Streetwise Professor

May 16, 2009

Medvedev Channels SWP

Filed under: Economics,Financial crisis,Politics,Russia — The Professor @ 5:09 pm

Several gems were contained in this Bloomberg story about the 9.5 percent decline in the Russian GDP in 2009Q1.  [Your bet is looking pretty good, Michel.]  In particular, no sooner had I written my post about short-termism in Russia, did I read this in the linked article:

A $9 billion slate of guarantees aimed at kick-starting lending to the companies designated as strategic enterprises had “failed,” Medvedev said on May 13.

Today, Medvedev poured cold water on the government’s bid to diversify the economy away from a dependence on exporting oil, gas and metals.

. . . .

“There have been no significant changes in the technological level of our economy,” Medvedev said in a meeting today outside Moscow.

‘Only on Paper’

The country’s venture fund, special economic zones and so- called techno-parks, all aimed at nurturing high-tech industries, “exist only on paper,” he said. Businesses are also to blame and only invest where a “high, quick return” is guaranteed, he said. [Emphasis added.]

So, Medvedev agrees with my diagnosis of the myopic economic behavior of Russians–a diagnosis that I’ve made for years, and which I have consistently attributed to the fundamental institutional and demographic weaknesses that pervade Russian society; in particular, when life, liberty, and property are insecure, it makes eminent sense to focus on the here and now, rather than the future.  (Here’s another post that explores this theme.)  

Please keep Medvedev’s words in mind, all you self-styled Russophiles, the next time you want to take issue with my analysis of the institutional impediments to Russia’s long term economic prospects.

And I wonder if the high-tech industries that “exist only on paper” (per Medvedev) include that much vaunted nanotech sector.  Anyone (ahem) care to comment?

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  1. Enjoy.

    So I probably failed on the GDP growth prediction (I know think it will be in the -4% to -6% region).

    There’s lots of other bets to be made, though.

    For instance, a 3%+ recovery in 2010.

    Also, lots of demographic stuff. For instance, population growth will resume in 2010-11, and natural increase will turn positive in 2013-14.

    Michel is of course free to counter, and then compare.

    Comment by Sublime Oblivion — May 16, 2009 @ 5:32 pm

  2. Let’s see. I predict at best stagnation for next year for Russia: if they are lucky, the GDP may go up by 1 or 2%.

    Absolute number of children born in 2009 and 2010 will go down as women will put off having children and as there will be fewer women entering into their childbearing years. The Russian population, consequently, will continue shrinking.

    Comment by Michel — May 16, 2009 @ 10:14 pm

  3. OK then, Michel.

    Bet #2
    Your 2010 predictions: 1.5% or less
    Mine: 3%+

    Bet #3
    Re-demography – I think that’s likely for 2009-10, though you neglect death rates.
    But how about you give concrete figures, like a range?

    Comment by Sublime Oblivion — May 17, 2009 @ 3:24 pm

  4. I predict that at least 10% fewer babies will be born in Russia in 2009 than in 2008, and a few percent less children born in 2010 than in 2009.

    As for an increase in mortality, it won’t be seen for at least 3 to 5 years: a crisis leads to greater alcohol consumption, notably of samogon and cheaper alcohols and the higher consumption of such alcohols won’t lead to an immediate increase in mortality, i.e. a noticeable increase in deaths the year of the crisis or the one that follows. For this reason, changes in death rates are not as immediate as that of the birth rate, as changes in birth rates can happen in the same year due to factors such as abortion and couples simply using birth control which can lead to a rapid drop in birth rates in a period of months. For this reason, I do not expect any major change in death rates for 2009 or 2010 but do expect higher death rates starting in a few years.

    Comment by Michel — May 18, 2009 @ 10:00 am

  5. OK. You predict 10% or less births in 2009 relative to 2008.
    I predict around 5% less. So the range is: if the fall is more than 10%, you win; if the fall is less than 10%, I win.
    Since there were 1,717.5k births in Russia in 2008 (, than means 1545.8 is the demarcation point.

    I also predict the number of births in 2010, relative to 2008, will be around 5% to 0%.
    By then it will be pretty clear which of us is correct.

    As for mortality rates, I agree but not for the same reasons. Greater alcohol consumption has an almost immediate effect on death rates. There were a couple of months a few years back when there was a vodka shortage, and death rates fell significantly, but eased back up as soon as it was resolved. So the fact death rates have continued falling in 2009 are highly encouraging. As such I agree with you in your prediction that death rates for 2009-10 will remain stable at worst, but unlike you I predict they will resume declining from 2011.

    Comment by Sublime Oblivion — May 18, 2009 @ 1:10 pm

  6. So we have three bets running now, right? Any corrections to #2 or #3?

    #1: GDP growth for 2009
    Michel = -4% –
    DR = -4% +

    #2: GDP growth for 2009
    Michel = 2% –
    DR = 2% +

    #3: BR’s in 2009
    Michel = 1545.8 –
    DR = 1545.8 +

    Comment by Sublime Oblivion — May 18, 2009 @ 1:14 pm

  7. The first obvious correction to #2 being that its for 2010, not 2009 lol.

    Comment by Sublime Oblivion — May 18, 2009 @ 1:14 pm

  8. Russia’s industrial production is down 17% for the quarter, automobile production down over 50%.

    Double-digit inflation AND unemployment.

    Budgetary reserve on the verge of exhaustion, FOREX reserves down by half and falling rapidly.

    Russia doesn’t rank IN THE TOP 150 nations of the world for adult lifespan.

    I can only wonder how bad things would have to get in Russia before the Russophile wackos would admit
    there is a problem. Presumably, as long as a single Russian citizen is above ground, it’s still a paradise.

    So sad, so very sad.

    Comment by La Russophobe — May 18, 2009 @ 3:31 pm


    I think you spoke too soon pronouncing the death of Russian nanotech efforts. But then again, you don’t seem to be rooting for anything to succeed in Russia, now that the vulcan mind meld between this site and La Russophobe is nearly complete.

    Comment by Charles Ganske — May 23, 2009 @ 10:38 pm

  10. Charles–

    Dishonest as always. Note that I was quoting MEDVEDEV’s criticism of Russian high tech progress or the lack thereof .

    Perhaps Medvedev is doing a mind meld with LR. Why don’t you comment on his blog and suggest that?

    I repeat, if it didn’t penetrate your thick skull the first time:

    “Please keep Medvedev’s words in mind, all you self-styled Russophiles, the next time you want to take issue with my analysis of the institutional impediments to Russia’s long term economic prospects.”

    And note that I said “I wonder if” nano-tech was one of the industries that MEDVEDEV was criticizing. I offered no affirmative opinion about that.

    If you are going to comment here (a) read what is written, (b) don’t project your paranoia, and (c) offer honest criticism, rather than the dishonest tripe that you usually serve up.

    The ProfessorComment by The Professor — May 24, 2009 @ 7:32 am

  11. Charles:

    Now let us turn to the substance of the link you so generously provided. Here it is, in full:

    State corporation Rusnano intends to open 20 to 30 $90m nano-centers throughout Russia, the CEO Anatoly Chubais reports.

    The centers are reportedly to open in Russia’s “most advanced” regions.

    Under plans, the centers are to have infrastructural capacities to host several small and medium innovational businesses.

    Each center is to consist of two components – material component, including real estate facilities and equipment, and financial component, represented by banks and other financial institutions.

    “Intends to open.” “Reportedly to open.” “Under plans, the centers are to have.” “To consist.” All about intentions. Plans. Everything in future tense. No dates, you will notice. Not even the usual fantasy date of 2020.

    Exactly like Medvedev said. These centers exist ONLY ON PAPER. Right now, these are vaporware, not real, tangible, productive things.

    Thanks so much for proving my point. Excuse me. Credit where credit is due. Thanks so much for proving Medvedev’s point.

    Hey, written that comment on his blog yet where you accuse him of doing a mind meld with La Russophobe?

    The ProfessorComment by The Professor — May 24, 2009 @ 9:50 am

  12. Professor, all I’m saying is that there are enough similarities — same delight in doom and gloom, same instant insults to anyone who disagrees, equating modern Russia with the USSR — to make people wonder if you moonlight as LR.

    Comment by Charles Ganske — May 24, 2009 @ 11:15 am

  13. SWP,

    Instead of dissing Charles in your usual low-life manner, why don’t you browse through the first link I gave you at the very top of post #1, which shows lots of real developments taking place in the Russian hi-tech sector:

    Considering your amazing Russian skillz you’ve been showing off here recently, it should be a breeze for you. Or use Google Translate.

    And of course most of it is going to be on paper for now. When WERE the big nanotechnology plans first proposed? Late 2007, IIRC! Do you really expect a river of world-beating technologies and chip factories to appear in Russia within less than 2 years of the commencement of real funding? If so, you are far more optimistic about Russia than I am.

    But we know you’re not, of course. You’re like the anti-Commie fanatic in 1929 who claims the USSR could produce a chemical or plastics industry (PS. this is not to imply that 2009 Russia is in any way politically similar to 1929 USSR).

    Comment by Sublime Oblivion — May 24, 2009 @ 5:20 pm

  14. Charles: Don’t delight in doom and gloom. Sorry. Re “instant insults”: you comment dishonestly, I ain’t gonna sugarcoat my response. And your comment was dishonest. You were dishonest about what I wrote. You were also dishonest in your characterization of what was in the link you provided.
    And re USSR. There are some similarities. Not identities, but as Mark Twain said: History may not repeat itself, but it rhymes.

    S/O: Again. This is getting bizarre. All I did in the post, if you’ll read it, is to note that Medvedev had been very critical of these vaunted high tech efforts. Like I said to Charles. If you have a problem with what Medvedev said, take it up with him. On his new blog maybe. All I said re nanotech is “I wonder if . . . ” It was an invitation for you to comment, son. That’s what the parenthetical “ahem” meant–given your obsession with nano, it was abundantly clear that the “anyone” was you. I didn’t make any comments one way or another on nano progress or lack thereof. Ganske said I spoke of the “death of Russian nanotech efforts” when I did no such thing. That’s why he was dishonest–he completely misstated what I had written and the implications thereof. And then he posts a link which substantiates what Medvedev said while implying that it says something completely different.

    I also think it is worth noting that Medvedev agreed with a diagnosis that I have made on numerous occasions re the short-termism of Russian economic thinking. If you disagree with that fine. Debate on the substance. But realize that, as I say in the post, that making that point is not tantamount to Russophobia. Unless you think Medvedev is a Russophobe.

    Your last paragraph is just bull.

    And re “skillz.” I know my Russian is rudimentary. I play around with it. But at least I am trying to learn something new, in part to get a better understanding of something that interests me. If you think that’s worthy of ridicule, so be it.

    The ProfessorComment by The Professor — May 24, 2009 @ 8:53 pm

  15. Correction, sorry:

    “But we know you’re not, of course. You’re like the anti-Commie fanatic in 1929 who claims the USSR couldN’T produce a chemical or plastics industry…”

    I’ll clarify by quoting an interesting and relevant extract from John Scott in Behind the Urals…

    “In talking with people in France and America I was impressed by the interest in the Soviet Union and the widespread misinformation about Russia and all things Russian. Everyone I met was opinionated. The Communists and their sympathizers held Russia up as a panacea…Other people were steeped in Eugene Lyons’ stories and would not concede the possibility that Russia had produced anything during recent years except chaos, suffering and disorder. They dismissed the industrial and material successes of the Russians with an angry wave of the hand. Any economist or businessman should have been able to see that the tripling of pig-iron production within a decade was a serious achievement, and would necessarily have far-reaching effects on the balance of economic and therefore military power in Europe”.

    I want kind of implying you were in the second, reality-denying / ideological category. Scott was saying this in 1937 when the evidence of progress was undeniable.

    Specifically re-nanotech, we’re in the late 1920’s (i.e. just beginning), so at least your skepticism on this point is more understandable. That said, as above, the fact that most of these projects are still on paper is to be expected considering that the nanotech focus is not even 2 years old.

    “Businesses are also to blame and only invest where a “high, quick return” is guaranteed, he said.” – I agree with Medvedev. That is in fact one of the reasons why the Russian state must play a much more active role in the economy than is typical in the West if it wants to develop something resembling an advanced economy.

    Re-Russian. OK, apologies. I didn’t like how you attacked Charles so I commented angrily. Reading the quoted thread will improve your skillz.

    I’ll reply to your Stalinism post later.

    Comment by Sublime Oblivion — May 24, 2009 @ 10:00 pm

  16. Most U.S. and European nano projects still mostly exist on paper. Venture capitalism is one of the most high risk/high reward businesses out there, with a huge failure rate.

    Comment by Charles Ganske — May 25, 2009 @ 9:30 am

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