The Parallax Brief


Unrepentant Subjectivity on Economics, Politics, Defence, Foreign Policy, and Russia

Time for a Better Understanding of Russia and Russians

A story by Clifford J. Levy in the New York Times yesterday opened with a sentence that encapsulated the insultingly patronizing view of Russians held by vast swathes of the western press:

“Over the last eight years, as Vladimir Putin has amassed ever more power, Russians have often responded with a collective shrug, as if to say: Go ahead, control everything — as long as we can have our new cars and amply stocked supermarkets, our sturdy ruble and cheap vacations in the Turkish sun.”

What Levy is basically saying is that Russians are so vacuous – at least compared to us enlightened and freedom-loving westerners – that they have happily traded liberty for lifestyle.

Ostensibly this is true. Russians are, in general terms, fatalistic and apathetic about their ability to change their environment. Further, it is true that while Putin has increasingly centralized power and runs an undeniably authoritarian government, he has remained amazingly popular as Russians are living better than ever. “Authoritarianism by consent,” Levy calls it.

Yet this is a slothful, superficial analysis.

Russians don’t love Putin because they can now afford to frolic in discount resports in Turkey, but because he was in power during the period when the country emerged from the crushing poverty, lawlessness and misery of the 1990s, and regained some of its pride and gave its citizens hope.

In the 90’s the Russian people were promised escape from the yoke of communism, but were instead ruined. Led by western economists of the Chicago School and their Russian equivalents, the young reformers, an insidious laissez fair capitalism was installed in Russia via the infamous shock therapy, and was combined with a stripped-down, basic form of democracy which, absent of the great institutions which protect democracy in the West, was ripe for abuse.

Most Russians were plunged into poverty the depths of which Russia had not experienced since the First World War. Meantime, a tiny, nefarious group, now known as the oligarchs, accumulated unimaginable wealth by plundering the nation’s resources, seizing control of Russia’s industries through bribery and violence, and stealing aid money earmarked for the beleaguered Russian people. The whole calamity was presided over by the corrupt, incompetent and infinitely malleable Boris Yeltsin.

The IMF, supposedly supervising Russia’s transformation to a market economy merely nodded its supine approval as the villains pillaged the family silver. And all the West did was gloat about its ‘Cold War victory’, support to Yeltsin in the mistaken belief he was a democrat, and point to the freedoms Russians now enjoyed.

Some freedom.

Russians may be naïve about capitalism and democracy, but they know when they’ve been ripped off. Is there any nation on earth in which the people, after that decade, wouldn’t accept a curtailment of freedom in exchange for some hope, pride, stability and prosperity?

It is clear that the blame for Russia’s current state should not be placed exclusively on the shoulders of the West, nor should we fall into the trap of becoming apologists for all that is broken in Russia, but until the West comprehends the epic scale of its post-communist nation-building failure, and understands that Russians are not simply a uniquely vacuous, apathetic rabble, but actually share the hopes of all peoples, the sooner the West can go about understanding Russia and its problems, as well as improving relations.

On this matter, it is rare to find anything other than the official line of anti-Putin invective published in British and American newspapers, but I am happy to say that the Financial Times is running a story today which actually provides balanced and fair minded – and therefore interesting and useful – analysis.


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Crisis Expained: MV=PQ

One of the best ways to understand why fiscal stimulus is of paramount importance if we are to avoid a Great Depression of the Twenty-Tens is that monetary policy has simply run out of room. Interest rates cannot drop below zero, and since the Fed and most major central banks are at, or will soon be at, zero, we need something more if we’re to arrest the decline toward economic oblivion.

A brilliant multi-media presentation from the Guardian (London) provides a hint as to why zero rates are proving ineffective, and ironically, just as the teachings of John Maynard Keynes are reentering the lexicon of politics after a 30 year hiatus, it is an equation beloved of Milton Freidman which provides the key insight.

Click here for the kind layman’s monetary explanation of the crisis I find useful, and why MV=PQ highlights the need for government fiscal intervention.

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