Streetwise Professor

November 18, 2009

Potemkin Civil Society

Filed under: Economics,Politics,Russia — The Professor @ 7:31 pm

I haven’t written anything about Medvedev’s State of the Nation speech because, to be quite blunt, there’s not much to write about.  In many respects, it is a piece with the entire genre: political cotton candy; a pastiche of platitudes.

One thing that struck me, though, was his discussion regarding civil society:

It is the government’s job to create the necessary environment for the development of civil society. People who are not indifferent to what is happening around them should benefit from every opportunity to realise their noble aspirations.

We will continue to support non-profit, charitable organisations that help resolve complex social problems. Corresponding amendments to legislation will be designed to simplify the operation of non-profit organisations that are engaged in charity work and help vulnerable social groups.

What will be done in this respect? First, we will introduce the concept of socially oriented non-profit organisations. Those who receive this status will be able to count on the government’s direct support. The authorities will be able to provide such non-profit organisations with financial, information and consulting support. But this is not all: what is no less important, they will receive tax incentives and governmental and municipal orders. It will be possible to transfer property to non-profit organisations for them to use in their work.

We intend to eliminate any tax on the material assistance provided by charitable and non-profit organisations to children without parental support, as well as to the disabled.

There is another suggestion. Services rendered by non-profit organisations in caring for the sick, the disabled, the elderly, and social services for orphans and children without parental support, will be exempt from VAT.

Neither will any income tax be taken from grant-supported projects such as health programmes, promotion of popular sports and physical education.

Another change in legislation that we have been talking about for years now concerns the creation and replenishment of special-purpose capital of non-profit organisations. This will become possible through donations of securities and fixed property (this conversation has been going on for some years now), and environmental protection will now be on the list of activities for which special-purpose capital can be used.

Third, we will finalise and adopt rules governing charitable activities. In particular, their objectives will include: the social rehabilitation of orphans and children without parental support, providing legal assistance, promoting scientific and technical creativity of children and youth, philanthropy and volunteering.

All of these things are quite admirable, of course.  It is particularly desirable to create and support independent organizations, if for no other reason but to demonstrate that people needn’t be dependent on the state for everything.  But what strikes me is the very cramped and narrow vision of acceptable activities for private organizations to engage in.  Russia certainly needs to encourage civil organizations to assist in the care and development of the orphaned and the aged, but it needs a much broader development of “little platoons” than that.  It needs a variety of civil organizations that can, in a sense, interface with the state and indeed compete with.  That can give citizens a voice against the state.  But Medvedev is completely silent on this.

Not that I am surprised.

To give a flavor of the attitudes of the Russian state to this type of civil society, consider this from Oleg Kozlovsky’s Facebook page:

Russian National Exhibition, a grand event organized by Russian government to attract US investment, opens in Chicago tomorrow. Russian bureaucrats and businesspeople will try to convince their American counterparts that it is safe and profitable to put money in Russia’s economy.

. . . .

The organizers of the Exhibition will not ignore the humanitarian aspect too. They even have a whole 2.5-hour long session on “Formation of Civil Society.” Five regional ombudsmen (from Samara, Yekaterinburg, Dagestan and Kabardino-Balkaria), an editor of an online paper and an unkown (to me) expert will be explaining how Russia develops its civil society. The apparent lack of any NGOs’ representatives speaks for itself: the government has no activists to show to their Western partners without loss of image.

That is: “civil society” is viewed as an appendage of the state, and representatives of the state speak on its behalf.  Little more needs to be said.

One other thing on the Medvedev speech.  He again condemned state corporations.  Stratfor argues that this is an opening salvo in a battle between the Surkov clan (plus the civiliki) and the Sechin clan (the siloviki).  Perhaps.  Although the orders to launch investigations of these corporations is something more than mere words, I think it is still premature to conclude that a real battle is underway.

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  1. My view is slightly outside the main, but I view tax exemption for charitable organizations as an extension of government power rather than a boundary to it. It is a way for the government to pull independent concerns underneath its control. They have the power to bless some (exempt) and punish others (non-exempt) and the power to control what the “blessed” say and and the action they take, as exempt institutions live with a sword dangling over them, the implicit threat of their special status being revoked.

    It also serves to undermine individual charity in favor of institutionalized charity. Buying a man I see on the street a meal and a cup of coffee is 100% expense, while donating the same amount to a soup kitchen is only ~65% expense, meaning I could give more at the name net expense to me, feeding more people; or feed the same amount at a lesser expense to me, depending on how you look at it. That distortion tends to funnel money away from individual acts of charity, and toward organized, government-blessed charitable institutions.

    The result is charity–which knows no tax law–is encouraged by government on one hand and punished by it on the other. The net effect would tend toward zero, but in my opinion it really drops below zero, as it also has the consequence of subordinating the individual impulse for charity to that of collective action.

    Much like government involvement in various other areas tends to lower private involvement (ie, “I already pay thousands a year to Medicaid, why give to XYZ hospital?”, a preferential treatment of institutionalized charities lowers the individual feeling of responsibility to fellow men (ie, “I’ll write a check to ZYX food bank, they’ll take care of him”).

    It isn’t the fault of the charitable institutions. Very often they are doing excellent work, but their __preferential__ treatment vs. other, equally important avenues of charity is a problem.

    It is a problem at the very heart of any income tax system, and one I view as intentional, not accidental. Its net effect is to channel power away from individuals, away from charities, and to government. Since both the rule maker and the beneficiary is government, it is hard to imagine how such a system would spring into existence by accident. The insidious quality is that many people think the government is doing good, and showing its support of charity, by the special exemptions when nothing could be further from the truth.

    Comment by ThomasL — November 18, 2009 @ 9:34 pm

  2. Thomas–

    I have a good deal of sympathy for your argument. When thinking about Medvedev’s piece and what I would say about it, I considered focusing on his statement about “the government’s direct support.” That is, this is a proposal to make the charities dependent on the government, which is the gravamen of your argument. Indeed, “government supported civil society” is damn near an oxymoron. Civil society should be self-organizing, a means by which people realize their own goals and ambitions, not a handmaiden to the state. Indeed, it should be a counterweight to the state. But, as you note, governments (including the US gov’t) use the tax system to bring it to heel.

    The ProfessorComment by The Professor — November 19, 2009 @ 8:18 am

  3. Yes, Thomas has a valid point to consider there, certainly. Just look at what the Boy Scouts have faced in the past few years, i.e. being threatened to lose their tax exempt status and lose park land because of their particular beliefs. However, whenever I hear a point that makes me pause, like Thomas’, I give myself a timeout and say, “But look at the results.” If you look at the West’s forms of civil society, they do all of what they are defined to do in spite of the tax exemption status that could be abused (as SWP notes in Comment 2) whereas civil society does NOT function this way in Russia. So, regardless of government influence via tax exemption, there is still a thriving alternative to government as opposed to the different groups Medvedev wants to set up that are just the government’s own claws stretching out into public life. Medvedev even says it when he mentions that these new groups will get direct support from the government. Uh, that ain’t civil society, Dima. Civil society shouldn’t need a dime from the government. Russia’s leaders will never be able to let a full blown anti-government, civilian-funded group shout back at them without repercussions. Power sharing is a historically unthinkable option for them so they have to create a fake version of it.

    A few years back, I’m embarrassed to say, I didn’t even understand fully what civil society meant, possibly because it was so normal to me, and thus the concept went unnoticed. I asked a German friend for a definition. He said, “Civil society is when small towns like in Germany or the U.S. have 5 soccer teams and a volunteer fire department and in Russia, the small town has a bunch of drunks who may or may not have a garden hose.”

    Anyway, not sure I added much here, but at the very least, Dima, it seems, is just doing what every other Russian leader has done before him, so for those people who think there is a breath of fresh air here, I wouldn’t get too excited.

    Comment by Howard Roark — November 23, 2009 @ 11:03 am

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