The Russian Collapse?

http://www.tapsns.com/blog/?p=419

by ilamont • 17 years ago

18 25 17 years ago

mattjaynes3• 17 years ago

Is Russia blind to basic economic principles?

I inadvertently took an economics class in college. Fortunately the professor was amazing and the class was incredibly mind-expanding. The downside to this is that now I am constantly aware of people (and nations) completely ignoring proven economic principles - it can be really frustrating to watch.

This is a bit off topic - but I've often wondered why the US public school system requires so many classes in order to graduate from high school, but rarely even touches economics. I'm all for english literature, social studies, etc - but I think a simple economics course would be far more valuable to the American populace. Apparently, basic economics would be pretty valuable to the Russian populace as well ;)

old-gregg4• 17 years ago

Is Russia blind to basic economic principles? Apparently, basic economics would be pretty valuable to the Russian populace as well.

So... what exactly makes you think that Russians need your tutoring on basic economic principles? How much do you read on Russian affairs per week and have you ever spent any time there? Also, I am assuming you're very knowledgeable regarding latest Russian history, from the collapse of USSR to the latest financial crisis, right?

This reminds me of when Michael Dell, in a typical naive Western manner asked Putin what western computer/software companies can do to "help out", and he got back the only answer this question deserved. Look it up on Youtube.

mattjaynes3• 17 years ago

He he, ok. You can put the pitch-fork down :) I like Russians and I like Americans. It's OK... deep breaths...

So Russians don't need "my" individual tutoring, lol. Of course that's not what I meant. The point is that there are basic economic principles that seem to be ignored by governments and individuals and it can be frustrating to watch. I'm advocating in a round-about way I guess for basic economics to be taught to more than just a relatively few students that happen upon it at University.

cperciva• 17 years ago

I inadvertently took an economics class in college.

How do you inadvertently take an economics class? Did you accidentally wander into the wrong room?

mattjaynes3• 17 years ago

Basically. I had a list of about 10 classes that would satisfy a requirement in the 'Social Sciences' and econ just happened to fit into my schedule so I took that one and it just happened to be the econ class with an amazing professor. I guess 'serendipitously' would be a better word.

ruslan5• 17 years ago

> Is Russia blind to basic economic principles?

How has told you this bullshit ? Nowadays Russia is more capitalist than US ever was.

aristus2• 17 years ago

The comment about Venezuela is astute -- I wish he had followed that up. Out of a couple dozen venezuelano entrepreneurs and owners I know, only 2 are planning new business (one in tourism and one in PR).

The rest are desperate to cash their chips and get around the capital export controls. Five or six have moved out of the country entirely. (Every time a bell rings and angel gets its wings. Every time Chávez sneezes a condo agent in Miami gets a commission)

Forget the politics of it. If you scare off two generations of business owners, in a few years your economy will be f-u-c-k-e-d.

ruslan5• 17 years ago

Believe it or not, but setting up business in Russia is incredibly simple and welcome. The overall entrepreneurship environment is very warm, the taxes are very low (as a small business you can choose to pay flat 6% or 13%) and you don't need to hire expensive lawyers or tax accountants (to file all the innumerous IRS forms), cause you can do all the paper work on your own easily! Even if you cannot or not bother to, you can alway hire a part-time accountant girl for cheap. What's more, there are no problems with tech savvy talented people in Russia, you can hire a really good hacker just for $1000-$1500 a month! And yes, there is a lot many web startups and software development companies in Russia, ours is one of them :-).

The only problem for startups here in Russia is lack of venture capital, as all the capitalists were frightened out away by Putin, who sued YUKOS to death for not paying taxes and hiding crime. So, most startups here are bootstrapping self-supported profitable busineses, as there is no way other.

I pesonally know a guy who developed mobile IM client and sold it to well-known russian internet giant for $1MM. He's now starting a new company for developing desktop client :-).

aristus2• 17 years ago

That's good to hear! I have no opinion on Russia; I know nothing about it past or present and I'm embarassed to say I at first thought the original article was somewhat accurate.

But VE is pretty bad unless you can navigate around some big and scary forces. Some people are getting rich there but it's tricky. The diversity of the economy (which has always been kind of bad because of the distortion of the oil business) is getting worse as far as I can tell.

old-gregg4• 17 years ago

The article is so hopelessly out of touch with reality that I don't even believe the author has ever been there. This crude and inflexible approach of applying American political jargon to everything regarding drastically different countries and cultures leads either nowhere [good] or to disasters like the one Iraq [bad].

In programming terms the author is bitching about Python's OOP implementation having only programmed C++ for his entire life. Amusing but pointless.

The article comes across as immensely naive, on the border of stupid, to any Russian or anyone who lived there in the 90s. Every sentence in it is just so bizarre and stereotypical beyond funny, I was expecting a next paragraph to start with bears eating alcoholics on the streets and nuclear warheads offered for a bottle of vodka on farmers markets. Yes, it's that retarded.

I'm not even sure if junk like that is more amusing or dangerous: I guess muslims got less lucky - they're just "all terrorists" when viewed through Western glasses people like author seems to wear.

yan• 17 years ago

I'm not disagreeing with you, but can you just mention specifically what you didn't like about his analysis (and I'm using the term 'analysis' very loosely)?

Refuting an authors point with a fairly lengthy reply that doesn't address a single specific point of his is just as useless, albeit not as dangerous, as a over-generalized analysis piece.

old-gregg4• 17 years ago

Well, for one, Russia never had a truly market economy that Putin (supposedly) destroyed, let alone a full-fledged democracy which roots Putin supposedly eliminated. That's the crucial moment that many Westerners simply aren't aware of or like to forget about.

I lived there in the 90s. Opening your own small business inevitably meant meeting with local gangs and paying them monthly. If that's the "market economy" Putin destroyed, then nobody is missing it for sure.

Pre-Putin Russia looked very much like a bandit state ruled by a few "influential groups" that Eltsin couldn't control. After USSR collapse, what Russia needed was a massive financial help from the West, similar to what Marshall plan offered Germany after WWII. Instead, they received vast numbers of western scam artists and mostly useless economic advice from IMF and very expensive loans (and the default which followed). That's why remarks like Michael Dell's will always make everybody there laugh and even anger.

For anyone who lived through those times, reading about "Putin destroying democracy and market economy" feels... strange, to say the least. Moreover, the article is filled with pointless exaggerations, like "privatized all oil companies". There are plenty of private energy companies there, just pick up Forbe's billionaire list: what do you think those Russian-looking last names represent?

Russia simply needs more time. Their political scene is interesting but not very practical: tons of small and disorganized democratic parties [always fighting each other], one big pro-government "conservative" one, plus always amusing and relatively numerous communists that are slowly dying off.

katz• 17 years ago

I'll give it a shot (full disclosure, I have not been to Russia but have a keen interest in the country):

"and oh, goodness, weren’t there just a great number of these in unregulated America?"

Europe which is much more stringently regulated has the same (or even bigger) problems than the USA – so does Japan. So to blame everything on the Americans is not a 100% correct. Some of these regulations (e.g. Community Reinvestment Act) even had a hand in the cause of the economic troubles. Europe's “well regulated” banks are falling just as fast as American banks.

“Here he was, blowing up civilians in apartment buildings in ...”

Blaming Putin for the Russian apartment bombings is standard conspiracy stuff. It is like blaming Bush for 911.

“nationalizing all resource companies, “

The Russian oligarchy obtained most of the state assets in a pretty corrupt way during the Yeltsin era. I am pretty sure that pure nationalisation of assets would not be bad. (even though Putin is corrupt).

“working on re-constituting the old Soviet Union,”

What did Putin do to “reconstruct” the Soviet Union? Even its closets allies (and component states of the Soviet Union) were forced to pay market prices for natural gas (e.g. Belarus) – i.e. Russia stopped subsidising them.

“while people like me were warning investors for the last couple of years to get as far from Moscow as they could (too bad BP didn’t listen). “

Hindsight is always 20/20.

“The system, instead of being diverse and robust, is a monoculture with no life to it.”

The economy was in pretty dire straits when Putin took office (1998 Russian financial crises). It can be argued that the economy now is in better shape than it was before Putin took over from an alcoholic.

“I don’t think this will save Putin or his current ideation of Russia. “

As far as I know, Putin was extremely popular when he was president and he is still now pretty popular. State ownership of television stations may help with this. The United Russia party (of which Putin is the chairman) won the last elections in 2007 by an almost 2 3rds majority.

c00p3r2• 17 years ago

btw, there are no possible jokes with alcohol related problems in Russia. Do you aware what happened with nordic tribes in Russia? And that this time most of men died before 50 because of ruined health and stresses? It's not a target for bad jokes, it is a catastophe.

earl3• 17 years ago

To be fair, one point at least seems accurate -- falling oil prices will probably doom Russia's government. This has happened before: see this very interesting book by economist and former Russian PM Yegor Gaidar: Collapse of an Empire. I can't recommend it enough. But basically, his thesis is the reason communist Russia fell was oil prices fell below the level needed to support spending and because of structural deficiencies in the Communist government they were unwilling to confront this problem. Hopefully this is a lesson only for Russian and Venezuela, and not the USA :(

Link: http://www.amazon.com/gp/product/0815731140

You can read an excerpt for free here: http://www.aei.org/publications/pubID.25991,filter.all/pub_d...

or here: http://scribd.com/doc/12796808

ruslan5• 17 years ago

> To be fair, one point at least seems accurate -- falling oil prices will probably doom Russia's government.

I believe it will not. Only 38% of Russian GDP comes from Oil and Gas industry and this figure is contantly lowering, means the gov doing its best to devercify incomes. What's more, Russia has saved significant amount ($400B) of currency reserves. This will allow Russian government to support economy and stay afloat for a couple of years no matter what prices on energy resources will be. How much did US gov save ? ;)

earl3• 17 years ago

I hope not too -- Russians seem to keep getting the short end of the stick. Nonetheless, Putin has burned through something like 1/3 of the foreign currency reserves in 6 months, trying to defend the ruble and rescue the stock market. Further, the Russian national budget assumes, IIRC, an oil price of greater than $80. This, obviously, is no longer the case. Last time I looked, oil and gas were supposed to account for some 30% of the federal budget; I'm sure that is no longer operative. See:

http://www.globalsecurity.org/military/world/russia/budget.h...

There are hard times ahead for Russia, along with the rest of the world.

ruslan5• 17 years ago

I wonder how this piece of crappy blog-post turned up appearing here ?

artaak• 17 years ago

Surprisingly, I even upvoted it, because I appreciate a lot very well written comment by old-gregg. This is exactly the case than the folllow-up discussion is so much more richer than the original very poor pitch.

c00p3r2• 17 years ago

It will collapse because of several generations were fooled to many times and they gave up everything except alcohol and TV. They're tired, hopeless and simply waiting for death.

Of course, new people, like the internet generation are different, but they are weak and immature.

About this article - it is probably based on authors imagination.

The Russian Collapse?

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