Though some American press might make you believe that the two countries discussed below are on the brink of collapse, two items quoted in this post show what the policies of the new governments in Bolivia and Venezuela have been achieving by retaking public control over energy resources and applying them to the benefit of the whole population, instead of obeying the privatisation mantra.

1.

David Bollier quotes a first report on Bolivia in On the Commons:

“Sara Kozameh of the Center for Economic and Policy Research, describes how the Morales administration has achieved record growth despite the recession by reclaiming public ownership of natural resources.

The country was expected to have the highest growth in the Southern hemisphere last year, according to a new study by the Center for Economic and Policy Research. For the previous four years, growth rates averaged 5.2% per year — a considerable achievement in light of the decline of foreign remittances to Bolivia from citizens living abroad and the U.S. Government’s exclusion of Bolivia from a trade treaty that would have helped its exports.

What made the difference, writes Kozameh, was Bolivian government revenues from hydrocarbons, which increased from 5.6% in 2004 to 25.7% at the end of 2008. She adds:

“Bolivia dramatically increased its foreign reserves, from under $2 billion in 2005 to over $8 billion in 2008, providing a cushion against economic shocks like the current global downturn. This increase in revenue and reserves allowed Bolivia to implement expansionary macroeconomic policies that kept the Bolivian economy growing through the world recession.

“It also helped fund one of the most important policies taken up by the Morales administration: a significant increase in public spending. The Morales administration has ramped up public support for education, health care, loans to small businesses, infrastructure, and public pensions to reduce extreme poverty among the elderly. It is also making conditional cash transfers available to poor families, enabling them to keep their children in school and providing health care for pregnant women and children up to the age of two.

“According to the report, public spending has increased from 34 percent of GDP in 2005 to 45 percent of GDP in 2008. Morales’ administration has succeeded in maintaining growth during the world recession, and has continued to put the interests of the poor at the forefront of his policies, which undoubtedly helps to explain the president’s popularity in Bolivia.”

If Bolivia had followed the neoliberal orthodoxy and sold off its natural resources to investors — as so many U.S. states now seem eager to do — the investors would have done better but the country would have been in much worse shape.

The Bolivian experience confirms just how fallacious and socially misguided the “Washington consensus” of privatization, deregulation and government spending curbs really is. Governments should treat public resources and infrastructure as precious equity assets to be carefully stewarded for maximum public benefit — not sold at fire-sale prices to well-heeled foreign investors who negotiate sweetheart deals for themselves and then call it the “free market.”

2.

A related report from the same CEPR gives a broadly similar picture concerning Venezuela, of course, before the meltdown, which considerably darkens this picture:

“The current economic expansion began when the government got control over the national oil company in the first quarter of 2003. Since then, real (inflation-adjusted) GDP has nearly doubled, growing by 94.7 percent in 5.25 years, or 13.5 percent annually.

Most of this growth has been in the non-oil sector of the economy, and the private sector has grown faster than the public sector.

During the current economic expansion, the poverty rate has been cut by more than half, from 54 percent of households in the first half of 2003 to 26 percent at the end of 2008. Extreme poverty has fallen even more, by 72 percent. These poverty rates measure only cash income, and do not take into account increased access to health care or education.

Over the entire decade, the percentage of households in poverty has been reduced by 39 percent, and extreme poverty by more than half.

Inequality, as measured by the Gini index, has also fallen substantially. The index has fallen to 41 in 2008, from 48.1 in 2003 and 47 in 1999. This represents a large reduction in inequality.

Real (inflation-adjusted) social spending per person more than tripled from 1998-2006. From 1998-2006, infant mortality has fallen by more than one-third. The number of primary care physicians in the public sector increased 12-fold from 1999-2007, providing health care to millions of Venezuelans who previously did not have access.

There have been substantial gains in education, especially higher education, where gross enrollment rates more than doubled from 1999-2000 to 2007-2008.

The labor market also improved substantially over the last decade, with unemployment dropping from 11.3 percent to 7.8 percent. During the current expansion it has fallen by more than half. Other labor market indicators also show substantial gains.

Over the past decade, the number of social security beneficiaries has more than doubled. Over the decade, the government’s total public debt has fallen from 30.7 to 14.3 percent of GDP. The foreign public debt has fallen even more, from 25.6 to 9.8 percent of GDP.

Inflation is about where it was 10 years ago, ending the year at 31.4 percent. However it has been falling over the last half year (as measured by three-month averages) and is likely to continue declining this year in the face of strong deflationary pressures worldwide.”