Michael Rowan, the author of "Getting Over Chavez and Poverty," considers that Chavez could easily have halved poverty in Venezuela in the last 8 years, but he chose not to do it
Michael Rowan, the author of "Getting Over Chavez and Poverty," which appeared in Venezuelan bookstores November 6, talks about his book in the following interview. Rowan, originally from New York, is a political strategist with experience in 14 nations since 1970. He moved to Venezuelan in 1993 and is a regular columnist in several Venezuelan newspapers.
Q. Why did you title your book "Getting Over Chavez and Poverty?"
R. Because Chavez is not running a revolution for the poor and it would be nice to have one. Chavez could easily have halved poverty in Venezuela in the last 8 years, but he chose not to do it. That's where the title comes from - Venezuela has to get over Chavez and then it can get over poverty.
Q. Where did Chavez go wrong, as you see it?
R. He made the same old Venezuelan mistake. He believed that the state and not a free society could eliminate poverty. Total state control of the economy made poverty and corruption worse, which has been the problem for decades.
Q. But how can a free economy eliminate poverty?
R. Just as it has always done all over the world -- by using the classical economic tools of wealth creation. If the tools are there, poverty will fall.
Q. What economic tools are you talking about?
A. First, private property titles to their homes - not a 'right to occupy' property owned by the state, which is useless as collateral at the bank. Second, direct access to some oil funds to sow in family investments of their own choice - not state handouts of oil money with political strings attached. And third, formal private enterprises that can make them rich through hard work - not state socialist collectives that are beehives for theft, politics and crony capitalism. The poor can make themselves rich with tools that are denied to them by the Chavez government.
Q. This sounds like "Mi Negra Tarjeta" and Manuel Rosales - are you behind his campaign?
R. I met Governor Rosales in July to discuss campaign strategy and gave him a copy of my book. Rosales is very open to ideas and better than that, he applies innovative ideas. Rosales manages for results. Look at the difference between Zulia and Caracas. Zulia works, its highways and bridges are functional, and the public hospitals aren't death-traps as they are in Caracas. Rosales, not Chavez, could defeat poverty in Venezuela.
Q. Do you believe Rosales as the unified opposition candidate for president can win on December 3?
R. Yes, it's possible, and precisely because he is not the opposition as much as a viable proposition candidate. Rosales wants to eradicate poverty in Venezuela, and he knows how to do it. He's different.
Q. How is he different? Mi Negra sounds like the same old populism of the Adecos and Chavez.
R. Providing 20% of the oil wealth directly to poor families and the unemployed is a radical, revolutionary departure from Chavez, AD and Copei. It could also double the size of Venezuela's economy in the short term.
Q. But can Venezuela afford it?
R. Easily. Imagine that Chavez had provided the $50 billion in foreign giveaways since 2004 to Mi Negra.A $50 billion investment in millions of families could have cut poverty and unemployment in half while potentially adding five times that amount, or $250 billion, to Venezuela's GDP. When poor families spend Mi Negra funds on housing, property, enterprises, and equipment they produce new jobs and wealth for Venezuelans - and tax revenues to government. Subsidizing the Cuban regime or buying Argentine debt does none of that but hasten the day for the next crash.
Q. In your view, when will that crash come?
R. It's here right now. The world oil price has fallen 25% from its $78 high, and it will fall more. Chavez is running a $2 billion deficit already which will mushroom in 2007. His domestic subsidies, foreign giveaways and internal corruption will collapse the economy, which has few tools for private wealth creation to pick up the slack. Instead of saving oil money when the price was high, Chavez was borrowing and spending money that didn't exist. Now Venezuelans will pay the price for that stupidity.
Q. In your book you write that direct family investments of oil wealth can also reduce government corruption. Explain that.
R. The state doles out the oil wealth through a transaction system that steals up to 80% of the funds via corruption, middlemen and political "administrative costs." That was the case under Caldera's Agenda Venezuela programs for the poor, and it is the same under Chavez' missions, both of which have had a minimum effect on poverty. If you want to get money to the poor, give it to them directly at an ATM and get rid of the political middleman commissions.
Q. Do you really believe that Venezuela can eliminate poverty in a handful of years even if it does all the right things?
R. Yes, through common sense and hard work it can be done. In my book, I describe how another oil state, Alaska, reduced poverty by 75% and equalized income better than any of the 50 states, by applying the same tools - an open society, a respect for private property, enterprises for the poor, and oil funds directly to families. In a little more than one generation, most of the indigenous poor of Alaska entered the middle class and Alaska's GDP grew from $3 billion to $40 billion. Venezuela can do the same, as Arturo Uslar Pietri said repeatedly for 50 years.
Q. So Venezuela's mistake was nationalization of oil?
R. Not necessarily. Norway nationalized oil but also has a strong and competitive private oil sector that competes on the same level field as Statoil. PDVSA the way Luis Giusti led it was a force for an open society, meritocracy, and competitiveness. My point is not about national oil companies, it is about states that monopolize command economies and foster poverty and corruption.
Q. You write that the export of the Chavez revolution is nonsensical. Why?
R. The facts of economic history show it is a worthless idea. Since 1820, world population has increased by six times. Income in the poor nations increased by over five times, and in the rich nations, nineteen times. For a thousand years before 1820 everybody was poor. The reasons the world progressed so much since 1820 are technology and trade, private property and finance - the Enlightenment. China, India, Mexico and Brazil get it, but Chavez does not. Chavez is exporting failure to a successful world, which is why he's surrounded by losers.
Q. Losers such as?
R. Cuba, the FARC in Colombia, Libya, North Korea, Zimbabwe, Iran, Hamas, Hezbollah, and Iraq when Saddam Hussein was there - all modern misfits who terrorize or destabilize the world. They have no answer but terror, warfare and hate - what's so new about that?
Q. You disagree with Chavez at the UN calling Bush the Devil?
R. I am no defender of Bush, I worked in the Democratic campaigns of Presidents Clinton and Carter - sorry about Carter, come to think of it, what he has done here is a disgrace. But the Chavez attack on Bush was ignorant. Chavez has no solution to poverty, corruption or insecurity. He is not interested in development or democracy but how to subvert both and take power for himself. Soon he will fail, as bin Laden will fail, but a lot of people will die in his quixotic crusade -- and most of them Venezuelans.
Q. So you don't see the US as the Evil Empire?
R. That's political rubbish and even Chavez knows it. No country in since World War Two has entered the First World of nations without using the US market as its engine for growth. Venezuela can do the same by leveraging its oil to attract investment in its renewable resources, especially tourism. That means Venezuela has to open up to the world, not close down or tell the world it has to change. US policy should encourage the tools of wealth creation among the 213 million poor Latin Americans, 15 million of whom live in Venezuela.
Q. Yet the polls show Chavez at 50% or more of the vote, supported mostly by the poor? How do you explain that?
R. The Chavez voters are in deep conflict.. They favor private property, Mi Negra, and working with, not against the US. And they oppose the foreign giveaways, the subsidies of Cuba and Argentina, and association with rogue regimes like Iran and North Korea. But half of the Chavistas are on the government payroll directly or indirectly, and the other half are on the waiting list with great expectations for handouts. They are in a desperate situation, knowing there is no economic future with Chavez versus wondering whether Rosales can be trusted.
Q. So what's your prediction for December 3rd?
R. Whether a fair election will occur on December 3rd is doubtful. But Venezuela has changed. With Rosales, Venezuela has found a unified messenger with a message for the poor that can defeat poverty - there is a national consensus on that. So the alternative to Chavez is clear and present, and it can work. When Venezuela gets over Chavez is just a matter of time, and then it can get over poverty. That time may be now.
Michael Rowan is a political consultant who came to Venezuela for the 1993 presidential campaign. A former president of the International Association of Political Consultants, Rowan's column has been carried by El Universal for ten years. He worked in the Democratic campaigns of Presidents Bill Clinton and Jimmy Carter. Now, he is a strategic consultant for Venezuelan presidential candidate Manuel Rosales