Good News from Russia

Daniel Greenfield by Daniel Greenfield on August 6th, 2012

This is article 221 of 469 in the topic Government Corruption

After terrorizing the West for two generations, no one pays much attention to the Great Bear anymore. The latest unrest in Russia has merited a fraction of the headlines about the Arab Spring, Palestine or upset Muslims in Burma. The old journalistic guidelines used to be, “If it bleeds, it leads.” The new journalistic guidelines are, “If it’s not about Muslims, we don’t care.”

But the events in Russia are highly educational, not in their absurd specifics involving a female punk band and overweight thugs beating up people in their street, but in the glorious spectacle of what happens when a government mafia starts running out of money and the economy that it has been feeding off can no longer nurture its numberless ranks of official and semi-official parasites.

Most countries have their mafias, and by that I don’t mean the jolly grunters who run numbers out of basements or break legs over interest rates that even banks can’t charge. The government mafia is a web of mutual connections for mutual profit.

Say Ivan wants a construction contract. So he talks to Alexei, who knows someone in politics who can get him that contract in exchange for a bribe. That someone is Boris, who owes his position in a ministry of something or other to his friendship with Anatoly back when they were both junior KGB thugs whose fathers were also in the same business. Ivan gives some money to Alexei, who takes a percentage and passes along the rest to Boris, who takes a percentage and passes it to Anatoly who ushers in Ivan to see Vladimir, who is the undersecretary to the deputy minister of construction, who then demands a bribe that is twice as large as the cost of construction, but that’s okay because the bid is four times the cost of construction.

This is obviously a very inefficient system. In the United States, Ivan would be named John, there would be only half as many people to see, and the bribe would be known as a campaign contribution. And this is also why the United States has fewer bribes and higher taxes, because we don’t believe that government contracts should be handed out to unqualified people on the basis of bribes. We believe they should be handed out to unqualified people on the basis of race, sexual orientation or imaginary environmental crisis.

Our versions of Boris, Anatoly and Vladimir still have to make money. Our version of Ivan runs an NGO dedicated to building clean energy windmills in Ghana or underwater electric cars to feed the hungry in Oslo. Boris and Anatoly didn’t meet while badgering a frightened poet in a Lubyanka basement, but passing a joint at an anti-war rally that the KGB boys in the Lubyanka probably helped organize. Their fathers were both professors of radical history at Yale and have written well-regarded books on how the Founding Fathers only started the American Revolution to protect their monopoly on cotton. They scored the dough for the Ghana underwater hungry windmills by adding a 4 percent tax on gasoline, cough drops or tanning salons. It doesn’t matter because so long as the money exists, the mafia can keep stealing it one way or another.

The big scary question is what happens when the money begins to run out? In Russia, the question isn’t merely academic. It’s disturbingly real. Predators expand in proportion to prey. An open system attracts predators who feed off it. We call this taxation, and it works fine, though with more for those at the top of the food chain than those at the bottom. The predators breed larger and larger numbers until they cease to understand that they need the prey to survive. That’s when the predators start telling the prey, “You didn’t build this.”

In the natural kingdom that you can occasionally spot out your window or on a television channel in between shows about truckers on ice roads and mythical monsters, when predators grow in number while the prey dwindles, what occurs is a dieback. The predators are not capable of regulating their numbers. While they try to pretend to be sheepdogs, they are actually wolves. A sheepdog might have enough of a sense of loyalty and duty to go on a diet. Wolves however don’t go on diets. When their food supply is threatened, they sense danger and begin gorging themselves on all the available food to prepare for the famine. They run up a 16 trillion dollar national debt and assure us that they’ll pay it back twenty years from now.

Russia’s government mafia isn’t cutting back, it’s redoubling its aggressiveness. With less money coming in, it’s relying more and more on wholesale confiscation. Confiscation was how the regime built up its original fortune, but the problem is that it’s eating up the business ecosystem and running out of money to confiscate. Every 6th businessman in Russia has been prosecuted in the last decade. Three million have been sentenced in that time. Half are planning to leave the country. And the numbers are increasing sharply because the clock is ticking.

If Obama had gotten a complete blank check for a decade and his backers had been allowed to operate with no legal constraints on their authority, then the United States in 2020 might look like the way Russia does today. But the good news is that government mafias have a limited shelf life. Four years ago the Russian flavor looked unchallengeable. Fast forward to economic decline leading to a rigged election and widepsread contempt for the out-of-control corruption at the top, and there’s a reason for the Soviet-grade repression being applied to the Russian street and the number of dual citizenships in the Russian government. When things go south, the mafia needs a fast plane, a good passport and a lot of gold fixtures on the plane that can be unscrewed and resold once they’re safely on the ground in Finland, Venezuela or Syria.

Government mafias have bad taste but good investments. No, they don’t really need gold on everything or a new 5,000-dollar jacket for every event. Think of those things, whether it’s Putin’s toilet or Michelle’s outfits, as a portable investment that can be easily loaded on a plane in case the peasants outside the palace get too rambunctious and suddenly a commission is investigating you when it was under explicit orders to never ever do that.

The good news from Russia is also good news for those who fear the shadow of eternal Chinese hegemony. The century of the dragon cannot be ruled out, but the Chinese system is just the Russian system with a better work ethic and more cheap labor. And like the Russian ex-commies, the Chinese ex-commies have very poor self-control when it comes to not robbing the country blind. Communism was the ultimate government mafia, and its practitioners, whether they call themselves presidents, premiers, commissars or community organizers, never know when to stop stealing.

The media is paying little attention to the trial of Bo Xilai, because he isn’t a Muslim, isn’t involved with Muslims and his case in no way demonstrates that Islamophobia is the greatest peril to the world since Red-Baiting. But Bo Xilai did happen to be a red, a fervent and committed red, who became tangled in an embarrassing scandal when his wife tried to move money abroad and had to kill the British businessman who was supposed to do the moving.

Bo Xilai might have been the future leader of China’s Communist Party, but he was too busy eavesdropping on the wrong people who were also busy eavesdropping on him. Now Xilai is being ritually shamed for his corruption, but it’s a corruption that is universal in a corrupt system. China’s wealth, like its dragons, is partly real and partly fictional. And it’s only as real as putting a lot of men under a giant cloth can make it.

Communist China will never dominate the world, for the same reason that Putin’s Russia has trouble dominating its own backyard. It’s a mafia state that opened up the system, but kept it crooked, and is feeding off it at a high enough rate that an economic setback will also lead to a dieback.

A political dieback is ugly business for a government mafia that exists by taking a percent of everything and distributing it throughout its vast network. What happens when the mafia keeps growing but the economy is no longer growing fast enough to keep all the wolves fed? The wolves begin frenziedly feeding on the sheep and then on each other. They grab police powers and begin cracking down on even the smallest sign of dissent, and those crackdowns only spur more dissent. Either a tyrant emerges to massacre everyone and rule over a state of universal misery, or the mess ends with a tyrant on the plane trying to sell gold-plated bathroom fixtures on eBay.

Watching this play out in Russia or China makes for grim theater, but it’s also playing out in the European Union, which is dealing with its own dieback by the usual methods of centralizing power and covering up the economic implosion with more fraud. Those are the preliminaries to a much uglier meltdown once the dieback properly kicks in and people start demanding to know why there’s no money and why their pensions are worthless.

America, being a backward country that was too slow in hopping on the bandwagon, isn’t hitting the worst of it yet. Despite the best efforts of a Canadian leftist magazine and some wannabe hippies, there aren’t any daily riots in the streets, and, for now, there’s enough fake money to cover the other fake money with which everyone is doing business.

The American economy is diversified enough that it can struggle on even when its financial sector is a disaster because its old growth plan was all about lending money to people who couldn’t afford to buy houses and wouldn’t be able to repay the loans, and its new growth plan is to lend money to people who can’t afford college educations and won’t be able to find jobs to repay the college loans, Its lower reliance on bribes means that Americans won’t be confronted with civil servants demanding twice as much bribe money. In a centralized system that’s what higher taxes are for.

But the dieback is still going to kick in. Our government mafia is one of the biggest in the world and getting bigger because there’s still money in the pot to finance new projects building underwater windmills in Ghana and solar food for Pakistan, but mostly office buildings everywhere, but the squeeze is already on in Rhode Island and California. And there’s only so much debt that can be assumed when the entire system is already built on debt.

A government that is incapable of controlling its consumption cannot stop gorging even when it becomes clear that it has outgrown the economy and that its food supply is endangered. Instead it speeds up its consumption, grabbing as much as it can, and through that course of gluttony triggers the very crisis that shows it to the door.

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