President Obama wants to spend billions of dollars to stimulate the economy. He and his party believe this will create jobs, protect the poor, and help get the country out of a grave economic crisis. Welcome to life in modern Russia.
I’m teaching in St Petersburg for the next few months. But if the language weren’t different and the sets a little cheaper, you’d never know it from watching the nightly news. The policy wonks say a lot of the same things. Why are bad ideas so universally popular?
Some of it is probably simple imitation. The pride of other nations notwithstanding, America is still seen as a world leader, not just militarily but economically and politically. Newly formed nations form tripartite governments, like America. They write constitutions, like America. They send their best and brightest to American universities. They may not like everything we do, and they may put their own spin on American institutions, but ultimately much of American ideas, culture and policy are imitated by other countries. Including post-communist Russia.
But there’s got to be more to it than that. Nobody seriously believes that taking money from group A and giving it to group B can “stimulate” anything. Every dollar (or ruble) in a spending plan can only come from three places, and none of those stimulate anything.
The money could come from taxpayers, in which case it’s just redistributed, with government taking something off the top for overhead. While there is some role for taxation in the provision of public goods, that’s not what economic “stimulus” legislation is about. Once the dust settles, this type of spending makes the country poorer.
The money could also be borrowed. But again, borrowing doesn’t stimulate anything. It simply adds to debt, crowding out capital from the private sector. It is politics at its worst, giving money to grownups and taking it from children. We only get away with it because children can’t vote.
Finally, the money could simply be printed, which leads to inflation and the hideous misallocation of resources that entails. Both the US and Russia have sufficiently modern economies and sufficiently vigilant finance ministers to resist this temptation, although Russia knows its citizens will put up with more inflation than their American counterparts. Still, the temptation to print money in response to political pressures remains a tremendous risk.
None of these points are seriously challenged, in the economic literature or elsewhere. It’s just that nobody cares. Whether you live in Russia or America, being right doesn’t matter nearly as much as wielding power. We’ve got a stimulus package not because the evidence says that is what we need, but because there’s something deep-seated in human nature that wants other people to be in charge and “do something”.
This is especially true in Russia, which despite its difficult transformation to at least nominal democracy and pluralism has a long history of group mentality, the primacy of the collective over the individual, and a desire for a strong hand on the reigns. The Communist Party still exists here, and every day I walk past a group of Stalinist reactionaries peddling their views to whomever will listen. Scary stuff.
But it’s not just Russians who want a powerful leader who’ll make everything OK. Think about the nominating conventions of either party, or the post-election victory celebrations. Russians in particular watched the frenzied pre-inaugural rallies of our incoming president with rapt attention. After all, they know the feeling.
Spending the inauguration over here and seeing the similarity of how business is done makes me think there’s something deeper than politics at work. I think we’re seeing something inherent in human nature. Deep down inside, we want to believe in better, smarter, wiser people than ourselves who, if we just give them enough power, will make everything OK.
Sure, we now elect them democratically instead of having people kill each other, and I guess that’s progress. But it’s not progress enough. We still believe that, deep down, we’re just not capable of running things by ourselves. We think we need other people, better than we are, to be in charge. That’s true in Russia, it’s true in America, and I have a sneaking suspicion it’s true just about everywhere.
That doesn’t make it right. It just makes it popular.