However, that was not to be and, before too long, many reasons were
given why Russia has since performed so lamentably. True, in the last year or
two, its growth rate, at about 7 or 8%, has been very respectable --
bdetter than Europe by far, in fact -- but this is mainly due to the current
high price of oil. However, the standard of living of the vast majority of
Russians, except for a few oligarchs and a new largely parasitic, well-off
middle-class in Moscow and St. Petersburg, has hardly changed at all. Among
the reasons given are that there's still an absence of comprehensive property
law (and its support by an independent judiciary) making it almost impossible
for new small businesses to start, a poor banking system, an overwhelming
centralised bureaucracy (a cultural hangoever from both Tsarist and Communist
Russia) and a great deal of corruption almost everywhere.
One of the consequences of all this is that labour is still largely
immobile in Russia. This was always the case in Tsarist times when most of the
serf population couldn't leave the estates of their lords except in special
circumstances and often at great risk, and also in Communist times when large
numbers of workers were sent to faraway places to work in this industry or
another and not allowed to return to their former homes, or indeed to go
anywhere else. But it is still the case that most of the population of Russia
are not mobile, not so much trapped by heavy government regulation these days,
but by circumstances. For one thing, there are too few new businesses and
industries to offer opportunities and encourage voluntary migration and, for
another, the government doesn't know how to move them in large numbers for
what seems to us to be a curious reason.
There were few property rights when I was in Russia
nearly a decade ago. As for labour mobility or immobility, I'm not so
sure I agree with you. During the Communist era, Moscow grew very
rapidly, from something like a million people to some ten
million, because large numbers of people were needed to operate the
various central plans. My understanding is that these people were drawn
from all of the USSR because of the need to make the various nationalities
feel that they were part of a single system. When I was in
Russia in the mid-1990s, I met Georgians (not the Harry Pollard kind!),
Kazakhstanis, Azerbaijanis, etc., etc. You did not dare call one of
our guides a Russia. She would flare up and tell us she was a North
Ossetian!
It is that because so many Russians in Communist times
were drafted into intensely cold regions, they could only survive there if
they lived in large centralised heating systems in new specialised cities and
towns. Large numbers of people are stuck psychologically because, for a
generation or more, they are hardly prepared for life elsewhere; but they are
also stuck because it is logistically difficult, if not impossible for any
sort of significant government make-work initiative to be devised elsewhere
which could bring them out in large blocks. That is, even if the government
wanted to do so.
I would agree with some of this. As I noted
above, there were few property rights when I was in Russia nearly a decade
ago. As for the Gulags, while they were places to which the
government sent undesirables, both criminal and political, they
also functioned to undertake huge projects of importance to the
state. They were a form of very cheap, forced labour,
and involved millions of people. Among other projects, Gulag
prisoners constructed the White Sea-Baltic Canal, the Moscow-Volga Canal, the
Baikal-Amur main railroad line, numerous hydroelectric stations, and strategic
roads and industrial enterprises in remote regions. Gulag manpower was also
used for much of the country's lumbering and for the mining of coal, copper,
and gold. How many people were actually involved seemed to depend on who
you asked. I heard estimates ranging from 20 million to 60
million.
The authors of a recent book, Fiona Hill and Clifford Gaddy, have
devised a curious, but significant indicator for this curious, but significant
consequence of the way the former Communist regime displaced large populations
of people into Siberia. It is called "temperature per capita". In Russia,
despite global warming in a climatic sense, the average Russian's immediate
environment has become cooler -- at least when compared with people living in
a free labour market in otherwise comparable conditions, such as Canada. This,
too, must therefore be part of the overall reason why Russia has not done well
in the last decade.
What follows is a review in this week's Economist.
In my view it is one of the most interesting items this week.
Keith
Hudson
P.S. I almost heading this posting as "Love in a Cold Climate",
referring to the best-selling novel of some 40 years ago, by Nancy Mitford,
because I was tempted to say that, while making love in Siberia is probably
not totally impossible -- though I wouldn't personally like to try --
the prospect of raising a family there must be appalling. The "Siberian
effect" must be a contributory factor why the fertility rate in Russia is now
much less than replacement rate. The large populations still in Siberia must
be due to tumble quite precipitously in the coming decades -- and then who
will maintain the centralised heating systems for the remainder! The present
government who apparently want to keep the population high in order to keep
the Chinese out must be quite worried.
<<<<
DESTINY AT
-60°C
The Siberian Curse: How Communist Planners Left Russia Out in
the Cold. By Fiona Hill and Clifford Gaddy. Broakings Institution; 213
pages; $46.95 hardback, $18.95 paperback.
Russia is the wrong shape.
Too big, far too long, flat for much of the way and accursedly mountainous in
between; but above all, as Fiona Hill and Clifford Gaddy show in this
fascinating study, the wrong shape economically.
Its problem, in a
word, is Siberia. All Russia's rulers have been obsessed with territory, and
Siberia, with its vast expanses, unearthly cold and untold reserves of oil,
wood, diamonds and metals, is an obsession-forming place. Both the tsars and
the Bolsheviks moved people there, both to exploit the wealth and stake
Russia's claims to the land -- the Bolsheviks most effectively, with planned
cities and labour camps in Siberia's remotest reaches.
As a result,
millions of people ended up in Siberia who would never have gone there in a
market economy. Canadian cities, for instance, cluster near the southern
border; people who go north do so only seasonally. Alaska's only biggish city
is Anchorage. Russia, though, is dotted with such mining towns as Norilsk
(metals, population 235,000) and Mirny (diamonds, population 40,000), where
winter lasts 10 or 11 months, temperatures drop to -60°C, and the nearest big
cities -- themselves none too warm -- are hundreds of miles away.
I would like to beg Hill's and Gaddy's pardon, but
people live in Canadian places like Yellowknife (Popn. 20,000),
Whitehorse (about the same) and Inuvialuit (5,000?) year round. They are
well established cities. The climates of Edmonton (aprx. 800,000) and
Winnipeg (a bit smaller) are not much better and there is no record of a mass
migration out during the winter. As for Anchorage, it's quite a warm
place because of the Japan current. But try Fairbanks (40,000) a little
further inland! Yet even there, people stay year
round.
Using a clever indicator, "temperature per capita", the
authors show that while the average Canadian's environment has got warmer over
the past century, the average Russian's has grown colder. Cold means cost: in
Soviet times, construction and living costs were up to 50 higher in Siberia
and the Russian Far East than in European Russia. Distance means cost too: a
developed economy depends on internal as well as external trade, and trade
over thousands of miles is expensive. Instead of forming an economic network,
Russia's cities are islands, with few economic links except back to Moscow.
Many, overinflated by Soviet planners, are too big to survive economically.
Yet Soviet cities are also the hardest in the world to shrink, because they
rely on centralised heating that can be cut off only to entire neighbourhoods
one at a time.
What all this adds up to is that turning Russia into a
true market economy is tougher than anyone thought. Rampant corruption,
crony-capitalism or a weak banking system are minor annoyances compared with
the fact that too many Russians are simply living in the wrong places for the
economy to work properly. Some are already moving west; nobody builds company
towns in the Arctic circle any more. But, say the authors, the government
needs to help. "The basic principle is to maximise labour
mobility."
How? Unfortunately, the book contains only a few general
suggestions, such as easing restrictions on internal movement and providing
financial incentives. But as the authors recognise, the first and biggest
problem is psychological: the sense that Russia's wild east, like America's
wild west, is part of the country's manifest destiny. The typical Russian
leader wants Siberia not emptied out, but re-populated as a buffer against the
trickle of Chinese immigration that he fears could become a flood (even though
no Chinese wants to live at -60°C any more than a Russian does). If only some
of them would read this book, Russia might start shifting towards the right
shape.
By whatever means it uses, Russia has a psychological
need to control Siberia. It's partly a haunting spectre out of the past
like hoards of horsmen riding westward across the vast Siberian plains,
sacking, pillaging and demanding tribute. But currently, if the Russians
don't control Siberia, someone else will, and that won't work out in Russia's
favour. It could be the Chinese or it could be the Americans making
deals with the various "stans". Whoever it is, the Russians don't
want to see it happen not only because of the resources but also because, like
the Asian horsemen, it could put them into some kind of box that they
really don't want to be in.
>>>>
Keith
Hudson, Bath, England, <
www.evolutionary-economics.org>
