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Understanding The Social Classes Of Venezuela

2009-06-05  marsopa



Understanding The Social Classes Of Venezuela

One of the first rules of living on Margarita should be "Be careful who you listen to"

Many foreigners living on Margarita have a very poor understanding of what the country is like. They look around at what they see and assume that the rest of the country is a lot like Margarita. This is an easy mistake to make, because many of them are coming from "1st world" nations that are far wealthier than Venezuela. Unfortunately, this lack of understanding leads to a misunderstanding of many other facets of Venezuela- especially the politics.

In order to understand the country, one needs some basic background information on the population of Venezuela. The population is broken down into 5 basic social classes, which are described as follows: (information is from Datos i r, a research and polling group, www.datosir.com )

  • Class A: the rich people
  • Class B: the upper middle class
  • Class C: the middle class
  • Class D: the working class / working poor
  • Class E: the extreme poor

  • Class A, B and the upper part of class C comprises about 1 million people, or 4% of the population. They own large houses or apartments, vacation homes (that would probably be on Margarita) and they often travel abroad. Household income is more than Bs. 3.7 million per month. Over half of them have a university degree (54%). 99% of them have TV's, 89% have cellular phones, 74% of them own vehicles, 72% of them own computers, and we find it really interesting that only 38% have a credit card.

     

  • The lower part of Class C comprises about 3.9 million people, or about 16% of the population. They tend to live in apartments that have all services, they have enough income that they are able to save money, and household income is about Bs. 1.45 million per month (+/- 10%). 87% of them have at least a high-school diploma, but only 29% have a university degree. 98% of them own TV's, 84% own cellular phones, 60% of them own vehicles, 51% own a computer and 27% have a credit card.

    Together, these three classes comprise about 5 million people out of a population of some 25 million people. Most of them are part of the political opposition to Hugo Chavez, but with only 20% of the population they have very little chance of winning an election.

     

  • Class D- the working class or the "working poor" is comprised of about 6 million Venezolanos, some 23% of the population. They live in deteriorating homes and public housing. Their household income is some Bs. 768,000 per month (+/- 10%). 37% have a 6th grade education or less, an additional 33% have a high school diploma, 18% have been to technical school and only 12% have a university degree. In this class, 98% of them have a TV, 69% of them have a cell phone, 36% own a vehicle, 24% own a computer and only 9% have a credit card.

     

  • Class E is the extreme poor, 15.1 million people who comprise 58% of the population of Venezuela. They live in "ranchos" which are makeshift shacks often built on land that belongs to someone else. Their household income is only 437,617 (+/- 10%) per month for a household average of 6 persons. Almost 60% of them have a 6th grade level of education or less, only 28% have graduated high school and less than 4% have a university education. 96% have a TV, but only 56% have a cell phone. Only 18% own a vehicle, 8% own a computer and less than 3% have a credit card.

    This is the reality of life for 6 out of 10 people in Venezuela.

    The two lower social classes comprise 80% of the population, and this is the demographic that support Hugo Chavez.

    The demographics of Margarita are heavily skewed in favor of the top 3 social classes, and have very few members of class E. One major reason is that the tourist, fishing and construction industries all offer jobs to unskilled labor and the people who want to work generally can. Another reason is that Margarita is primarily a vacation and tourist island that has a high level of property ownership by members of the upper classes.

    A realistic guess is that fewer than 1 in 10 of the people living on Margarita fall in this category. This means foreigners who move to Margarita and don't travel on the mainland will not understand the country because they simply won't have seen it.

    This article uses 2004 data that came from a presentation by Datos IR for the Venezuelan American Chamber of Commerce. The most recent information available shows that the income of the lower two classes has grown substantially in the past two years.

    • Social Class E has seen an increase in household income from 437,613 Bolivares per month in 2004 to 680,419 Bolivares per month in the first quarter of 2006.
    • Social Class D household income rose from Bs. 768,333 per month to Bs. 890,990 per month
    • The lower half of Class C saw it's income rise from Bs. 1,415,099 in 2004 to Bs. 1,765,000.

    Democracy in Venezuela is similar to the US, inasmuch as the electorate "votes with their wallet." If the economy is doing good, people are happy, and barring some other compelling reason they tend to re-elect the president.

    58% of the population has seen their household income rise by over 50% in the last 2 years, and for the most part they support Hugo Chavez. One might very well ask the question: can you blame them?

    Per capita consumption of products and processes
       Per capita consumption of products and processes

    Venezuela: A Polarized Electorate

    Disparity in income is a huge problem, but there are several other reasons why the political process in Venezuela is so polarized. We start with the fact that the members of government and business are made up almost exclusively of the upper social classes, and their social and business relationships cannot be described in terms other than incestuous. Prior to Chavez being elected president, much of the oil wealth of Venezuela benefited only the upper classes. From the mid-1950's to the mid-1990's, Venezuela went from being a relatively wealthy and stable country to the country with the highest percentage of poor people in the Western Hemisphere.

    This is an "accomplishment" that many do not want to talk about.

    After Chavez was elected he started making changes and many of these upper classes lost their jobs in government and the oil industry, which meant that the gravy train was over. To say that they aren't happy about this situation is an understatement. In April of 2002 there was an attempted coup that managed to last only a day, but "President for a day" Carmona's first decree:

    "reversed all of the major social and economic policies that comprised Chávez's "Bolivarian Revolution," including loosening Chávez's credit controls and ending his oil price quotas by raising production back to pre-Chávez levels. Carmona also dissolved both the National Assembly and the Venezuelan judiciary, while reverting the nation's name back to República de Venezuela.

    Carmona's decrees were followed by pro-Chávez uprisings and looting across Caracas. Responding to these disturbances, Venezuelan soldiers loyal to Chávez called for massive popular support for a counter-coup. These soldiers later stormed and retook the presidential palace, and retrieved Chávez from captivity. The shortest-lived government in Venezuelan history was thus toppled, and Chávez resumed his presidency on the night of Saturday, April 13, 2002." from Wikipedia

    The coup didn't work, and 2003 saw a strike in the oil sector that brought the economy of Venezuela to a halt and plunged the country into a depression. Throughout 2003 and into 2004 there was massive unrest in the electorate that culminated in a recall referendum that forced Hugo Chavez to face a recall election, which he won by a healthy majority.

    Finally, in the election of December, 2006, Hugo Chavez received 62% of the popular vote, a resounding defeat for the political opposition.

    The majority of the broadcast and print media is owned by members of the political opposition and one sees the most amazing things published and said in the realm of political discourse. In the world of political discourse in Venezuela, "over the top" is just the beginning.

    To make matters worse, under the Chavez government the tax agency SENIAT has actually been enforcing the tax laws. The upper social classes in Venezuela avoided much of their tax obligations for many years through simple evasion, bribery or through the inability of SENIAT to collect the data necessary to assess a tax. Under Chavez, SENIAT was tasked with collecting the taxes that are due. The tax laws haven't been changed, but SENIAT is now collecting well over 50% more in taxes. This represents money that the upper classes were not paying prior to the Chavez administration.

    Then too, there is the problem with the data: The hard data shows that Chavez has done a better job of running the country that the previous administrations. We specifically refer to the inflation rate, economic growth (GDP), population literacy rate, poverty rate, infant mortality rate, and levels of foreign investment. This is not to say that the Chavez government doesn't have problems: the problem with crime in Venezuela is horrible, and it isn't getting any better.

    Venezuela is bordered by the country with the highest level of crime in the Western Hemisphere: Colombia. Due to the drug trade and the current civil war in Colombia, Venezuela is absorbing a lot of problems. In the past several years the paramilitary groups have begun moving into Venezuela, and this is a major problem because they finance their operations through the drug trade and kidnappings.

    Crime in Venezuela is a catastrophic problem, and there is no simple or easy solution.

    The Road Ahead

    Chavez has taken his electoral victory in December as a mandate for Socialism, and as he puts it "I'm just the governor- the people voted for Socialism and that's where we're headed." We question whether the people who voted for Chavez have any idea where they're headed, but their right of self-determination.

    In the first 4 months of 2007 Hugo Chavez pursued an aggressive course of nationalization of "Strategic Sectors" of the economy (the phone company CanTV and the electric utilities), and threatened to nationalize the banking system. This has created a great deal of turmoil within the political opposition, and they have started to vigorously pursue what they call "Plan B" -- immigration to other countries. The United States, Spain and Panama seem to be receiving the majority of the immigrants at this point.

    The investor class and business class has already liquidated assets and taken the money out of the country, and the professional class is now starting to leave the country. In the long run this "brain drain" is the worst problem for Venezuela's future, even worse than the crime.

    Sounds pretty bad, doesn't it? Makes one wonder how such a rich country can be so screwed up? We constantly encounter Venezuelans who say the same thing. We consider ourselves lucky, because in the midst of all these problems we've found the one spot in the country where the system works.

    Margarita Island sits off the coast of Venezuela and demographically it may as well be a separate country. A realistic guess is that fewer than 1 in 10 of the people living on Margarita fall into the Social Class E category, whereas 6 out of 10 on the mainland are extremely poor. Margarita does not have the crime or the social unrest that plagues the mainland, and we hope it stays that way. The economy is booming and there is a net in-migration of people fleeing the crime on the mainland so the housing market is doing well. All in all, it's a great place to be.

    This article was laid out as a simple primer on the social classes of Venezuela. Datos IR is owned by a member of the political opposition, and much of the information used in this article came from a presentation given to the Venezuelan American Chamber of Commerce, an organization that could truthfully be described as "rabidly anti-Chavez."
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