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December 10, 2011
Crony Capitalism in Russia and U.S.

protests-in-moscow-december-2011.jpeg
Many protesters in Moscow came out into the streets for the first time in their lives on December 10, 2011

No country's history proceeds on its own anymore, uninfluenced by events elsewhere. Thus, there was a great deal of interest in Russia in the Occupy Wall Street demonstrations, just as there were with the Arab Spring. Yet, in the aftermath of the demonstrations against Vladimir Putin and United Russia that followed the parliamentary elections, Putin is blaming the public displays on--Hillary Clinton.

This is like politicians in the American South during the civil rights movement who blamed the demands for change on "outside agitators." If Putin merely expressed annoyance with the tone of U.S. scolding, it would be hard to disagree. Whether it is Clinton or her predecessor, Condolezza Rice, moralizing U.S. Secretaries of State seem to think that they should be constantly announcing what other governments "must" do. It's hard to know what such near-daily lectures accomplish, other than infuriating heads of state with whom we must deal. Once in a while? Sure. All the time; it is a little hard to take.

Nonetheless, Putin cannot imagine that his problems with the Russian people are the result of comments made by Hillary Clinton and the United States government. There was too much Internet evidence of fraud in the elections. One blogger became famous for the beatings he endured in government hands. These protests hardly look like the work of Ms. Clinton or the CIA.

Instead, Prime Minister Putin might consider that the long-suffering Russian people can see in the Occupy demonstrations in the U.S. how a truly democratic country handles dissenters. Comparatively, America almost coddles them. Police protect them, even when they invade private parks and public buildings and then set up camps. In Russia, the Kremlin either attacks demonstrators (in the old days) or, at best, criticizes them as stooges of the West (these days).

Russia is suffering from crony capitalism, a politicized form of mercantilism: state sponsorship of industries, state manipulation of supposedly private companies, preferential regulations and official corruption that hobbles new businesses. It isn't fascism, but it is hardly the kind of free marketplace of ideas and enterprise that Russians thought they were getting twenty years ago. Sadly, the first efforts at liberalism after the fall of communism were chaotic and badly delivered, and the consequent economic collapse brought about the Putin reaction. Had his party spearheaded more serious reform and resisted the temptation to enrich its leaders and managers, Mr. Putin ciould have succeeded much more than he has. Had he merely decided to limit his leadershi to the twelve years he has put in so far, he would have retained his popular standing. He probably could have kept (and still may keep) the mansions he has built for himself since assuming public office.

Instead, Russia now serves as an example of how persistent, unyielding crony capitalism can demoralize an economy and democracy. People are right to object. Paired with the fiscal failures of Social Democracy--through over-spending--in most of Europe, you have twin dangers that should flash political warning lights in America during our own lesser, but very real crises.



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Russia Blog presents up-to-date news, facts and commentary on the state of events in Russia and the former Soviet Union. The blog was created and is managed by Yuri Mamchur, Director of Discovery Institute's Real Russia Project, Executive Director of the World Russia Forum, and a Vanderbilt University MBA graduate.


 






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