By Paul Craig Roberts and Michael Hudson
“Is Neo-Liberalism Killing Russia?”
Sourced from Information Clearing House
What am I doing wrong . . . ?
Why has my approval rating declined . . . though it is still high?
“Is Neoliberalism Killing Russia?”By Paul Craig Roberts and Michael Hudson
March 01, 2019 “Information Clearing House” – I have learned from Andrei Martyanov that southfront.org’s report misinterprets the Russian VCIOM poll. The poll asked who is the most trusted politician in Russia. Putin was first according to 32.6% of respondents , Shoigu with 15.6% of respondents, and Lavrov with 13.2% of respondents. These percentages are not approval ratings of the individuals. The percentages represent the share of the respondents who chose them as the most trusted politician.
If you add these percentages, it shows that overall the three most trusted politicians account for 61.4% of the respondants. As these three individuals are the most visible members of the Russian government, obviously there is high confidence in the government.
Although Putin’s approval rating has been hurt by the “pension reform” and value added tax, his approval rating has declined but is still high.
With this correction, we have decided to leave the article up for now as the article is about the damage done to Russia by neoliberal economics. Our title is “Is Neoliberalism Killing Russia?” and not is “Putin’s Approval Rating Killing Russia?”
We might edit the article and repost it in order to correct the southfront misinterpretation of the poll.
Is Neoliberlism Killing Russia?
By Paul Craig Roberts and Michael Hudson
Southfront.org reports that according to polls by VCIOM, a state pollster, the Russian public’s confidence in Putin, prime minister Dmitry Medvedev and the Russian cabinet has dramatically declined over the past year.
The decline is related to domestic, not foreign, policy. Apparently, the public perceives recent Kremlin economic policy as a continuation of the disastrous policies that Washington imposed on Russia in the 1990s when Russia was loaded up with foreign debt while state assets were privatized and plundered by oligarchs sponsored by the West who “cashed out” by selling the assets to foreigners.
Russia’s stock market became the darling of the West in the mid-1990s as underpriced mining, oil and infrastructure were sold for a fraction of their value to foreigners, thus transferring Russian income streams abroad instead of leaving the income to be invested in Russia. In effect, Russians were told that the way for their country to get rich was to let kleptocrats, oligarchs, and their U.S. and British stock brokers make hundreds of billions of dollars by privatizing Russia’s public domain.
Washington took advantage of the gullible and trusting Yeltsin government to do as much political and economic damage as possible to Russia. The country was torn apart. Historic parts of Russia such as Ukraine were split off into separate countries. Washington even insisted that Crimea, long a part of Russia and the country’s warm water port, was retained by Ukraine when the Soviet Union was dismembered.
The approval rating of Putin and the Medvedev government dropped sharply in response to the recent increases in the retirement age and value added tax.
The former raised concerns about pension security and reminded Russians of the collapse of Soviet pensions. The latter reduced consumer disposable income and lowered consumer demand and the economic growth rate. These policies represent austerity imposed on the domestic population instead of on foreign creditors and reflect the neoliberal view that austerity leads to prosperity. The US sanctions give Russians every reason not to repay their foreign loans; yet Russians continue to enable their own exploitation by foreigners, as neoliberal economists have told them that there is no alternative.
Russia is experiencing capital outflows due to the Russian private sector’s repayment of loans to Western creditors. Russia has experienced over $25 billion a year of capital outflows since the early 1990s, accumulating to over a trillion dollars. This money could have been invested in Russia itself to raise the productivity and living standards of its citizens. The outflow puts the ruble under pressure, and the interest payments draw money out of the country away from Russian uses. If it were not for these outflows, the value of the ruble and Russian wages would be higher.
Russia’s economic problems are due to the looting of the country during the Yeltsin years, to the imposition of neoliberal economics by the Americans, and to financialization as a result of the privatizations.
People’s savings (called the “overhang”) were wiped out with hyperinflation. Privatization was not accompanied by new investment. The economy was not industrialized, but financialized. The proceeds from privatization were deposited by the Russian government in private banks where the money was used to privatize more Russian assets. The banking system thus served to finance the transfer of ownership, not to fund new investment, and the proceeds were transferred abroad. Russia was turned into a financial colony in which proconsuls created wealth at the top.
Today privatization continues in the de facto privatization of public assets, such as charging fees for use of federal highways. As the Russian economic profession has been brainwashed by the Americans, the country is devoid of economic leadership.
We have pointed out on more than one occasion that it is nonsensical for Russia to indebt itself by borrowing abroad in order to finance investments. The Russians were sold a bill of goods that the central bank cannot issue rubles unless the rubles are backed by dollars. This advice served to prevent Russia from using its own central bank to fund public infrastructure and private investment projects by issuing rubles. In other words, Russia might as well not have a central bank.
Apparently, Russian economists do not understand that Russia does not spend borrowed foreign currencies inside Russia. If Russia takes a foreign loan, the borrowed money goes into central bank reserves. The central bank then issues the ruble equivalent to be spent on the project, and the cost of the project goes up by the pointless interest paid to the foreign lender.
As far as we can tell, the Institute of Economics of the Russian Academy of Sciences is so brainwashed by neoliberal economics that their minds are closed to correct policies. The failure of Russian economic leadership imposes far more costs on the Russian economy than do Washington’s sanctions.
Southfront’s report says that the Russian government has failed to explain its economic policy to the public. Perhaps the reason is that the public, unlike the economists, has not been brainwashed and will see through the nonsensical explanations.
Apparently there is also no intellectual leadership. Although Putin is a leader and has a sense of Russian purpose, many officials use their office not in service to Russia but in service to their own wealth, much of which is held abroad. Corruption and embezzlement seem to be the purpose of many office holders. Scandals abound among members of government and reflect badly on Putin and Medvedev.
The Russian government’s popularity was at a peak when the government showed it had the intelligence and will to reincorporate Crimea into Russia. However, the Russian government, hoping to reassure Washington and Europe, refused the requests of the Luhansk and Donetsk republics to be reincorporated into Russia. Russian nationalists, the majority of the population, saw this as kowtowing to the West. Moreover, this mistake by the Russian government has resulted in Ukraine’s ongoing military assault on the breakaway republics and to the arming of Ukraine by the West. Instead of acting decisively, the Russian government enabled the continuation of conflict that can be exploited by Washington. The Russian people understand this even if the government does not.
By failing to show firmness, the Russian government encourages the crony system of oligarchs who want a government that they can use for their narrow interests. Their interests include participating in the system of Western plunder known as “globalism.” These client elites of the West oppose a powerful Russian state that could assert itself on the world stage and offer an alternative policy to the West’s policy of plunder. The influence of this narrow interest group on government policy indicates that the Russian government is compromised.
Putin is trying to break free of the West’s grip by directing Russia’s economic orientation to the East. His effort is helped by the American sanctions. But Russia remains sufficiently mired in the Western system to be vulnerable to sanctions and is only slowly extracting itself. To be part of the West has been an important goal since Peter the First and Catherine the Great, and the Russian Atlanticist Integrationists cannot let go of the ancient goal. This goal no longer makes sense. Not only does it imply Russian vassalage, but also Europe is no longer the center of power. The East is rising, and China is the center and will be until the Chinese destroy themselves by copying the Western neoliberal policy of financializing the economy.
Various aspects of Russia’s difficulties and transformation into a power with a foot in both West and East are discussed by commentators. What goes unacknowledged is that Russian economic policy is constrained—indeed, crippled—by the neoliberal brainwashing given to Russian economists by the Americans in the 1990s. Consequently, Russia is enfeebled by an economic policy that encourages privatization and foreign ownership, and by financialization of economic rents, that is, of income streams that do not result from productive investment but from such factors as location and rise in value due to public infrastructure development, such as a road built across a property. In a financialized economy credit is used to transfer property ownership instead of to finance new plant and equipment and construction of infrastructure.
The Russian government and central bank have been blinded to the fact that Russian infrastructure projects and private investment are not dependent on borrowing dollars abroad or by acquiring dollars by selling Russian assets to foreigners. Such projects can be financed by ruble creation by the Russian central bank. Money that flows into productive projects that raise output is not inflationary. Generally speaking, such projects lower costs.
For Russia to succeed, Russia needs an economic re-education and a government that finds its footing in Russian nationalism and discourages Western provocations with firmer responses.
It is our view that the Western world, indeed all of life, has an interest in a Russia too strong to be attacked or provoked as a strong Russia is the only way to curtail the Western aggression that is leading to nuclear war.
By ARCH STANTON
A reissue of an article originally published in September 2015
under the title “Hitler vs Stalin”.
HITLER VS STALIN
YOU CAN HATE THEM BOTH, BUT YOU CAN’T LOVE THEM BOTH—
BECAUSE THEY WERE POLAR OPPOSITES WHO LOATHED EACH OTHER
As for a comparison of Stalin and Hitler, Stalin was clearly a megalomaniac. Take a look at all the Stalin iconography and then compare it to the iconography devoted to Hitler. How many grandiose statues and murals featured Hitler as their focus? Stalin was a cold-blooded murderer, his track record leads to this inevitable conclusion. Stalin was behind the mass murder of his own people. Tens of millions of them, most of them Russian Christians. When did Hitler ever conduct any mass murder campaign of this magnitude?
The Stalin regime produced the Soviet Gulags, a system of death camps purposefully designed to starve and work inmates to death. Hitler’s concentration camps spanned a twelve year period from 1933 to 1945. In 1937, there were only 7,500 prisoners in four concentration camps: Dachau, Sachsenhausen, Buchenwald and Lichtenberg. Note that war at this point was less than three years away.
German camps were originally designed to rehabilitate the inmates, hence the sign “Arbeit Macht Frei”, i.e. learning a trade and becoming a productive German citizen led to the inmate’s release.
According to Bernadac, Reichsführer Himmler “wanted the concentration camps to be primarily re-education centers, genuine courses that should result in lasting conversions.”
Before the war, German inmates were released from the camps after satisfactorily completing their rehabilitation process. Of course, the release process ceased with the beginning of the war.
By contrast, only a tiny percentage of inmates ever returned from Stalin’s death camps during a 71 year period spanning both side of WWII.
Soviet camps were first established in 1919 under the Cheka. By the early 1930s, camp populations had already reached significant numbers and by 1934 the Gulag, or Main Directorate for Corrective Labor Camps, now under the NKVD, housed several million inmates.
A peacetime incarceration rate of several million inmates in Stalin’s USSR compared to a few thousand in Hitler’s Germany — how do these two leaders compare on this point alone?
— § —
THIS IS WHAT WENT ON IN THE SOVIET GULAGS
SET UP BY STALIN AND HIS JEWS
The murderous Stalin felt the need to have his troops backed by “blocking units” tasked to execute anyone retreating from the front. He also branded anyone who was captured as a “traitor” and later had them executed, while sending their innocent family members to fill up his slave labor camps. Where did Hitler ever espouse such iniquitous policies?
Hitler stated his intentions openly in advance. He never planned nor utilized the “sneak attack.” Unlike Stalin and his communists who openly declared that their aim was world conquest and domination, Hitler never had any such plans in mind. He was too busy just trying to survive and keep his people unmolested.
Hitler tried repeatedly to prevent war by offering peace terms. These terms were rejected in toto by the allies who wanted war.
Stalin had 22,000 Poles murdered in an attempt to decapitate the Polish government and thereby any possibility of a Polish counter revolution. He then blamed this atrocity on the Germans. Where did Hitler ever order the mass murder of a country’s leaders and intelligentsia? When did Hitler ever blame any actions, taken by himself or his government, on others?
The Soviet regime under Stalin considered citizens insane if they failed to regard communism as their one and onlr religion and to offer slavish support to the “workers paradise”. When did the National Socialists in Hitler’s Germany ever consider people crazy for having a diversity of opinions? When did they ever incarcerate citizens in insane asylums for disagreement with their policies?
Unlike the sole example provided by Stalin’s Conversation with A.M. Kollontai, there are far too many other examples of these differences to list.
LD: The Stalin conversation with Alexandra Kollontai—which attempts to portray Stalin as a heroic figure who would one day be fully vindicated and take his place among the gods—almost certainly never too place. There are definite indications that this entire conversation with Stalin is an outrageous fabrication or forgery. In which case what we are dealing with here in Ms Kollontai’s purported interview with Stalin is a worthless document.
TORTURE IN STALIN’S GULAGS
VIEWER DISCRETION ADVISED.
CHILDREN UNDER THE AGE OF 18
AND THOSE OF A SQUEAMISH DISPOSITION
SHOULD AVOID LOOKING AT THESE PICTURES.
Danzig Baldaev, Drawings From the Gulag
Naked Christian women were lined up for inspection by Jewish commissars when they first arrived in Stalin’s gulags. The prison guards had their pick of the most attractive women.
As a result of exhaustion from overwork and starvation rations, many of the women suffered from vaginal prolapse.
LIFE AND DEATH IN STALIN’S GULAGS
In Stalin’s camps sadistic thugs were allowed to murder inmates by electrocution, stabbing, hanging, decapitation, and the insertion of red-hot crowbars into the anus.
In Stalin’s torture camps Christian inmates were sodomized, as in this picture, by having long iron needles thrust up their rectums.