On Economic Freedom

Andy from Siberian Light posted some very interesting statistics from Index of Economic Freedom 2007 compiled by Heritage Foundation. According to the index Russia is #120 among 157 rated countries while other post-Soviet countries are mostly doing much better. For example, Kazakhstan is #75 and Georgia is #35.

Andy is at a loss
I’ve been racking my brains to think of something positive to say about this for Russia, and about the only thing I can think of is: if Russia has the world’s 10th largest economy, but is this unfree… imagine what it could do if it took deregulation seriously.

I decided to dig a bit deeper into the index because I know well how the economy of Kazakhstan works and I don’t find any serious differences between Kazakhstan and Russia. I did find many curious details.

First, the overall country index is based on a weighted score of such factors as business freedom, fiscal freedom, property rights, freedom from corruption, etc. The freest country in the world Hong Kong has the score of 89,3. At the bottom of the list are Cuba (29,7) and North Korea (3). Russia’s score is 54 and Kazakhstan’s score is 60,4. The difference of 6,4 points brings Russia 45 places down. If Russia could improve its score from 54 to 64 it could be as free as Jordan and South Africa (67 countries in between). At the same time at the top of the list things look different. Hong Kong score of 89 minus 10 brings us to Luxembourg (6 countries in between). Luxembourg score minus ten brings us to Czech Republic (69,7 and 23 countries in between). As we see for “mostly unfree” and “repressed” countries every point counts but for free countries plus-minus 10 points don't really matter.

Second, let us look at detailed ratings of Kazakhstan and Russia. There are two approaches: some ratings are calculated technically: inflation, taxes, taxed to GDP, etc. This is a very nice approach – no bias only digits. But then some rating are purely subjective and sometimes subjective beyond comprehension. Technical scores of Russia and Kazakhstan are very similar. There are only two differences. The first difference: in financial freedom Kazakhstan gets 60 but Russia 40. Why? I agree that Kazakhstan has better banking regulations, fewer banks and the sector is less dominated by state-owned banks (it is dominated by private banks run by Nazarbayev’s close relatives). But does it make 20 points difference? The second difference in ratings: Kazakhstan labor freedom rating is 80,5 but Russia gets only 66,2. This means that in Kazakhstan labor has less guarantees from employers, minimal wage is tiny, working hours are not limited, unwanted workers could be fired without much ado. Russia cares more about employees rights and less about employers. Conclusion – Russian economy is less free. Don’t you find this labor freedom index a bit tricky? For example, the shining example of labor freedom is Georgia – it’s 99,9 (one of the main reasons Georgia is #35). I can confirm it – in Georgia employees are treated like cattle.

Third, even technical scores could be adjusted subjectively. There is a freedom from corruption score. It's subjective but separate from technical ratings. Good. But the guys from Heritage Foundation act differently. There’s corruption rating, then (in case with Russia) they say that from the point of legal demands the courts are totally independent but judges are corrupt and we bring the score down. Property rights judicially are ok but officials are corrupt. What’s the problem? Either get rid of a separate corruption rating or stop introducing this “Russia is corrupt” bias into every technical ratings.

Comparing ratings of rich countries and the rest of the world is hilarious. Take labor freedom rating in France and Russia. French labor code is Draconian – to fire a lazy worker is almost impossible. France labor rating is 65,9 and Russia has 66,2.

Heritage Foundation has a lot of problems trying in vain to prove that economic freedom brings prosperity, growth and a lot of investments. Unfortunately the correlation is so weak that special methods are introduced into methodology to make statistics more “supportive” for ideological dogmas.

PS. By the way, Andy. Before exclaiming "Russia's economy is less free than Communist China's" look at the rating Russia and China both have 54,0 score. Why China is #119 but Russia #120? Can you guess?

Sagacious Economist

It is widely believed that the Economist is a serious and respectable magazine but somehow its analysis of Russia is simply miserable. Only a couple of years ago Economist stopped making doomsday forecasts for Russian economy. It embarrassed itself too many times.

Kirill Pankratov found this wonderful masterpiece in Economist’s “The World in 1999” where its renowned analysts made economic forecasts almost for every country on this planet.

1999 will be the year of Russia's disintegration… Trade between Russia's regions will plunge at least until they hit on a stable, trusted currency in which to do business. That is hardly likely to be the rouble, and the planned coupons and currencies which some regions have been planning look equally unattractive substitutes. How much would a Urals franc be worth in Rostov-on-Don, or a Saratov mark in Perm? ...foreign invasion, albeit of a peaceful and benevolent kind, is exactly what Russia's regions should want… The probable decline in Russia's wealth in 1999 will be around 10%… expect yet another bleak and miserable year.

Fedia Kryukov's New Blog

When I grew completely sick and tired of writing on the topic “Western media lies about Russia” Fedia Kryukov took the baton from me and started his own blog “Russia in the media”.Here’s an extract from his post “The “Empire of Lies” Strikes Back”:

Our fearless exposer of lies and liars, Alexandra Poolos, further maintains that if you "ask any seemingly cosmopolitan Russians on a downtown Moscow street about their take on the international scandal, [...] they will most likely shrug and suggest that the former spy Alexander Litvinenko poisoned himself just to make Russian President Vladimir Putin look bad." Well, from this I can only assume that Alexandra Poolos never actually bothered to "ask any seemingly cosmopolitan Russians" anything of that nature. Because the polling agencies, those who actually ask such questions as part of their job, came up with somewhat different results. For example, the independent Levada Center conducted a poll between December 8-12 and found that 20% of Russians believe Litvinenko was killed by his former business partners, 15% -- by Boris Berezovsky, 10% -- by Russian special services, 8% -- by western special services, 8% -- he accidentally got poisoned while smuggling radioactive materials, 1% believe it was a suicide. The same poll also asked why Litvinenko was killed. Only 19% of Russians believe it was done to make Russia (14%) or Putin (5%) look bad. Other theories included revenge for something Litvinenko did (15%), due to dangerous information he possessed (14%), in order to create a political emergency in Russia to enable Putin to run for the third term (4%). Thus, Alexandra Poolos's alleged "most likely" replies are possible only from the 9% of respondents who believe Litvinenko killed himself, and the 19% of respondents who believe it was done to damage Russia or Putin. And these two sets don't even necessarily intersect, which would make the number of people who espouse the "most likely" view rather tiny.
Read more…

Great job, Fedia!

Now and then

I haven’t been in the UK since 1990. A lot of things changed and changed almost completely. The UK was always a multi-cultural country but sixteen ago British culture was a part of this “multi”. How ironic! British women spent hundred of years fighting for equality but today they see hundreds of creatures completely clad in black sacks who are treated as house animals by their husbands.

What is even more striking – everyone I know realizes how many problems the “multi-culture” brings but don’t say it aloud. That’s not PC. It reminds me of the Soviet times when everyone understood total imbecility of Soviet propaganda but could discuss it only among friends at kitchen tables. The kitchen table discussions are back in the UK. Is there any political party in the UK that actually voices evident concerns are “multi-culturalism”? There are more and more people on British soil that sincerely hate British culture and British life-styles. What would it lead to?

Some other observations. British kids became very unruly. Women started drinking like men. Much more litter on the streets. Hobos have much fewer teeth.

The Right Way

On the arrow, "The Right Way"
Bear, "I'd better go my own way"

Where is America's Politkovskaya? Part 2.

This is my answer to Mark Ames question.

Any war dehumanizes people. No matter what were the reasons for war the moment people start killing each other humaneness is lost and sooner or later only the need to survive remains. But fighting nations need soldiers who beyond survival can also behave “heroically”. How can you force a sane person into killing more enthusiastically? He must hate the enemy. He must hate not an abstract enemy but any concrete enemy soldier who looks exactly like you and me. One needs some magic to transform an ordinary person into beast, insect, disgusting piece of dirt, sadist and not actually a human being at all. This task at war is performed by war journalists.

War journalists should satisfy a number of hard demands, like
- The should be brave and courageous. This is a real war after all.
- They should be sincere and truly believe in what they write even when they fantasize.
- They should be able to find some real facts about enemy’s crimes to sound credible.
- They should be able to write beautiful fiction and to add chilling details to the facts they find. Who at war is really interested that two children were killed by a hellicopter missle? A real war correspondent should decribe in great details how the pilot was intentionally hunting the poor kids, how tears of the helpless babies were streaming down their faces, how the pilot was laughing demonically when pushing the button and how horrible their mutilated bodies looked. Some call it death porn but for a war correspondent it’s job – nobody says wars are pretty.
- In case there are no facts at hand war correspondents should always be able to find credible witnesses and make interviews with them.

That's exactly what Anna Politkovskaya was – a war journalist fighting on the side of Chechen rebels. And she did her job fine. I believe her books and articles helped dozens of Chechen men and women to become guirillas and suicide bombers. During proper wars like WW2 nations don’t have war correspondents writing “truth” about their soldiers but in case an army is fighting guerillas like in Chechnya or Iraq things are different. First, such wars are mostly distant and don’t disturb everyday activities of ordinary citizens. Second, we live in a very politically correct world where big transnational NGO’s keep a close eye on human rights and power abuses. This way it’s normal that there’re many Politkovskayas both in Russia and in America. Only people both in Russia or America have very little interest to read books where their sons are described as sadistic orcs from Mordor. Enemy war correspondents are almost always marginal figures to the general public in there native countries but are extremely popular in countries that support their enemies. This is why Politkovskaya was so popular in the West and Gore Vidal is so loved in Iran.

Things would be very different if the war with Iraq would’ve been real. Imagine – Iraqi tanks at the gates of Chicago, half of the country lies in ruins, office workers of yesterday are toiling at production lines. What kind of reaction newspaper stories about American soldiers raping helpless Iraqis would provoke?

Taken, for example, into the context of WW2 Politkovskaya’s best stories would sound outrageous. Imagine a Christmas 1944 Time issue with an article by Ann Politkoff. Young American intelligence officers arrest two poor German farmers Hans and Fritz, put them into a pit with water where they lie naked in their own excements when the temperature is at ice point. From time to time American officers rape them saying, “We do so because your German women don’t want to sleep with us”. At last Hans and Fritz are set free. They find Ann and tell her the story but she has to keep them anonymous as well as the place where they were tortured – evil Americans would certainly hunt them down and kill. “Now the only thing I want is revenge, - says Fritz – That’s why everyone in American uniform is a legitimate target for me.”

The story sounds absolutely absurd. How long can a person survive in a pit with freezing water? Did young intelligence offices washed the poor guys from excrements before raping them? How comes they don’t rape German women who don’t want to sleep with them? Why at last didn’t they kill them? On the other hand if this story would've been published in Voelkischer Beobachter Germans in 1944 would’ve found it totally credible – everybody knows Americans are irrational sadists and perverts.

Sticking it up Vladimir the Impaler

This is an article by N.Petro published at Asian Times Online.

Sticking it up Vladimir the Impaler
By Nicolai N Petro

Among Russian President Vladimir Putin's many sins, surely the most outrageous is that he dares to compare Russia to the West. He has clearly forgotten Russia's proper role in our Narrative of Western Civilization: to serve as a poignant example of all the sins that we never commit. Putin has the temerity to suggest that Russia and the West face similar problems, and the gall to think that the West could even learn a thing or two from Russia.

Quite understandably the US media have responded to such insolence with a collective "ecrasez l'infame!" After the Group of Eight summit on July 19, the venerable Times of London politely told Putin that we Westerners didn't appreciate his wisecracks about the scandals surrounding Lord Levy (Prime Minister Tony Blair's chief fundraiser, dubbed "Lord Cashpoint") or democracy in Iraq. "A little more grace, and less hubris," if you please, wrote The Times.

Hear, hear! The last thing any of us needs is to hear about corruption, criminality, and violence in our own countries. Why, the next thing you know Putin will discover racism in some benighted corner of our enlightened lands and start quoting Samuel Johnson at Americans: "How is it that we hear the loudest yelps for liberty among the drivers of Negroes?"

The Times editorial quite properly pointed out that, as host at the G8, it was quite ungracious of Putin to give voice to such piffle. As every civilized person knows, the mark of true gentility is to attack your guest at a private dinner in his honor, as the president of the European Parliament, Josep Borrell, did at recent the EU-Russia summit in Lahti, Finland.

According the Italian daily La Stampa, Borrell introduced his guest by sarcastically remarking that "we should be thanking Putin for closing the pipelines to Ukraine last January, which has brought us here to talk about energy". From there he spoke movingly of his concern for human rights, non-governmental organizations and the free press (only in Russia, of course). "We buy oil from the worst countries," he added sadly, "but we don't ask them to share our values."

What subtlety! What grace! What a coincidence that his remarks at an event closed to the press were leaked in time for the morning editions.

Putin, though, has still not learned to sit quietly and bow his head in shame. First, he slyly admitted that he too was concerned about crime, but then added that surely Russia wasn't the only country that had such problems. What about the recent criminal indictments of several Spanish mayors, and oh, by the way, "The mafia was not born in Russia."

One could have heard a fork drop on the fine linen tablecloth. The 25 European Union leaders who had gathered to gang up on the Russian president that evening could scarcely believe their ears. Once again Putin had violated one of the cardinal principles of our relations with Russia by comparing his problems to ours.

The danger in such behavior should be apparent to all. If Russia's problems are seen as in any sense comparable to our own, then it can no longer be excluded from Western institutions on the basis of its cultural incompatibility, and what else is really left?

Militarily, as everyone knows, Russia is but a shadow of the former Soviet Union. It poses so little threat that when Georgia seized four Russian military officers, the Russian parliament responded by speeding up the withdrawal of its remaining forces. Georgian Minister of Defense Irakli Okruashvili now regularly dares Russia to try to invade his country.

Economically Russia has done better, but its foreign investments overseas still put it on a par with Malaysia. As an energy provider, Russia supplies Europe with about a quarter of its natural gas, but this is two-thirds of Russia's gas exports, so that actually Russia is far more dependent on its European consumers than they are on it.

Putin's wily retorts pose a real and present danger to the West, however, precisely because they erode the sharp distinction between Western and Russian identity, between Western and Russian values, that are needed to safeguard Western Unity.

If this distinction disappears, pray tell, how will we be able to sustain our fear of Russia? If Russia's domestic debates are likened to our own, or if the Western press should begin reporting about all the areas of cultural, economic and political similarities that already exist between Russia and the West, I ask you, how will we preserve a proper sense of Russia's fundamental alienness?

Will we still be able to distinguish clearly between the perfectly tolerable levels of corruption, intolerance, and violence in the West and the totally intolerable levels of the same in Russia? In Russia's reflection, might not our own domestic and foreign policies soon begin appear less than ideal?

This is a very slippery slope. Ultimately, such thinking could lead to questions about whether "Western values" are truly the best for all nations at all times. The faint-hearted among us might even be drawn to consider the possibility of cross-cultural dialogue about the meaning and political usefulness of such terms as "democracy" and "human rights".

Down this treacherous path one can envisage multilateral initiatives, based on more culturally inclusive definitions of democracy, taking the place of the tried and true strategies of "regime change" and "democratic-values education" promoted by the administration of US President George W Bush. Perish the thought!

That is why it is of such vital importance that Putin's uppity attitude be firmly swatted down at every opportunity and why I, for one, applaud the Western media for their diligence in this regard. The alternatives are simply too awful to contemplate.

Nicolai N Petro served as the US State Department's special assistant for policy on the Soviet Union under president George H W Bush, and now teaches international politics at the University of Rhode Island.