Editor’s note: The article below, translated by George Gerich, was written by Yulia Latynina in the “Novaya Gazeta” in 2010. Titled “Either the Swarm or the Anti-Bread Maker,” it triggered a threat from the Russian administration to bring the paper down. Latynina is a modern dissident in Russia. The magazine “URA.Ru” re-published the article at its own risk.
The Swarm or the Anti-Bread Maker
By Yulia Latynina
The Reality of how Russia functions today:
1.1. According to Adam Smith, when an individual acts in his own self-interest in a free market, the result is an increase in the benefit of all. When a baker bakes bread he’s not thinking of the general social good, he’s thinking about personal profit. But as a result of his actions there is an increase in the general welfare.
It is easy to see that this correlation between personal and general welfare is not always present in society. The marauders that pillage a city, reaping personal benefit, do nothing to increase the social welfare. A bureaucrat who exploits the benefits of his position in order to buy himself a higher one does not increase the general welfare. Throughout history there were many societies where it was more beneficial to be a pillager than a bread maker.
1.2. A society where it is profitable to be a bread maker is a free society.
A society where it is more profitable to be a marauder becomes an un-free society.
1.3. In Putin’s Russia it is disadvantageous to be a bread maker. It is more profitable to be a fire or medical inspector or a tax auditor who monitor the bread maker. The Russia of Putin is a serious case of a closed and un-free society.
2.1. All un-free societies suffer from economic degradation. Rather than producing, everyone wants to control the producer. The baker who is trying to bake his bread or an entrepreneur attempting to organize the production of cell phones are demonstrating irrationality in their economic enterprises. Instead of maximizing their profits, they are maximizing their vulnerability. The bureaucrat best demonstrates rational behavior when he extorts a bribe from the businessman.
The simplest economic endeavor is no longer practical. It has been replaced by importing because the transactional expenses of any imported product are less than the transactional expenses of its production. The merchandise that is produced in the country is only that which cannot be produced abroad. For instance, stores or airports will still be maintained because a Muscovite will not buy milk in a shop in Warsaw.
2.2. One of the specifics of an economy during a period of degradation is its inability to develop high technology. Sophisticated technology is the most volatile part on an economy. You cannot have development in nanotechnology in a Byzantium-like country.
3.1. An equally important consequence is “Africanization,” that is, a degradation of social motivation and expectations. The motivation to “build a career in a company” is replaced by “finding a more profitable position.”
Levels of education begin falling and that which simulates one to move forward disintegrates. If a federal judge makes $5,000 per month, there is no rational reason to get an education if, in this country, you are paid $500. As such, integrity and a good education becomes an economically absurd activity.
3.2. The fallout of this motivational disincentive results in a degradation of the educational system. One illustration of this degradation is reflected at the “International Branch of Moscow University Law School in Geneva.” The existence of this educational facility became known only after four of its students organized a sport car race in Geneva of Ferraris and Lamborghinis. The head of the “international branch” was a certain Mr. Gasanov, who just several years prior, was arrested in Moscow University for stealing ten million dollars from the government of Azerbaijan. According to the Moscow University website, the courses at the Geneva branch were taught in the Russian language.
One can only guess about the quality of the diplomas given out by this institution. Most amazing is not that these rich, young ignoramuses couldn’t get into Oxford or Harvard, but that their parents did not even think it necessary.
Here’s another example: upon completion of work at the “Seliger Camp” (for exceptional children) in 2006, top graduates were given an opportunity to receive practical education at “Gasprom” (Russia’s energy monopoly) or with the administrative staff of the President. In comparison, the government of Georgia pays for a university education of any high school student who graduated in the top ten percent of the class.
This cancer of low motivation destroys not only today’s society, but future societies as well.
Degradation of the Ruling System
4.1. In a closed society every level of every part of the ruling system, whether it’s a Department or an Agency evolve into governmental corporations, whose purpose is to expand the territory from which they can then extort bribes.
The strategic damage that these tactics influence society, as a whole, is not taken into account. Let’s take, for example, the Ministry of Finance. How is the Russian budget structured?
It is structured in a way that maximizes power for each bureaucrat of a department and for the Ministry of Finance over the entire country. The fact that regional governors, who receive funds from the central government, are not interested in developing a local tax base and do what they can to alienate and self-appropriate local businesses is of little concern to the Ministry of Finance. As a group their only motivation is that the more the governors depend on them in the center, the more windfall there will be for the center and each of them personally. In this controlled society every ruling level attempts to maximize, to the fullest, its potential to steal.
4.2. In addition, the individuals in ruling system stop carrying out even the orders that come from the top. As an example, consider the building of the sports facilities in Sochi (a future Olympics site) – Putin’s personal project. The work there is moving very slowly. Two groups of bureaucrats (who are in constant conflict) are demanding large kickbacks from each contractor. If only one group gets the kickbacks, the other could stop the entire project. But, if both get paid, the money they are demanding will preclude any possibility of making a profit on the Games.
In February 2008, Vladimir Putin visited Botlih and demanded that a military road be built there which he characterized as “one more access corridor to Georgia.” He stressed that this road should be able to handle “heavy military equipment.” However, in August 2008 the road, which would give access Georgia from a third direction, from Southern Ossetia and Abhazia, as well as from Dagestan, was not being built for a very simple reason – thievery.
4.3. This system behaves as if every bureaucrat, and not only Putin, is himself the center of this so-called ruling system. Everyone wants to decide everything.
Degradation of Law Enforcement
5.1. The American economist, Arthur Laffer, once noted that when taxes reach a certain threshold the ability of the government to collect them begins to decline. This is known as the “Laffer Curve.” It appears that such a threshold also exists when it come to criminal behavior. Dimitry Kamenschik, co-owner of the Domodevo airport, calls this barrier the “penitentiary threshold.”
5.2. In a country where criminal violations exceed the penitentiary threshold, crime investigation becomes meaningless. Law enforcement groups not only stops preventing crime, but also become part of the problem by committing crimes themselves.
5.3. A system is not defined by mistakes. A system is defined by its reaction to mistakes. At present, when a police officer or bureaucrat commits a crime, the system tries to come to his defense.
5.4. As a result, the crime is no longer seen as a crime, but, rather, as a privilege afforded to a bureaucrat.
5.5. Secondly, law enforcement officials stop doing that which they are supposed to do, i.e. conduct criminal investigations. It is believed that the MVD and prosecutors don’t do their job in not punishing the higher-ups. That is not so. It is system itself, which does not work.
Here is a simple example: on the 20th of March, 2009, a courier was robbed in 24 seconds on the tarmac of Vnukova Airport by a group of unknown armed men. He was carrying 43 million rubles ($1,075,000) in cash from Mahachkaly. Airport police routinely robbed such couriers, but this time when it became known that an investigation had begun, the robbers became “unknown persons,” though airport security knew them very well. Let me remind you that Vnukova is a government airport. It could well have happened that instead of well-armed robbers, the airport could, just as easily, been breached by terrorists, intent on capturing the airplane of Vladimir Putin.
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