Chavez and the Power of the State

By: Alex Tabarrok - Between 2002 and 2004 millions of Venezuelans signed petitions calling for a vote to remove Hugo Chavez from office. Signatories were not anonymous and during the petition campaign Chavez supporters hinted darkly that there would be retaliation. Chavez was in fact forced into a recall election, but unfortunately he won (not one of democracy's better moments). After the election, the list of signatories was distributed to government agencies in an easy-to-use database. The database included the names and addresses of all registered voters and whether they had signed an anti-Chavez petition. Technology thus provided Chavez supporters the information they needed to retaliate. Technology cuts both ways, however, and in a truly remarkable paper, Hsieh, Miguel, Ortega and Rodriguez match information in the petition database to another database on wages, employment and income. What the authors find is shocking, albeit not surprising. Before the recall election, petition signatories and non-signatories look alike. After the election, the employment and wages of signatories drop considerably, about a 10% drop in wages relative to non-signatories. Survey evidence conducted by the authors is consistent with retaliation by Chavez supporters especially in the form of job losses in the public sector. The authors estimate that the retaliation was so widespread, many workers were pushed into informal employment, that the Venezuelan economy was significantly damaged. This is original, important and actionable research. Bravo to the authors, especially to Ortega who--as of this posting--has a job in Venezuela.