Can any autocracy get away with it?

In the comments they ask, they say, how is it, can any autocracy really come out dry, even a default is not terrible for it. Well, firstly, all the worst that can happen to the economy has already happened and will continue to happen to the Russian economy. We are in for a transformational downturn, the usual channels of export supplies will eventually become unavailable, the potential of the economy has fallen, the investment climate has been killed, access to imported technologies and foreign capital is severely limited. Hardly it can be considered for "nothing". Secondly, not any. We have to admit that, in general, the Russian economy is holding up well.

Why is that? On July 2, 2020, I shot a short video about how Putinomics works.

The economic system that Vladimir Putin and his technocrats have built is a response to the key economic problems of the 1990s. What are these problems? Persistent budget deficits, high inflation, or even hyperinflation, financial instability, weak federal government.

After the dashing nineties, the well-fed zero came, as it were. Putin's answers have not always been optimal. But in many ways they really gave a positive result. The well-being of Russian citizens grew, and grew very, very quickly, inflation ceased to be double-digit, public finances came into order. And in general, society seemed to feel both political and economic stability.

But the same answers cannot bring the same results in all epochs. Especially if there are changes in the dilemmas. The time when Comrade Colonel occupied the Kremlin for the first time was already very different from the time when Mr. Prime Minister found himself in the presidency for the third time. What is both funny and scary at the same time is that the dilemmas of the 10s are born from decisions made in the 2000s. But first things first.

What is Putinomics? What does she rely on? Why did everything seem to work as it should at first, and then stop? And did it happen by chance that filling the refrigerator in the 2000s led to its devastation in tenths, while simultaneously tightening censorship and moving from soft to hard authoritarianism?

This video is relevant for those who want to understand why, with all the obvious shortcomings of the Russian economy, it is surprisingly stable. Not all autocracies are smart autocracies. Reliance on macro-stability allows the regime to survive the sanctions, and the Russian economy does not fall too deep. Reserves, budgetary rules, a modern central bank, a proprietary payment system similar to SWIFT, competitive oil and gas, a thrifty fiscal policy, a sound banking system in terms of stability - all this is about the stability of the economic system.

If another autocracy had taken the place of Russia, the consequences, including for citizens, would have been much worse and more painful.

Watch if you haven't watched before. This is a short but very capacious video about the Russian economic system.

Grigory Bazhenov 2022-06-28