Saturday, April 18, 2015

Reinventing Reinventing Collaspe?

This article about Russia from the BBC is interesting. It details how Russians are coping with the disintegration of their economy. Ironically, it is a very similar scenario to the SU collapse – crashing oil prices mean less money for oil combined with Western sanctions (this time for Ukraine instead of Communism)

I find it particularly interesting because the approach being taken in Russia seems eerily close to that advocated by many Peak Oilers  for the United States – relocalization, growing your own food, reduced reliance on imports, and making do with less.

For example, this fellow started his own urban farm to deal with rising food costs:
On a small dairy farm some 30 miles from Moscow, 15 cows munch contentedly on hay in their gleaming new barn. Maxim Chebanov has just moved premises to make room for expansion. A former manager in a brewery, he switched to farming a couple of years ago to provide high-quality milk and cheese for his young family, selling the rest at farmers' markets. Then the crisis started and demand escalated. He has increased his herd five-fold in just 18 months due to Kremlin "counter sanctions" which blocked the import of European dairy products and other fresh food. Chebanov is a perfect example of what President Putin calls "import substitution". He even offers his buyers an "anti-sanctions" discount on his website.
In Russia, just like here, it is the rural areas that are hardest hit, and just like here, there is a lack of jobs since industry shut down or moved overseas:
In Moscow, many shoppers said they were coping: either their income was big enough, or they were getting help from relatives. But in the provinces there is much more angst. One woman in Oryol, a small town south of Moscow, said: "Many people went from here to Moscow in search of work when the old Soviet factories went bankrupt. "Now those jobs in Moscow are folding and they are coming home. But there are no spare jobs here and prices keep going up. How are they supposed to live?" She added that she knew many people who had stopped buying meat- too expensive for those with a family to feed.
Eerily similar to here, eh? Have they not heard of the eds and meds economy? Prisons? Meth labs? Selling cans of soda?

Even though the downturn has been several years running, the economic sanctions put in place after the Ukraine invasion have given Putin an excuse to hide behind:
But the downturn does not necessarily translate into pressure on the Russian government from its own consumers. Many people seem to blame the West for all Russia's economic woes.

"It's sanctions that are behind it all," said a shopper outside one Moscow supermarket. "After all, you are the enemy."

And many Russian political analysts conclude that Western sanctions have, in fact, been counter-productive. "Sanctions may have hurt the Russian economy," says Evgeny Minchenko, an independent political consultant who names the Kremlin among his clients. "But politically they unite people against the West. Recent polls show the highest level of anti-Western feeling in recent history. It won't be easy to reverse."
By the way, have economic sanctions EVER worked in the entire history of the modern world? I mean ever? If anyone knows even a single instance, please enlighten me. They seem to be just a way of making politicians look tough without actually doing anything.

But Russia is actively trying to develop local economies by trying to become more self-sufficient, which they term 'import substitution' - using local suppliers and manufacturers rather than from abroad, something long advocated by the peak-oil community. This includes tax breaks for small and medium-sized businesses (unlike America, where lobbying ensures advantages accrue to the biggest players and smaller-scale producers are crushed):
So instead, the Kremlin is focusing on import substitution and other measures to try to make the internal market work better - by cracking down on corruption, and giving tax breaks to small and medium-sized enterprises. Whether it will work is another matter. Reports on a recent Cabinet meeting suggest President Putin was agitated and frustrated at the lack of young Russians willing to risk opening new businesses. In theory, Dmitry Finikov is doing exactly what President Putin wants. He has switched from importing to producing his own lower-quality, Russian-made guns and ammunition.
But all is not rosy on the small-business front. There’s a lot of uncertainty:
[Finikov] explains why small businessmen like him remain pessimistic. "I used to plan for five years. Now I can only plan for two or three weeks. The Russian economy has been so globalised over the last 20 years, that it cannot survive like this. "Sooner or later the oil price will go down again, then the rouble will drop again. For the moment we are eating into our reserves. But when they are used up, then the economy will drop immediately like it was in 1992. You remember: hyperinflation, people losing their jobs and not getting paid for six months or a year, and everyone going out to the suburbs to plant potatoes to feed themselves from the ground."
I don’t remember, but I have read Dmitry Orlov’s book, so, yeah, I know the deal. It seems that book may end up being very relevant again very soon.

Speaking of Putin's Russia, the New York Times published an entertaining piece by the novelist Gary Shteyngart called "Out of my Mouth Comes Unimpeachable Manly Truth," a tongue-in-cheek look at Russian television. The impression one gets is that it is a funhouse mirror image of the American media (especially FOX News) - a controlled and manipulated media kicking up a cloud of misinformation to rural, low-information citizens to keep them riled up against imaginary and perceived enemies, foreign and domestic, while flattering them as true, hearty, salt-of the earth-type folks (unlike urban dwellers and intellectuals). Like FOX, it engages in chauvinistic, war-mongering rhetoric against "weakness," and "moral degeneracy." Either that, or mindless drivel and trash TV of the Jerry Springer variety pandering to the lowest common denominator. Also, just like here, most educated, aware people get their news from the few non-censored Web sites:
The imposition of Western sanctions against Russian officials after Crimea’s annexation dealt but a glancing blow to the Russian economy. Putin’s next move, his support of pro-Russian rebels in Ukraine’s industrialized Donbass region, led to a war that the United Nations estimates has displaced a million people and resulted in more than 5,000 deaths, and further sanctions from the West. (As of this writing, a cease-fire has been brokered, but it is fragile and may not last.) But it is the collapse of the price of oil, Russia’s main export commodity, that has weakened the regime. As the price of a barrel of Brent crude and the value of the ruble go down, the tenor of propaganda on Russian television goes up.

Putin’s popularity has mostly survived intact despite the ruble’s collapse and the gradual pauperization of his subjects. The media helps with a twofold strategy. First, the West and its sanctions are blamed for the economic situation. Second, the nascent Ukrainian democracy is portrayed as a movement of torch-wielding Nazi fascists under direct control of their Western masters. Few Russian families escaped unscathed from Hitler’s onslaught, and Nazi imagery, which remains stingingly potent, is invoked frequently and opportunistically, as a way of keeping historical wounds fresh.

Ninety percent of Russians, according to the Levada Center, an independent research firm, get their news primarily from television. Middle-aged and older people who were formed by the Soviet system and those who live outside Moscow and St. Petersburg are particularly devoted TV watchers. Two of the main channels — Channel 1 and Rossiya 1 — are state-owned. The third, NTV, is nominally independent but is controlled by Gazprom-Media, a subsidiary of the giant energy company that is all but a government ministry. Executives from all three companies regularly meet with Kremlin officials.

Each channel has a slightly different personality. Channel 1 was the Soviet Union’s original channel, which beamed happy farm reports and hockey victories at my parents and grandparents. It features lots of film classics and a raucous health show whose title can be roughly translated as “Being Alive Is Swell!” Rossiya 1 is perhaps best known for a show called “News of the Week,” featuring a Kremlin propagandist, Dmitry Kiselev, who once implicitly threatened to bomb the United States into a pile of “radioactive ash.” (Sadly, for me, Kiselev is taking this week off from ranting.) NTV is more happy-go-lucky, blasting noirish crime thrillers and comedy shows, like a “Saturday Night Live” rip-off shamelessly titled “Saturday. Night. Show.” But during regular breaks for the news, the three networks are indistinguishable in their love of homeland and Putin and their disdain for what they see as the floundering, morally corrupt and increasingly lady-bearded West.

Back in my sunlit chamber of horrors, Rossiya 1’s news is on a rampage. A 35-car pile up in New Hampshire. No serious injuries, it seems, but clearly the West is falling apart. Things are even worse across the ocean. “An unpleasant New Year’s present for Prince Andrew,” a reporter says with a honed mixture of seriousness, sarcasm and glee. “Britain is shocked by a sex scandal between the prince and a minor who claims to have been held in ‘sexual slavery.’ ” Viewers in Yekaterinburg wolfing down their morning kasha are given a rundown of the crimes committed by the British royal family, from Prince Harry wearing a Nazi uniform to Princess Diana’s death “in mysterious circumstances.”

Russians, on the other hand, are leading exemplary nonfascist lives. At the site of the Air Asia disaster, in the Java Sea, “Indonesian authorities are relying heavily on Russian divers and their equipment” to find and recover the doomed plane. In the northernmost reaches of Russia, we meet Aleksey Tryapitsyn, a “salt of the Earth” postman in a tiny village who somehow doesn’t smoke or drink and has been featured in a recent documentary, “The White Nights of the Postman Aleksey Tryapitsyn.” His wife is pretty salt-of-the-earth too. “I’m such an ordinary woman,” she says, “I know how to do everything: shoot a gun, catch ducks.”

The lessons for all Russians, especially spoiled Camembert-addicted Muscovites, are clear: In the difficult days to come, learn to shoot a gun, learn to catch ducks.

On my last visit to Moscow several years ago, a drunken cabdriver from a distant province drove me through the city, nearly weeping because, he said, he was unable to feed his family. “I want to emigrate to the States,” he said. “I can’t live like this.”

“You should try Canada,” I suggested to him. “Their immigration policies are very generous.”

He mock-spit on the floor, as he nearly careened into the sidewalk. “Canada? Never! I could only live in a superpower!”

It doesn’t matter that the true path of Russia leads from its oil fields directly to 432 Park Avenue. When you watch the Putin Show, you live in a superpower. You are a rebel in Ukraine bravely leveling the once-state-of-the-art Donetsk airport with Russian-supplied weaponry. You are a Russian-speaking grandmother standing by her destroyed home in Luhansk shouting at the fascist Nazis, much as her mother probably did when the Germans invaded more than 70 years ago. You are a priest sprinkling blessings on a photogenic convoy of Russian humanitarian aid headed for the front line. To suffer and to survive: This must be the meaning of being Russian. It was in the past and will be forever. This is the fantasy being served up each night on Channel 1, on Rossiya 1, on NTV.
P.S. I wanted to pass along this comment someone posted to Morris Berman’s blog (“Wafers” is the nickname for Berman’s readership, from Why America Failed)
"It was a very interesting weekend from a Waferian standpoint. First, the lights went out in Yankee stadium Friday night for 18 minutes. Second, my wife and I went shopping on Saturday and the store had all its computers down, so the store clerks were writing up sales on paper. We stood in line for 30 minutes. Third, we went for a drive on Sunday but gave up on the country roads after the first 100 potholes. Finally, I went to work on Monday morning and the water was shut off in my office complex. A couple of hundred workers were sent home. What do these events have in common? They all point to the gradual but steady decline of America. At least my wife and I weren't tased or shot to death over the weekend, so there is that hold onto."
Both sides lost the Cold War, one just did it somewhat faster than the other (to paraphrase the late, great Charles Bowden). Breakdown continues apace. Here’s an article on the Yankee stadium outage, something more common in a third-world country (which we basically are now). Personally, I think it’s a good metaphor for our libertarian future –  individuals rationally using their initiatives with privately-owned cell phones to replace the horrors of “collectivist” stadium lights. Let freedom ring!


  1. Johnny, this is one of the greatest blogs around. I'm thankful for your work. It's fairly unique and biting, up there (in my private Pantheon) with Mr. Smith, the druid, Orlov, IOZ, Ian Welsh, Chris Floyd, et al. Fan-forking-farking. Write a friggin' book. You already have. Whatever book you have floating about, it is now required reading by society at large.

  2. Oh, and it just occurred to me that said "Orlov" fella has branched into publishing.

    That's a match made in heaven, buddy.


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