Medvedev is “Dizzy From Success”?

Most older Russians know the meaning and context of “dizzy from success.” As collectivization and war against the peasants threatened to get out of hand in 1930, Stalin published his “Dizzy From Success” article in Pravda. In this piece, he criticized local leaders for excesses, which he claimed he did not intend. Encouraged peasants reduced their resistance and began to leave the collective farm. Shortly thereafter Stalin ordered a resumption of terror in the countryside.

In Krasnodar at a campaign rally, Medvedev warned party activists that if they come to  feel superior and complacent: “You get what the classic called 'dizzy with success.'" It is strange, to say the least, to refer to Stalin as “the classic.” Either Dmitry Medvedev is ignorant of Russian history or has decided to take a page from Stalin’s playbook. Let’s hope the answer is ignorance.

Minijobs, Milton Friedman, and an Overlooked Success Story (Berlin Journal #3)

One of several reasons why Germany has the lowest unemployment rate in Europe is the “minijob.” Long-term recipients of unemployment benefits and social assistance (Haartz IV recipients) can keep extra earning from “minijobs” up to 160 Euros per month. They can earn up to 400 Euros but their benefits are reduced for earnings above 160 Euros. This works something like Milton Friedman’s negative income tax. Persons with minijobs are counted as employed.

Notably, the German Federal Labor Agency reports that 93 percent of minijob holders earn 160 Euros. Who says the long-term unemployed cannot count?

October 3 was the Day of German Reunification – a national holiday. The streets were empty except for huge crowds in downtown Berlin and Bonn. Nightly television ran documentaries and showed films about life in a divided Germany. Overlooked was a major success story. The most respected  public opinion survey research organization reported for the first time a near parity in life satisfaction between the East and German populations. At huge cost and effort, it seems German reunification has been completed. No one seems  to notice, which is a victory in itself.

State Capitalism, Hubris, And What China Owes Us

Times have changed. A decade back, the United States lectured the rest of the world on the advantages of democracy and its private enterprise system. Now, countries like China and Russia tout their “benevolent” one-party system and state capitalism as growth engines that correct the mistakes of the free market. Russia’s Putin characterizes the U.S. as a “parasite that lives off the global market.”

China, in a show of Schadenfreude, lectures us to get our economic house in order before we ruin everyone else. Domestic critics bemoan the pathologies of unfettered markets and political stalemate and point to China as a model for us.

I’d like to ask: Who is living off of whom?

go to Forbes.com 

The European Mess (Berlin Journal #2)

More than a week of speaking with people, reading the press, and watching the nightly news in Berlin has brought home what a mess Europe is in.  The European Union now consists of 27 member states. Nine more are lined up to join, the most contentious being the “non-European” Turkey.  Seventeen countries have the Euro as their common currency. EU member countries range from small and desperately poor (Albania), to South Mediterranean spendthrifts (Greece), to large, wealthy, and thrifty (Germany). Each night’s TV news headlines leads with the latest attempt to save Greece from default.

The European Union has a parliament chosen in elections that attract little attention. It has a Council of Ministers, and a proliferation of high-paid Euro-bureaucrats. It operates ad hoc on the basis of a series of treaties. Its one attempt to draft a constitution failed. Key decisions require unanimity; others do not.

No one appears to understand what power the EU concoction has – in what cases it can trump national decision making.

If we think we have a mess sorting out federal-state issues, we have it easy compared to Europe. Let me take just one news item from the Frankfurter Allgemeine, September 29  to illustrate. The article is entitled “EU Parliament Approves Reform of Stability Pact,” and here is my reaction to it.

In its wisdom, the EU parliament approved “sanctions with teeth” for those countries like Greece and Portugal that run large deficits. Those who break the stability pact rule (deficit no more than three percent of GDP) will have to pay large fines. (They were already supposed to pay fines, but now the EU is really serious, I guess). The minority socialists, greens and leftists voted against this “blind savings fever.” The Christian democrats countered against torpedoing the stability pact “with worn ideas from the socialist mothball chest.” No one ventured to ask how countries that are broke are going to actually pay these fines.

Then things get even wackier. The EU parliament ruled that it could impose sanctions against countries with “excessive imbalances in their trade accounts.”  A green delegate argued that countries with export surpluses (like Germany) should make “fair wage agreements and future investments” to correct their imbalances.” In other words, Germany should take measures to reduce its competitiveness and efficiency so that inefficient spendthrift countries can sell to Germany!

I assume that such talk was just hot air. How can anyone force a country to become more or less efficient?

What I see generally is an endless struggle between Europeanists and nationalists. The EU will increasingly seek independent taxing authority so as to have its own sources of revenue. The EU proposal of a tax on financial transactions is a case in point. The poor countries will favor EU wide rules and taxes, and the richer countries will resist. In a United States of Europe, the poor countries know they can count on a steady stream of transfers from the rich countries. There are many more of them than rich countries.

The rich countries realize that they are being set up, but they have been conditioned to be “good Europeans.” On the Sunday (October 2) political talk shows, the head of the conservative CSU (part of the ruling Merkel coalition) explained that he voted for the German bailout of Greece because “we must all be good European neighbors.” He warned, however, that there were limits to neighborliness. He would not vote for any more money for Greece. If he did, his Bavarian base would throw him out of office.

Oh No. Another Twelve Years of Putin

Four years of non-suspense ended Saturday. Vladimir Putin will return as president of Russia in March. This decision does not bode well for Russia, the West, or for those who wish to do business in Russia. In fact, nothing much will change. Only the election of a new president could change the status quo, and this is not going to happen.

Putin’s maneuvering within the constitution has restored the Soviet practice of lifetime tenure of the top leader. He became president at age 48. When he retires at age 72 (if he does not choose to serve longer), Putin’s quarter century tenure will match that of Joseph Stalin.

Let’s go back to the events of Saturday’s  United Russia convention: First,  Prime Minister Vladimir Putin rose to nominate protégé and current President Dmitry Medvedev to head the party list in the December parliamentary elections. As party head, he will  replace Putin as  Prime Minister. Newly lame-duck Medvedev, purportedly near tears,  then proposed Putin as the party’s presidential candidate for the March 2012 elections.  United Russia delegates approved both proposals unanimously and with enthusiasm. (All that was missing was the “stormy and sustained applause” of the Stalin era).

United Russia controls almost three quarters of the votes in the  Duma. Of the three other parties, only the Communists act as a feeble opposition. The other two are pro-Kremlin “pocket parties” that serve as democratic window dressing.

Russia’s new 2012 leadership has already been selected. Russia and the West are stuck with it, like it or not.

go to Forbes.com

Berlin Journal September 26, 2011

What do Germans think of U.S. politics?

So far, there appears unanimity that Obama’s “good plans and intentions” are being held hostage by the evil Republicans. The Tea Party is universally hated as a bunch of suicidal kooks.  On state television, Tea Partiers are shown as clowns, racists, and idiots. These opinions appear to be shared across age groups and comes from relatively well educated people.  There is disappointment in Obama but only insofar as he has not been able to put his plans through.

German network television

German network television (prime time at least) is directed at a gray audience. I guess young people either nightclub or surf the web. I have yet to see a prime-time romantic comedy in which the man and woman are under fifty. In most case they are sixty and above.

The Pirate Party

Berlin just had its elections. The Pirate Party, whose agenda has something to do with personal privacy rights, received enough votes to enter the Berlin city government. Apparently, the German Green Party started the same way and now it is a part of mainstream German politics. And the Germans look askance at our Tea Party?

The Berlin Marathon

The Germans are usually a quiet people, but if you give them a chance to celebrate, they won’t shut up. They began their loud music and vuvuzelas at about 8 AM on Sunday and didn’t stop until four in the afternoon.