

The Russian Collapse? - ilamont
http://www.tapsns.com/blog/?p=419

======
old-gregg
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
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-gregg
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.

~~~
gruseom
I'd upvote this more than once if I could. The standard-issue Western line on
Russia is seriously off-base. This myth of a 1990s liberal democracy,
subsequently destroyed by Putin in a kind of gradual neo-Stalinist coup, is a
good example. I'm not saying this as a fan of Putin; I just don't think our
propaganda smells any better than the other guys'.

~~~
andrewl-hn
There's one point western people miss about the democracy in Russia. The thing
is that the part of the society which is connected with the government, local
authorities, parliament, city councils, etc. is relatedly separated from the
rest of the population. Of course there's no barrier of entry but the
perspectives of growth are relatively limited for a newcomer.

Consequently at all elections the same group of people competes for the seats
(to some extend). It's especially visible on regional layer. In fact this
situation hasn't changed from the Soviet period.

And as you might imagine these people are very uncomfortable with that
democratic thingy. During the late 90s the United Russia was introduced to
support the most popular politician of that time (Putin). It was created from
the ground up and expanded very aggressively. Joining that party looked like a
clear opportunity to improve once position. That's why everybody tried to jump
in.

The resulting growth was enormous! And combined with a complete inability of
right parties to form a strong opposition this resulted in the formation of
the superparty. Suddenly everybody in this ruling slice of the society felt
the comfort of the good old days of the Soviet Era: 'just join UR to get a
warm fuzzy feeling' :)

Now here's the thing western people do not understand: this situation is Ok!
It's much much better than what Russia had during the 90s. One thing Putin
tries to teach other politicians it that there're some formal rules which they
should follow at least to some extend. As it was already said at least small
and medium businesses are not forced to pay for 'protection'. That's a huge
thing because it affects the whole nation. People have at least some
confidence and feel secure.

After all democracy is not that much important. And comparing to China
democracy is doing pretty well in Russia.

The real political problem today is the lack of strong right opposition.
Communists are doing pretty well on the left side with about 20% of support
among the population. But on the right side there was never a strong entity.
If there's one I'm sure it could get about the same support ratio. These two
strong oppositions could ultimately overcome this superparty situation. Than
it depends. If UR gets divided into two parties Russia will end up with two
identical parties of equal power (US model). If it stays united then it will
be a three-party system (European model). Anyway, if there are no revolutions
or big wars I would expect them to become democratic before the end of the
century. Otherwise we'll have to wait even longer.

Personally I do not expect to see a democratic Russia during my lifetime (I'm
in my early 20s).

Thing you should know:

1\. Despite what you might be told by your officials Russia is not a big deal.
It's just a country.

2\. They are not your enemy and they never want to.

3\. If you let them (and help them) build a better image of Russia they'll be
very thankful.

4\. They want to fell big and important. So be it. If your president decided
to gang up with a couple of others just invite Russian leader over as well.
Meeting in Russia is a good idea as well.

5\. When the right opposition start to form don't rush and don't give them you
aid. Otherwise it's reputation will be tarnished among the nation. It must be
a homegrown thing. That's something US gov and NGO screw things up all the
time. Once there're western money involved these democrats will start
targeting each other, not the superpower. Look at a Belorussian opposition as
an example.

6\. Just do what you have to anyway: go green, improve recycling, ease the
environmental pressure, reduce oil and gas consumption. Once you do it you
won't give a dime about their pipes.

7\. Bring all that green high tech to Russia. Russians are smart and they want
to live on a healthy planet, too.

Communism is not really a bad thing and it doesn't prevent the democracy. I
live in a western European country now. But when I walk along the streets I
see the same life my parents had in Soviet Russia. How ironic is that!

edit: formatting

------
mattjaynes
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-gregg
_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.

~~~
mattjaynes
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.

~~~
old-gregg
Dude, no pitch-fork was up :) I guess I'm guilty at abusing your post just to
illustrate the point I'd been trying to make earlier.

Didn't want to single you out, sorry if it came across this way.

------
aristus
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.

~~~
ruslan
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 :-).

~~~
aristus
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.

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

~~~
artaak
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.

------
earl
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...](http://www.aei.org/publications/pubID.25991,filter.all/pub_detail.asp)

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

~~~
ruslan
> 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 ? ;)

~~~
earl
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...](http://www.globalsecurity.org/military/world/russia/budget.htm)

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

~~~
ruslan
That is not correct again. $150B of the reservers were NOT spent on supporting
ruble, but were allocated on supporting banking system and restructuring loans
Russian companies borrowed from foreign institutions. But you are right, this
was bad move, cause banks took rubles from the gov and instantly turned them
into dollars thus harming ruble even more. Putin never supported stock market
cause it is (and was) close to non-existant. Russian economy so loosely depend
on stock market that even if it goes void noone ever notices that. :-)

~~~
earl
I strongly disagree. Russia made major purchases to support the Ruble. Viz

January '09: Russia spends $30B in a week

[http://www.bloomberg.com/apps/news?pid=20601087&sid=aalw...](http://www.bloomberg.com/apps/news?pid=20601087&sid=aalw.8ABkiPs&refer=home)

$40B sold in Oct, keeping ruble in desired band

[http://russiatooat.blogspot.com/2008/11/massive-foreign-
rese...](http://russiatooat.blogspot.com/2008/11/massive-foreign-reserves-
outflow-puts.html)

further discussion of selling to support Ruble

<http://www.cnbc.com/id/29099569>

That's not to say that Russian hasn't spent hundreds of billions also on
loans, and even more billions on loss of FDI and declaring financial war on
foreign owned companies. But my point holds.

In any case, I wish Russians the best of luck; they were almost uniformly kind
to me when I lived there. But I think the probability that Russia avoids
another governmental crisis is shrinking.

------
c00p3r
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.

