Michael Rowan
Special for El Universal

With an investment of $48 billion in the next 5 years, poverty can be eliminated in Venezuela. To allow the state to accommodate this effort, the investment can be sequenced by year as $4, 8, 12, 12, and 12 billion. By 2011, virtually no one in Venezuela will be poor.

To impact poverty, the investment can be distributed so that the bottom 10% receive $1,000 per capita per year, the next poorest 10% receive $900 per capita, and so forth, and the top 10% receive $100 per capita. This distribution is facilitated to compensate for the de facto situation in which the top 10% now receive half of national income and the bottom 10% receive less than 2% in an oil state where all the people nominally own the natural resources. That de facto situation continues seven years into a revolution for the poor, which needs to be reformed to achieve its objective.

What the poor need is money. Trust them to know how to invest it in housing, health, education and security. The bottom 60% of Venezuelan families now lives on $2 per person per day or less, which is the international poverty line. The distribution will triple their income for five years, at which point it can be adjusted to help those few who remain poor.

The mechanism to facilitate this distribution is an oil fund, as exists in Alaska, Alberta, Norway and Kazakhstan. Oil funds distribute benefits directly to populations very efficiently. If the state taxed 1% of the oil fund distributions, it would make taxpayers of every family. This would help formalize the economy along with the personal bank accounts and credit families would open to receive and invest funds.

The world oil barrel price is likely to exceed $50 for the next five years. With efficient management, the state can maintain the public goods in security, health, education, infrastructure and the missions that are required while dedicating $48 billion to eliminate poverty once and for all. In fact, economic growth of $200 billion can be expected as the poor invest and spend their new income -- $30 billion of which would return to the state in VAT tax alone. The revolution against poverty can succeed if the poor are given a fair share of oil benefits. And the state can easily afford it.
mrowan@cantv.net

Michael Rowan's column is published every Tuesday