PAINFUL START OF THE NEW ERA
Russia, Economics, Win-Win
THIS ARTICLE WAS WRITTEN TOGETHER WITH SLAVA RABINOVICH
Today, nation-states are faced with the problems that they do not know how to resolve. Conflicts between the states also seem intractable. As a result, the world looks as if a large war is about to break out. But this is not about a war: it is the beginning of a new era in human history.
First, we describe the situation as it is seen today, and then tell you how it will be resolved. We will keep you intrigued until the end, just to make it a little more interesting.
Money is the functional equivalent of goodness: a baker gives you bread, and you give him the money and say, “Thank you!” That why thieves cannot use money productively: they can only burn money, waste it on something unproductive.
Theft is a moral opposite of service and creativity. However dexterous a pickpocket may be, he would never work as an artisan: his dream is “hit a jackpot”, to steal more in a minute than an artisan could make in a month. And this dream does change the pickpocket’s life: he ends up behind bars, alongside the unwashed mugs of his ideological brethren.
Previous paragraph describes the presidential rule of Putin: they hit a huge oil jackpot, spent it all building palaces, and did not build a single factory, pave a single road, or fix the country’s healthcare.
A thief must hire a maid to fix his grub, launder his stinking socks, and at the end he would not pay her. Without this maid, the thief would be hungry. In Russia, the role of a “maid” is played by foreign investors. Indeed, an American car is not like a Russian car, and American jeans are not like Russian pants.
Once Putin’s wise guys came to Mikhail Khodorkovsky and freakin took his oil company, Yukos. But Yukos was at the time a western public company, that is, it was owned by private investors, including foreign ones. The investors went to court, and the court told Putin’s wise guys to cough up fifty billion bucks.
But Western judges probably did not know that a mafia man owes nothin’ to nobody: a made man collects what others owe him. The only thing a made man has that should be yours is a bullet. So the Boss of Bosses, Vladimir “Puttin’ on the Ritz”, cannot respect no verdict of no freakin court: he is the only court there is.
Thus, Russia cannot agree to pay what the Yukos verdict awarded. It is not a matter of international politics, not a matter of economics: it is a matter of honoring the criminal code Vladimir Putin lives by. By the way, this problem has a solution: someone else could pay for Russia. For example, Saudi Arabia’s King can negotiate with the Yukos investors and pay them to drop the case. It would be smart for the Yukos investors to settle for ten billion dollars. For these ten billion dollars the King could be reimbursed, because paying the King is not a problem. The King could get a stake in Rosneft (formerly known as Yukos), and that would settle the case to everyone’s satisfaction.
One way or the other, if Russia does not settle the Yukos case, it is as good as dead. Here is why. Russia is entirely dependent on foreign investors. Western investors can invest their personal money without a contract that has a legal protection clause. This is unlikely and unwise, but it is technically possible. A public company, such as British Petroleum, cannot invest without a contract that has a valid legal protection clause. That is technically impossible for the Officers and Directors to do. They will become personally liable, and they will lose their jobs. Since Russia no longer respects verdicts rendered in foreign jurisdictions, be it London, Stockholm, The Hague, or New York, major western investment in Russia is no longer possible.
This means that Putin’s wise guys have in mind one of two resolutions:
1. A major war or a nuclear blackmail would completely change the rules of the game;
2. Russia would rely only on Chinese investment with a resolution of disputes in Chinese courts. That is, Russia would become a de facto Chinese dependency.
As far as Ukraine, Putin used it as a pawn to achieve his larger goals:
1. To separate Russia from the West and to turn Russia into an authoritarian dictatorship by using the threat of war. That would allow Putin to stay in power for life. Here we must add three things (a) Putin was certain that Ukraine would collapse (b) Putin thought that the West will prove weak, divided, and very willing to make a deal, and (c) Putin, being completely ignorant of economics, thought that the Russian economy is much stronger than it actually was;
2. Putin needs to stay in power for life because he is the only law that exists in Russia; without Putin, nobody in Russia has any property rights. If you do not believe that, go back and review the Yukos case. When ordered, a Russian court can legally state anything whatsoever; without an order, a Russian court cannot legally state anything as a Russian judge is a person with a moral stand of a thug and thuggery is extra-legal;
3. Putin is a smallish guy who cannot be satisfied with the length of his prick. These are the kind of guys that like to send normal-sized men to war;
4. The war would conveniently hide from the Russian people how much Putin’s wise guys have stolen (and wasted);
5. When Russia is authoritarian, Putin would be able to transfer Russia to China in exchange for guarantees of his personal safety;
6. There was also a main goal, but we’ll talk about it later.
China has two problems.
The Communist Party cannot manage what is about to become the world’s largest capitalist economy. These two notions were meant to be the exact opposites! One look at Chinese currency — and the problem is clear: Mao hated capitalism, Mao wanted to cancel the money, and now his picture is on every Chinese banknote. All cases of corruption in China stem from the Party’s attempt to figure out “are you with the capitalists or with the party.” The party which puts members of the Politburo on trial, lacks stability and cohesiveness. The Chinese political system cannot continue as it is, so China is an upheaval-in-waiting.
Today, there are real tensions between China and the United States. The main reason for them is that China is waiting for Russia to fall into China’s pocket, and the United States does not want to give the entire Russia to China, fearing that it would make China too powerful.
Russia is not an economically powerful country. Russian high-tech projects fail one after another: Proton missiles crush, Sukhoi Superjet airplane does not sell, GLONASS, that was supposed to compete with GPS, does not exist. On the world market, we do not see any Russian high-tech products: no medicines, no computer programs with the exception of Kaspersky Antivirus. The level of development of the Russian economy is reflected in the Russian-made car, the Lada — take a look and try to hold back tears. In Russia, there were many talented, well-educated people, but now almost all of them live and work in America and in Western Europe.
Anyone who knows the thief, knows his story. One day, it is, “Look it, Johnny’s had it made: he is sitting in a classy joint, with a blond chick!” And the next day Johnny is behind bars, to be without chicks for the next ten years. The history of Putin’s rule is the same: it would seem that Putin has acquired Crimea, but in reality Putin has lost Siberia, if not the whole of Russia.
Despite the contradictions between China and the United States, China knows that if a real confrontation with the United States were to occur, the Chinese stocks would collapse and the entire Chinese prosperity, including all savings of the Chinese citizens, would be wiped out. Capitalist economic system makes a country dependent on the world’s capital markets, that is, first of all, on the United States.
Russia has no superpower status, and its economy will only go down from now on because the country is badly governed and is under sanctions. In about twenty years, Siberia will be peacefully divided between China, Japan and South Korea, and the western part of Russia will be waiting to be admitted to the EU.
The United States
The US is the undisputed economic leader of the world, and here’s why: 90% of the new global economy, the economy of the brain and the Internet, is in the United States. In this regard, the United States is experiencing a difficult period: the economic capital of the country is moving from New York to San Francisco. Just think of it: a personal fortune of Bill Gates exceeds the market capitalization of General Motors.
The European Union
The EU was created by Germany and France in a difficult moment in history. Germany had to overcome a tragic and embarrassing episode of its recent history, and start working again as the Germans know how to do. In France, there was another problem. France ceased to be a Great Power after Waterloo, that is, exactly 200 years ago, but still does not want to admit it. More than half the cost of any French product is the value of its image, which essentially means that you can get something as good for half the price. Wine is the prime example. That is why the union of Germany and France is so strong: Germany gets from this association its standing as a peaceful and progressive country, and France gets from this association the motors that work. But the problem of this alliance is that it is ideological, and as such it prefers images and stories to reality.
That was how Greece was able to accumulate its enormous debt. For the last fifteen years, the Greeks have had a lot of fun living in the European Union at the expense of the Germans. Here are three examples. Greek Railways are the most unreliable in Europe, but the salaries there are among the highest in Europe. On Greek island, all taxi drivers, in addition to their regular income, were receiving disability benefits. Cause of disability — blindness. The scam was organized by a doctor, but it lasted for years. In Greece, one needs to pay a luxury tax for a private pool. According to tax returns, there are four private pools in Greece. The problem that the Greeks are facing is well known to thieves: stolen money end quickly.
Today, Greece owes 332 billion euros. This is twice the annual national product. And it is 30,000 euros for each the Greek citizen, including the elderly and infants. The Charter of the European Union needs to be completely rewritten so that this orgy of waste and theft never happens again.
But this is unlikely to happen because the European Union is an ideological construct. Ideology is the idea that considers itself more important than truth and life. Ideology is a terrible thing; people need to live in reality. Greece should be expelled from the European Union and, above all, it is necessary for Greece itself, so they began to work and create a functional state. But this will not be done because it will focus on the ideology of the EU, on its legislation restricting the ability to work and produce, its bureaucracy, on the social assistance system which makes it unprofitable to work, and its unjust tax system that redistributes funds from the producer to the bureaucracy and to parasites.
The EU must change for the better, and fast, because there are other countries with giggling accountants: Spain, Italy, and Portugal. It would be better if the Greek alarm clock could wake up the EU. Yet, the ideology usually does not give up that easily.
The cause of the global crisis
The era of “democratic capitalism (1945–2015) has ended, and therefore the problems facing the world temporarily seem intractable. But this is good news because it means the end of one era and the beginning of the next one. We see the start of an era where the main productive force will be human brain. And it is obvious already, as the economic power of Google is greater than that of most nation-states.
What does it mean: “the main productive force will be human brain”? It means that a person will be seen as creator, not as object of exploitation. It means that people will learn to respect and appreciate each other, and live according to the principle of mutually beneficial cooperation. Envy, hatred, and lies that cover them up will become outmoded because they do not work for anyone. Human society will finally be based on protection of human rights and personal freedoms.
As soon as the principle of mutually beneficial cooperation asserts itself as a new foundation of human society, all our current problems will be quickly solved.
Now back to Putin. What is his goal?
When the Soviet Union collapsed, Russia began to build capitalism. But Russia did not know that capitalism is based on the Win-Win principle. That is understandable since for the last thousand years Russia has lived according to the Lose-Lose. Thus, Russian “capitalism” ended up being badly distorted. Nonetheless, even a badly constructed free enterprise system eventually teaches people to be free.
By the year 2005, it became clear that Russia could become an ideologically free, economically prosperous, civilized, and successful country. And that certainly does not reflect how Putin feels about life. For Putin, existence without domination, fear, hatred, unfairness, deceit, and murder is inconceivable. There is this enormous existential fear of what freedom can do to a human being. It comes from a thousand of years of Putin’s ancestors all of whom were slaves and who learned that gray was the best protective color.
So who is Mr. Putin? Putin is the man whose crusade, whose mission is to protect Russia from freedom. There was this expression, “Putin’s Plan”, even though nobody knew exactly what it was. It was thought that this Plan was an economic one, but when Russia lost a trillion dollars in the Ukrainian war, Putin was not the least bit bothered. We know how Putin “likes Russia”: just compare his palaces to the average size of Russian pensions. Yet, Putin sees himself as Russia’s Protector, and try to makes sure that Russia is strong, fierce, full of hatred, mischievous, unfair and actually desperate and self-hating enough to cause some real mischief.
Consider a snake. Essentially, it is just a crawling mouth. It has no hands or feet, it hears nothing, and all it can do is to use its poisonous fangs. This is exactly how Putin sees Russia. “I am just a crawling mouth, but you are mortally afraid of me! Just let me crawl into your bed, where I could rally terrify you…”
This explains the rage Putin felt when Ukrainians rose to demand their freedoms. What kind of an example they could give to the Russians! All that Putin did diligently preparing himself for the role of an absolute monarch, has been threatened!
Understanding the negativity
Recently Hillary Clinton called for greater engagement with Putin to find areas of common ground interest and to cooperate on that. But the fact is that Putin has no positive agenda, while he does have a comprehensive negative agenda. Hilary must understand that positive engagement with Putin starts with getting rid of him. A person that operates under the assumption of innate goodness of every human being, no matter how ideologically influenced, does not deserve to be President.
Yet, one must be an optimist. Look, soon the Iranian leaders will be able to safely dismantle their nuclear weapons program (that they had started so that the US airborne troops would not descent on Iran to steal fruit from the bazaar vendors — a legitimate safety concern). Then the Ayatollahs will be able to sit in the shade, play with their Persian cats, and drink pomegranate juice. And who are we to suggest to President Obama that the purpose of the Iranian nuclear program is to horrify people, not to assure comfort, safety, and prosperity? For the Iranian leaders, the purpose of nuclear talks is to protect and expand the nuclear program, not to dismantle it.
The Win-Win World is upon us, and all will be well. Be it Putin, ISIS, or Iran — these people are in a hurry because they sense that the world, where humans are appreciated for their goodness and creativity, is fast approaching. ISIS is executing people because they sense that these may well me the last executions in human history.
We need to help Russian people to discover Win-Win, and Putin’s power base will very quickly melt away. We can indeed be friendly with most Russians, as long as they are not thieves and murderers of whom the Putin’s gang is made. We can and should negotiate with Iranians by forcibly removing the ayatollahs and the nuclear weapons program that the Iranians do not need. We can deal with ISIS, by sending them to the Allah in tiny little pieces.
And then we should get to work to make sure that the Win-Win is the only way that people deal with each other.