05 August 2011

Can Russia Survive Until 2020? Can China?

The key factor that will determine Russia’s collapse will be the price of oil. Five years ago, a balanced budget required only $30 per barrel of oil. This year, it has jumped to $115 because of higher government spending, waste and corruption. Next year, the figure will increase even further to $125 per barrel. If the price of oil drops to $90 a barrel, this will be the beginning of a serious economic crisis for Russia. The stabilization fund might be able to hold the budget over for a couple of years, but inevitably the state will have to cut back on social programs. These cuts in social spending will only exacerbate public discontent. It may also provoke self-sufficient regions to rethink their loyalty to Moscow. _MoscowTimes

Russia's economy is critically dependent upon the price of natural resources -- specifically gas and oil. The growing global boom in shale gas due to North American methods of horizontal drilling and fracking, have cut the legs from under Russia's extortionate pricing for natural gas sales to Europe and elsewhere. Now, if a global economic downturn causes sustained lower oil prices as well, Russia's government will be hard pressed to maintain popular morale -- or more properly, popular indifference to the Moscow government's corruption and mismanagement.
Most Russian adults do not vote, largely because they have lost faith in any hope that post-Soviet elections can be pluralistic, free and fair. The one factor that has kept middle-class Russians distracted from politics is their high level of consumption. As long as they have money to spend, they will have much more interest in consumer goods than who is sitting in the State Duma, local legislatures, Kremlin or White House — or their policies. But as soon as this relative prosperity drops, civil protest will surely awaken.

Any student of economics can name a dozen factors that carry a risk of economic collapse. Among them are the high dependence on natural resources; low productivity; an ineffective, corrupt, bloated and overly centralized state apparatus; dependent courts; technological backwardness; and an unattractive investment climate. These factors, among others, generate a vicious cycle of poverty and excludes the implementation of a long-term development strategy for the country. It also guarantees a flight of capital, as well as Russia’s most talented and innovative people to freer and more open societies. _MoscowTimes
All of these problems contribute to the low morale, disastrous state of public health, high crime and corruption, massive levels of generalised neglect, and a great sense of quasi-suicidal futility that one easily finds in Russia today. The failure of Russia's core population to reproduce to replacement rates is the result, leading inevitably to the collapse of Russia's current borders sooner or later.

As for China, the many failures, weaknesses, and shortcomings of the Beijing government and its regional extensions have been well documented. The recent crash of two of China's high speed passenger locomotives puts the exclamation point to several of China's poorly concealed, underlying problems.
The leaders have pinned their own and the country’s prestige to high-speed rail. From a standing start, China has built the world’s longest high-speed network—a genuine achievement, but one the leaders exaggerated. High-speed rail was a patriotic symbol and the next great export. Yet even before the crash, the network was plagued by breakdowns. Earlier this year the railways minister was sacked on suspicion of vast corruption. A darling programme is in trouble.

Second, the authorities have this time bungled the public relations. They first tried to blame the weather (lightning) before faulting the institute that designed the signalling. Rescuers rushed to bury part of the wreckage, either in haste to get the service going again before all the survivors had been accounted for, or because they wished to hide technology (either Chinese, or some lifted from foreign companies). Corpses were not at first handed over to families. And Grandpa Wen took days to pay his respects to victims. He had been sick, he said, which raised more questions than it answered (see article).

Third, in their unprecedented anger over the crash and its handling, ordinary Chinese and the state media have, amazingly, suddenly found common cause against the government. China has nearly 500m internet users. On Twitter-like microblogging sites, criticisms spread so quickly that censors could not keep up. Even the state-controlled media sharply questioned official explanations for the crash and criticised the government’s response to the accident. On July 29th, when the openness threatened to get out of hand, the censors ordered an end to it, but even then some state publications defied orders. Mao Zedong said that a single spark could start a prairie fire. The capacity of both journalists and the public to speak up in huge numbers has breached a firebreak not crossed since the Tiananmen protests in the pre-internet age. _Economist
The CCP government has been lording it over the Chinese people for several decades now. Although many Chinese have become quite wealthy under the more liberal economic regime of the past two decades, hundreds of millions of Chinese people continue to live in extreme poverty. In addition to poisoned water, soil, air, and food, the quality of life for large numbers of Chinese people is burdened by a toxic atmosphere of censorship and oppression. The current economic and financial bubble within China could create severe repercussions, if not allowed to deflate carefully.

Under the one-child rule, most of the new Chinese have neither siblings, cousins, uncles, aunts, nor non-familial close relations. Chinese society is become the very picture of alienation in an existential sense. The Chinese people are typically intelligent, ambitious, hard-working, and goal-oriented. But how much more corruption, oppression, and top-down greedy mismanagement will they tolerate before the nation is torn apart?

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Blogger neil craig said...

"Most Russian adults do not vote, largely because they have lost faith in any hope that post-Soviet elections can be pluralistic, free and fair"

Some seem to have even less faith.

US 2010 37.8%


Actually this is pretty good news for Sarah Palin because it means all those polls showing large numbers of voters wouldn't vote for her are meaningless because they won't vote for anybody. If she can just get 20% sufficiently enthused to actually go out and vote she wins.

Friday, 05 August, 2011  
Blogger al fin said...

While the proportion of non voters may be similar, the reasons for not voting can be significantly different between two such different cultures.

Russians are much more realistic about their dire predicament of woe under the hyper-corrupt regime of Putin et al. The suicide and alcoholism rates in Russia reflect the levels of futile despair.

Americans tend to be more complacent, often not bothering to go to the polling place unless they feel themselves personally affected by bad governmental policy, or feel that their government benefits are being threatened.

Look at the flow of emigration and immigration, for a clearer idea of how the cookie is crumbling.

Friday, 05 August, 2011  
Blogger neil craig said...

The suicide and alcoholism rates are undoubtedly worse in Russia. I assume the drug death rate in the US is higher and the murder rate in both countries is unusually high. Migration is, for obvious reasons, almost always from poorer to richer countries probably almost irrespective of freedoms - eg there was always heavy migration by blacks into South Africa.

I am not, however, saying that I have any doubt I would find the US much the more attractive country to live in, merely that it is usually easier, but less useful, to notice the faults in other countries than your own.

Friday, 05 August, 2011  
Blogger Howard Roark said...

Al Fin, you really seem to be critical of Chinese infrastructure, but have you looked at the Americas? The entire housing stock of San Francisco is comprised of Victorian relics, the entire housing stock of most cities are little dilapidated boxes made in the 1950s-1970s that sell for hundreds of thousands of dollars. Most skyscrapers built in the US are from the 1980s. China has thousands of brand new gleaming high rise buildings. When were the US highways constructed – in the 1940s? American cities are connected through airplanes that burn huge amounts of fuel – rail is much more fuel efficient. You insinuate that China has poor manufacturing quality and that is infracturere is bad. If that is the case how is it China can make iPhones and other advanced electronics of high quality and low price? Is it a real estate bubble? Yes. Is it malinvestment? Probably. But with 1.3 billion people its hard to argue that it wont eventually be used. The US is spending about 40% of its GDP on the governmet – yet we don’t seem to have much in terms of physical assets like gleaming new buildings to show for it.

Friday, 05 August, 2011  
Blogger al fin said...

It is best not to assume anything without looking up the statistics yourself. It is fine to defend the indefensible if you have the numbers to back it up. Otherwise, one's comments can become too much like the unhappy norm on the web: free of any real content. We should try to avoid that sort of thing.

Russia has the ninth highest murder rate on this planet, higher than any other major industrialized nation. No other nation in the world has a higher divorce rate. Only only four nations drink more alcohol. By contrast, Russia doesn’t even rank in the top 125 nations of the world for life expectancy.

If a person showed this kind of absolute, grim and dismal failure, a psychiatrist would no doubt classify him as a suicide risk. Indeed, Russia seems to be, for all the world, an entire nation hellbent on suicide — and indeed only five countries on this planet have people more likely to commit suicide than Russians.

Supporting links at the source

Howard Roark: Shiny new buildings? Shiny new empty buildings? Shiny new empty buildings with an average lifespan of 15 to 25 years? Best to pay cash, since a 30 year mortgage wouldn't make sense for a building made to collapse in 20 years.

Friday, 05 August, 2011  
Blogger neil craig said...

OK I acknowledfe Russia at 15 murders per 100,000, and America at 5 which oputs it under the world average though srill very high for the developed world. Singapore, which scores at the top of almost every tree being 0.3

Saturday, 06 August, 2011  
Blogger al fin said...

True. And taking away murders by blacks and hispanics, the US murder rate is virtually identical to that of Singapore.

The US is becoming less and less a developed country, demographically, just as Europe is doing. The US has a large head start in that regard.

Saturday, 06 August, 2011  
Blogger Ugh said...

"The failure of Russia's core population to reproduce to replacement rates is the result, leading inevitably to the collapse of Russia's current borders sooner or later."

It is so interesting to talk to everyday Americans about these sort of demographic subjects. Most look at you like you're talking crazy-talk. They are so blissfully unaware. Every family from my era has a brother or sister that had no children and others that had five (making up the replacement values) but today many kids don't even have a brother or sister at all. The rest is pure mathematics and the numbers for the U.S. are just slightly better than those for Russia, Japan, Europe and China.

Saturday, 06 August, 2011  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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