Monday, April 27, 2009

If you think capitalism has problems, check the situation in Russia

As savvy readers know, the problems with western economies began with government interference in the mortgage and energy markets, so regulation, not capitalism, caused the current downturn.

If anyone believes that a stronger dose of government is what's needed now, check this article summarizing the situation in Russia, where Putin pulled back capitalist reforms since his rise to power. Perhaps you'd rather have their 10% drop in GDP last quarter. Their official unemployment rate is only 8.5%, but that's of the 53% who are defined as "economically active", so less than 50% of the population is actually working, and of course, many of those working for the government aren't really producing anything of value. This is all in the context of double digit inflation, which is also getting worse.

So their Dear Leader Putin is now personally setting interest rates in Russia, as his amply demonstrated economic expertise is superior to that of the professionals who run the Central Bank.

The Russian example tells us what's in store for America as our own Dear Leader applies his vast store of economic knowledge to the American economy. He's already pushed gigantic spending programs, tremendous inflation of the money supply, and a takeover of the banking system, so our economy should come to resemble Russia's within a few years. And as we can see from their example, government intervention is just what we need to justify more government intervention as our economies head south.

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