So instead, let’s talk about the poor, and how well they fared under Chavez. It looks to me as if Chavez’s government made substantial improvements in things like primary school completion, progression to secondary education, and so forth. (The World Bank’s statistics on Venezuela are surprisingly patchy, so this limits the number of variables I could look at). Poverty rates have fallen. This is all genuinely good news that happened on his watch.
But in the course of these achievements, he severely compromised the engine of Venezuela’s future prosperity: its oil fields. And over the long run, the poor cannot thrive if the economy is failing. …
Venezuela’s oil output has fallen by almost a third since Chavez took power. That’s why Venezuelan economic growth is pretty underwhelming. Those social programs so beloved of Nation writers came out of investment funds that were previously used to keep oil production high–necessary, as we’ve discussed, because Venezuela’s sludgy crude is hard to get out of the ground. Which gives us a paradox: Venezuela’s reserves are growing, but its production is in decline. …
The cracks have been showing for a while, but Chavez has been able to paper over them with excuses (it’s all the fault of George Bush, the Great Satan!) and emergency measures. Unfortunately, you can’t hold together a high-tech oil drilling economy with baling wire and chewing gum. Especially since other countries are bringing more “unconventional oil” onto the market, which is going to put some downward pressure on oil prices. Even a moderate fall in the price could put Venezuela into a whole lot of hurt.
