Streetwise Professor

December 15, 2011

Always Look on the Bright Side of Life

Filed under: Economics,Politics,Russia — The Professor @ 10:35 am

I thought I’d seen everything.  I thought that I could not be surprised by Putin chutzpah.  I was wrong:

Prime Minister Vladimir Putin said the positive side of bribery in Russia is it shows that people have money to spend.

Putin was speaking in his annual call-in television show from Moscow today.

The entire 4.5 Castro-esque filibuster was chock full of paranoid rantings about the US, which included an assertion (immediately rejected) that US Special Forces killed Gaddafi and claims that the US was fueling the protests in Russia.  He scorned the protesters, saying that he thought their symbolic white ribbons reminded him of condoms tied in an unusual way.   He flipped out on John McCain–who is becoming a pathetic figure, which makes Putin’s fury all the more pathetic itself. In a characteristic moment of projection, he claimed that the US wanted vassals not allies.

With regards to corruption, I’m reading Douglas Allen’s The Institutional Revolution, which argues that corruption in pre-modern England (mid-17th century, say) was an efficient way of aligning the incentives of servants of the monarchy with the interests of the crown in an era when measurement costs precluded the use of modern bureaucratic ways of inducing good behavior by government agents.  This got me to thinking of whether a similar argument can be made in Russia.  Commenter markets.aurelius has pointed me to an interesting PhD dissertation by a German poli sci student that speaks to that point.

I’ll give it some further thought.  I can see corruption as a way of aligning incentives in a hierarchical system.  The main difficulty in applying the Allen argument to modern Russia is that it does not seem immediately obvious that the measurement cost argument holds: Allen relies very heavily on the fact that in pre-modern times the ability to control and observe outcomes was highly limited by technology.  For instance, given the vagaries of the winds, it was very difficult to know whether an admiral’s fleet didn’t close for battle because he was a coward or a shirker, or because the winds didn’t cooperate.  According to Allen, the development of standardized production and measurement technologies made it easier to control and observe outcomes, thereby reducing monitoring costs, and reducing the need to rely on “efficiency wage” type incentives, which Allen believes corruption to be.

So, hopefully more on this topic at a later date.  Until then, just marvel at Putin’s cheeky effort to look at the bright side of corruption.  And sing along with Eric Idle.

*Or, as @SaraLabib tweeted, Putin is looking at the bribe side of life. You’re right Sara. He does: 24-7.

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  1. Hamster Wheel Gone Paranoid

    Ousted Finance Minister Alexei Kudrin said Putin shouldn’t “provoke” political protesters with claims that many of them were paid to attend rallies.

    People are right to condemn the election results because violations occurred and the response from the authorities has been “inadequate,” Kudrin told reporters in Moscow today.

    Putin’s attitude to the protests shows that he hasn’t understood the need to take on board the complaints of middle- class Russians who took to the streets, said Julian Rimmer, a trader of Russian shares at CF Global Trading in London.

    “He has been trotting out the familiar canards to explain away the most vociferous expressions of discontent since his reign of ‘managed democracy’ began,” Rimmer said by e-mail today. “He has, by turns, blamed foreign interference for the dissent or clever manipulation of callow youth by unscrupulous ‘counter-revolutionary elements.’”

    Hamster Wheel Gone Wrong

    Comment by Anders — December 15, 2011 @ 3:43 pm

  2. He just has to run faster, Anders!

    The ProfessorComment by The Professor — December 15, 2011 @ 3:51 pm

  3. Just because Putin said it, doesn’t mean it’s not true. Hey, in October 2004 he said there were ties between Al-Qaeda and Saddam to boost his “friend George”.

    Anyway, it’s not what he said, it’s how he said it. He looked as insecure and tongue-tied as he did in 2000, before his handlers choreographed everything. Even, the weakest candidate you can put up would beat him handily in a debate. I guess that’s why he doesn’t do debates. AFAIK, before being appointed by the Chief Drunk he never won an election.

    Comment by So? — December 15, 2011 @ 5:10 pm

  4. The Chief Drunk was a good man, and he won an election .

    One controversial incident, not mentioned in Yeltsin’s memoir,The Struggle for Russia (1994), occurred during a highly stressful period of his career. He was traveling by car to the village of Uspenskoye, outside Moscow, to visit a friend from the days when Yeltsin was Communist Party boss in Sverdlovsk (now Ekaterinburg). The narrative of events is muddy and depends entirely on Yeltsin’s own recollections-except for a local police station’s record that he suddenly turned up, fully dressed, and wet from head to foot.

    What had happened? Looking back, Yeltsin was not sure. He said that he had been driven to within a few hundred yards of his friend’s house, had dismissed the driver and decided to walk the rest of the way. But as he about to cross a bridge, another car pulled up. And then, Yeltsin states abruptly, “I was in the river.”

    Comment by Anders — December 15, 2011 @ 5:37 pm

  5. The 1996 election was stolen. But Zyu was gutless. Perpetual “opposition” is all fine with him and Zhirik. The current system has its roots in 1993.

    Comment by So? — December 15, 2011 @ 7:18 pm

  6. As if people have a choice when it comes to paying bribes. Presumably Putin hasn’t heard of opportunity costs?

    Comment by Tim Newman — December 15, 2011 @ 11:31 pm

  7. Once again, SUBLIME PSYCHOPATH is proved to be a lying jackass.

    Comment by La Russophobe — December 16, 2011 @ 3:29 am

  8. Here’s an extension of what we were talking about earlier, Prof. It comes from Director of National Intelligence Open Source Center ( )

    The DNI report at is all about Russian oligarchs (ex-KGBers connected to the Kremlin) taking control of the internet social media in Russia. That’s probably not a surprise, given the pattern in the energy markets noted in earlier SWP posts.

    From the DNI report footnote h on p. 6:

    “In October 2009, the Communications and Press Ministry (of Russia) offered a tender for the provision of technology needed to allow bureaucrats to promote state interests on social networking sites like Twitter and Facebook.

    “According to the tender, the winning company would further be required to draft a concept to promote state interests through the websites and propose “methods of monitoring” the sites in order to “boost the effectiveness” of the activities of state bodies on the sites. The ministry added that it was also considering tracking discussions at social networking sites operating in languages other than Russian (Moscow Times, 23 October 2009).”

    Fast foward to 2011 — msnbc refs that DNI report here

    Important because: “The Russian Internet company that this week (5 Jan 2011) purchased a stake in Facebook was prominently mentioned last February in a U.S. intelligence report questioning whether Russian oligarchs, operating on behalf of the Kremlin, were gaining too much control of the Internet in the former Soviet Union and Eastern Europe.

    “Digital Sky Technologies, working with Goldman Sachs, has agreed to invest $50 million in Facebook. The investment gives the Moscow-based company a 2.38 percent stake in Facebook. DST Global, a related investment vehicle, also has an undisclosed stake of its own in Facebook. Unconfirmed reports quoted by Agence France Press put that added stake at 10 percent.”

    Your tax dollars and bank support at work.

    Comment by markets.aurelius — December 16, 2011 @ 5:35 am

  9. Capital flight now soaring out of control.!

    Comment by La Russophobe — December 16, 2011 @ 7:46 am

  10. Surprise, surprise, a journalist who founded a newspaper that reported on corruption and the abuses carried out by the police and Russian military in the north Caucasus has been shot by a gunman….

    Russia shooting: Dagestan journalist Kamalov shot dead

    Comment by Andrew — December 16, 2011 @ 12:03 pm

  11. “Prime Minister Vladimir Putin said the positive side of bribery in Russia is it shows that people have money to spend.”

    Isn’t that exactly the same kind of obscene, insane drivel you would expect from the likes of SUBLIME PSYCHOPATH? Usually Putin is smart enough to let others be labled morons for spewing out such goo, but now it seems he realizes he no longer has to care what anyone thinks, just as they didn’t care in the Poliburo in Soviet times.

    Russia is doomed.

    Comment by La Russophobe — December 16, 2011 @ 5:30 pm

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