Business in “modern” Russia – back to primitive violence

This is, sadly, the main reason why even if I wanted to, I wouldn’t do business in today’s  “modern” Russia…

“He was a very successful businessman,” Yelena Denisova, a member of the company’s board of directors, told The Moscow Times in a telephone interview Monday. “The company has produced the best wine in Russia. I don’t think he had any enemies. It could be only a robbery.”

I hope, I am not the only one who cannot believe that this was a case of a simple robbery, but rather a case of “normal” way to “compete” on the Russian market, as in if your business becomes attractive, and there is no way you would give up the gains earned through honest hard work, you will eventually be “stepped aside”, forever…

McKenzie on High Income Tax

“The Soak-the-Rich tax proposal reduces to the argument that those Americans who made good, and conservative economic decisions in the past should now be forced to pad the pockets of the CEOs who have made unbridled risky business decisions, and of other profitable Americans who over the past decade tried to live far beyond their means.

Any proposal to Soak-the-Reach is all too often grounded in the presumption that the rich got their gains through bribes, corruption, and thievery. Some, no doubt did. But now rich retired CEOs who absconded with tens of millions of ill-gotten bonuses and stock options when they were misrepresenting the risks that they had their companies take should be jailed [...]

However, many of today’s rich  people have got their incomes in the good, old-fashioned way through hard work, frugality, and judicious and concervative investment policies.

Indeed, many rich people today have actually earned over the course of their lives the lower average wage rate than people making far less. How can that be?

Many rich people of today have put in mountains of unpaid hours in developing a product or a business over the last decade, with their efforts finally paying off today.

Their current incomes may look excessively high, but only because no account is made for all the unpaid hours worked long ago, or for the substantial risks that they took [...]“

(Professor Richard McKenzie,  Paul Merage School of Business at the University of California, Irvine)

Transnistria – a cultural hazard

I know this is an old documentary, but just to show you that it’s true – the Russian tsarist and soviet culture is alive and demanding its rights, in Transnistria.

Are these people better off? I would say not, but certainly a small fraction got super rich at the expense of all the rest. And although it is culturally attractive for the majority of locals who after 1990 just craved for some old-style soviet social stability – for their previous lives “good or bad as they were” – without ever knowing an alternative  option, for the Transnistrian’s government, this is a convenient recipe to secure an easy target population to steal from.

Yes, not fair, but with all their political and civil rights restrained by the monster that they’ve encouraged grow itself, would these people ever choose to be free and live a better life?

Hard to believe. It’s almost as asking a deaf person to walk toward the most beautiful sound…

EVERY hour is an Earth hour

… and you need NOT turn  your lights off.

As a grad student I don’t watch television that much. I stopped doing it general as every time I turn my TV on, I often find myself struck by misleading and harmful stupidities, mindlessly thrown at me in no order.

Like today, on Larry King Live, celebrities like Alannis Morisette and Edward Northon talked about the need of common action in stopping global warming, and how proud they are to contribute to the “Earth Hour” event worldwide. I just cannot help myself in saying “Guys, your whole idea of a special Earth hour is absurd.”

Every hour is an Earth hour. People are not intruders on Earth, but are intrinsic part of it and if Ed and Alannis dream of a different face of the Earth than the current one, than their argument must be in favor of a slow human extermination.

Think that every moment energy production gets cut off or limited, there will be less products and services available for consumers’ use, in terms of shortages, or higher prices. And consider that almost all products on the market use energy as a primary of complementary input. Less things to buy for one person may mean zero to buy for another. The latter person is a poor person of course, the well-being of whom depends critically upon competitive prices. In reality terms, all this translates into an increase in deaths caused by famine and diseases among the poorest people of the world, and in a poorer quality of life for the rich as well.

My message to Morisette and Northon:

Sure, the Earth hour idea sounds fun. Yes, it seems fun for people who look for “extreme experiences”. Let’s all spend one hour in the dark, how exciting, wow, it even feels like a childhood game. Than get back to your usual activities thinking that you saved the world. No you didn’t… Always remember that your one hour in  “extreme darkness” might mean long hour of torture for other people.

And consider that, for instance, when Russia regularly  stopped the flow of electric energy to Moldova throughout the ’90s, Moldova’s economic activities also stopped, and you can imagine how Moldovans’ quality of life plummeted. Urban areas were paralyzed. People living at the country side, could make a fire, use woods to keep their homes warm during the cold winters. Those living in cities did not have that option. Putting more clothes on was the only way to deal with the situation for the majority. An epidemic of bronchitis and pneumonia erupted during those years. I certainly remember every day of the two painful months as “my share of it”, as well as I remember doing my homework at weak  improvised candle lights. Was I happy or excited about the candles or bronchitis experience? NO, I suffered greatly like many others at that time, and I am happy to be still alive. For me, to see a voluntary movement that militates in favor of something as destructive as this, it is both perplexing and disturbing. Thus, I consider the anti global warming movement a criminal movement responsible for promoting poverty and misery in the world.

Bottom line: Human activity is what makes people flourish, and if using energy resources in the most efficient way in the present brings prosperity, stimulates innovation, and creation of advanced technology, than we are on the right track, and this is what I want for future generations. I want them to benefit from today’s advancements and use this high platform to create a higher one that would help and protect them from any threatening catastrophes of any nature. Human societies are unique and sacred.

People have to stop thinking of human activity – mother Earth relation as one of parasite – host relationship. Yes, modern societies consume many resources, but what gets often omitted or not seen, is the fact that  they also consume what they create, that human minds develop as societies become more prosperous. Thus, always keep in mind that for us the most important resource of the Earth is the man himself.

So, let’s celebrate every hour of man on Earth by doing what each of us already do – things that we’re best at in relation to others.

Impressions from the climate realists’ conference

Here’s an article  I wrote for my Romanian free-market friends and colleagues. It’s on my conclusions from my participation at 2009 International Conference on Climate Change organized by the Heartland Institute on 8-10 March in NYC this year – an impressive gathering of over 300 scholars and entrepreneurs from all over the world to discuss the current misleading propaganda raised by the global warming movement.

More on this event, check the program with recordings and power point presentations.

Macro and cliff jumping…

What I would love to do before my macro midterm next Wednesday… Back to Abel&Bernanke’s book [sigh].

A world of artists

Wish I were an artist…
To picture the world as it is, highlight the best of it, and inspire others.

Too bad economists can not yet be like artists; too many things going wrong in their world.

Wind farms – more could mean less

From yesterday’s Economist.com we find out that if there is one policy area that President Obama should not worry (about not being able to keep his promise), that is the renewable energy area as America has just become the world leader in wind power! They proudly say that last year America increased its wind-power capacity so much that it led to the overthrowing of Germany – the previous leader.

How cool… This seems to be excellent news that should make every American feel proud of his country and president. However, at a closer look, how good news is this?

First, I doubt that building more “capacity”, that is planting more wind farms, is necessarily a good thing for the economy. It depends on the efficiency of this form of energy in comparison with other possible alternatives. Questions such as, “what is the production rate per unit of time of all this newly created capacity?”, “What are the benefits provided by it in comparison with the costs of installing and maintaining it?” should have been answered in this article before jumping to easy conclusion.

Is it really so important for American people to know that they are nation is world’s number one in wind energy? May be, but I doubt they would enjoy it just for the sake of being number one as opposed to achieving it as a clear result of a competitive process.

Second, how can something like this be attributed to the current president? He has been in the office for only two weeks. This seems to be just one of those “lucky” coincidences in his case.

The Black Reading

This is what I plan to read after I finish Eric Weiner’s “The Geography of Bliss” - a book about his own pursuit of finding the happiest places/people on earth…

It is 850 pages long, and as in Jeffrey Tucker’s shared review of the book,

” The historians writing in this 850-page book cover Lenin’s murders, Stalin’s Gulag, Mao’s Great Leap Forward and Cultural Revolution, Pol Pot’s Khmer Rouge, and every other case of shocking crime and horror. [...]

They establish for all time that the machinery of communism is fueled by crimes, terror, and repression, and ends predictably in massacre.”

Gas crisis and monopoly profits

On Russia-Ukraine gas crisis via Reuters:

Russia accused its former Soviet neighbor of stealing about 15 percent the gas it ships across Ukraine to European states.

“Ukraine has stolen gas not from Russia, but from consumers who have bought the product and paid for it,” Prime Minister Vladimir Putin said in televised remarks late on Tuesday.

Ukraine’s pro-West President Viktor Yushchenko blamed Moscow for the supply disruptions, saying Moscow would continue to close the gas taps to Europe or stop them altogether.

Wait a second… it looks like Putin is the good guy, doing his poor customer countries in the region a favor by pointing out Ukraine’s theft. But wait another second, he didn’t stop at that, as I would have done if for example I had noticed someone stealing from my customer the merchandise he bought from me. No, Mr. Putin goes further with his “good” deeds, he punishes the thief, cutting off gas supplies. Fair enough if only, by doing so, he could have avoided punishing the victims.

Hence, Putin’s claim of working in Gazprom customers’ best interest cannot be faithful as it is doing far more harm then good (if any), but rather something else. Hmm, what would that be? Well,  Gazprom is a monopoly on natural gas on the European continent. This makes reducing its output very profitable and, thus, makes inventing reasons to brake any previous settlements (such as bilateral agreements) a political means to achieve new profits for Gazprom.