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Post-communist Russia?

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Buzz Killington posted on Mon, Nov 5 2012 9:19 PM

An objection to libertarianism that I've come across a few times is that Russia declined after free market reforms.

"in the decade after the fall of Communism, as advised by free-market absolutists like Jeffrey Sachs. Russian GDP declined 50% in five years. The elite grabbed the assets they could and shuffled them out of Russia so fast that IMF loans couldn't compensate. In 1994 alone, 600 businessmen, journalists, and politicians were murdered by gangsters. Russia lacked a working road system, a banking system, anti-monopoly regulation, effective law enforcement, or any sort of safety net for the elderly and the jobless. Inflation reached 2250% in 1992. Central government authority effectively disappeared in many regions.

By the way, Russia is the answer to those testosterone-poisoned folks who think that guns will prevent oppression. The mafia will always outgun you.

Today's Russia is moving back toward authoritarianism under Putin. Again, this should dismay libertarians: apparently, given a little freedom, many people will demand less. You'd better be careful about setting up that utopia; ten years further on it may be taken over by authoritarians."

from http://www.zompist.com/libertos.html

What are your thoughts on this, does post-communist Russia disprove libertarianism?

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A large country like russia wont recuperate within a few years from 50+ years of communist oppression.

Free market does not work instantly.

How do you know that the mafias werent a product of their government? THere is a  lot of black market if the government outlaws and controls various goods.

 

“Since people are concerned that ‘X’ will not be provided, ‘X’ will naturally be provided by those who are concerned by its absence."
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But why would GDP decline? I guess because the state monopolized the economy for so long?

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It depends which component of GDP declined

C + I + G + (x-m) = y

C = consumers buying stuff

I = private investment

G = government intervention

(x-m) = exports minus imports

It could by any of these variables which can cause the gdp to decline.

The most probable would be private investment and consumers declining, and G component rising.

Remember, GDP does not really measure the health of an economy.

“Since people are concerned that ‘X’ will not be provided, ‘X’ will naturally be provided by those who are concerned by its absence."
"The sweetest of minds can harbor the harshest of men.”

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Russian society has been poisoned by centuries of slavery. Just like European society and American society are being poisoned now. So, my explanation is social.

I am sure, though, there is a political explanation too. The government was supposedly in charge, but in reality, it was not -- it allowed mafia to proliferate. Many times, the governments was cahoots with the mafia or mafia-like structures. It was similar to American-style crony capitalism, except it was crony feudalism. Now the feudal structure has become much more centralized, but it's still feudalism.

That's similar to FDA today. FDA presumably is in charge of monitoring safety of food and drugs, but in reality it does a terrible job. AND it's in cahoots with pharma companies. AND it forbids any competitors to check food and drugs for safety. AND it regulates production of drugs and food. And then my father-in-law shows me an article in local newspaper about some private pharma company producing a drug that killed thousands of people: 'That's free markets for you.'

 

Also, the argument about owning guns is idiotic. Owning guns protects one from muggers and psychopaths shooting in public. As a protection against organized crime structures, you need to hire organize protection structures -- which, again, the government claims to be, but in fact does a bad job and oftentimes is an ally of the organized crime structures.

I don't think if today every state was like Texas or Wyoming, the federal government would be less despotic. We are not living in the 18th century anymore, when a musket was a musket, whoever was wielding it. Today, we have handguns and rifles, while the government has tanks, helicopters, and nukes.

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Buzz Killington:
By the way, Russia is the answer to those testosterone-poisoned folks who think that guns will prevent oppression. The mafia will always outgun you.

Is that so? You know that for a fact, even though it hasn't happened? Nevermind, this apparently didn't come from you.

Anyway, a lot of why the Russian economy didn't improve immediately after the end of the Soviet Union was because the proportionally giant military-industrial complex ended with it. If the same thing happened here in the US, I'd expect it to have much the same effect.

The keyboard is mightier than the gun.

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Jargon replied on Thu, Nov 8 2012 11:25 AM

You have to understand that the market is a process, not a beast all its own. For example: Privatization does not immediately mean the desirable consequences of a regularly functioning market economy, built up from entrepeneurs and homesteaded property. The capital structure in real goods is still that of a centrally planned economy; much requires liquidation or redirection towards other purposes. Applying private property paradigm to socialist economy doesn't immediately mean that that economy was planned by private entrepeneurs. It means they've got to work with what the planners made, which often means tearing it down.

Additionally 'privatization' is often little more than a backdoor for corporatists. The state sells off its assets to businessman. Foreseeably, this will be a corrupt process and that's what happened in Russia. A small handful of men acquired russia's productive facilities for pennies on the dollar, creating an economy wide oligopoly. A monopoly can only be desirable if it has become one by virtue of excellent entrepeneurship (as in the case of S.O.). A state of affairs like the Russian one is not desirable. It is corporatism. A good rule of thumb for 'privatization' would be putting a minimum number of separate entrepeneurs for any given industry, so that an entire industry does not end up in one person's hands. The setup they employed is anti-competition as it was born of anti-competitive practice. Standard Oil's was born of competitive practice, which can be seen in the fruits of its labor.

No, post communist Russia does not disprove libertarianism. Privatization =/= Libertarianism. They employed a mixed economy.

As Ayn Rand said "a little bit of poison with a little bit of food is still poison".

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FlyingAxe:
Also, the argument about owning guns is idiotic. Owning guns protects one from muggers and psychopaths shooting in public. As a protection against organized crime structures, you need to hire organize protection structures -- which, again, the government claims to be, but in fact does a bad job and oftentimes is an ally of the organized crime structures.

The funny thing is that a lot of the "crime" that organized crime engages in would be perfectly legal in a voluntaryist society. I'm talking in particular about the "big three" of gambling, drugs, and prostitution. In fact, the whole point of organized crime is to resolve disputes over such activities. That's why organized crime proliferated in the US during Prohibition. Declaring alcohol to be illegal hardly made it disappear. So there was still a huge incentive on the part of those who were still producing and distributing alcohol to resolve disputes in an organized manner.

Even things like the "protection racket" strike me as maybe not being such a racket after all. People say that it's a racket because it benefits from the existence of thieves, murderers, rapists, etc. But by that reasoning, the government also benefits from their existence. At least with the "protection racket" you might get a lot more competition.

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Answered (Not Verified) Vitor replied on Thu, Nov 8 2012 11:32 AM
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Do russians still wait for hours in long lines to buy bread or they can do it in 5 minutes?

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Don't they have iPhones, and TVs, and computers, and this and that?

The first mistake is thinking GDP is an accurate measure of economic growth. It's not.

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Uhm...am I going to be the first one to say....maybe we shouldn't be trusting Soviet statistics?

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Marko replied on Thu, Nov 8 2012 3:38 PM

Is that so? You know that for a fact, even though it hasn't happened?


If you check the original post again you will see it was not orignal poster who claims this, instead almost his whole post is a giant citation of somebody else he wants you to reply to. (Which is why I don't feel like, he wants effort on our part but there is none on his.)

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Marko:
If you check the original post again you will see it was not orignal poster who claims this, instead almost his whole post is a giant citation of somebody else he wants you to reply to. (Which is why I don't feel like, he wants effort on our part but there is none on his.)

You're right. For some reason I thought the quotation ended beforehand. I stand corrected - thanks!

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Vitor replied on Thu, Nov 8 2012 9:06 PM

Well, Paul Samuelson was a big fan of Soviet statiscs. cheeky

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