Sunday, June 9, 2013

Bernie Madoff was a piker

If you really want to steal, Russia is the place:

All this speaks of incompetence, but what really irritates shareholders is the company’s enormous waste and corruption. This takes various forms, such as asset stripping. The most egregious form is excessive capital spending.
Analysts at the state-controlled Sberbank (SBER) assess that Gazprom would need $11 billion a year for its gas production, but in 2011 its capital expenditure soared from an originally planned level of $27 billion to $53 billion. It stopped at $43.2 billion last year.
The analysts call this excess expenditure “value destruction,” which is their euphemism for waste and corruption, amounting to $30 billion to $40 billion a year. Investment analysts in Moscow suggest privately that two-thirds of this might be sheer corruption, while the rest is wasteful overinvestment. Corruption at that level may explain the poor management of the company’s official business.

This is from a Bloomberg News piece.

It tends to confirm several obvious things about Russia that drive the rightwingers wild:

1. Regime in and regime out, Russia doesn't change much.

2. Reagan didn't cause the downfall of Russian communism. It fell from its inability to manage the domestic economy, in particular agriculture. (Russian ag is still a mess, as it has been forever, but its overall importance in economic output is relatively less because of greater resource extraction, mainly oil and gas.)

3. The poor performance of the USSR economy is completely explained by a) Russia's eternal incompetence; and b) the destruction caused by a series of capitalist (imperialist and/or fascist) invasions (with about 30 million people slaughtered, mostly in their most productive years).

It may be that Bolshevism is a lousy way to organize a production system, but you cannot prove it from the Russian experience.

Nor can you from the so-called liberalization since the end of the USSR. The free market experts (in their own eyes, anyway) thought what Russia needed was an electronic stock exchange when what it really needed were all-weather farm roads and modern on-farm grain silos.

And less ideology of every brand.

(One of the stupidest women of the 20th C., Lady Astor (an American raised with all the prejudices and ignorance of te Virginia FFVs, but also the first woman elected to the House of Commons), was offered by the Bolshevik government some tsarist-era jewelry at a bargain price. "I don't buy," she said, "stolen property." Proving she did not understand thievery at all. That was in the late '20s. Ten years later she was a big Hitler fan.)


  1. Another attempt at proof by anecdote by Harry.

    Looking at broader and more representative measures, the Russian GDP has more than doubled since the fall of the Soviet Union and the real GDP growth rate is well over 5% per year for the last ten years (source ). Compared to the decades of stagnation under the communist regime, that looks pretty damn good. So, the numbers are actually an excellent repudiation of Bolshevism, Communism, Socialism, and all other sorts of Collectivism.

    Oh, and in the new regime, people are actually allowed to leave the country. What a concept!

  2. They should live so long. Why don't you tell us how life expectancy is doing.

    I used to say, in the early days of RtO, that you have to disaggregate the aggregates. Time to remind everyone.

  3. Are you just going to keep throwing out baloney and hope I don't check it?

    Life expectancy has increased by about a year over the last 10.

  4. Last 20? It's been 20 years and more.

    And what is that life expectancy? Pretty low, right?

  5. Life expectancy is decent for women (75+ years) and has never been higher, is only 65 for men, also has never been significantly higher, and the discrepancy is mostly explained by rampant alcoholism.

    So perhaps the argument that being wealthier has enabled more Russian men to buy yet more vodka which has enabled them to continue drinking themselves to death. But it would be a weak argument since life expectancy hasn't gotten worse.

  6. Wikipedia sayeth thus:

    Russia's economy sank into deep depression by the mid-1990s, was hit further by the financial crash of 1998, and then began to recover in 1999–2000. According to Russian government statistics, the economic decline was far more severe than the Great Depression was in the United States in terms of Gross Domestic Product.[5] It is about half as severe as the catastrophic drop borne out of the consequence of World War I, the fall of Tsarism, and the Russian Civil War.

    Following the economic collapse of the early 1990s, Russia suffered from a sharp increase in the rates of poverty and economic inequality.[6] Estimates by the World Bank based on both macroeconomic data and surveys of household incomes and expenditures indicate that whereas 1.5% of the population was living in poverty (defined as income below the equivalent of $25 per month) in the late Soviet era, by mid-1993 between 39% and 49% of the population was living in poverty.[7] Per capita incomes fell by another 15% by 1998, according to government figures.

    Public health indicators show a dramatic corresponding decline. In 1999, total population fell by about three-quarters of a million people. Meanwhile life expectancy dropped for men from 64 years in 1990 to 57 years by 1994, while women's dropped from 74 to about 71. Both health factors and a sharp increase in deaths of the youth demographic from unnatural causes (such as murders, suicides and accidents) have significantly contributed to this trend. As of 2009, life expectancy is higher than at the nadir of the crisis in 1994, yet it still remains below the 1990 level, with men living to 59, and with women's life expectancy decreasing to 70.[8]

    Alcohol-related deaths skyrocketed 60% in the 1990s. Deaths from infectious and parasitic diseases shot up 100%[citation needed], mainly because medicines were no longer affordable to the poor.

    While Russia no longer suffered from the supply shortages of consumer goods that were so characteristic of the 1980s USSR (see Consumer goods in the Soviet Union), this was not only related to the opening of the Russian market to imports in the early 1990s but also to the impoverishment of the Russian people in the 1980s. Russians on fixed incomes (the vast majority of the workforce) saw their purchasing power drastically reduced, so while the stores might have been well stocked in the Yeltsin era, workers could now afford to buy little, if anything.

    By 2011, the average income has risen to more than $700 per month,[9] emblematic of the mild recovery in recent years thanks to a large extent to high oil prices. Growing income however, has not being evenly distributed. The social inequality has risen sharply during the 1990s with the Gini coefficient, for example, reaching 42% by the end of 2010.[10] Russia's income disparities are now nearly as large as Brazil (which has long been among the world leader in inequality) while regional disparities in the level of poverty continue to trend upwards.

  7. It may be that Bolshevism is a lousy way to organize a production system, but you cannot prove it from the Russian experience.

    Having seen the place, I disagree. Bolshevism is an outstanding way to turn everything into soul-crushing rubbish.

    Of course, Russia could just be an unfortunate outlier. Which means there must be examples of Bolshevist excellence.


  8. I cannot think of anyplace, except maybe Cuba, that wasn't an economic disaster zone before the commies took over. And Cuba was badly off although better in some respects (like literacy) than any other Latin American country (all of them militantly anti-commie).

    Cuba is a difficult test case, inasmuch as its biggest trading partner, natural partner and source of capital cut it off.

    A relevant comparison would be Cuba and Puerto Rico. PR has enjoyed much coddling from the US but is not much better by most measures than Cuba.

    I might give your remark about seeing Russia more weight if, for example, you had compared what you saw with Gorki's 'Lower Depths.' That's the relevant standard.