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Editorials Chavez's socialist populism perpetuates inequality

Handout photo released by the Venezuelan Presidency of Venezuelan President Hugo Chavez speaking during a rally of the United Socialist Parties of Venezuela (PSUV) in Caracas on June 5, 2010. Getty Images/PRESIDENCIA

PRESIDENCIA/Getty Images

Venezuela's escalating crime rate reflects the failure of President Hugo Chavez to address the glaring disparities between the rich and the poor.

When "el Comandante" came to power in 1998, he promised to use the country's oil wealth to benefit the poor. But his Bolivarian socialist model has not alleviated the long-term problem of income inequality, and the attendant social ills it perpetuates.

Ironically, this runs counter to the overall trend in the region. Latin America used to be known for its acute and persistent income inequalities. But 12 of the largest economies in the Americas - including Brazil, Chile, Argentina and Mexico - actually saw a reversal of this pattern in the past decade. A new study shows that the average decline in the Gini coefficient - a measure of income inequality - was 1.1 per cent a year from 2000 to 2007. Venezuela improved the least of the 12 countries, conclude the authors, the economists Luis Lopez-Calva, of the United Nations Development Program, and Nora Lustig, of Tulane University.

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President Chavez's much-touted anti-poverty initiatives have not only failed to create sustained wealth, but have failed to keep people safe. The world's fifth-largest oil producer is also now among the countries with the highest crime rate. Venezuela has seen a dramatic escalation in homicides: 43,792 since 2007, compared with about 28,000 drug-related deaths in Mexico since late 2006, when the country declared war on the drug cartels.

The reasons are complex, and include the undermining of the judicial system by the government. But economic mismanagement is also a factor: President Chavez has not succeeded in diversifying the economy from dependence on oil or in improving productivity. With the drop in oil prices, programs to create public employment and subsidized food have become difficult to maintain. Venezuelans are faced with rising inflation, and a housing shortage.

Mr. Lopez-Calva and Ms. Lustig attribute the improvement in the income inequality gap in other countries in the region, such as Mexico, Peru, and Brazil, to three factors: an expansion in basic education; large-scale government transfers to the poor; and a decrease in the earnings gap between high-skilled and low-skilled workers. They find that "social democratic left-leaning regimes" are better at reducing inequality and poverty than "both non-left and radical left regimes."

Mr. Chavez should put aside his "21st-century socialist" rhetoric, and initiate polices to truly transform Venezuela's boom-and-bust economy. People need social mobility - not government-handouts. A reduction in crime rates would no doubt soon follow.

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