quinta-feira, janeiro 18, 2007

178) Irlanda, um artigo de Marcio Coimbra

O Tigre Celta
Por Márcio C. Coimbra*
marciocoimbra@gmail.com

Se buscarmos qualquer palavra para definir a Irlanda atual, sem dúvida será liberdade. As reformas de cunho liberalizante iniciadas em 1997, conduzidas com enorme inteligência, levaram o país a ostentar indicadores invejáveis. Durante uma recente reunião da The Mont Pèlerin Society, na Guatemala, foi apresentado um trabalho que cruzava dados de todos os indexes de liberdade elaborados por diversos institutos de estudos pelo mundo. Depois de analisar todas as informações, a Irlanda foi considerada o país mais livre do mundo, ou seja, uma nação que possui baixa carga tributária, excelentes níveis de educação, respeito ao cumprimento dos contratos e das leis, independência do Judiciário, respeito à propriedade intelectual, instituições fortes, baixos níveis de corrupção e pouca regulação do Estado na economia. Tudo com o objetivo de incentivar o empreendedorismo. Sua pujante economia liberal, responsável por gerar ótimos indicadores sociais, levou o país a receber o apelido de Tigre Celta.

A mudança começou a ser gestada durante uma cisão política em 1985, com a criação da Democracia Progressista ou simplesmente Partido Democrático (An Páirtí Daonlathach). Este novo grupo político introduziu os conceitos de valorização da livre-iniciativa, baixos impostos, economia competitiva, privatizações e equilíbrio orçamentário com o objetivo de criar um ambiente de comércio dinâmico. Mesmo com Partido Republicano (Fianna Fáil) ocupando a Presidência e a Chefia de Governo (Taoiseach), a habilidade política da Democracia Progressista forneceu a possibilidade de influenciar nas políticas da administração federal por intermédio da Vice-Chefia (Tánaiste), desde a formação do governo de coalizão de 1997, primeiro com Mary Harney (1997-2006) e atualmente com Michael McDowell.

A Irlanda, entretanto, nem sempre foi livre e rica. Durante muitos anos viveu com grande interferência do Estado em sua economia. O desemprego, que hoje é de cerca de 4%, já alcançou 19% em 1987. Os problemas já foram enormes, como crises econômicas que geraram ondas de fome, secas que destruíram plantações e levaram a morte mais de 1 milhão de irlandeses ainda no século XIX. Neste período, mais de 2 milhões deixaram o país, que perdeu por volta de 35% da população. Os problemas continuaram com a interferência dos britânicos e as fortes reações irlandesas, como o Levante da Páscoa em 1916. A independência total veio aos poucos, primeiro com o estabelecimento de um Estado Livre, depois com a Constituição de 1937 e finalmente a República em 1949. Hoje, aberta, soberana e livre, a Irlanda se tornou uma nação de forte imigração, de braços abertos, especialmente aos descendentes dos antigos irlandeses que deixaram o país no passado.

O surgimento do Tigre Celta, na década de 90, é creditado a diversos fatores, entretanto, o mais interessante é observar o processo de ruptura com a interferência do Estado na economia e o surgimento de um país moderno, desenvolvido e socialmente saudável. A entrada na Comunidade Econômica Européia em 1973 é uma parte importante do processo, embora não explique o progresso espetacular a partir de 1997. O mesmo vale para a Espanha, que conheceu um governo de características similares que iniciou no mesmo período que o irlandês. A simples entrada da Espanha na Comunidade Européia em 1986 não foi responsável pelo seu magnífico progresso. Espanha e Irlanda implementaram políticas liberalizantes, responsáveis por seu fabuloso progresso muito tempo após sua adesão ao bloco econômico europeu. O crédito, neste caso, deve ser dado a coalizão entre Democracia Progressista e Partido Republicano na Irlanda, a partir de 1997 e ainda em curso, e ao Partido Popular na Espanha, entre o período de 1996 e 2004.

Durante meu período em Dublin, tive a felicidade de conhecer um país aberto, com liberdades plenas, sem interferência do Estado na economia, o que gerou pleno emprego e um ambiente socialmente desenvolvido. A experiência da Irlanda, sem precedentes em sua história, é uma lição aos países irresponsáveis, toscos e ignorantes que flertam que o populismo e políticas de assistência, como o Brasil e alguns de seus pares na América Latina. As políticas de plena liberdade levam invariavelmente ao sucesso, ao progresso e aos melhores indicadores sociais. “There is no free lunch”, como dizia o saudoso Milton Friedman. Ele estava certo. É só observar no que se transformou a Irlanda.

Artigo redigido em 31.12.2006
Em Dublin, Irlanda.

* Márcio Chalegre Coimbra. Analista político. Habilitado em Direito Mercantil pela Unisinos. PIL pela Harvard Law School. MBA em Direito Econômico pela Fundação Getúlio Vargas. Especialista em Direito Internacional pela UFRGS. Mestrando em Ação Política pela Universidad Francisco de Vitória e Universidad Rey Juan Carlos, em pesquisa para Fundación FAES (Partido Popular), em Madri, Espanha.

Membro da The Mont Pèlerin Society. Conselheiro do Instituto Liberdade. Membro do Conselho Consultivo do Instituto Federalista. Sócio do IEE - Instituto de Estudos Empresariais. É editor-chefe do site Parlata.

Possui artigos e entrevistas publicadas em diversos sites nacionais e estrangeiros (www.urgente24.tv e www.hacer.org) e jornais brasileiros como Jornal do Brasil, Gazeta Mercantil, Zero Hora, Jornal de Brasília, Correio Braziliense, O Estado do Maranhão, Diário Catarinense, Gazeta do Paraná, O Tempo (MG), Hoje em Dia, Jornal do Tocantins, Correio da Paraíba e A Gazeta do Acre. É autor do livro “A Recuperação da Empresa: Regimes Jurídicos brasileiro e norte-americano”, Ed. Síntese - IOB Thomson (www.sintese.com).

quarta-feira, janeiro 17, 2007

177) On education (2): da inutilidade de certos cursos universitários

Dando continuidade à série iniciada com o artigo anterior (ver o post 176), o autor trata agora dos cursos universitários.
Aqui, bem mais do que no ciclo médio ou elementar, os ensinamentos para a experiência brasileira são relevantes, sobretudo porque continuamos a exibir esse culto do "canudo" universitário e porque o governo insiste em privilegiar o ensino de terceiro ciclo, em detrimento do ensino fundamental, médio e técnico profissional.
Acredito também que muitas pessoas poderiam fazer "colleges" de dois anos e ficarem plenamente habilitadas para uma vida produtiva, sem precisar de todas essas milhares de faculdades de direito de 4 anos, que liberam outros tantos milhares de "analfabetos funcionais" na própria área em que são supostas formar mão-de-obra de qualidade.
Para ler e refletir.

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ON EDUCATION
What's Wrong With Vocational School?
Too many Americans are going to college.
BY CHARLES MURRAY
The Wall Street Journal, Wednesday, January 17, 2007

The topic yesterday was education and children in the lower half of the intelligence distribution. Today I turn to the upper half, people with IQs of 100 or higher. Today's simple truth is that far too many of them are going to four-year colleges.

Begin with those barely into the top half, those with average intelligence. To have an IQ of 100 means that a tough high-school course pushes you about as far as your academic talents will take you. If you are average in math ability, you may struggle with algebra and probably fail a calculus course. If you are average in verbal skills, you often misinterpret complex text and make errors in logic.

These are not devastating shortcomings. You are smart enough to engage in any of hundreds of occupations. You can acquire more knowledge if it is presented in a format commensurate with your intellectual skills. But a genuine college education in the arts and sciences begins where your skills leave off.

In engineering and most of the natural sciences, the demarcation between high-school material and college-level material is brutally obvious. If you cannot handle the math, you cannot pass the courses. In the humanities and social sciences, the demarcation is fuzzier. It is possible for someone with an IQ of 100 to sit in the lectures of Economics 1, read the textbook, and write answers in an examination book. But students who cannot follow complex arguments accurately are not really learning economics. They are taking away a mishmash of half-understood information and outright misunderstandings that probably leave them under the illusion that they know something they do not. (A depressing research literature documents one's inability to recognize one's own incompetence.) Traditionally and properly understood, a four-year college education teaches advanced analytic skills and information at a level that exceeds the intellectual capacity of most people.

There is no magic point at which a genuine college-level education becomes an option, but anything below an IQ of 110 is problematic. If you want to do well, you should have an IQ of 115 or higher. Put another way, it makes sense for only about 15% of the population, 25% if one stretches it, to get a college education. And yet more than 45% of recent high school graduates enroll in four-year colleges. Adjust that percentage to account for high-school dropouts, and more than 40% of all persons in their late teens are trying to go to a four-year college--enough people to absorb everyone down through an IQ of 104.

No data that I have been able to find tell us what proportion of those students really want four years of college-level courses, but it is safe to say that few people who are intellectually unqualified yearn for the experience, any more than someone who is athletically unqualified for a college varsity wants to have his shortcomings exposed at practice every day. They are in college to improve their chances of making a good living. What they really need is vocational training. But nobody will say so, because "vocational training" is second class. "College" is first class.

Large numbers of those who are intellectually qualified for college also do not yearn for four years of college-level courses. They go to college because their parents are paying for it and college is what children of their social class are supposed to do after they finish high school. They may have the ability to understand the material in Economics 1 but they do not want to. They, too, need to learn to make a living--and would do better in vocational training.

Combine those who are unqualified with those who are qualified but not interested, and some large proportion of students on today's college campuses--probably a majority of them--are looking for something that the four-year college was not designed to provide. Once there, they create a demand for practical courses, taught at an intellectual level that can be handled by someone with a mildly above-average IQ and/or mild motivation. The nation's colleges try to accommodate these new demands. But most of the practical specialties do not really require four years of training, and the best way to teach those specialties is not through a residential institution with the staff and infrastructure of a college. It amounts to a system that tries to turn out televisions on an assembly line that also makes pottery. It can be done, but it's ridiculously inefficient.

Government policy contributes to the problem by making college scholarships and loans too easy to get, but its role is ancillary. The demand for college is market-driven, because a college degree does, in fact, open up access to jobs that are closed to people without one. The fault lies in the false premium that our culture has put on a college degree.

For a few occupations, a college degree still certifies a qualification. For example, employers appropriately treat a bachelor's degree in engineering as a requirement for hiring engineers. But a bachelor's degree in a field such as sociology, psychology, economics, history or literature certifies nothing. It is a screening device for employers. The college you got into says a lot about your ability, and that you stuck it out for four years says something about your perseverance. But the degree itself does not qualify the graduate for anything. There are better, faster and more efficient ways for young people to acquire credentials to provide to employers.

The good news is that market-driven systems eventually adapt to reality, and signs of change are visible. One glimpse of the future is offered by the nation's two-year colleges. They are more honest than the four-year institutions about what their students want and provide courses that meet their needs more explicitly. Their time frame gives them a big advantage--two years is about right for learning many technical specialties, while four years is unnecessarily long.

Advances in technology are making the brick-and-mortar facility increasingly irrelevant. Research resources on the Internet will soon make the college library unnecessary. Lecture courses taught by first-rate professors are already available on CDs and DVDs for many subjects, and online methods to make courses interactive between professors and students are evolving. Advances in computer simulation are expanding the technical skills that can be taught without having to gather students together in a laboratory or shop. These and other developments are all still near the bottom of steep growth curves. The cost of effective training will fall for everyone who is willing to give up the trappings of a campus. As the cost of college continues to rise, the choice to give up those trappings will become easier.

A reality about the job market must eventually begin to affect the valuation of a college education: The spread of wealth at the top of American society has created an explosive increase in the demand for craftsmen. Finding a good lawyer or physician is easy. Finding a good carpenter, painter, electrician, plumber, glazier, mason--the list goes on and on--is difficult, and it is a seller's market. Journeymen craftsmen routinely make incomes in the top half of the income distribution while master craftsmen can make six figures. They have work even in a soft economy. Their jobs cannot be outsourced to India. And the craftsman's job provides wonderful intrinsic rewards that come from mastery of a challenging skill that produces tangible results. How many white-collar jobs provide nearly as much satisfaction?

Even if forgoing college becomes economically attractive, the social cachet of a college degree remains. That will erode only when large numbers of high-status, high-income people do not have a college degree and don't care. The information technology industry is in the process of creating that class, with Bill Gates and Steve Jobs as exemplars. It will expand for the most natural of reasons: A college education need be no more important for many high-tech occupations than it is for NBA basketball players or cabinetmakers. Walk into Microsoft or Google with evidence that you are a brilliant hacker, and the job interviewer is not going to fret if you lack a college transcript. The ability to present an employer with evidence that you are good at something, without benefit of a college degree, will continue to increase, and so will the number of skills to which that evidence can be attached. Every time that happens, the false premium attached to the college degree will diminish.

Most students find college life to be lots of fun (apart from the boring classroom stuff), and that alone will keep the four-year institution overstocked for a long time. But, rightly understood, college is appropriate for a small minority of young adults--perhaps even a minority of the people who have IQs high enough that they could do college-level work if they wished. People who go to college are not better or worse people than anyone else; they are merely different in certain interests and abilities. That is the way college should be seen. There is reason to hope that eventually it will be.

Mr. Murray is the W.H. Brady Scholar at the American Enterprise Institute. This is the second in a three-part series, concluding tomorrow.

176) On education (1): uma discussao relevante nao apenas para os EUA

O The Wall Street Journal, conhecido por suas posições conservadoras -- mas nem por isso menos pragmaticas, preocupadas com custos e resultados, como é característico da cultura capitalista e liberal -- está publicando uma série de três artigos sobre educação nos EUA.
Ainda que o contexto, a história e as características sejam totalmente diferentes do Brasil, sempre se pode aprender alguma coisa com a experiência alheia em matéria educacional.
Afinal de contas, todas as pessoas do mundo nascem absolutamente iguais, isto é, igualmente providas de algumas habilidades inatas -- que são as reações e sentimentos primários -- e totalmente desprovidas de cultura e conhecimento, ou seja, zero em matéria de educação. O que as pessoas serão na vida adulta depende em grande medida do ambiente familiar e da educação recebida. Nesse sentido, todas as pessoas são intercambiáveis, pois podemos ter (ou não) habilidades técnicas que podem ser colocadas ao serviço de qualquer economia nacional.
Nesse sentido, qualquer discussão sobre educação, em qualquer lugar do mundo, deveria nos interessar, pois não existe "teoria da jabuticaba" no que se refere aos conhecimentos básicos que toda pessoa produtiva deve ter em sua vida útil.
É com esse espírito que, neste post e nos dois seguintes, transcrevo as matérias do WSJ. (Depois falarei sobre o autor, que tem trabalhos controversos na área de QI.)

==============

ON EDUCATION
Intelligence in the Classroom
Half of all children are below average, and teachers can do only so much for them.
BY CHARLES MURRAY
The Wall Street Journal, Tuesday, January 16, 2007

Education is becoming the preferred method for diagnosing and attacking a wide range problems in American life. The No Child Left Behind Act is one prominent example. Another is the recent volley of articles that blame rising income inequality on the increasing economic premium for advanced education. Crime, drugs, extramarital births, unemployment--you name the problem, and I will show you a stack of claims that education is to blame, or at least implicated.

One word is missing from these discussions: intelligence. Hardly anyone will admit it, but education's role in causing or solving any problem cannot be evaluated without considering the underlying intellectual ability of the people being educated. Today and over the next two days, I will put the case for three simple truths about the mediating role of intelligence that should bear on the way we think about education and the nation's future.

Today's simple truth: Half of all children are below average in intelligence. We do not live in Lake Wobegon.

Our ability to improve the academic accomplishment of students in the lower half of the distribution of intelligence is severely limited. It is a matter of ceilings. Suppose a girl in the 99th percentile of intelligence, corresponding to an IQ of 135, is getting a C in English. She is underachieving, and someone who sets out to raise her performance might be able to get a spectacular result. Now suppose the boy sitting behind her is getting a D, but his IQ is a bit below 100, at the 49th percentile.

We can hope to raise his grade. But teaching him more vocabulary words or drilling him on the parts of speech will not open up new vistas for him. It is not within his power to learn to follow an exposition written beyond a limited level of complexity, any more than it is within my power to follow a proof in the American Journal of Mathematics. In both cases, the problem is not that we have not been taught enough, but that we are not smart enough.

Now take the girl sitting across the aisle who is getting an F. She is at the 20th percentile of intelligence, which means she has an IQ of 88. If the grading is honest, it may not be possible to do more than give her an E for effort. Even if she is taught to read every bit as well as her intelligence permits, she still will be able to comprehend only simple written material. It is a good thing that she becomes functionally literate, and it will have an effect on the range of jobs she can hold. But still she will be confined to jobs that require minimal reading skills. She is just not smart enough to do more than that.

How about raising intelligence? It would be nice if we knew how, but we do not. It has been shown that some intensive interventions temporarily raise IQ scores by amounts ranging up to seven or eight points. Investigated psychometrically, these increases are a mix of test effects and increases in the underlying general factor of intellectual ability--"g." In any case, the increases fade to insignificance within a few years after the intervention. Richard Herrnstein and I reviewed the technical literature on this topic in "The Bell Curve" (1994), and studies since then have told the same story.

There is no reason to believe that raising intelligence significantly and permanently is a current policy option, no matter how much money we are willing to spend. Nor can we look for much help from the Flynn Effect, the rise in IQ scores that has been observed internationally for several decades. Only a portion of that rise represents an increase in g, and recent studies indicate that the rise has stopped in advanced nations.

Some say that the public schools are so awful that there is huge room for improvement in academic performance just by improving education. There are two problems with that position. The first is that the numbers used to indict the public schools are missing a crucial component. For example, in the 2005 round of the National Assessment of Educational Progress (NAEP), 36% of all fourth-graders were below the NAEP's "basic achievement" score in reading. It sounds like a terrible record. But we know from the mathematics of the normal distribution that 36% of fourth-graders also have IQs lower than 95.

What IQ is necessary to give a child a reasonable chance to meet the NAEP's basic achievement score? Remarkably, it appears that no one has tried to answer that question. We only know for sure that if the bar for basic achievement is meaningfully defined, some substantial proportion of students will be unable to meet it no matter how well they are taught. As it happens, the NAEP's definition of basic achievement is said to be on the tough side. That substantial proportion of fourth-graders who cannot reasonably be expected to meet it could well be close to 36%.

The second problem with the argument that education can be vastly improved is the false assumption that educators already know how to educate everyone and that they just need to try harder--the assumption that prompted No Child Left Behind. We have never known how to educate everyone. The widely held image of a golden age of American education when teachers brooked no nonsense and all the children learned their three Rs is a myth. If we confine the discussion to children in the lower half of the intelligence distribution (education of the gifted is another story), the overall trend of the 20th century was one of slow, hard-won improvement. A detailed review of this evidence, never challenged with data, was also part of "The Bell Curve."

This is not to say that American public schools cannot be improved. Many of them, especially in large cities, are dreadful. But even the best schools under the best conditions cannot repeal the limits on achievement set by limits on intelligence.

To say that even a perfect education system is not going to make much difference in the performance of children in the lower half of the distribution understandably grates. But the easy retorts do not work. It's no use coming up with the example of a child who was getting Ds in school, met an inspiring teacher, and went on to become an astrophysicist. That is an underachievement story, not the story of someone at the 49th percentile of intelligence. It's no use to cite the differences in test scores between public schools and private ones--for students in the bottom half of the distribution, the differences are real but modest. It's no use to say that IQ scores can be wrong. I am not talking about scores on specific tests, but about a student's underlying intellectual ability, g, whether or not it has been measured with a test. And it's no use to say that there's no such thing as g.

While concepts such as "emotional intelligence" and "multiple intelligences" have their uses, a century of psychometric evidence has been augmented over the last decade by a growing body of neuroscientific evidence. Like it or not, g exists, is grounded in the architecture and neural functioning of the brain, and is the raw material for academic performance. If you do not have a lot of g when you enter kindergarten, you are never going to have a lot of it. No change in the educational system will change that hard fact.

That says nothing about the quality of the lives that should be open to everyone across the range of ability. I am among the most emphatic of those who think that the importance of IQ in living a good life is vastly overrated. My point is just this: It is true that many social and economic problems are disproportionately found among people with little education, but the culprit for their educational deficit is often low intelligence. Refusing to come to grips with that reality has produced policies that have been ineffectual at best and damaging at worst.

Mr. Murray is the W.H. Brady Scholar at the American Enterprise Institute. This is the first in a three-part series, concluding on Thursday.

terça-feira, janeiro 09, 2007

175) Sobre a Russia, a mesma velha Russia de sempre...

Reflections from Europe
Russia Hopping Along on Clay Feet
Anthony de Jasay*
EconLib, January 8, 2007

Fast growth and price controls, glory and misery, ambition and sloth do not mix well. Russia is relapsing into its old ways.

The first half or so of Vladimir Putin's presidency started to look as if Russia were embarking on its history's third great attempt at becoming a "normal country" with a middle class filling the vacuum between her thin ruling elite (if "elite" is the fitting word) and her mostly miserable, passive masses, and with the benign consequences of such a structure for the country's stability, prosperity and good-neighbourly conduct. This column, under the timidly hopeful title of "Third Time Lucky" (5 April 2004), speculated that after the liberation of the serfs in the 1860s and the Stolypin reforms of the 1900s, both of which ended in miscarriages that seem so typical of Russia, the Putin experiment might turn out to be the one that defies and lifts the old curse that sits on the country. Privatisation of more than 60 per cent of non-farm production seemed to have passed the point of no return that would be followed by an irreversible loosening of the government's grip on the economy, on people's livelihoods and hence also on their political obedience. It is now clear that this was a false hope.

Anatoly Chubais, the privatisation tsar under Boris Yeltsin, held that it did not much matter who got hold of state assets and by what corrupt manoeuvres. The important thing was to get the greatest possible volume of state property into private hands as fast as possible before the political climate changed and further privatisation was stopped. He thought that there might be no time to arrange for a wide distribution of state property and for thus laying the foundations of a property-owning middle class of small shareholders and small entrepreneurs. The result was that many, probably a majority, of state enterprises were simply stolen by their previous "red directors" and wheeler-dealer insiders, creating some astronomical fortunes out of thin air. But unlike Schumpeter's "private fortresses" (the great business empires that acted as counterweights to the state), these concentrations of wealth depended to no small extent on the Kremlin's grace and favour, if only because their illegitimate origin gave the authorities some hold over them. The fate of Mr. Khodorkovsky, now in an obscure Siberian prison, and his giant oil company Yukos, driven into bankruptcy by bizarre tax claims, was a shrill warning signal to the other "oligarchs" to very closely heed Mr. Putin's wishes. By all accounts, they now do. And are repaid with favours.

Ambition and Squalor

Mr. Putin rose from middle-level provincial KGB officer in occupied East Germany to all-powerful president, reputedly as part of a complex and secret deal between his secret service and military backers and the Yeltsin family. The deal has supposedly secured immunity for Mr. Yeltsin's daughter Tatiana for amassing a fortune by unorthodox means. His elevated role fitted President Putin like a glove. He soon perceived that the common Russian's and his wife's desire for normalcy, an end to queuing, more variety, less drabness, a modicum of free speech and foreign travel was really not their first priority. He did satisfy it to a limited extent, though in time-honoured Potemkin for-show fashion the effect was mainly confined to central Moscow shop windows, with the provinces and in particular the villages getting little uplift from their Soviet-era squalor.

However, the real priority of the Russian people has proved to be the restoration of their pride in holy Russia, her greatness and virtue. They did not want it to be like "any normal country"; they wanted it to be unlike any other, once again a colossus feared by its adversaries and admired by the rest. The deep humiliation of the failed Soviet experiment, the bitter insult of the Baltic states, the Ukraine, Georgia, Azerbeijan, Kazakhstan and some smaller fry all rushing to shake off Moscow's rule the weakness of the Yeltsin years, the shame of the 1998 financial collapse, left deep wounds in Russian self-respect. The first priority of politics became to reassert Russian might. It is proving a stretch to do it with inadequate means.

In the service of this ambition, incipient democracy is now giving way to barely veiled dictatorship and covert re-nationalisation of what they call "strategic" resources. Such liberal economists as Greef and Ilianorov who had directed much of economic policy until recently, have little or no influence left and the winner of the 2008 presidential elections, reputedly already chosen by Mr.Putin, is likely to be an army Marshal.

Clay Feet Showing

The perception in the West is that Russia is advancing by leaps and bounds. To a critical eye, the advance is more like hopping along on clay feet. Admittedly, economic growth is proceeding fast at about 6 per cent p.a. and has done so since 2000. However, some of this growth is clearly a catching-up after the shrinking during the 1990s. More sobering, though, is that once past the catching-up phase, little or no growth might have occurred if the oil price had stayed at its turn-of-the-century levels. Now, with $60 a barrel, oil money is pouring in and sloshing around the economy, forcing up prices and wages (the latter at a hardly sustainable rate of the order of 15 per cent p.a. for industrial wages), sucking in imports and making non-oil exports uncompetitive. Oil slipping back to $40 or less a barrel would be a nightmare scenario for Russia.

Another weakness, this time actual and not just potential, is the severely strained power generating capacity. Present capacity is 150 gigawatts, still below its Soviet-era peak. This is wholly inadequate. Many industrial companies are now rationed, and in Moscow no new consumer may be connected to the power grid, which has led to new housing being connected in exchange for fabulous bribes.

The root cause is not so much the typical Russian vice of careless, slothful maintenance, but rather the equally typical waste of power brought about by low state-controlled tariffs. The giant state-owned power utility UES which controls 70 per cent of all generating capacity needs to install 23 gigawatts of new generating capacity by 2010 to meet demand and needs $83 billion to do it. It has neither the money nor the extra supply of natural gas to fuel the new power stations if it contrives to build them. Ironically, it is money and natural gas that Russia is supposed to have most of. The key reason is price control. Controlled prices in most provinces are either just below or just above break-even for "social reasons." De-control is promised, but comes slowly. In 2007, only an extra 5 per cent of power consumption will be de-controlled. Meanwhile, UES is seeking investment from abroad. In 2007, it plans to float between 5 and 10 of its constituent companies on the admirably patient and tolerant London Stock Exchange, raising $10 billion. Even that much would not begin to ward off the looming power shortage.

A word needs also to be said about the clay feet of the much-feared giant Gazprom. It is alternating between assurances to Western Europe about how reliable it will be as its principal supplier of natural gas, and flexing its muscles and threatening to restrict supplies if it gets no direct access to the retail market that is more remunerative than bulk contracts. At home, however, it must sell gas at small fractions of export prices, starving itself of investment funds. Consumption at these controlled prices is appallingly wasteful and rising fast. Pipelines are decrepit, poorly maintained and leaking badly (as do most of the oil pipelines). Gazprom has a monopoly of gas pipelines and exports from Russia, and is categorically refusing European demands to relax it.

Perhaps even more ominous than the rickety economic infrastructure is the biological future of the Russian people itself. Life expectancy, rising virtually everywhere else in the world, has fallen drastically in Russia. The population is already decreasing and a further and faster decline in the next two decades is written into the demographic statistics. Moreover, public health outside select spots is worthy of some poor third world country.

In this as in so much else, Russia conceals what the now happily defunct Marxist language used to call "internal contradictions" behind a bold front of sham greatness.

* Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State (Oxford, 1985), Social Contract, Free Ride (Oxford 1989) and Against Politics (London,1997). His latest book, Justice and Its Surroundings, was published by Liberty Fund in the summer of 2002.

The State is also available online on this website.

For more articles by Anthony de Jasay, see the Archive.
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