What Danny Glover and I have in common

In a kind of a weird back-door way, I also support Hugo Chavez. Or put another way, and going a little Hegelian, as Tyler likes to say, I think Chavez is an historical necessity, and a richly deserved one at that.

Venezuela has relatively high levels of income inequality (a gini coefficient in 2000 of around .44 compared to .36 for the US according to the UN) from a relatively low base and was run by a corrupt elite class who swallowed up oil wealth while the economic standing of the country plummeted. In 1957, Venezuela’s GDP per capita was 51% of the US, in 2003 it stood at 18.5% of the US.  Existing institutions had no credibility with a very large
portion of the population and simply could not continue to exist as they had.

Don’t get me wrong here, I’m NOT endorsing Hugo. Do I think that Chavez and his policies are going to serve the long term economic interests of Venezuela? NO. Do I think Chavez is a charming guy? NO. Would I be sad if Chavez lost power? NO. If George Bush and Chavez were in a burning building and I could only save one would it be Chavez? NO.

I am just saying that Venezuela was run into the ground by its ruling class and Chavez is the (I hope only temporary) result of their short sighted, poor governance.

A similar analysis applies to Evo Morales. Bolivia has even higher income inequality (year 2000 gini of .60) from an even lower base, and has fallen even more precipitously in economic standing relative to the US, From 25% of US per-capita GDP in 1951 to 8.7% in 2003. That is just a disaster. The ruling elite of Bolivia had Evo Morales coming and I hope he gives it to them but good.

I am not sure whether this type of path is inevitable in Latin America. Lula was a populist firebrand but has governed quite moderately.  Brazil though, did not suffer nearly the same fall in its relative living standards. Their peak of per-capita income relative to the US occurred in 1980 at 31% and it "only" declined to 21% by 2003. Income inequality though is very high (2003 gini of .58).  Will Brazil avoid a Chavez, or is that yet to come for them?

Note that the GDP figures used here are from the Penn World Tables 6.2 and are adusted for deviations from purchasing power parity (the variable I use is "CGDP relative to the United States" and it is available from 1950 – 2003).


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