Bloomberg.com’s audio program On the Economy talks with Marshall Goldman about Gazprom, Putin, Medvedev, oil and gas, and the “Dutch disease.” Goldman’s new book Petrostate: Putin, Power, and the New Russia just came out on Oxford University Press. You can download the interview here.
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By Sean — 9 years ago
The British medical journal Lancet is no stranger to controversy. Many will remember how in 2004 and 2006 the journal published studies on Iraqi casualties resulting from the American invasion. Its estimate of 654,965 excess deaths related to the war caused a firestorm in the press.
Lancet is back in the media limelight with its recent study “Mass privatisation and the post-communist mortality crisis: a cross-national analysis.” The study’s authors, Prof. David Stuckler, Dr. Lawrence Kind, and Prof. Martin McKee, commit the sin of all sins by arguing that “Rapid mass privatization as an economic transition strategy was a crucial determinant of differences in adult mortality trends in post-communist countries; the effect of privatization was reduced if social capital was high.” Namely, that the “shock therapy” of the mid-1990s led to 3 million premature deaths in Eastern Europe and the former Soviet Union. In Russia in particular rapid privatization was a continuing factor to the five year drop in life expectancy between 1991 and 1994, resulting in an estimated 1 million premature deaths.
Defenders of rapid privatization have jumped all over the authors’ findings. In a letter to the Financial Times, Jeffery Sachs, the stanchest apologist for “shock therapy,” called the study a “confused polemic” and that his policies had “no discernible adverse effect in these countries on life expectancy. If anything, its effects were positive.” The study cited one article by Sachs and for some reason he took this as its authors taking him to task personally. Methinks the ideologue doth protest too much.
The Economist blamed everything but shock therapy for any rising mortality rates. They condemned Lenin and Stalin for creating the planned economy (If the Economist really wants “the blame game to start at the beginning” why not begin with Ivan Grozny for establishing serfdom), Brezhnev’s geriatric auto-piloting for failing to start reforms, Gorbachev for “running printing presses red-hot,” the all-time favorites of “poor diet, smoking and, especially, drinking,” and the West’s failure to prepare for the Soviet collapse. Basically everything but privatization is given a accusatory nod. Apparently admitting that privatization had any adverse effect would be like questioning the existence God himself. In the end, the editorial concludes “correlation is not causation.” Maybe, but correlation certainly doesn’t help.
To Sachs charges in particular, the Lancet authors replied:
First, [Sachs] conjectures that rapid mass privatisation “probably played zero role” and that “a rapid transition … had no discernible adverse effect”. We provide robust evidence that rapid privatisation increased unemployment, reduced access to healthcare, formerly provided by state-owned companies, and depleted the state budget for social safety nets.
Second, Prof Sachs seems unaware of the causes of the post-Soviet mortality crisis. He argues that Russia’s devastating mortality surge in the 1990s resulted from diets high in saturated fats and red meat, dating back to the 1960s. While poor diets are a factor in the underlying death rate, they cannot plausibly explain the massive fluctuations that occurred at this time. Instead, there is a wealth of evidence that these additional deaths were substantially due to changes in hazardous drinking.
Nobel Prize winning economist, Joseph Stiglitz had this to say in regard to the Lancet study:
In retrospect I think “shock therapy” was a disastrous economic policy. It was ideology trumping good economic analysis. The comparison between the successes in China and the failures of Russia tell a clear story of how bad “shock therapy” was.
The defenders [of shock therapy] say things like, “We were worried that if we didn’t engage in rapid change, there could be reversals.” The critics of that view said: “If you proceed in this reckless way it will result in alienation, failure and reversals.”
It was a matter of judgment, of course. We hadn’t gone through these experiments. But there were other historical experiments on which we could base judgments. None were identical. More reversals occurred in the shock therapy countries, whereas the countries that proceeded in a more careful way have typically moved to reinforce a more democratic direction.
This last sentence is worth thinking about. Not only did privatization contributed to increased mortality, the political fallout from this disastrous policy might had led to Russia’s authoritarian backlash. Interesting.
And so the debate over the 1990s and its legacy continues . . .Post Views: 76
By Sean — 3 years ago
Balazs Jarabik, a visiting scholar at the Carnegie Endowment for International Peace, where his research focuses on Ukraine and Eastern Europe. His most recent article is “What Did Minsk II Actually Achieve?”
Valerie Sperling, professor of Political Science at Clark University and author of Sex, Politics, and Putin: Political Legitimacy in Russia (Oxford, 2014).Post Views: 129
By Sean — 2 years ago
For all intents and purposes, Russia’s official unemployment rate remains quite low for an economy in recession. The Russian Statistical Agency reports that the official unemployment rate in October-November went from 5.5 percent to 5.8 percent. This is still a far from the rate in February 2009 when official unemployment hit a high of 9.4 percent. The recession of 2008-2010, when GDP in Russia fell from 2.65 percent in January 2008 to -3.53 percent in April 2009, continues to overshadow Russia’s current economic woes. The crucial difference between then and now is that there’s no rebound of global oil prices in sight, sanctions constrict borrowing Western capital, and the Russian government has chosen austerity as a means to climb out of the doldrums.
Despite the low numbers, unemployment in Russia is subject to a myriad of concealments. There’s the standard measurement problem where unemployment figures only record people registered as unemployed. Many people in Russia, like in the US, slip through the statistical cracks.
Nor does the federal unemployment rate reveal the variation of regional unemployment where the variation can range from a low of 1.4 percent in St. Petersburg to a high of 30.7 percent in Ingushetia.
But unemployment is also increasingly hidden by long term unpaid mandatory furloughs. Workers are technically employed. They are just not working. Or getting paid. As Moskovskii komsomolets explains:
Hidden unemployment is one of the most important indicators. In a crisis, many businesses are compelled to place employees on long-term unpaid leave and save money for employee severance. While such official reductions of staff do not impact the unemployment level, it actually only makes the situation is worse. Because they are not technically laid off, it is impossible [for workers] to register as unemployed and receive any state assistance. The artificial creation of positive unemployment data helps maintain the authorities’ approval ratings. Currently, the number of people in unemployed limbo is much greater than last year.
Another problem plaguing workers is wage arrears. As this chart shows wage arrears have almost doubled in 2015:
As the article below shows, all this talk of dry statistics are the stuff of a cold-hearted social scientist. The fetishism of figures elide the humanism of Tatiana’s story as a furloughed worker from the AvtoVAZagregat parts factory in Togliatti and the effort by her fellow workers to recoup 52.5 million rubles ($743,200) in back pay from their employer.
How people on unpaid furloughs spend their time.
By Natalia Fomina
Special Correspondent for Novaya gazeta in Samara
You can talk to a PhD of whatever social science and hear all about economic instability, the financial crisis, the fall of the ruble, the GDP and government spending. And you can meet people who find themselves on six months of unpaid leave. Only they will talking about something else . . .
Until recently, AvtoVAZagregat was one of the largest parts supply factories in Togliatti. At the beginning of July 2015, AvtoVAZagregat stopped production. Since June, two and a half thousand of the company’s employees have not been paid a salary. On September 15, this fact provoked a criminal case under Article 2, Section 145.1 of the Criminal Code (The failure to pay full wages for more than two months out of self-serving or other personal interests).
Tatiana is one of those who has not been paid. She’s 52 years old. She’s worked at the AvtoVAZagregat plant as a quality inspector since 1995, that is for 20 years. She’s worked the last twelve in the assembly shop. It’s in the assembly shop where the car seats we’re accustomed to take shape. They undergo pre-cutting work, packaging, handling, palleting, assembly, sealing, inspection and labeling. Tatiana worked as an inspector. Until they stopped paying her. No, she still went to work for another month, and would have gone longer but they started to remove equipment from the factory and there was nothing left to inspect.
We meet on Revolution Square in Samara behind the Lenin monument where you can see the historic building of the regional court where the young Vladimir Ulyanov served as a lawyer. We go to the awful, but cheap café Zhili-Byli, where it smells of wet floors, cheap perfume and cabbage.
“Oh, good it’s warm!” Tatiana says and refuses to order food. “I don’t spend my own money,” I say decisively speaks. “It’s a business expense!”
Tatiana smiles. She decides to eat a hamburger patty and drink tea. As we wait for our order she says:
“I think things could have been different if we still lived in a house. With my husband and mother. I would have really worked the garden. You can not only live well from it but you can also regularly earn a living from a vegetable garden. We have women who breed ducks, this is also an option. And then I wouldn’t care for this factory and its manager. But our house burned down more than ten years ago,” she continues after a measured pause, “I buried my mother, I lost my husband.”
I’m silent. When we agreed to meet, Tatiana sent her picture. There she stood just near the once-upon-a-time-gingerbread house that is now lopsided on both sides. Sitting next to the elegant elderly lady is a tall man in a vest.
“And . . your husband . . . too?” I ask hesitantly: it’s awkward to specify such things. “I lost him.” This could mean anything.
“Not exactly,” Tatiana reassures me, “It’s not you. My husband’s in prison.”
The tea arrives. And the burger cutlets. Tatiana saws off a piece with her fork and continues: “We celebrated the New Year . . . my mother lived with us then, where could she go with a fractured hip, she slept in the kitchen. We sat, drank, I put out hors d’oeuvres. Well, we sat and sat, mother on crutches, it was a good thing she held her tongue, but when she opened her mouth, it was the same over and over: you cock sucking bastards, you cock sucking bastards. I don’t even know who she’s going on about. Then we went for a walk with her, there were firecrackers and everything. We hung around for a long time, like frozen icicles, and drank more vodka to warm up in the fresh air. We heard the fire engine sirens. Who knew it was for us. Of course, at first, we didn’t think it was our house burning. On the contrary, I thought there was some bonfire through the passageway. We came back and our house was gone, a horrible stench of smoke rose from the ruins and a crowd of people—neighbors, firefighters, and police. Not a single cup or spoon. Or blankets. It all burned.”
A manager sits at the next table with office workers. Young people dressed in suits discuss their annual bonus. A 100,000 rubles to some, 200,000 to others. Tatiana listens, furrows her brow, and continues the story: “Well, mom was burned alive then. She didn’t have time to get out of the house and open the door. Her aluminum crutches were far from her, they were found in the kitchen, she crawled to them but didn’t make it. And there aren’t any bars on all the first floor windows.”
The waitress asks, do you want anything else? Tatiana looks at me inquisitively. I ask for a brandy. Tatiana raises an eyebrow. Waitress quickly bangs down a decanter and two glasses on the table.. The oily brandy splashes around in the decanter kind of like crude oil.
“Well, then the firemen said: “It was arson.” I still don’t believe it was my husband. So, he always disliked mother. But to do this! ”
Tatiana falls silent. Then she says: “I wouldn’t have pulled through it if I hadn’t been working. It was in 2003 and things were very good at the factory. You probably don’t remember, we just adopted a new quality standard, the ISO 9000, it was nearly the first time in Russia. We won a Swiss medal. “For impeccable business reputation.” We received the “Russian National Olympics” award in all areas. I won’t lie, they paid us well then. And not just during working time! A standardized working day takes up time. There’s the morning when you go out to the factory. Then there’s a lunch break, when you eat soup and a main course in the canteen. There’s the evening when you go past the guard’s desk, through the shops and back. All the same people are on the minibus, since day in and day out we always take longer shifts, especially me, why me? I don’t have a home or family, I lived in a in a dorm and in public housing, and only after seven years I finally got the insurance money [from the fire] and was able to buy an apartment. And now I live alone in an apartment. When you have nowhere to go and nowhere to come back to in the evening, it’s hardly anything. It’s not even a new life, it’s no life whatsoever.
In October, the Samara Regional Arbitration Court will consider six companies’ requests to be included in AvtoVAZagregat’s bankruptcy. Between July and October over fifty lawsuits worth more than 340 million rubles have been filed against the company.
“My husband still has three years left on his sentence. Yeah, I visit him, as it should be. They give relatives long term visitation. We’re not divorced. I’ve told you that I don’t believe that it was him, right? Tatiana twirls an empty glass in her hands.
I nod as Tatiana speaks.
“I don’t know what happened to me back then. Reactive psychosis, says the doctor at the psychiatric hospital. Thankfully, everything is alright now. I’m as healthy as a bull. In September, I got a job in a florist shop arranging bouquets. I should say it’s awful work. The shop is cold because the flowers love it. There’s ice water in the planters. Look at my fingers!”
Tatiana shows me her hands. Red fingers jump out from under the wooden table. Her nails are cut at the roots. There’s a watch with a leather strap on her left wrist. She takes the glass and empties it in a single gulp.
“Honestly, I don’t think they’ll pay us our back pay. There are women at VAZ trying to but it’s not likely. Our women trying to rebuild at VAZ, but it’s not likely. There’s nowhere for them to go and next year they’ll start a four day work week.” she says between sips of watery tea.
An hour later I close Tatiana’s taxi door for her ride from Samara to Togliatti. It’s 300 rubles a person and you need to wait for four before leaving. On closer inspection, the driver is Tatiana’s former co-worker—a mechanic in the AvtoVAZagregat welding shop and has been out of work for six months. “A welder for life,” he says and promises to drive Tatiana for free. As one of his own.
According to the latest figures, AvtoVAZagregat owes more than 1,400 employees a total of 52.5 million rubles. As of today, the prosecutor’s office has filed over 905 lawsuits on behalf of employees. “As the work proceeds, about twenty claims go to court a day. By the organization’s count, 16.5 million rubles have been given out to employees. In addition, there are126 more enforcement proceedings at the bailiff,” reports the regional prosecutor’s press service. In early September, there were repeated rallies in support of the workers in Togliatti and Samara.Post Views: 60