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Russia Sinking

Posted By Yulia Latynina On May 21, 2012 @ 12:11 am In Daily Mailer,FrontPage | 13 Comments

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:

Adam Smith

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.

Economic  Degradation

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 It has been replaced by importing because the transactional expenses of any imported product are less than the transactional expenses of its production.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.

Motivational Degradation

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.

You would think that the security of V.V. Putin should be more important than the immunity of a band of cops who rob a mover of black market currency. Be that as it may, the case was never solved, notwithstanding the fact that the guys from Mahachkaly found the instigator of the robbery and handed him over to the police.

5.6. Thirdly, a subordinate executes orders of his superiors only when the subordinate is satisfied that he has received the maximum. Another way of putting it: in this system there are no orders, rather there are requests for services rendered. The relationship between a subordinate and his superior are analogues to two market dealers — a buyer and a seller. The seller is the boss who presents the offer, while the buyer agrees only if it worth his while.

5.7. And fourthly, when the system does execute and order from the top, it is not capable of doing it in a professional manner. An example is the criminal prosecution of Hadorkovsky, who was accused of physically stealing all of the oil produced by the UKOS firm.

The Swarm

6.1. “System” – not an accurate word to describe such organizations. The word “system” presumes something highly regulated and often including a central governing body. “Swarm” is a much more precise definition.

6.2. Though a swarm has a high level of organization; it exists due to the most basic instincts. Termites are capable of constructing structures of great complexity, but because a governing leadership. Rather, they follow a series of simple commands like: “when another ant has marked an area with pheromones, leave a branch here.”

In exactly the same way Russian cops are able to work very complex criminal cases by obeying simple commands like: “ If something happened to an individual, charge him with a criminal act.” Recently, one of my friends, a businesswoman, had her purse stolen containing important documents. She went to the police. The first question she was asked was, “Oh, so you are an entrepreneur? ” After an hour she finally managed to get out of there: never mind the purse!

6.3. A swarm does not possess common reasoning. A swarm has only its individual instincts. One part of a swarm is incapable of giving orders to the other part. It is for this reason that certain orders from leaders are carried out (the pheromones left by them are active), but only if the hormonal condition of the subordinate persona is in his self-interest. If a general says to a hungry major, “don’t touch the food,” the major will continue eating. However, if the general says to a satiated major, “eat,” the major will not eat.

6.4. The swarm is not unconcerned when certain members refuse to behave in a mutually satisfying manner. Not all bureaucrats take bribes. Not all policemen kill citizens. That is not what’s important. Just like in a city besieged by marauders: some of the soldiers may refuse to pillage and kill. But their behavior has little impact on the fate of the citizens.

6.5. Marauding – the highest form of social disorganization.

Centralization

7.1. If most of the money in a country is earned in the marketplace, companies will deploy its production where it is least expensive to buy land and workers. This, then, automatically facilitates a decentralized economy.  If, however, most of the money that is earned is based on government decisions, companies will strive to base themselves where these contracts are signed. Companies, therefore, who can benefit from these contracts, are automatically brought together and concentrated in one place: and that place is Moscow.

7.2. From the Administrations point of view the country is divided up between Moscow (where no one came make a decision because of the conflicting interests of various clans) and the rest of the country (where no one can make a decision because they must ask Moscow first). From the standpoint of the transportation industry, again, Russia is divided into Moscow (where you can’t move because of the traffic jams) and the rest of the country (where you can’t move because of the absence of roads).

7.3. The transportation system, in fact, turns out to be a very good metaphor for Russian society. Imagine a bureaucrat who has pilfered all the funds designated for road repair, now solves his personal transportation issues by employing a siren and flashing lights on his vehicle. The condition of roads is the condition the ruling system in Russia.

Emigration

8.1. The totalitarian regimes of the past have attempted to conquer the world. To do this they prohibited the “brain drain.” Stalin would rather allow a scientist to rot in Siberia, than let him go to the West. The current Russian regime is not attempting to conquer the world — because if they did that, where would they purchase their Mercedes-Benzes and where would they send the money made from oil exports?

From 1991 to 1996, at the height of the post-perestroika period’s economic distress, 429,000 people emigrated from Russia. From 2003 to 2008, during its most prosperous period based on oil sales, 440,000 left the country.  People are leaving not for just a better life, but for more freedom.

8.2. And the more that talented and capable people leave; the easier it is to rule the remaining swarm. The regime, by de facto, is supporting the “brain drain.”

Memory

9.1. One of the most obvious indications of the swarm’s lack of reason is: the absence of past memory. The swarm does not remember what happened yesterday. If a swarm of mosquitoes hovers around a certain spot, then moves to another, then comes back to the former, it is not because it remembered something about the first location. It occurred due to its haphazard movement of swarm members and the rule: “Keep yourself at a specific distance from certain members.”

9.2. Our ruling swarm has shown a complete lack of a memory. Today, we might stigmatize the World Trade Organization (WTO), agreeing to become members only with our friend Byelorussia and tomorrow its Lukashenko, under the pretext of signing a tariff agreement, insists on receiving from us tariff-free oil. We are friends with the USA on Tuesdays, Thursdays and Saturdays when Putin meets with Obama, but then on Wednesdays, Fridays and Sundays we become hostile, when Putin decides to stop imports of American ham or display anger regarding the US anti-ballistic shield program.

9.3. The system does not remember what it said yesterday. It only reacts to whomever it is upset with today.

Public Relations (PR) instead of an ideology

10.1. There is only one function of this highly frenzied activity and it is the last to die: that function is self-justification. There is nothing more inherent in an individual than the desire to see oneself as something great. And no one desires this more than a completely devastated drug addict.

And what does this drug addict say to himself? a) No one shows me any respect. b) I am the greatest. c) The time will come when I’ll show them all!

The more drugs he takes, the further he escapes from reality. To escape even further he needs more and more drugs.

10.2. The self-awareness of the ruling swarm is not unlike the self-awareness of a drunk. The drug is injected with the use of an Ostankino syringe. (The Ostankino tower is the largest TV antenna in Moscow).

10.3. Their self-awareness in no way resembles an ideology. Rather, it is merely PR. Ideology is an algorithm, which prescribes correct behavior to the believer of the ideology. But, PR is a mechanism for justifying behavior.

Adam Smith

11.1. Society should be configured in such a way that the desire for self-interest evolves in to a desire for the common good. This is the definition of a free society.

Many other societal systems – bureaucratic, feudalistic, class – oriented – extract personal advantage at the expense of others. From the moment the industrial revolution began these societies were no longer competitive in the free market.

Contrary to certain pessimistic views that, for example, “Russia was good for nothing” – with a history of slavery and a predisposition to authoritarian rule (a point of view aggressively propagated by the ruling swarm under the label, “Russia’s unique historical path”) – we see that a host of different nations at different times changed to free societies.

At the beginning of the 20th century, China was an empire on the decline. Their leaders were smoking opium and selling of their country to the hated foreigners. By the middle of the century, because of an extreme famine, the Chinese resorted to cannibalism. But today, China is a dynamically developing super power.  Just seven years ago, Georgia was considered to be the essence of a Soviet state and a synonym for racketeering, corruption and legal thievery. Today, police no longer take bribes and it has become one of the most open economies in the world. South Korea and North Korea are no different in terms of their historical past or unique social spirit. They differ, exclusively, in their corresponding ruling systems.

History has no certainty. History is defined by decisions.

Japan, Singapore, South Korea, China, Chili, and a multitude of other countries at different times and under different circumstances had to find solutions to catch up to progress and development. These solutions can also be found in Russia. Russia is too great a country to be destroyed by lice.

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