Why Russia doesn't die: three causes of enemy's economic survival

In order to defeat the opponent, you need to study and understand it. The misunderstanding of processes in Russian society and the economy, by the way, has been very expensive, since 2014, says economist Alexei Kush Sanction on the Russian Federation and further structural changes in the Russian economy still need to be studied. By the way, I do this regularly. In Ukraine, unfortunately, there is no conditional scientific institute "Study of Russia", but in vain.

The USSR had a "US Institute for Study", and the Soviet Union was actively studied in America. We have the study of the Russian economy to the level of memes and foolish programs in the style of "there in swamps". Although the opponent is better overestimated than underestimated. The misunderstanding of processes in Russian society and economy, by the way, has been very expensive to us since 2014.

Paradoxically, but now Western analysts are better aware of the situation in the Russian Federation than we. This leads to tremendous expectations on our part and extremely incorrect estimates. "Anaconda operation", "The collapse of Russia", "Economy - to pieces", "Strilling by sanctions" - and much more. It would be common propaganda for the inspiration of the masses, it would not be so tragic.

But the expectations of the rapid collapse of the Russian economy form erroneous strategies and inefficient tactics in Ukraine. I have repeatedly encountered people who make strategic decisions that have seriously formed their forecasts on the economic collapse of Russia. This is the case when the authors of propaganda begin to believe in it. Professional. Here is an extremely dangerous dichotomy: we form our strategy, relying not on our own efficiency, but on the inefficiency of the enemy.

That is, we do not increase the qualitative advantage, but we wait for the opponent. In this post, I will consider only three interesting phenomena in the Russian economy. Incentive to launch structural transformations in the economy in the form of budget (state investments), monetary (policy of negative real rates), credit (mass use solvent demand of the population, investment demand of the state and business) incentives.

I wrote about this model, in relation to Ukraine since 2016, but we have other development programs in honor. You can find out their success by looking out the window. For a long time, the internal business in the Russian Federation was in the role of stepson, the ball was ruled either by raw materials or foreign companies.

Somewhat, the Russian model was similar to ours, but only with a wider raw material line of exports: not only metal and grain, but also oil, natural gas, coal, diamonds and more. Approximately the same imported import. And so, as a result of sanctions, the huge economic inner space was released. And not only has released, but with the advent of stimuli of growth: tax reduction, simplification of regulations, lending at low rates, compensation of capital and engineering costs.

Take the money and release what you want - from packing film to drones. Nobel laureate Paul Krugman has created a realistic theory of international trade, according to which developed countries dominate due to the fact that their large technological corporations benefit competition, saving on a scale, and developing countries lose this struggle even with cheap labor.

Yes, the latter should be temporarily limited to import and stimulate the development of internal industries, and as they competitively strengthen them gradually remove customs barriers. So they did in Japan, Taiwan, South Korea, Singapore, China.

There is also a positive Krugman's theory, which is that the state should stimulate the industries that lead to the emergence of new sub -sectors of the real sector of the economy, as it happened in Japan, when the development of metallurgy has contributed to the emergence of mechanical engineering. And the rate of production of final goods is deadlocked. It can be said that both theories of Krugman worked in the sanction trade vacuum of the Russian economy.

Of course, this model has its disadvantages. The technological dependence of the Russian Federation, especially in part of chips and semiconductors. Reduction of competition and, as a consequence, reducing the quality of goods of own production. Factor of overhead, especially in the context of capital production. For example, the world market of capital -intensive goods x - 100,000 units per year.

The overhead costs of a transnational company, in particular from the development of new models, are divided into 100,000 units. And in the Russian Federation, where the market, for example, 1000 units, they will be distributed to the volume of production (1000 units), which is one hundred times less, that is, per unit of production will be constant costs, respectively, one hundred times higher. Which, for its part, will lead to overruns of internal resources and economic inefficiency.

But these are all problems of the second order. The only thing that could bleed Russia is the financial and technical involvement of Western countries in the war. For example, an analogue of the Tehran-43 conference, where our allies make a decision to spend 5% of their GDP on the development of MIC and assistance to Ukraine in the form of technical means of war. It is about an astronomical amount of $ 2. 5 trillion per year.

In order to form at least the illusion of parity, Russia would have to spend almost 100% of its GDP (Germany at the Second World War, that is, after Tehran-43, spent 120% of GDP). But that didn't happen. Why is the topic of a separate article. As a result, although the Russian Federation will spend $ 120 billion in the war in 2024-but it will be only 6% of its GDP, while we will have to spend 30% of GDP.

Russia was not only an import -dependent country, but also a country with a huge outflow of capital into Western jurisdictions. Along with Ukraine, the Russian Federation was one of the top ten countries with the largest outflow of capital in the world. From 1991 to 2014, about one trillion dollars were withdrawn abroad from Russia. The mechanism here was exactly the same as with us. The raw material revenues have invested in Western financial instruments, mainly into US bonds.

The oligarchs kept their capital in offshore and invested these resources in the Western economy: businesses, real estate, yachts, lacquer goods and more. Capital was stored, in particular, in Western banks. Now the outflow of capital from the Russian Federation is almost completely blocked, just like the import of goods into its territory. Capital can be withdrawn through crypt and Yuan, but these are far from the scale.

The accumulation of internal government reserves is generally almost suspended - all raw materials in accordance with the budget rule of the Russian Federation spend on investment in the economy through the National Welfare Fund. In particular, the infrastructure and structural restructuring programs. It turns out an economic system into which huge raw materials (approximately $ 700-800 billion per year) are poured and almost nothing is poured in the form of payment or capital outflow.

As a result, the system began to swell literally from the money. The only thing that is threatening now is inflation. Although price dynamics are not critical, moving in the hallway 5-15%. These are not our extremums from 25% to 5%. By the way, the model of international sanctions can be successfully used to combat Ukrainian corruption. If in the West, finally, they want to start fighting with it not only on words, but also by blocking the accounts and assets of our corrupt officials.