Friday, November 20, 2009

An inconvenient truth, but for how much longer?

In a comment on my earlier post about Hugo Chavez's adventures in authoritarianism, Globetrotter asked, "I wonder what they will do next?"

Well we didn't have to wait very long to find out:

President Hugo Chávez wasn't pleased with data released this week that showed the Venezuelan economy tumbling into a recession. So the populist leader came up with a solution: Forget traditional measures of economic growth, and find a new, "Socialist-friendly" gauge.

"We simply can't permit that they continue calculating GDP with the old capitalist method," President Chávez said in a televised speech before members of his Socialist party on Wednesday night. "It's harmful."

Mr. Chávez's comments came shortly after data showed Venezuela's gross domestic product -- a broad measure of annual economic output -- fell 4.5% in the third quarter from the year-earlier period. It was the second consecutive quarterly decline, and observers have questioned how Mr. Chávez will be able to generate growth without high oil prices.

Indeed it is harmful, Hugo. Harmful to your bid to be President for life.


Anonymous said...

Maybe Stiglitz can help him with this

Anonymous said...

Angus you are just arriving! This Chavez's proposal is quiet old, since the missions programs started in Venezuela in 2004, was clear that the social improvement component will never be reflected in the GDP measure. Chavez is right when he says that the principles and methodology of GDP calculation will only reflect the private activity, but not the public enterprise. Stiglitz was already talking about the impossibility to stop the boom and burst of global economy, if the GDP metrology wasn't change. Why do you think he won the Nobel prize? So if you want criticised Chavez, you have to do a bit more of efforts.

Angus said...

Chavez gave these quotes the day after the bad numbers came out. It is true he said similar things in 2004, but in the intervening years when the traditional numbers showed decent growth, he made no complaints and was quiet about the issue.

By the way, since GDP can also be measured by adding up factor payments, the idea that traditional GDP doesn't measure "social activities" is basically false.

And finally, Stiglitz did not win the Nobel prize for advocating a different method of computing national output.

If you want to criticize me, you have to do a bit more of efforts as well.