We hear all the time about how Venezuela is in crisis. There are plenty of interrelated reasons, such as the drop in oil prices, scarcity, inflation, insecurity, and corruption. To be sure, these are all present, but there is another variable that helps us understand how serious the crisis is. Demography is standing in the way of revolution.
My co-author John Weeks and I have been doing research on the political demography of socialist experiments in Latin America. Socialism (of whatever specific type) is all about redistribution, using the government to shift wealth from the richer to the poorer. For that you need a sufficient number of people who contribute through work more than they receive. Having large numbers of people either too young or too old to work puts a greater strain on the economy.
For a government to redistribute resources, the balance of resources to people needs to be stable or growing. If the resources per person are the same this year as last year, or are higher this year than last year, the population is likely to be content. However, if the share per person is declining, then the government will face unrest. The demographic regime that best facilitates socialism is one in which the population is not growing, and thus in which the age structure is stable over time.
Overall, fertility rates are falling in Latin America. As countries develop, people no longer feel the need for large families, which were once crucial in traditional rural societies. In Chile and Brazil, fertility is actually below replacement level (which is an average of 2.1 children per woman). But in Venezuela these rates are falling more slowly.
Fertility even now is still above replacement level in Venezuela, and this has contributed to a steady increase in population over time. In 2015 the population was six times the size that it was in 1950, and the United Nations projects that it will be nine times larger by 2050, and still growing at that point, despite the long-term decline in fertility.
Demographers commonly define the length of a generation as 25 years. The generational ratio is the size of an older generation in relation to the generation to which they would have given birth. If the younger generation is much larger, there is a heavier dependency burden.
The generational ratio in Venezuela hit its peak—approaching a value of three–in the 1980s just as the economy was slowing down. It is not a surprise that the economy would slow under conditions in which the younger generation was three times the size of the next older generation.
Thus, we can be sure that the economic crisis that roiled the country by the late 1980s, ending in an unpopular bailout by the International Monetary Fund in 1989, was exacerbated by population growth characterized by a continuously larger young population. Given the heavy reliance on oil for national income in a government-subsidized economy, the steadily growing population could be sustained only with a steadily increasing production of oil and/or an increase in oil prices. A leveling or drop in either one signals automatic disaster.
What this means is that demography has been working against the government and the effect has been mitigated only by oil revenue. The drop of oil prices wouldn’t constitute a crisis if there was a smaller non-working population. But the combination of relatively high fertility and longer life expectancy is now putting a massive strain on the process of redistribution.
At least for now, economic crisis isn’t stopping Venezuelans from having children in higher numbers than many other Latin American countries (perhaps a shortage of condoms helps as well). That, in turn, makes high levels of redistribution even harder to sustain.
Something like the Bolivarian “revolution” is difficult to maintain in the face of a steadily growing dependent population. The burden on economic resources from a growing population is difficult under any economic circumstances, but is especially difficult in an economy based on income/resource distribution.
Based on the 2011 census, the Venezuelan government has tried to spin demography in its political favor, emphasizing the size of the working age (15-64) population. But even its own estimates show a rapidly growing older population, which in 35 years will move from 6.3% of the population to 17.8%.
There are no good policy prescriptions for maintaining Hugo Chávez’s economic model. A country’s age structure just doesn’t change quickly. Especially with low oil prices (but even with somewhat higher prices) Venezuela’s socialist revolution is not demographically viable.