Wednesday, October 24, 2007

Putin's self defeating ordinance

I see that Vladimir Putin has decided to impose food price controls.

Not only will it not work, it will start to distort the rest of the Russian economy- the emergence of a Soviet style black market is one real possibility, the other is increased smuggling as producers naturally seek a better market price overseas (and try to avoid the excess tariff).

This political meddling in the most basic market will cause more problems than it solves. It also warns us that the gains of globalisation are fragile.

On the other hand, with such economic illiteracy prevailing in the Kremlin, it probably reduces significantly the potential strategic threat of Russia to the West. After all, it was the economic suicide of Soviet Communism that allowed the West to prevail in the cold war, despite the many strategic advantages that the USSR was deemed to possess.

1 comment:

Anonymous said...

It's yet another example, of course...however, Cicero, I'm surprised you have not commented on the Tusk victory in Poland...