|
Putin On The Role Of The State In The Economy
Most of the commentators on yesterday's post were right. It was the Russian President Vladimir Putin who said this:
Many of us read The Little Prince by Antoine de Saint-Exupéry when we were children and remember what the main character said: “It’s a question of discipline. When you’ve finished washing and dressing each morning, you must tend your planet. … It’s very tedious work, but very easy.”
I am sure that we must keep doing this “tedious work” if we want to preserve our common home for future generations. We must tend our planet.
The subject of environmental protection has long become a fixture on the global agenda. But I would address it more broadly to discuss also an important task of abandoning the practice of unrestrained and unlimited consumption – overconsumption – in favour of judicious and reasonable sufficiency, when you do not live just for today but also think about tomorrow.
We often say that nature is extremely vulnerable to human activity. Especially when the use of natural resources is growing to a global dimension. However, humanity is not safe from natural disasters, many of which are the result of anthropogenic interference. By the way, some scientists believe that the recent outbreaks of dangerous diseases are a response to this interference. This is why it is so important to develop harmonious relations between Man and Nature.
It was a part of a talk he gave at this year's Valdai Discussion Club meeting.
I found the excerpt remarkable because it included this, on might say, anti-capitalistic statement:
.. an important task of abandoning the practice of unrestrained and unlimited consumption – overconsumption – in favour of judicious and reasonable sufficiency, when you do not live just for today but also think about tomorrow.
That 'green' statement will rile those people who argue for free markets and a right to sell bullshit in ever more flavors. In their view the fight against such 'communists' thinking must be renewed.
As the full English transcript of Putin's speech and the two and a half hour Q&A is now available I can also quote another interesting passage where Putin talks about capitalism and the role of the state. His standpoint seems very pragmatic to me:
Question: Mr President, there has been much talk and debate, in the context of the global economic upheavals, about the fact that the liberal market economy has ceased to be a reliable tool for the survival of states, their preservation, and for their people.
Pope Francis said recently that capitalism has run its course. Russia has been living under capitalism for 30 years. Is it time to search for an alternative? Is there an alternative? Could it be the revival of the left-wing idea or something radically new?
Putin: Lenin spoke about the birthmarks of capitalism, and so on. It cannot be said that we have lived these past 30 years in a full-fledged market economy. In fact, we are only gradually building it, and its institutions. [..]
You know, capitalism, the way you have described it, existed in a more or less pure form at the beginning of the previous century. But everything changed after what happened in the global economy and in the United States in the 1920s and 1930s, after World War I. We have already discussed this on a number of occasions. I do not remember if I have mentioned this at Valdai Club meetings, but experts who know this subject better than I do and with whom I regularly communicate, they are saying obvious and well-known things.
When everything is fine, and the macro economic indicators are stable, various funds are building up their assets, consumption is on the rise and so on. In such times, you hear more and more that the state only stands in the way, and that a pure market economy would be more effective. But as soon as crises and challenges arise, everyone turns to the state, calling for the reinforcement of its supervisory functions. This goes on and on, like a sinusoidal curve. This is what happened during the preceding crises, including the recent ones, like in 2008.
I remember very well how the key shareholders of Russia’s largest corporations that are also major European and global players came to me proposing that the state buy their assets for one dollar or one ruble. They were afraid of assuming responsibility for their employees, pressured by margin calls, and the like. This time, our businesses have acted differently. No one is seeking to evade responsibility. On the contrary, they are even using their own funds, and are quite generous in doing so. The responses may differ, but overall, businesses have been really committed to social responsibility, for which I am grateful to these people, and I want them to know this.
Therefore, at present, we cannot really find a fully planned economy, can we? Take China. Is it a purely planned economy? No. And there is not a single purely market economy either. Nevertheless, the government’s regulatory functions are certainly important. [..]
We just need to determine for ourselves the reasonable level of the state's involvement in the economy; how quickly that involvement needs to be reduced, if at all, and where exactly. I often hear that Russia’s economy is overregulated. But during crises like this current pandemic, when we are forced to restrict business activity, and cargo traffic shrinks, and not only cargo traffic, but passenger traffic as well, we have to ask ourselves – what do we do with aviation now that passengers avoid flying or fly rarely, what do we do? Well, the state is a necessary fixture, there is no way they could do without state support.
So, again, no model is pure or rigid, neither the market economy nor the command economy today, but we simply have to determine the level of the state's involvement in the economy. What do we use as a baseline for this decision? Expediency. We need to avoid using any templates, and so far, we have successfully avoided that.
Then comes a paragraph that shows where Russia differs from the current 'western' economic policies of negative interest rates and deflation:
Of course, the Central Bank and the Government are among the most important state institutions. Therefore, it was in fact through the joint efforts of the Central Bank and the Government that inflation was reduced to 4 percent, because the Government invests substantial resources through its social programmes and national projects and has an impact on our monetary policy. It went down to 3.9 percent, and the Governor of the Central Bank has told me that we will most likely keep it around the estimated target of around 4 percent. This is the regulating function of the state; there is no way around it. However, stifling development through an excessive presence of the state in the economy or through excessive regulation would be fatal as well. You know, this is a form of art, which the Government has been applying skilfully, at least for now.
Keeping inflation up by a bit will make it easier for Russian consumers and companies to pay back their loans. It is economically healthier than the deflationary policies of western societies.
Russia is well on its way to overtake Germany as the fifth biggest economy. Putin's pragmatic positions towards the role of the state in the economy and his relative generous policies of social programs and large national projects have contributed to that.
The many questions and answers on foreign policy in the Valdai talk show a similar pragmatism on other issues. For those interested in those here is again the link to the transcript.
Keeping inflation up by a bit will make it easier for Russian consumers and companies to pay back their loans. It is economically healthier than the deflationary policies of western societies.
That’s a great idea, except both government and household debt in Russia are among the lowest in the world (probably the lowest of any industrialized country). Both Putin and the foreigners who fawn over him, including myself not very long ago, are the first to tout this fact. This way inflation in the Russian economy means consumers get to enjoy rising costs of living, and the state and companies rising costs of raw materials, energy etc. while there’s virtually no debt on the other side of the equation for inflation to devalue. There’s still a lot of corporate sector debt in Russia, but the bulk of it is still, incredibly, denominated in dollars, euros, Swiss franc, and so on. Ruble inflation and falling exchange rates don’t make this debt to cheaper to service, but of course the opposite.
It’s a great thing that the rate of home ownership (without associated mortgage debt) is so high in Russia, and it’s probably the only result of the privatization drive that was actually a good outcome. There’s no reason that Russians should now be loaded up with huge debts in order to own a house or an apartment. Access to personal credit for things like a car is difficult and expensive in Russia, which obviously means a lot of people can’t afford a car, but on the other further helps to ensure the indebtedness of households is kept low. At the same time, like Putin (and b) does here, many in Russia apparently want to pretend that their economy is like a Western economy, and that accordingly its households are partially relieved financially by inflation when they actually only suffer from increased prices. It’s absolutely bizarre.
The reality is that Russia’s leadership has an unparalleled committment toward, and talent for, getting the worst of all worlds economically. Thanks to them Russia is probably the only major economy in the world with high inflation but microscopic domestic currency debt (and correspondingly low investment in the domestic economy). This way Russia has gotten to enjoy, historically, very high inflation but much lower growth rates than other developing economies. (The high growth rates in the 2000’s came from high raw materials prices, resulting merely in accumulation of foreign exchange reserves which the Russian government itself then said could not be efficiently converted into rubles and invested in the Russian economy. Growth in industrial and agricultural production, or in fixed assets like infrastructure, was accordingly much smaller, if even existent.)
There’s also the continuing Wild West capitalism where oligarchs have gotten to keep their stolen assets in potash, gold mining, coal mining etc., even in strategic industrial sectors like steelmaking, power engineering or the automotive industry, while at the same time even Chinese investors are discouraged from investing through opaque regulation and unpredictable Russian state intervention. In other words, stability for the oligarchs who openly tried to destroy the Russian state and turn it into a Hong Kong-style neo-feudal hellhole, and who today just as before continue to asset strip the last residues of Soviet-era manufacturing, but a Great Wall against the Asians who want to come in and develop petrochemicals plants, e-commerce, timber industry or whatever.
Through the entire 2000-2012 era, the Russian government came down like a hawk on ruble-denominated debt, while corporations (both private and state-owned) could take out basically unlimited loans in foreign currency. State-owned companies like Rosneft actually led the foreign currency indebtedness, helping enormously to ensure that Russia’s only real advantage and asset in the post-Soviet era, the trade surplus resulting from its oil and gas exports, is sent out of the country as interest payments to American and European banks, rather than (as China has done) paying for the imports of Western machinery and technologies to help develop domestic manufacturing.
Certainly, Russian companies are now much more restricted in the amounts of foreign currency credit they can accept, but access to ruble credit is highly limited as well. The result is of course austerity in the economy, with anemic growth and falling living standards.
Another important “benefit” was that the West had an easy way to put pressure on the ruble. They simply forbade Russian companies from rolling over their debt, forcing them to come up with huge sums of foreign currency in short order. That crashed the rouble, thereby dramatically forcing up prices (and equivalently, inflation) in the, by its own design, almost completely import-dependent Russian economy. The crash in oil prices (again, simply limiting Russia’s income in dollar terms, much of which they needed simply to pay back Western creditors anyway) was just icing on the cake.
One could keep going like this forever. If China and South Korea had political and corporate elites with this mentality, and with this level of commitment to neo-liberalism and globalization, but (critically!) only to its worst aspects and outcomes, these countries would have been very lucky to be at the level of development of Thailand today. That’s the reality and attacking people who raise these criticisms as enemies of Russia, as many did to me in the last thread about thread on these topics, does nothing to help matters. In fact, with “friends” like you, maybe Russia does not need enemies.
Posted by: Eric | Oct 24 2020 21:10 utc | 18
@Posted by: Eric | Oct 24 2020 21:10 utc | 18
I for one, having not had time to read thoroughly the past threads due exhaustion from overloasd of work, find your post quite interesting.
Even not having the knowledge in economics, it seems to me an elaborated legitimate constructive criticism of the state of affairs at economic level in Russia.
I am also surprised of the unconditional kind of mesianic support for Putin in this and other forums, whatever he does, and as I love the Russian people as much as it could be, I really wonder what those “unconditional” supporters, mainly Trump supporters as well, know that I am not.
And I say this because Putin´s and Trump´s projects seem anathema, if you take into account tha, as i learned today by an article linked by an activist, Trump project is that of the neoreactionaries of “Dark Illustration” of Peter Thiel and the likes…In fact, learned that it was precisely this Thiel, CEO of Palantir, CIA, Pentagon and DoS contractor on big data, who was called to form the Trump´s White House staff…One guesses it was from there where Mnuchin came out…and one guesses it was from there where the coup in Bolivia came out as well, as these people are allied in their project with others their kind in Silicon Valley…
If I would have been able to concur to the Valdai Club session, I would had been asking Putin about this movement and what the role he thinks they will play in the future…
The goal of this movement is ending nation states to end their influence, laws and regulations, and thus try to dinamite, through sowing divide ( and in this they are helped by alleged opponent Soros and his network of franchises mstering regime change, color revolutions, blunt coups d´etat and lately “peaceful transitions of power”, being both, Soros and the NRx, connected to the CIA…)countries with which make what they call “The Mosaic” of regions resulting, at the head of which there will be a corporation CEO and their stakeholders in a hierarchical authocratic order. These people think that Democracy simply does not work and thus must be finished, and that there are people ( white, of course ) who have developed a higuer IQ ( at this point I guess some of you have noticed this creed sound very familiar to you, from our neigbors here by the side at SST, where “james” and Pat lately love each other so much…)and must rule over the rest.
To achieve their goals, these people, as geeks from Silicon Valley, are willing to cross the human frontiere to transhumanism so as to enhance their human capabilities to submite the rest…
Wondering why this topic have never been treated at MoA…nor at the Valdai Discussion Club…
The Alt-Right and the Europe of the Regions. According to Wikipedia, Steve Bannon is inspired by the theorist Curtis Yarvin (https://es.m.wikipedia.org/wiki/Ilustration_oscura), who states that countries should be divided into feudal areas in the hands of corporations (Patchwork).
https://twitter.com/andrei_kononov/status/1126684073009639425
The Moldbug Variations
Yarvin considers Thiel “fully enlightened.” What does that mean, coming from a founder of the “Dark Enlightenment” movement?
Yarvin believes there is no such thing as democracy—and Thiel has said as much, as well. Yarvin’s stunted political imagination prizes strict hierarchies—despotisms, monarchies, and experimental new feudalism via a “patchwork” of corporate fiefdoms managed by absolute dictators who might be appointed by a vote of property-owning “shareholders.” Unlike some advocates of Silicon Valley secessionism, Yarvin has never been shy in acknowledging that this amounts to a revolution and would require the forcible overthrow of the established order. He advised, for instance, that the new dictator of California should throw the old elected governor in Alcatraz, and then briskly proceed to pack the government with Google guys.
Yarvin’s Dark Enlightenment dogma also is steeped in pseudoscientific racism. Yarvin preaches that intelligence is determined in large part by the laws of “human biodiversity”—which hold, in his telling, that white people are congenitally smarter than black and brown people, and that Chinese people may be the smartest of all. It takes no great stretch of the imagination to see how a blood-and-soil white nationalist like Bannon and a racist bomb thrower like Donald “Good Genes” Trump would find a great deal of reassurance in this toxic philosophy.
Yarvin’s idea of enlightenment also means believing that history as we’ve come to know it is a lie. It means believing that the Soviet Union was the greater evil in the Second World War and that Nazi Germany acted in preemptive self-defense against the nefarious scheming of Stalin and FDR. It also means believing that ever since that war, upstanding American fascists have been unjustly persecuted by the state, and that the United States has been ruled by a conspiracy of wealthy establishment Communists and a “ruling underclass” of violent black mobs who are their eager pawns.
Notice how this last sentence coincide verbatim with Pat Lang´s motto repeated to exhaustion from his blog, and also notice how the recent riots in the US come as self-fulfilled profecy to these individuals…( this is why some of us though the riots organized by the same Trump people…)
Another interesting quote which leaves no doubt where the shots go to…( and never better said…), where they intertwin with the “white trash”, by instrumetalizing of the militias and even Trump proper…
To be enlightened, in Yarvin’s world, means forming an uncomfortable alliance with street Nazis—the Stormfront set—and other déclassé white nationalists. The same goes for right-wing terrorists such as Anders Behring Breivik, whom Yarvin denounced, but only in the most limited and depraved terms possible. Yarvin wrote that Breivik should be condemned because his 2011 massacre in Oslo was ineffective as terrorism, which Yarvin considers a legitimate military tactic. Nazi terror was legitimate because it worked, Yarvin wrote. Breivik’s killing spree, which targeted young Norwegian leftists, was illegitimate because it was insufficient to “free Norway from Eurocommunism.” After all, he only killed ninety-two people! “We can note the only thing he didn’t screw up. At least he shot communists, not Muslims. He gored the matador and not the cape,” Yarvin wrote on July 23, 2011, one day after the terror in Oslo, and five years before going to Thiel’s house to hang out and watch their guy, Trump, get closer to power.
As Yarvin evidently sees Thiel as his project, Thiel presumably sees Trump as a useful vehicle to achieve his “enlightened” vision.
This way, one gets to understand why an individual with such self awarded “high IQ and intelligence skills” like Pat Lang, supports a botarate like Trump, whatever he does, and has done during these past four years, as if there was no tomorrow…
Posted by: H.Schmatz | Oct 24 2020 23:01 utc | 28
|
