The economic successes of Chavez in Venezuela

Thus after a few days considering moral issues I thought that I might return to the everyday grinding stone of Venezuelan reality and electoral campaign. I did get some help along as some recent economic information came to the front, illustrating, at the worst possible moment for Chavez, how his "economic policies" (to call them charitably by some name) are not working. Not to mention the allusion to the kind of mess he will be leaving to whomever takes over Miraflores next February.

The housing fiasco

It has been now a long established fact that under Chavez housing for the poor has been a real problem. Any reader of any serious Venezuelan newspaper has been able to read about the multiplicity of protests that lower social classes are holding. These protest can range from demanding the fulfillment of the promises that the government made to people that had to be evacuated from dangerous places (remember those who almost fell over the collapsed viaduct of last January?) to those who had to invade private land to blackmail local authorities in offering them some form of subsidized housing. I can even include the disgraceful excuses of Barreto about Caracas Golf Courses.

This Sunday El Universal published the numbers given by the Construction Association of Venezuela. Well, the table did not meet my standards in these type of data. So I decided instead to compare it to the average price of oil. That is, I rounded the numbers published by El Universal and I got some graph that showed the evolution of oil prices through the last two decades (it was any good as any source since what really matters here is the trend). I took an average of sorts for each year, and voila, the graph below. Perhaps my averages are not the best, or perhaps the exact numbers of housing might be contested, but the trend lines shown below are damning to the Chavez administration: clearly, there is a reason why the people are protesting as the governement has failed miserably in its effort to build subsidized housing. With the highest oil prices of any government in the last two decades, Chavez has built less subsidized hosing than any president, including Caldera and the banking collapse, or Carlos Andres Perez and the military coups. (Click to enlarge)

But sure enough we hear all sorts of excuses here and there, from "but the houses are of better quality" (right, as more people than ever would settle for a roof, any solid roof) to now classics "sabotage" "high price of construction material from the private sector" "the Chinese pre fab houses have not arrived yet" and soon enough "It is George Bush's fault".

I do not know what the 2006 numbers will be, but from the continuous protests I doubt very much that the numbers will reach pre Chavez numbers, and too many people anyway are still in the waiting list. Heck! According to El Universal the numbers of people in the "habitat deficit" has risen from 1,220,179 homes in 2001 to 1,680,000 homes in 2006.

Meanwhile in a burst of creativity Chavez promises 150 000 homes for 2007, more it seems than all what he built since he became president (at least according to El Nacional who publishes the official numbers of "mision habitat" deficit as 90,000!). I wonder if he really thinks that people will buy that one...

Inflation bites further

And today we had the inflation number for September. I remind the diligent reader that there are already problems as to how the Central Bank calculates that number, and that it is generally thought by economists that the real annual rate of inflation is at least 5-10% above what the Central Bank publishes.

The good news? Inflation dropped below 2% monthly.

The bad news? It is still at 1.9% for September (officially at least) and the target for the year, a 12 % at most is blown as the cumulative inflation is now 12.5%. And we still have three months to run so it is rather likely that we will reach 15%, perhaps even more than last year!

What did Chavez expect? Lots of oil money spent on social programs and corruption instead of productive investment: what better fuel for inflation? Social programs are certainly good to restart an economy but when the real jobs are not coming and the only growing sector is commerce and imports, what is the most likely result?

But it might even get worse: as a hint of what the real inflation might be, or might become, the housing industry has announced that the average price of homes might rise this year by a total 35%!!!

Which other economic bad news are going to hit Chavez before the campaign is over? Drop in oil prices? Another 2% inflation month? A jobless hike? All of the above?