Some ‘amazing’ news from Russia – President Vladimir Putin has met with the country’s richest business people and warned them that unless they share their wealth they risk losing it. He told them they must use their wealth to help reduce poverty, saying there is a line between wealth and political power. Seems like an offer they can’t refuse…
Sounds familiar? You bet. Putin used to be the head of KGB and I expect no less of him. His career since the fall of communism did nothing more than reinforce his old communist opinions and prejudices. It is possible that his ‘talking to’ to the 800 businesses could be, just could be, a very clever PR ruse to appeal to the Russian people who have to struggle to make the ends meet in a whole new and ‘free’ post-communist fashion whilst the nouveau rich flaunt their wealth. But I do not really think so. It is worse than that, he actually believes it. The few politicians from the former communist bloc who are perceived as ‘englightened’ by the West are more often then not paleo-communists whose rhetoric has turned communitarian, or outright anti-capitalist. This is what Putin told a packed Hall of Columns in the House of Unions that included at least five billionaires:
[Businesses] must aim their efforts at developing a system of new social guarantees for the population in line with the new demands of the time. [We must join] forces to make the lives of people economically sound so that they have plenty to live on.
Bye-bye the lip-service to individual property rights whilst economic future of Russia circles round the drain as her dozen billionaires and several thousand millionaires have begun the process of moving their money off shore. God speed, ‘comrades’.
I am sure that these ‘gentlemen’ are no lambs. In fact, I am certain that their money does not come from honest business. Most likely they grew obscenely rich on rigged privatisations – they happened to be at the right place, right time, with nastier thugs at their command. From what I have seen so far it seems to me that Mikhail Khodorkovsky might not of the same ilk but I do not know enough about him to stand by that conclusion.
Nevertheless, the way to tame the ‘oligarchs’, as they are affectionately known in Russia, is not making them hand-over their money. Just make them subject to the same laws as everyone else (I hope it is obvious that Yukos is not Russia’s Enron). That would, however, require strong institutions such as courts and legislature upholding laws in general and contracts between individuals in particular. This is profoundly lacking in Russia and elsewhere in Eastern Europe.
The Russian state machine is toxic. It may have divested itself of the evil ideology, but it continues to trample over the individual. Rights and justice are considered Western luxuries or, better yet, a clever propaganda by the Western politicians to mask the strings pulled by the military-industrial complexes. Tinfoil hat material? I do not think so – not enough tinfoil in Russia for the lot of them.
It is always fascinating to watch as Russia continues its march into global irrelevence.
“Putin used to be the head of KGB”
Are sure? He was certainly an agent in the KGB but are you certain he was the top banana?
I have been to Russia twice now. While that does not make me an expert I did pick up some vibes.
In the first place, I found that the Russian people did not put too much stock in ideals. When I spoke of freedom of speech, property rights etc. it was as Gabriel said in his article. Our freedoms in the US are illusory, a mere front for the string-pullers. For this reason I think idealistic appeals to the Russian people will fail–ideals do not matter, only “ground truth.” Neither are abstract things like “law” important to Russians. Only those who are close to them, family, friends etc. matter. If there is a conflict between family/friend loyalty the personal connections will win out–as long as the concequences are not too severe. We should not underestimate the resentment many ordinary Russians have for the Oligarchs since their wealth was not acquired legitimately and many Russians are materially worse off then they were under the Soviets.
In the second place, I found the Russians I interacted with to be very generous, warm people–even if they are not drunk. 😉 I think they deserve better but I do not think they have the concepts necessary to make it happen. Remember, ideals of liberty, property etc. are just a scam to delude the simple minded.
What will happen? I think about this a lot. When I was there I thought Russia could go either way. I think she began to slip when she restricted press freedoms. Now that the government is being even more heavy handed I am even less confident than I was.
Some problems are that Russia has almost no history of ANY liberty or even non-brutal government. Coupled with the extreem cynicism we can see why things are the way they are.
Having said all that, I really enjoy Russia. It is a very interesting country with some really good people. I would recommend it if you want to go somewhere that is a little (just a LITTLE) edgy.
P.S. I was in Siberia, the “real” Russia according to Siberians. 😉
While the approach lacked subtlety (and who would have expected less from a Russian) the notion in general is this, if you don’t find ways to properly utilize surpluses, the mass will find a way to take what they want. That seems to be a historical fact.
Major benefactors of a capitalist system have routinely been confronted with the best way to ‘redistribute’ their surpluses. Unfortunately, if done wisely, leads to even greater surpluses, and greater realitive disparity, and greater indignation. Outside of reinvestment, with an eye towards profit, the best way to use excess resources by an individual was an allocation for ‘public works’ such as libraries, halls, auditoriums etc etc that didn’t benefit specific individuals directly (and the negative effect on motivation), provided construction jobs, and provided public buildings at little expense to the general taxpayer. Stimulation of culture by the rich was common and is a legitimate way to transfer wealth without directly benefiting, and stultifying, the individual. It also keeps the cultural paradigms out of the hands of the State.
Crudely stating that you’d better give it away or we will take it away sounds rather familiar though. Here in the US, if philanthropy of the rich is lacking, it is the perfect excuse for raising taxes so I find little difference in substance.
So the end point is how to best put excess and idle resources to use without creating an indigent and worthless society. Giving it away directly does just this. Investing in new ventures which expands output and creates jobs, or financing cultural endeavors, are the best way.
How to motivate investment in an incomplete economy without State interference is the trick. Unfortunately the shambles collectivism made of the people and economy is likely to create an environment to bring its return in some form. That and it seems cultures East of Budapest have difficulty getting the gist of a classically liberal society, so falling back to some form tyranny seems built in. But then again I have some reservations about cultures West of Budapest sometimes too.
While I have only anecdotal evidence to offer, my sense is that the generations who lived with the “security” of the communist state, now miss it. The years of oppression have beaten individualism and independence out of them. But the young seem more outward looking and supportive of the Western paradigm. If so, I wish them sucess.
“How to motivate investment in an incomplete economy without State interference is the trick. ”
Threatening to club people like baby seals seems to work for Putin. Of course stuff like this will make outside investors really uneasy and will probably result in the flight of wealth out of the country.
ed
Hasn’t anyone pondered that Putin may be acting as the “strong institution”? Law/force monopolies are a “given” in the world today.
Indeed, the Oligarchs are as deserving of “their” wealth as China is of the yuan peg.
mark holland: Putin was a KGB official, it was Gorbachev who was the head of KGB. Same difference. 🙂
My point still holds, Putin’s worldview has been shaped by his past in the KGB and apparently his staff consists mostly of former KGB officials.
Gorby wasn’t head of the KGB I think.
Anyway “give-us-your-money-or-else” is the motto of gangsters and governments the world over.
“Here in the US, if philanthropy of the rich is lacking, it is the perfect excuse for raising taxes so I find little difference in substance.”
Yeah.
I don’t see how Putin’s speech is so much different from the widespread rhetoric of “Socially responsible”, “engaged in the community” etc. , slogans widely used in the West (including the US).
Surely, Putin has his rough edges, and freedom isn’t as deeply rooted in Russia as in the West, but I don’t see an immediate danger of catastrophe.
Perry:
“It is always fascinating to watch as Russia continues its march into global irrelevence”
I repeat – you are mistaken. A country the size of Russia, given it’s resources, it’s population, it’s geography – will **never** be irrelevant. And don’t ignore the fact that they have made great progress since the end of USSR, ank keep moving in the right direction despite road bumps.
Jacob: Size does not matter. Russia is in a dire state and always has been. I am not sure they are moving the right direction and even if they were that does not justify road bumbs size of Kremlin. As for resources, if that was what mattered Argentina and South Africa would be the most powerful countries in the world.
West has slogans about ‘social responsibility’ as you point out, but Putin actually puts businessmen in jail. I am sorry but that is a world of difference.
I can’t understand that starry-eyed view of Russia by the West. It’s a shit-hole beyond Westerners’ imagination and Putin is behaving like an absolutist despot in the ‘best’ Russian tradition. The only contraint on him so far was the perception of Russia by the West, but I doubt that he worries too much about that. Otherwise, he would never laid his hands on Yukos or bully the ‘oligarchs’.
Perhaps, he is worried that he might get ‘Magna Carta’ed’ by them, as they are the only ones who have any power (as unpalatable as the source of it may be). Snap out of it please, Russia sucks big time.
We need to remember that Russia is a country where three whole generations grew up surrounded by lies, in which there was no rule of law, no security of property, and arbitrary arrest for anything or – usually – nothing.
They may eventually be able to build a normally-functioning society but it will take ages, perhaps another three generations have to learn it all again.
The chances of that much time passing without another lapse into dictatorship are pretty small imho.
Putin is just reverting to type as a former apparatchik of “The Organs”.
Gabriel,
“I can’t understand that starry-eyed view of Russia by the West. It’s a shit-hole beyond Westerners’ imagination and Putin is behaving like an absolutist despot in the ‘best’ Russian tradition. The only contraint on him so far was the perception of Russia by the West, but I doubt that he worries too much about that. Otherwise, he would never laid his hands on Yukos or bully the ‘oligarchs’.”
Russia is not a “shit-hole”, while not very wealthy by western standards, people live and work there, they are well clothed and well groomed. In their homes they are quite happy. There is a larger proportion of poor people then in the west, but there are many, MANY places worse then Russia in the world. Russia has serious problems, true, but often we in the west exaggerate them.
As I said in my ooriginal post, the problems are extreem cynicism. This is a function of the Soviet era in my opinion.
Now lets look at Putin’s statements in their Russian context. Russia has tremendous natural resources which are controlled by a few who illegitimately acquired the country’s natural wealth. Many Russians are materially worse off than they were in Soviet days. This causes tremendous resentment among the Russian people because they feel in effect “we was robbed.” Enter a politician during an election cycle, fill in the blanks.
This does not mean I agree with putin’s actions, but he is not really behaving worse than a run-of-the-mill lefty populist. Remember Al Gore in the last American election cycle?
Ed
Surely the idea of Russians ‘learning it all again’ is a bit bizarre; the vast majority of their history has been one of being ruled by various despots. It’s more a matter of establishing the idea that living without such despots is possible, & that oppression is not inevitable.
That’s certainly the impression I got from a friend of mine who worked over there for a couple of years. And you’re right, many people there are nostalgic for the communist period; partly because they felt ‘protected’, and partly because Russia was a world power at that time. My friend said a number of people said they’d willingly go through the privations of the communist era again in order to see Russia great again. As a people, they’re very proud of their country (plus, I don’t think the average Russian has seen much change in terms of prosperity or freedom as a result of capitalism so far; the main difference now is that there’s no pretence of solidarity in poverty).
As for the ‘no rule of law’ thing, well… surely that’s one of the things that worked actually; unless I’m grossly misinterpreting you. As far as I understand it, crime (at least crime as we understand it in the West), increased massively as the country became less totalitarian. Same as Iraq, no doubt. I don’t think that lack of rule of law was the big problem in the USSR; a lot of oppressive regimes manage to keep non-state crime down to incredibly low levels; the problem lay more the nature of the laws & the way they were enforced.
Gabriel
“I can’t understand that starry-eyed view of Russia by the West. ”
Seems it’s more your view that needs reconsideration.
Russia will never be irrelevant, no matter what regime it has. It was’n irrelevant *even* under communism. They were an enourmous threat and a trouble fomenting bully worldwide, then. They could become that again – i.e. – be very relevant.
But I don’t see them going there just now.
You wildly exagerate Putin’s problem. Putting one (1) businessman in jail is a very bad thing (provided he’s innocent as I, too, tend to beleive). But things like this happen, even in the US (Michael Miliken ?). The communist regime put tens of millions in the Gulag and outright murdered, with or without trial, hundreds of thousands (at lest). There is absolutely no comparison to Putin. Your rhetoric is wildly off mark.
Putin might have his flaws, Russia might have it’s flaws, but not every flaw indicates the end of the world, as you imply. It is a matter of perspective, of proportions.
>Surely the idea of Russians ‘learning it all again’ is a bit bizarre
It’s not quite true that all I know, I learned playing GURPS. Nonetheless, let me reach for GURPS Russia (http://www.sjgames.com/gurps/books/russia/), in which it describes Russia in the late dark ages as much freer than in Western Europe, with Novgorod as a particularly attractive example. In this history, what did in Russia was when it became a tributary of the Mongol’s. The need for a State that would steal (“tax”) enough to meet the tribute demands turned the region very statist. Later, the nobles made it a crime for peasants to leave (and stop working) the land where they lived, and any sort of freedom got worse. So, if we trust S. John Ross, then Russia really does have a past that it can learn [at least some freedom] from again, albeit a past in which they were not a unitary state run by Moscow…
Jacob: Putin’s recent actions have nothing to do with my view of Russia. There is not ‘end of the world’ rhetoric, just recognition of the dire state Russia is both as a political system and a society.
The Soviet Union was perceived as a big threat, but in fact was not. I remember bursting out laughing when my American friends told me that it was considered a ‘superpower’ during the Cold War. I know, i know…
Also, I never compared Putin’s actions to communist crimes in magnitude, just in essence. It amounts to the same, struggle for power. What I say about Russia is no rhetoric, just extensive experience with that particular God-forsaken place. This is not to slight Russian people, in fact, some of my friends are Russian… 🙂
1. “The Soviet Union was perceived as a big threat, but in fact was not. I remember bursting out laughing when my American friends told me that it was considered a ‘superpower’ during the Cold War. I know, i know…”
Ummm. It WAS a superpower. And a good portion of the world was very afraid of what it would do. The USSR wasn’t some paper tiger with more growl than bite. It had an enormous land army, a tremendous air force and a decent coastal navy coupled with a very good submarine force. That it has been vivisected and reduced into a historical footnote should change the past.
The USSR was very dangerous. Unless you’ve got a different opinion and are willing to explain it in painful detail.
The USSR also had all those thousands if MIRV’ed ICBMs, nothing laughable about that. Maybe they don’t work, but I would not care to find out about it.
They still have them.
They are laughable compared to what ? To Britain ? to France ? to Belgium ?
They have a space program, and a space capability. Who is keeping the Space Station supplied, while the NASA shuttle is inoperational ?
And while you burst out laughing they made trouble everywhere, in Cuba, in Africa, in South East Asia, in the Middle East. Nothing to laugh at, that.
And – they are not in a “dire state”. They are in a lower stage of economic and social evolution than the West (much lower). It will take time for them to catch up. They have made enormous advance in the last 14 years, much more than I thought possible at the time. They still have a long way to go, true, they still have a lot of troubles. We cannot predict the outcome of the ongoing processes. But things change – you ignore this at your own risk.
“What I say about Russia is no rhetoric, just extensive experience with that particular God-forsaken place”
I respect your experience, but you must try to project into the future. They will not always stay the way they are now. They are not now the way they were 10 years ago.