down to 39.4% in 2006, simply brought poverty to roughly the same level found by Hugo Chavez when he became President in 1998, despite the biggest oil windfall in the country’s history. Some achievement no?

Not exactly a record to be proud of after eight years of Government.