Those who follow Russia know that its dreams of becoming a colossus are built on demographic feet of clay. Nicholas Eberstadt has the details in today’s NYT.
Human capital is a far more important, enduring, and reliable basis for economic growth than oil and minerals. Death and disease certainly deplete a nation’s stock of human capital, but there are other interesting issues here as well. I have commented before on the presentism not just of Putin (whom I called “A Man in a Hurry” in a post some time back) but of Russians at large. I have also mentioned the emphasis on consumption as opposed to investment and saving. Now, the available data focus primarily on expenditures on consumption and saving, but people make all sorts of life choices that don’t really show up in the statistics that affect their stocks of human capital. I would conjecture that a consumption oriented culture is not focused on accumulating human capital.
The causation can go both ways, but there also has to be a connection between the demographic factors that Eberstadt depressingly documents and consumption, saving, and human capital investment choices. People–men in particular–who have a high risk of dying early, and a small chance of living well into retirement years, have a small incentive to save, or to invest in human capital. It must also be noted, though, that health and longevity are the result of choices as well. People choose to engage in unhealthy lifestyles, to smoke, to overeat, to imbibe too much vodka. Indeed, health is a form of human capital, where capital is conceived of broadly as anything that requires a sacrifice of consumption today and receive in return a stream of benefits (higher consumption) in the future–health is capital, and there is a choice component to health. People who make those life-shortening choices are deliberately opting not to accumulate human capital; they would prefer the immediate gratification of consuming those things, rather than living longer and consuming more in the future. Viewing demography as the product of a constellation of choices, some personal, some political, it is evident that Russians have overwhelmingly voted for the present over the future.
Seen this way, Russia’s demographic crisis and many of the more mundane choices of present over future that Russians make are of a piece. They are both symptoms of a tendency to discount the future very, very heavily. Why? That is a weighty question, certainly beyond easy analysis. It is effectively a matter of preferences, and economists typically take those as given. Someone more religious than I might attribute it to a spiritual deficit–but that only pushes the question back a step, to: Why is there a spiritual deficit? As someone historically and economically oriented, I am inclined to conjecture that the tendency to discount the future reflects (a) the historical experience of the Russian people, who have suffered cataclysm after cataclysm, and (b) the insecurity of property and life in a system that lacks a rule of law, has a weak civil society and institutions, and which is vulnerable to the predations of an overawing and virtually unlimited state.
But these are just conjectures, and given that we have only one data point and myriad potential competing explanations, no definitive answer is in prospect. It does seem to me, however, that the presentism of Russia and Russians, which is so evident in the decisions of both the powerful and the ordinary, is a central fact that anyone studying Russia, or charged with making policy towards it, or doing business with it, must always keep in mind. It likely contributes to aggressiveness and impulsiveness in government policy at home and abroad, and an incentive to deal aggressively and dishonestly in business (as the accumulation and protection of reputation is effectively an investment). It also tends to contribute to instability in political, business, and human relationships. And, perhaps more depressingly, it is self-reinforcing, an equilibrium outcome that is difficult to exit. So, in the end, when thinking about how Russia will evolve in the future, it is important to remember that Russians are focused on the present.