Elections in Russia
- Thread starter Neamos
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pipboy-x11
It Wandered In From the Wastes
Brother None said:
Ouch.
Man, have you ever tried to run a business here in Russia? How on Earth do economics gains of Gazprom help you? How do rising prices on gasoline and natural gas help you to get a higher profit?
Answer - they don't. Actually current prices on oil/gas _hurt_ all other businesses. Don't forget, all transportation prices rise. All prices rise. Real estate prices rise, rent prices rise, etc. Business in Russia, except those exporting natural resources and related to them, got hurt from current oil/gas prices rather than profiting from it. If some non oil/gas export business is doing well in Russia now, it's not because of high natural resource prices, it rather _despite of them_.
pipboy-x11 said:
To understand that you have to understand the nature of the concept of added value and surplus in a "virtual economy" (I think that's the official term economics uses). You're thinking in terms of "running a business", that's already wrong, but I'll try to work from there.
It's going to be really hard to explain because it doesn't actually have anything to do with the direct interaction happens between companies and Gazprom, it has more to do with Gazprom's ability to inflate infrastructural support for the consumer market without any direct profitability.
I know this is going to be hard to get because people generally aren't good in thinking in real economic terms rather than real financial terms, and the two are really hard to split if you don't have any economic schooling.
Lemme look up my notes from the seminar Russian Economy...
'k, to begin, we have to go back to the mid-90's. What happened at that point is that all debts by companies were rolled over, creating a chain of deficits that moved from company to company. No company would pay the other company any of its debts back, but neither would any company demand its payment back.
Because of this, and especially because of the fact that the government willingly cooperated in the continued existence of de facto liquidated companies, we created on the one hand the shadow economy of illicit business outside of taxes and often in natura, and on the other hand we created virtual economy.
Now the main demand of the concept virtual economy are:
- There is no move for restructuring of any companies, whether they are technically liquid or not
- In many of those companies, there is no real added value to the product by their link in the production chain (real added value as the non-Marxist but more economic concept of an investment of time and capital that gives a return)
- Payment in natura and the rolling over of deficits hides the virtual economy
This meant that mid-90s privatization never lead to restructuring (which is the point of privatization).
Now what obviously happens here is that the economy would inevitably hit the viability constraint, that is what happens in a virtual economy by definition and the entire thing comes crashing down, except that we now go into "Loans for shares", and again inject an amount of viability into the economy by privatizing companies that are solvent.
In other words, if you take a balance sheet and sign up Russian GDP, export, production and import, the point of balance which means the Russian economy is not in the red is Gazprom.
So why is it not true, as you say, that this profit is limited only to Gazprom and companies have it "really hard" thanks to Gazprom?
Well, here we go to the core of why the virtual economy still exists, even though it shouldn't.
I'm going to be simplifying here, but bear with me.
If we look at the sales of a company to households then this is always in equilibrium in a normal economy. If the company has a budget of 200, it must earn 200, like this (300 gross profit minus employee cost is 200 for budget to be sold as products to households):
<center>
But that's not the case. To be viable, the Russian company has to have a profit of 300 with 100 in employee costs and 100 in "general unprofitability" (again, I'm simplifying, but this is only a model). In other words, it has a budget of 100 but needs to sell 200. The question is, where does the extra 100 come from?
Tadaaah:
<center>
Now if you're going to ask me "but how exactly does that work", then I'm not going to explain because it'll take too long, but it happens through a whole network of legal and semi-legal investments by Gazprom, a number of government taxation and redistribution programs and just general defrauding.
That's the clearest I can explain it, I'm afraid.
If it's still unclear, just try to remember that while I'm using a single company as a model, this is something that's applicable directly only to the economy as a whole. It's not a question of "what do companies subsist on", it's a question of "where does Russian money come from?"
pipboy-x11
It Wandered In From the Wastes
Brother None,
This reminds me of E.Rutherford quote: "If you can’t explain it to the charlady, you don’t know anything about it."
Ok, so some money a company gets as an income comes from Gazprom. What about the expenses? There is nothing about it in your equations. 100 comes from Gazprom, 150 goes back to it - as a result of increased fuel prices. My younger brother has worked at the local chemical plant until recently - the whole fucking city revolves around this chemical plant, which is not government-subsidized, BTW, it's a part of a private company - which produces staff and sells it in Russia and abroad. Now tell me, please - how exactly Gazprom-driven high prices on fuel and electricity help them? My bet that if oil/gas prices ever go down, this may result in some shock, but in the end this may actually bring the whole economy into a healthier state. Maybe then insane prices on this and that will stop killing small businesses right and left. Or maybe not. It will depend on many things.
This reminds me of E.Rutherford quote: "If you can’t explain it to the charlady, you don’t know anything about it."
Ok, so some money a company gets as an income comes from Gazprom. What about the expenses? There is nothing about it in your equations. 100 comes from Gazprom, 150 goes back to it - as a result of increased fuel prices. My younger brother has worked at the local chemical plant until recently - the whole fucking city revolves around this chemical plant, which is not government-subsidized, BTW, it's a part of a private company - which produces staff and sells it in Russia and abroad. Now tell me, please - how exactly Gazprom-driven high prices on fuel and electricity help them? My bet that if oil/gas prices ever go down, this may result in some shock, but in the end this may actually bring the whole economy into a healthier state. Maybe then insane prices on this and that will stop killing small businesses right and left. Or maybe not. It will depend on many things.
pipboy-x11
It Wandered In From the Wastes
Wasteland Stories said:
Oh please. No one needs a KGB regime (or any regime in any country) in the time when every family has a TV in their house. You don't need to suppress a bunch of free-thinkers, you don't need to care about them. Why? You may just tell the masses what to think. The times of revolutions are gone - we have the mass media. My bet is that revolutions and bloody regimes now exist only where people don't have enough TVs
pipboy-x11
It Wandered In From the Wastes
Ausir said:
Why not? Kadyrov once said "I'm not a man of Russian President - I'm a man of Putin". And he has _a lot_ of influence in Chehnya, reminding me of Stalin. Can you believe they, the whole republic, were collecting money to make him a birthday present? Shit. I lived there before the war. I hate that place.
Please don't post back-to-back, use the edit button to reply to multiple people
Expenses would be the 100 that disappears between company and budget, partially. But it's a simplification, I'm not trying to make a company's running model here.
Well, no. Though it does for some companies, that's true, it doesn't for the economy as a whole.
You're again using an example of a single company or business but it doesn't work that way, you can't explain virtual economy by virtue of one example or disprove it in the same way.
So just go back to my quote on the net effect on the economy: Russia has more money than it produces, where does that money come from?
I don't see how you can't see how a surplus of money would help most companies, either. The government keeps the rubl steady which makes imports relatively expensive, which keeps the general unprofitable businesses in business because they don't have to compete.
Of course this is a blanket generalization. Some companies have long since restructured and become profitable, and some have not survived despite the virtual economic structure. Most others are floating on the artificial counter-inflationary pressure...thanks to Gazprom.
That was kind of my point, except that it's worse than your realise. Once Gazprom stops being profitable, it won't result in some shock, it'll result in the bankruptcy of all remaining unprofitable companies.
pipboy-x11 said:
Expenses would be the 100 that disappears between company and budget, partially. But it's a simplification, I'm not trying to make a company's running model here.
pipboy-x11 said:
Well, no. Though it does for some companies, that's true, it doesn't for the economy as a whole.
You're again using an example of a single company or business but it doesn't work that way, you can't explain virtual economy by virtue of one example or disprove it in the same way.
So just go back to my quote on the net effect on the economy: Russia has more money than it produces, where does that money come from?
I don't see how you can't see how a surplus of money would help most companies, either. The government keeps the rubl steady which makes imports relatively expensive, which keeps the general unprofitable businesses in business because they don't have to compete.
Of course this is a blanket generalization. Some companies have long since restructured and become profitable, and some have not survived despite the virtual economic structure. Most others are floating on the artificial counter-inflationary pressure...thanks to Gazprom.
pipboy-x11 said:
That was kind of my point, except that it's worse than your realise. Once Gazprom stops being profitable, it won't result in some shock, it'll result in the bankruptcy of all remaining unprofitable companies.
pipboy-x11
It Wandered In From the Wastes
Brother None said:
It's the same with the US, right? We, at least, still have something to export except our currency
Just kidding.Actually, I do see. OTOH, current ruble rate hurts exporters, doesn't it? And they are the ones who produce, not those who sale imported goods. My point is that situation is not as simple as you suggest - like "Russian economy exists only due to high oil/NG prices". The current state of economy creates a huge income gap - both for workers and for businesses. Imagine that - we'll have an Olympic Games in Sochi (not far from where I currently live) in 2014. Now, Moscow banks, filled with oil money, start buying lands around like crazy. Prices go up on everything - even here, 500 kms from Sochi. My friend, who owns a bar, is closing the doors soon - the rent price came from 20000 rubles per month to 28000 per month starting from this year (about $1200). She can't afford it anymore. Now see - "a surplus of money" does make some parts of economy richer. Much richer. And it kills other parts.
Unprofitable companies going bankrupt is a bad thing? How? The VAZ, for example, will probably stop producing the junk they call "cars" due to some misunderstanding
Or at least they will not be profitable enough to bribe politicians into making laws which make any imported car at least 2 times more expensive than in Belorussia. Oh, some banks in Moscow will probably suffer, like in 1998. Big deal.Again, I don't say that the current state of Russian economics is good, no way. What I say is that "Russian economics" is not some monolithic thing, like it is in your textbooks. This is just one model, probably way too oversimplified to be an example for students. Things are much more complicated in reality.I've been reading this
http://ideas.repec.org/p/rif/dpaper/1088.html
the net result is "we have no idea, but the charts and benchmarks look cool"
Go figure...
pipboy-x11 said:
Suggest...where? Where did I say that the Russian economy exists only due to high oil prices? Where did I say this doesn't cause an income gap? Where did I indicate I'm not well aware of the real estate situation in Russia?
If you go and roll back a bit, you'll find that what I'm saying is mostly related to the concept of unprofitable ventures rolling over. Gazprom's role is just incidental, and the high oil prices have less to do with it than Gazprom's profitability does. In other words, even if the oil prices stay high, Gazprom's profitability might not, and that's bad.
Your theory that the high oil prices are bad for the economy kind of fails to explain how the Russian economy has risen with the oil price, and not before. What, you think structural reform is behind it? Please.
pipboy-x11 said:
You do realise how that is completely irrelevant for what I'm saying, right?
pipboy-x11 said:
I didn't say that's a bad thing. But like the current financial crisis in the US, you can't actually resolve that kind of a structural crisis except by another crisis.
How the Russian economy will emerge from that crisis is a question no economist has an answer for.
pipboy-x11 said:
Textbooks? How did you get the idea I got this from a textbook? As good as Spulber's text book for the seminar Russian economy was, it's too generalized to deal with this kind of stuff.
This isn't textbook material, this is the concensus amongst Western economic specialists. And thankfully, most Western economic specialists realise that models work, even though they are by definition simplifications.
That said, please start reading what I'm saying and stop discussing points that I'm not making. I don't care about your friend's bar or your brother's chemical plant, it's not relevant to what I'm saying, nor is the income gap, nor is the real estate situation.
I already noted "this is a blanket generalization" and that I'm discussing the "economy as a whole." How is it helpful to point out that this model is an oversimplification when I told you that myself?
Please understand that the function of what I'm saying is simply to indicate that there has been no structural reform since the fall of the USSR in many companies, and that this is possible thanks to Gazprom. That's it. Your father's sister cabin log company has nothing to do with it.
pipboy-x11
It Wandered In From the Wastes
Neamos said:Don't you mean TAZ? (Tolyatinskij AZ) VAZ now makes Fords, which I heard are pretty decent for something on 4 wheels to come out of Russia
edit: hurr, wikipedia says avtovaz doesn't actually make fords. I am so confused right now
LOL. "TAZ" is a joking name for VAZ, which is situated in Tolyati. TAZ="basin" in Russian, just to reflect their cars quality.
Brother None said:
Sorry if I mistook your words for doomsday predictions:
Brother None said:
Now..
"Russian economy", again, is not a monolithic thing. And saying "it has risen" is like talking about average temperature of hospital patients. Some parts of it, yes, got their food from oil/NG. Some of them got their shit together. Like the chemical plant - the one you seem to dislike so much as an example
- they were government-subsidized about 10 years ago. Some of them just suffered from it or closed their doors. GNP and so on... no, I know nothing about that, I'm just a little stupid tribal. But I do know that 15 years ago having an income $500/month was like having an income ~$2000/month today. So go figure if this "GNP" thingy is good or not In the end it is just that - statistics. Government, thanks to Gazprom, does have more money today than several years ago. Sometimes I think it has more money ( and hence => power ) than it should. You talk like they should reinvest them... I dunno. Again, I'm not an economist. I've heard explanations from our economists that investing those money directly would mean a destabilization of economy through inflation and stuff. And another option - to start trading natural resources (or just part of them) for rubles now is close to starting economical warfare, since it'll seriously hurt USD and Euro. Maybe there is an agreement with the US, or maybe this is a bullshit. I dunno.
Are they the same ones who couldn't predict the fall of the USSR and its economical system? Or just their relatives? Well, we've had an anecdote here during communist times: "Radio: - The experiment that lasted for 70 years is over. Good morning, ladies and gentlemen!".
At the same time...
( took from http://en.wikipedia.org/wiki/Predictions_of_Soviet_collapse)
"In 1983, Princeton University professor Stephen Cohen described the Soviet system as remarkably stable"
"Even as late as 1991, a leading American Sovietologist, Professor Jerry F. Hough, wrote that "the belief that the Soviet Union may disintegrate as a country contradicts all we know about revolution and national integration throughout the world". [5]
CIA studies showed that the Soviet gross national product was at 55 percent to 60 percent of that of the United States and growing; Soviet defense spending was put at 6 percent to 15 percent of GNP.[6]"
Brother None, come on, can't we have something to argue about? Please?
pipboy-x11 said:
Mistook? What the hell? I just explained *again* that my point is not related to the high oil price directly but that this is about an impending crisis that will on the long-term revitalize the economy.
I don't even know what the hell you're referring to.
pipboy-x11 said:
Look, can you understand why that is completely irrelevant when trying to map out the general course an economy takes? This isn't a micro-economic theory, this is a macro-economic theory, the distinction should be pretty obvious. It should be even more obvious since I already explained this is macro-economics two times now. Do you have trouble grasping the difference between micro and macro-economics?
Besides which, standards of living have risen over the past decade. Blame it on the rich getting richer all you want, but them's facts. All you're putting in comparison to facts is impressionistic data.
pipboy-x11 said:
I already noted a few posts back that some companies have restructured.
This is the second time you're making me repeat that. Are you incapable of basic reading comprehension or just trying to piss me off?
pipboy-x11 said:But I do know that 15 years ago having an income $500/month was like having an income ~$2000/month today. So go figure if this "GNP" thingy is good or not
GDP adjusted for inflation has also increased, so you are incorrect here.
pipboy-x11 said:
You are referring to the stabilization fund. Which is a solid concept, and has seriously helped stabilize the Russian economy. The stabilization fund as a concept isn't the problem, the size it's taken vs. the urgent need for Gazprom to invest in its infrastructure is.
pipboy-x11 said:
No, and that would be a logical fallacy. You're basically saying "they were wrong then, so they must be wrong every time." It doesn't work that way, sorry.
Now, you're clearly pissing me off, intentionally or not, so if you continue to just ignore my arguments and rant about things that have nothing to do with what I'm saying, I'll just stop replying. It's for the best.
pipboy-x11
It Wandered In From the Wastes
Brother None said:
Excuse me? Who wrote this then?:
You've made this point. I've answered. You may check the thread just few posts back.
Brother None said:
Oh..sorry... THAT macroeconomics! Which consists of some attempts to find empirical dependencies between artificial values like "GNP", market indices and unemployment rates? Lemme quote John Kenneth Galbraith:
“on the largest and most important questions facing the governments of the industrial countries the economics profession—I choose my words with care—is intellectually bankrupt. It might as well not exist.”
All those models have failed miserably in a close past already more than once - I've told you about crash of the USSR economy and "predictions". "The Economist" has predicted crash of Russian economy for 20 times already during last 10 years. What should make me think that those models are viable now?
"Science" is something that has precise mathematical models. You measure here and there, put values into a computer - and have numbers as a prediction, not "opinions" or "consensus". That's the science. Everything else is speculations. Economics doesn't have any viable mathematical model. See my point? So all you have is to choose between shaky empirical models for artificial values - and impressionistic data. The "impressions" I've told you and my mere attempt to look at a big picture by looking at its parts aren't worse. This is called "bottom-up approach". Check the "dynamic stochastic general equilibrium" theory. The behavior of the parts isn't "irrelevant" to the behavior of the whole.
Oh, and almost forgot
Neamos said:
There are Fords made in Russia. The factory, IIRC, is somewhere near St. Petersburg. There is also Toyota factory in St. Petersburg, opened a couple of months ago. Mitsubishi, Peugeot and Hundai factories are being build.
But of cause, they'll all disintegrate into a dust as soon as Gazprom profits stop increasing :-} Sorry, just couldn't resist...
pipboy-x11 said:
I've also made it clear that that wasn't the whole of my point. You've simplified it down to make it sound as if I'm treating the Russian economy as if it was Saudi Arabia, but that's not the case.
pipboy-x11 said:
No, that's econometrics, that's not my field. In fact, a lot of what you're saying is about econometrics, which isn't what I'm talking about.
pipboy-x11 said:
Seriously, if the only point you wanted to make is that you don't believe in economics, then why are you replying to me?
You can argue this economic theory is false purely in the framework of economics, but if the point you want to make is that economics is false, then you're not discussing what I'm saying, you're saying the whole basis of what I'm saying it incorrect.
And that's a fine opinion to have and it has some validity, all social sciences including economics have been wrong as often as they've been right, but they've also all proven their value. If you don't want to believe certain economic theories can be right then you can ignore them all, it doesn't matter to me because it will either happen or not, your opinion isn't very relevant to that.
But stop wasting my time, then. I'm not interested in the discussion of "is economics valid or not", so if that was your point then why didn't you come out and say it so I could ignore you?
Also, I hope you understand how trying to counter macroeconomic theory with microeconomic theory is like trying to counter history with anthropology. It doesn't work.
pipboy-x11 said:
This is the third time I'm repeating this: a number of companies are profitable in and of themselves. This would include most foreign ventures, since they're treating Russia differently.
And don't troll.
(double post, strike for me!)
So Medvedev won.
Big surprise.
My biggest question after this election is: were the Western media consciously trying to piss me off? I can't believe how many times they dragged in Kasparov as a "leader to the opposition". I've met people in Russia who do actual opposition, on one level or another, do they really have to give credence to this crazy guy? That won't exactly help bring about healthy opposition, y'know...
So Medvedev won.
Big surprise.
My biggest question after this election is: were the Western media consciously trying to piss me off? I can't believe how many times they dragged in Kasparov as a "leader to the opposition". I've met people in Russia who do actual opposition, on one level or another, do they really have to give credence to this crazy guy? That won't exactly help bring about healthy opposition, y'know...
It's much easier for media to drag someone already known to the forefront than to focus on the actual people leading the opposition.Brother None said:
Also, whoop-whoop, status quo.
Sander said:
Well, fuck easy.
Y'know, for the average Russian the experience is roughly the same as if foreign media would drag in Geert Wilders as "the prominent Dutch politician" every time Holland is mentioned ever.
Kasparov is media-horny, and he sure is useful to the big bosses by doing so, but dang...I don't wanna see him.
Yer, I know.Brother None said:
Then again, foreign media certainly did do that issue with Fortuyn (albeit more justified)
Eh, it's pretty funny if you ask me. Every time they drag Kasparov to the forefront I keep telling my friends about some ofhis craziness and they go 'Wait, what? I thought he was like a valid alternative.'Brother None said: