Streetwise Professor

August 10, 2015

Destroying Seized Food: Compounding Idiocy With Lunacy

Filed under: Commodities,Economics,Politics,Russia — The Professor @ 5:59 pm

Russia cemented its well-deserved reputation for insanity by bulldozing and burning tons of food seized for violating the country’s cut-off-its-nose-to-spite-its-face import ban. This was daft, even overlooking the foolishness of the ban.

Seizing smuggled foodstuffs raises the cost of violating the ban, thereby achieving a deterrent effect. But what’s the point of destroying what was seized? Selling it would make much more sense. First, selling would actually help strengthen the ban by increasing supply and reducing prices in Russia, thereby reducing the profitability of smuggling. This would have also increased Russian consumption, making Russians better off. Second, the Russian government could realize revenue by selling the confiscated products: God knows it can use every ruble it can get. Or it could just give the stuff away, and get a PR victory as well as reducing the incentive to smuggle.

In other words, no economic downside, and some economic upside (assuming the ban is rational).

Instead, the Russian government engaged in exhibitionist masochism, and destroyed the seized items in a very public and flamboyant way.

Why? Beats me. Maybe they were trying to make the point that Russia needs nothing from the decadent West. Or maybe they are in thrall to the broken window fallacy, and believe that destroying stimulates production.

I really don’t want to understand. Because to understand these lunatics, I would probably have to descend into lunacy myself.

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  1. Here’s a short alternative scenario that could explain the situation:
    1. Destroy only a fraction of the confiscated products, with lots of coverage by the media.
    2. Pass the rest to a trusted third party to sell it at a discount.
    3. Profit: split the revenue with the benefit that the third party just undercut his rule abiding competition.

    Comment by Mihai — August 11, 2015 @ 1:37 am

  2. Making Russians better off – that would be a bug, not a feature. Russians are more controllable and more willing to sign up as mercenaries when they are dependent on some form of Putin’s handouts just to survive and when mercenary is the only “job” available to pay for a mortgage.

    Comment by Ivan — August 11, 2015 @ 2:37 am

  3. Desperate times call for desperate serfs, as it be.

    Comment by Ivan — August 11, 2015 @ 2:54 am

  4. just show putler real face: a despot

    Comment by David — August 11, 2015 @ 2:58 am

  5. BTW, have you seen that the “most russian” food, caviar, is made in italy?

    That tells a lot on the capacity of russian food industry to take up the slack on the domestic food market provoked by the food ban. Also, since russian food producers who had normally competitive advantages with respect to their european peers (lower and transportation costs), why, although producing at cheaper cost, why they never manage to cover totally the russian market, let alone export abroad? The quality is clearly one factor and the food ban will not fix that. There certainly will be an incentive to relax sanitary controls for the domestic production. Just look at this:

    My feeling is that going to be USSR once again.

    The State Dpt should write a travel warning for Russia: food hazard

    Comment by David — August 11, 2015 @ 5:49 am

  6. Destroying seized food makes as much sense as destroying any other government property. However, considering that the counter-sanctions were put in place to serve powerful domestic agricultural interests at the expense of Russian consumers, it’s clear that destroying confiscated food is just more of the same.

    Comment by aaa — August 11, 2015 @ 7:17 pm

  7. Seems Russia has gone one step further, now even burning their own oil….;))

    Wilhelmus (this is the revenge of the burned Dutch flowers….sortof modern Triffids) Jan

    Comment by Wilhelmus Janus — August 12, 2015 @ 7:41 pm

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