Caracas Chronicles

Quico says: So, not long ago, the revolution’s favorite “economist”, Mark Weisbrot, published a rebuttal of all the main points in Francisco Rodríguez’s by-now famous Foreign Affairs piece evaluating the data on the revolution’s poverty reduction record. This week, Rodríguez ruthlessly picks apart Weisbrot’s rebuttal. As you can imagine, it gets pretty brutal:

[First], there is no evidence that the Chávez administration is devoting a higher share of resources to pro-poor spending. Second, inequality increased between 1999 and 2006, unless by inequality one means inequality among everyone except those who earn no income. Third, the Venezuelan government did not teach 1.5 million persons how to read and write – at most the magnitude of the program was 1/30th of what was claimed. Fourth, however one calculates it, Venezuela’s income elasticity of poverty reduction is below typical values for developing countries. Fifth, the majority of human development indicators do not show striking improvements under Chávez, and some show deteriorations.

Weisbrot has not produced a convincing counterargument to any of these claims. He has argued that social spending has increased by using series that are distorted by the inclusion of regressive pensions, large infrastructure projects, and even military spending. He has argued that inequality has declined on the basis of a series that excludes the poorest families from the sample. He has argued that the Venezuelan government put more than a million persons in literacy courses while presenting regression estimates that indicate that at most forty thousand persons were enrolled in these courses. He has misinterpreted the concept of elasticity, and furthermore argued that the reason why government statistics do not show an improvement in the health of newborns is that the monitoring system has collapsed. To top this all off, he has presented an incredible conspiracy theory of the 2001 Venezuelan balance of payments crisis according to which the private sector withdrew funds from the domestic system during more than a year in order to provoke a political crisis.

My take? Weisbrot has one genuine “gotcha” moment in his rebuttal: Francisco pretty blatantly cherry-picked the two data points for his original GINI coefficient comparison (2000 and 2005) to make the government look bad, something even Francisco’s retort shows clearly. Surely this kind of data massaging gets us no closer to the serious academic debate he claims to favor. Having been caught with his hands in this particular data-manipulation cookie jar, Francisco should just have waved a white flag on this point: the data do not show a steady trend towards increased inequality throughout the Chávez era, which is what his original piece clearly implied.

(Having cited him on this point, I feel particularly burned here.)

On every other point, though, it’s a bloodfest. Francisco’s deconstruction of Weisbrot’s stunningly dishonest claims on adult literacy is especially noteworthy for showing in stark terms Weisbrot’s Goebbelsian tendency to accuse his opponent of precisely what he’s doing: cherry-picking outliers in the data and using them to back up claims even the outliers cannot support.

But it’s in the discussions of government spending priorities and of the efficiency of poverty reduction that what remained of Weisbrot’s intellectual reputation curls up into a little ball and dies. Here is a man with a Ph.D in economics who gives every sign of not understanding what elasticity means! (The magnitude of the incompetence this flub reveals may not be immediately evident if you haven’t studied economics…to get a sense, picture an MD confusing your aorta with your placenta.)

Worse yet, here is a native speaker of English who appears not to understand what the word priority means: Weisbrot “rebuts” Francisco’s argument about the sectoral distribution of government spending with claims about the absolute magnitudes of government spending. At one point, Francisco is reduced to babbling homespun anecdotes about rich uncles and poodles in a (futile) attempt to elicit some sign of comprehension from the guy. It’s painful.

Lets be clear, here: Weisbrot’s rebuttal is crammed full of the kind of rookie mistakes that typically get undergraduates an F in Econ 101. How this guy worked up the nerve to challenge Francisco Rodríguez to a mano-a-mano totally defeats me. It’s just pathetic that this is the best spin all the government’s millions can buy.

Update: Speaking of “statements not backed up by the data cited to support them,” Francisco Rodríguez just wrote in to point out that:

…if you take the correctly calculated Gini series (including zero-income households) and fits a post-1999 trend through it, you find a statistically significant increase of .001685 points/semester, or .0253 points since the first semester of 1999. This is statistically significant at 1.8% (not a bad fit for 23 observations). One can get hung up on particular semester-to-semester changes here, but you also have to remember that there can be significant measurement error in this series, so you want to be able to identify general trends. In any case, it seems to me that the correctly calculated series does indicate (at least in a statistical sense) a significant trend of increase after 1999.