Archive for March 28th, 2010

The daunting task of providing for half a million new Venezuelans per year

March 28, 2010

Forget for a moment what is happening in Venezuela today. Concentrate on a single fact, a single number looking towards the future, Venezuela’s population grew last year by 480,000 people (The net of 580,000 births and 120,000 deaths). it is a daunting task to think about how to provide for these newly arrived Venezuelans in the years ahead, without even worrying of solving the problems that already exist.

I try to think about it in three different dimensions: When you read what the average Venezuelan wants out of life or expects out of its Government, there are three general priorities that motivate them politically: Hope, purchasing power and quality of life. Hugo Chavez has been able to provide lots of hope, a slight improvement in purchasing power which is now going to go below what it was when he became President, but he has failed miserably on improving quality of life.

It looks as if, with or without Chavez, it is only hope that can once again improve for the average Venezuelan in the next ten years. Improving the rest, even if you just focus in the newly born, represents a daunting task.

Take housing as an example. Providing housing to those 500,000 kids per year in the next four years will require half a million new homes if we assume two kids per family and two parents. Half a million homes is half the homes built in Venezuela by the Government ever since such programs exist. There are only 3.7 million formally built homes in Venezuela.

Well, building 125,000 homes per year, which I reiterate, would only provide homes for the newly born and their parents, is far above the maximum number Chavez has been able to build in any of his eleven years (27,000 housing units) and even above the maximum  (98,000 units) built in any of the ten years preceding him.

Thus, providing housing to these new Venezuelans is way above the organizational capabilities this country has had in the recent decades and the ability to even build them may been seriously compromised by the nationalization of the cement companies (to say nothing of the lack of electricity to generate the steel beams used in Venezuelan construction.

But note that there is already a shortage of 2.5 million housing units in the country,thus, even beginning to attack the problem is quite a task.

But is it? Coincidentally, there is an interview with one of the architects from a group that proposed to Chavez how to remedy the housing problem with a ten year US$ 30 billion program which seemed impossible to finance in 2000. They lasted two years in the constant shuffle that Chavez applies to his Cabinet and managers, as well as the fact that their program was completely decentralized. Add to that economic interests from the Capitalist, the socialists and the Bolibourgeois and the program went away faster than Chavista Justice acts on cases involving their enemies.

So, housing looks really tough.

Let’s consider purchasing power. Despite the biggest oil boom in the country’s history with oil prices increasing eight fold in the last eleven years, purchasing power improvements in the first ten years were only marginal and economists are predicting that the average Venezuelan will actually lose all those gains before the end of the year. Back to 1998 in a puff! Not pretty!

So, simple rules about growth in income break down in Venezuela because of The Devil’s Excrement. It is not a problem that the Venezuelan economy or oil prices would have to grow by 2% to accommodate the 480,000 new Venezuelans, the problem is that in the absence of a National Plan, with sound priorities like getting rid of military spending to benefit the people and the need for oil production to increase, Venezuelans will be poorer and poorer in the next few years. Politicians will be able to offer hope, but not much more which is real.

Unless, you could agree on four or five National priorities, a pact among political contenders that Housing, Oil, Education and infrastructure have to be taken out of the political diatribe.

Which simply sounds far fetched, if not impossible.

I could go on and on. You could take the electric problem, which takes knowledge, planning and money, or the crime problem, which takes knowledge, planning and money, or the education problem which takes ditto. Those half a million Venezuelans represent a daunting task and a challenge, which politicians in either side of the spectrum seem to be far from even attempting to address.

But ever since I realized that there will be half a million new Venezuelans every year going forward, that number has been giving me nightmares.