Andaras Prime
26-07-2007, 16:21
By: Gregory Wilpert
This article was originally published in October 14, 2002
“Chávez’ greatest error was to screw the middle class,” says Carlos Escarrá, a prominent constitutional lawyer and former Venezuelan supreme court judge, who describes himself as being with the “proceso,” but not a Chavista. The “proceso” is the process of social transformation that was initiated by the movement which brought President Chávez to power.
When Chávez first got elected, nearly four years ago, it looked like a vast majority was with the “proceso,” but now, large sectors of society that at first supported Chávez, particularly the middle class, appear to have joined the opposition. A clear indication of this opposition was the October 10 demonstration against the government, which attracted anywhere between 400,000 (government estimate) and 1,000,000 (opposition estimate) mostly middle class participants. No matter what the precise number, there is little doubt that this was probably one of the largest demonstrations in Venezuelan history, which was matched two days later by a pro-government demonstration of at least equal size, representing mostly the lower class of Venezuelan society. Why is the middle class so opposed to Chávez and the lower class not? The reasons are numerous and have to do with economics, government policies, the media, and racism.
The Economy
2002 was and still is a difficult year for Venezuela. The currency devalued 50% in the first six months, inflation skyrocketed from 12% in 2001 to 35% or more in 2002, and unemployment jumped from 13% to 17%. Contrary to what many people in Venezuela seem to believe, these economic trends have affected the middle class much more than they affected the poor. That is, the currency devaluation has a greater negative economic impact on the middle class because the middle class tends to purchase more products that are denominated in dollars, whether it is cars, computers, real estate, or vacations to the U.S. Suddenly they can no longer afford these purchases because their income is worth half as much as it was before the devaluation.
Also, while the devaluation causes a general inflation of prices, since Venezuela imports over 70% of its consumer goods, inflation is more acute among the products that the middle class consumes because they tend to purchase more imported goods than the poor do. Another reason why inflation affects the middle class more than the poor is that the middle class depends on a salary that is fixed at the beginning of the year. The poor, who are by and large employed in the informal economy, however, can more easily adjust their income to match inflation, simply by immediately charging more for their products and services – they do not need to wait for the annual salary increase. Finally, the poor tend to have more of a social net that softens the impact of inflation, in the form of larger extended families and communities that help each other out and in the form of free public services, such as health care and education. The middle class, however, tends to rely on private education, and private health care, which is of a better quality, but which have to be discontinued as soon as the prices for these service rise too much for their income.
Venezuela’s government has a large role in the economy, which means that a fluctuation in public spending has nearly immediate repercussions for economic activity in general. In other words, government spending cut-backs tend to push the economy into recession. Since about a third of government income comes from oil revenues, any fluctuation in the price of oil is rapidly felt in the rest of the economy. For example, in late 2001 the price of Venezuelan oil dropped from $18 to $16 per barrel. This caused a tremendous shortfall in revenues, so that public sector income declined by 13% in the first quarter of 2002, compared to the same period in the previous year. Most of this loss was attributable to declining oil revenues, which dropped by 46% in the first quarter, compared to the previous year’s first quarter. As a result, the state budget for 2002 had to be reduced by 7% relative to what had been planned. At the same time, in late 2001, the opposition decided to intensify its campaign against the government, by calling a general strike and organizing large demonstrations. This economic and political crisis contributed to massive capital flight, which, in turn, made the political and economic crisis worse. The central bank could no longer defend the currency against the devaluation pressure that the capital flight was causing and when it abandoned its efforts to defend the currency, the currency devalued and inflation shot up.
The combination of inflation and reduced government spending proved to be a double blow to the economy, so that many businesses were forced to close and unemployment increased dramatically. While unemployment had been reduced from 18% when Chávez came to power in 1999 to 13% in 2001, it went up to 16% by late 2002, according to government statistics. Also, the economy contracted by a whopping 7% in the first half of 2002. Of course, the attempted coup of April 11, 2002 exacerbated the economic situation because it temporarily stopped some oil shipments and generally increased economic and political uncertainty in the country. Now that the oil price has risen to over $27 per barrel of Venezuelan oil and that deflation has made it much easier for the government to cover the 2003 budget with its oil dollar income, the economy should grow significantly again in late 2002 and early 2003.
Government Policies
As mentioned earlier, the recession is not the only reason that the middle class opposes the Chávez government. Another factor is that the government’s policies have not benefited the middle class all that much. That is, the most important reforms the government has introduced, such as involving the new constitution, education, health care, or land reform, all tend to benefit the poor much more than the middle class.
The government’s health care and education policies have benefited the poor more than the middle class because the middle class tends to rely on private health care and education. In contrast, the poor have benefited from the institution of universal health care for the first time in Venezuela’s history, even if that health care is relatively miserable, at least it is more accessible to the poor than it has ever been. The situation is similar with education. The government has introduced thousands of “Bolivarian” schools throughout the country, which provide three free full meals per day to all students; something they would never be guaranteed if they stayed at home. As a result, one million new students have been matriculated in schools, who were never part of the school system before.
One of the most significant achievements of the new constitution is that it permanently broke the two-party system of Venezuela and has thus enabled the participation of large sectors of society that were traditionally excluded from government before. Important in this regard are the constitution’s inclusion of women, indigenous peoples, and homosexuals, who in the earlier constitution had few real rights. Again, these are changes that, at best, the vast majority of the middle class feels quite indifferent about.
Another area that is high on the Chávez government’s agenda, but which leaves the middle class out, is land reform. The government has introduced two kinds of land reform programs—rural and urban. The rural land reform has caught quite a bit of attention and its passage in November 2001 was arguably the beginning of the opposition’s campaign against the president. The land reform law is essentially designed to put idle land into production and to redistribute idle land to landless peasants if landowners refuse to put their land into production. The basic purpose is to both create greater social justice and to increase the country’s agricultural production. This program is also supplemented by a wide variety of agricultural credit and training programs.
The urban land reform program, in contrast, is designed to confer ownership titles to land which the urban poor currently occupy illegally through land invasions and to help them improve their communities through self-governance. The urban reform program sets up land committees of up to 200 families in the poor neighborhoods that help measure plots of land, determine communal property, negotiate with government for services such as water and electricity, and create a communal identity. This democratization of property is to be combined with a democratization of local governance through participatory planning processes for local projects, such as has been spearheaded in parts of Brazil under the Labor Party there.
Other major government programs that primarily benefit the poor, but not the middle class are the public housing program and the micro-credit programs. Related to this, the government recently announced the creation of a new “Social Economy” ministry. This ministry would support workplace democracy, especially the creation of cooperatives and other social justice projects, such as the micro-credit programs.
A policy that directly hurts the interests especially of the upper middle class is the government’s effort to collect income taxes for the first time in Venezuelan history. Only those with incomes in the top 20% or so are required to pay income taxes.
The Media and Psychological Warfare
Added to the mix of middle class economic decline and lack of government programs that benefit the middle class is a virulently anti-Chávez media. As if the economic and political neglect of the middle class did not provide enough reason to oppose the Chávez regime, the media supply additional justifications every day. Accusations of government incompetence, mismanagement, and corruption fill the papers daily. These accusations would be an example of a serious free media doing its job, if it weren’t for the fact that the vast majority of these accusations are in the form of unverified reports from opposition politicians. The media rarely practices fact-checking and counter-posing the responses of the accused to an accusation.
Often the media reflect the latent racism/classism in Venezuelan society. An example of this racism/classism was on open display in the October 14th lead editorial of one of Venezuela’s largest serious (non-tabloid) newspapers, when it wrote about the truly massive pro-government demonstration of October 13:
“The president’s and his followers’ response to the concerns of Venezuelan society about the serious crisis we live in (the economic, the political, the military, and the institutional) consisted of bringing from the country’s interior the same lumpen [dregs of society] as always, converted into everlasting bus passengers with a piece of bread under their arms and a bottle of rum, so that they come and cheer to the nation's great con man.”
The cumulative effect of the media assault is psychological warfare, in that the media present the general public with an image of Venezuelan society that is on the verge of complete collapse and that the government has lost all popular support and legal legitimacy. Front-page unsubstantiated accusations, such as those of Carlos Ortega, the leader of the union federation CTV, that the government was planning to murder two to three thousand people at the anti-government demonstration of October 10th and that the demonstration’s organizers managed to avert the massacre, are not unusual. Much of the opposition thus appears to genuinely believe that Venezuela is under a “castro-communist” dictatorship.
The hard-core opposition, which includes the CTV, the main chamber of commerce, Fedecameras, almost all of the opposition parties, and nearly all of the private media have come to believe their own media campaign, that practically no one supports the government and that those who participate in pro-Chávez demonstrations, such as the one on Sunday October 13th, are paid around $30 per person by the government for their participation.
Of course, not just the middle class buys the oppositional media’s propaganda, but so do many of the poor, just as many from the middle class do not accept the media’s version of reality and continue to support Chávez. Still, it is probably fair to say that a majority of the middle class opposes Chávez and a majority of the poor support him.
While Venezuelan society has always been divided along class and race lines, for the first time in Venezuelan history the classes (and races) are now also divided along clear ideological lines, particularly around the figure of Hugo Chávez. Many Venezuelans and outside observers have a hard time understanding why Venezuelan society is so polarized and in their puzzlement argue that Venezuelans should simply find the path of dialogue. This is certainly a laudable sentiment. However, there is a fundamental obstacle for dialogue if one side does not want to recognize some basic rules for having a dialogue in the first place. That is, Chávez’ opposition is of the firm belief that it is in the majority and that it therefore has the right to demand the immediate removal of the president before his term has expired. The opposition does not seem to realize that even if they were in the majority, which is doubtful, a fundamental rule of the democratic game is that leaders are elected for a pre-defined term and that if one wants new leaders, one has to wait until the next constitutionally scheduled election and not for a dip in the popularity polls. Until now, the largely middle and upper class opposition in Venezuela steadfastly refuses to recognize this basic rule, which makes meaningful dialogue virtually impossible.
Gregory Wilpert is a freelance journalist and sociologist, who lives in Caracas and he recently finished a book on Venezuela during the Chávez presidency.
He can be reached at: gregvenezuelanalysis.com
http://www.venezuelanalysis.com/articles.php?artno=1016
I thought I would start this thread to clarify some of the wacky opinions floating around.
This article was originally published in October 14, 2002
“Chávez’ greatest error was to screw the middle class,” says Carlos Escarrá, a prominent constitutional lawyer and former Venezuelan supreme court judge, who describes himself as being with the “proceso,” but not a Chavista. The “proceso” is the process of social transformation that was initiated by the movement which brought President Chávez to power.
When Chávez first got elected, nearly four years ago, it looked like a vast majority was with the “proceso,” but now, large sectors of society that at first supported Chávez, particularly the middle class, appear to have joined the opposition. A clear indication of this opposition was the October 10 demonstration against the government, which attracted anywhere between 400,000 (government estimate) and 1,000,000 (opposition estimate) mostly middle class participants. No matter what the precise number, there is little doubt that this was probably one of the largest demonstrations in Venezuelan history, which was matched two days later by a pro-government demonstration of at least equal size, representing mostly the lower class of Venezuelan society. Why is the middle class so opposed to Chávez and the lower class not? The reasons are numerous and have to do with economics, government policies, the media, and racism.
The Economy
2002 was and still is a difficult year for Venezuela. The currency devalued 50% in the first six months, inflation skyrocketed from 12% in 2001 to 35% or more in 2002, and unemployment jumped from 13% to 17%. Contrary to what many people in Venezuela seem to believe, these economic trends have affected the middle class much more than they affected the poor. That is, the currency devaluation has a greater negative economic impact on the middle class because the middle class tends to purchase more products that are denominated in dollars, whether it is cars, computers, real estate, or vacations to the U.S. Suddenly they can no longer afford these purchases because their income is worth half as much as it was before the devaluation.
Also, while the devaluation causes a general inflation of prices, since Venezuela imports over 70% of its consumer goods, inflation is more acute among the products that the middle class consumes because they tend to purchase more imported goods than the poor do. Another reason why inflation affects the middle class more than the poor is that the middle class depends on a salary that is fixed at the beginning of the year. The poor, who are by and large employed in the informal economy, however, can more easily adjust their income to match inflation, simply by immediately charging more for their products and services – they do not need to wait for the annual salary increase. Finally, the poor tend to have more of a social net that softens the impact of inflation, in the form of larger extended families and communities that help each other out and in the form of free public services, such as health care and education. The middle class, however, tends to rely on private education, and private health care, which is of a better quality, but which have to be discontinued as soon as the prices for these service rise too much for their income.
Venezuela’s government has a large role in the economy, which means that a fluctuation in public spending has nearly immediate repercussions for economic activity in general. In other words, government spending cut-backs tend to push the economy into recession. Since about a third of government income comes from oil revenues, any fluctuation in the price of oil is rapidly felt in the rest of the economy. For example, in late 2001 the price of Venezuelan oil dropped from $18 to $16 per barrel. This caused a tremendous shortfall in revenues, so that public sector income declined by 13% in the first quarter of 2002, compared to the same period in the previous year. Most of this loss was attributable to declining oil revenues, which dropped by 46% in the first quarter, compared to the previous year’s first quarter. As a result, the state budget for 2002 had to be reduced by 7% relative to what had been planned. At the same time, in late 2001, the opposition decided to intensify its campaign against the government, by calling a general strike and organizing large demonstrations. This economic and political crisis contributed to massive capital flight, which, in turn, made the political and economic crisis worse. The central bank could no longer defend the currency against the devaluation pressure that the capital flight was causing and when it abandoned its efforts to defend the currency, the currency devalued and inflation shot up.
The combination of inflation and reduced government spending proved to be a double blow to the economy, so that many businesses were forced to close and unemployment increased dramatically. While unemployment had been reduced from 18% when Chávez came to power in 1999 to 13% in 2001, it went up to 16% by late 2002, according to government statistics. Also, the economy contracted by a whopping 7% in the first half of 2002. Of course, the attempted coup of April 11, 2002 exacerbated the economic situation because it temporarily stopped some oil shipments and generally increased economic and political uncertainty in the country. Now that the oil price has risen to over $27 per barrel of Venezuelan oil and that deflation has made it much easier for the government to cover the 2003 budget with its oil dollar income, the economy should grow significantly again in late 2002 and early 2003.
Government Policies
As mentioned earlier, the recession is not the only reason that the middle class opposes the Chávez government. Another factor is that the government’s policies have not benefited the middle class all that much. That is, the most important reforms the government has introduced, such as involving the new constitution, education, health care, or land reform, all tend to benefit the poor much more than the middle class.
The government’s health care and education policies have benefited the poor more than the middle class because the middle class tends to rely on private health care and education. In contrast, the poor have benefited from the institution of universal health care for the first time in Venezuela’s history, even if that health care is relatively miserable, at least it is more accessible to the poor than it has ever been. The situation is similar with education. The government has introduced thousands of “Bolivarian” schools throughout the country, which provide three free full meals per day to all students; something they would never be guaranteed if they stayed at home. As a result, one million new students have been matriculated in schools, who were never part of the school system before.
One of the most significant achievements of the new constitution is that it permanently broke the two-party system of Venezuela and has thus enabled the participation of large sectors of society that were traditionally excluded from government before. Important in this regard are the constitution’s inclusion of women, indigenous peoples, and homosexuals, who in the earlier constitution had few real rights. Again, these are changes that, at best, the vast majority of the middle class feels quite indifferent about.
Another area that is high on the Chávez government’s agenda, but which leaves the middle class out, is land reform. The government has introduced two kinds of land reform programs—rural and urban. The rural land reform has caught quite a bit of attention and its passage in November 2001 was arguably the beginning of the opposition’s campaign against the president. The land reform law is essentially designed to put idle land into production and to redistribute idle land to landless peasants if landowners refuse to put their land into production. The basic purpose is to both create greater social justice and to increase the country’s agricultural production. This program is also supplemented by a wide variety of agricultural credit and training programs.
The urban land reform program, in contrast, is designed to confer ownership titles to land which the urban poor currently occupy illegally through land invasions and to help them improve their communities through self-governance. The urban reform program sets up land committees of up to 200 families in the poor neighborhoods that help measure plots of land, determine communal property, negotiate with government for services such as water and electricity, and create a communal identity. This democratization of property is to be combined with a democratization of local governance through participatory planning processes for local projects, such as has been spearheaded in parts of Brazil under the Labor Party there.
Other major government programs that primarily benefit the poor, but not the middle class are the public housing program and the micro-credit programs. Related to this, the government recently announced the creation of a new “Social Economy” ministry. This ministry would support workplace democracy, especially the creation of cooperatives and other social justice projects, such as the micro-credit programs.
A policy that directly hurts the interests especially of the upper middle class is the government’s effort to collect income taxes for the first time in Venezuelan history. Only those with incomes in the top 20% or so are required to pay income taxes.
The Media and Psychological Warfare
Added to the mix of middle class economic decline and lack of government programs that benefit the middle class is a virulently anti-Chávez media. As if the economic and political neglect of the middle class did not provide enough reason to oppose the Chávez regime, the media supply additional justifications every day. Accusations of government incompetence, mismanagement, and corruption fill the papers daily. These accusations would be an example of a serious free media doing its job, if it weren’t for the fact that the vast majority of these accusations are in the form of unverified reports from opposition politicians. The media rarely practices fact-checking and counter-posing the responses of the accused to an accusation.
Often the media reflect the latent racism/classism in Venezuelan society. An example of this racism/classism was on open display in the October 14th lead editorial of one of Venezuela’s largest serious (non-tabloid) newspapers, when it wrote about the truly massive pro-government demonstration of October 13:
“The president’s and his followers’ response to the concerns of Venezuelan society about the serious crisis we live in (the economic, the political, the military, and the institutional) consisted of bringing from the country’s interior the same lumpen [dregs of society] as always, converted into everlasting bus passengers with a piece of bread under their arms and a bottle of rum, so that they come and cheer to the nation's great con man.”
The cumulative effect of the media assault is psychological warfare, in that the media present the general public with an image of Venezuelan society that is on the verge of complete collapse and that the government has lost all popular support and legal legitimacy. Front-page unsubstantiated accusations, such as those of Carlos Ortega, the leader of the union federation CTV, that the government was planning to murder two to three thousand people at the anti-government demonstration of October 10th and that the demonstration’s organizers managed to avert the massacre, are not unusual. Much of the opposition thus appears to genuinely believe that Venezuela is under a “castro-communist” dictatorship.
The hard-core opposition, which includes the CTV, the main chamber of commerce, Fedecameras, almost all of the opposition parties, and nearly all of the private media have come to believe their own media campaign, that practically no one supports the government and that those who participate in pro-Chávez demonstrations, such as the one on Sunday October 13th, are paid around $30 per person by the government for their participation.
Of course, not just the middle class buys the oppositional media’s propaganda, but so do many of the poor, just as many from the middle class do not accept the media’s version of reality and continue to support Chávez. Still, it is probably fair to say that a majority of the middle class opposes Chávez and a majority of the poor support him.
While Venezuelan society has always been divided along class and race lines, for the first time in Venezuelan history the classes (and races) are now also divided along clear ideological lines, particularly around the figure of Hugo Chávez. Many Venezuelans and outside observers have a hard time understanding why Venezuelan society is so polarized and in their puzzlement argue that Venezuelans should simply find the path of dialogue. This is certainly a laudable sentiment. However, there is a fundamental obstacle for dialogue if one side does not want to recognize some basic rules for having a dialogue in the first place. That is, Chávez’ opposition is of the firm belief that it is in the majority and that it therefore has the right to demand the immediate removal of the president before his term has expired. The opposition does not seem to realize that even if they were in the majority, which is doubtful, a fundamental rule of the democratic game is that leaders are elected for a pre-defined term and that if one wants new leaders, one has to wait until the next constitutionally scheduled election and not for a dip in the popularity polls. Until now, the largely middle and upper class opposition in Venezuela steadfastly refuses to recognize this basic rule, which makes meaningful dialogue virtually impossible.
Gregory Wilpert is a freelance journalist and sociologist, who lives in Caracas and he recently finished a book on Venezuela during the Chávez presidency.
He can be reached at: gregvenezuelanalysis.com
http://www.venezuelanalysis.com/articles.php?artno=1016
I thought I would start this thread to clarify some of the wacky opinions floating around.