Russia's Trek, The Next Generation

You know, your post reminded me of a documentary I watched a few years ago. It was an hour special (I believe on one of the Discovery Channels, back when I had 800 to choose from); and it was a fascinating look at the "new frontier" that is the Russian economic landscape. It followed a young, married entrepreneur named "Yuri." He spent the years after the fall as many of his contemporaries did (read: 20-something wild eyed go-getters) scratching and clawing his way into one enterprise after another. The focus of this piece was the "wild-cattter", Old West mentality of staking out your claim now prevelant in Russia, particularly Moscow. And that's exactly the impression one got watching this. A pharmaceutical plant manager under the Soviets went around to the workers after the demise of his government and got their signatures to petition his purchase of the plant. In 10 months he went from the manager, to owner, to billionaire. Same with Yuri, on a lesser scale. He had A rental car business, a personal security service and a real estate store front which was his primary focus. Let me just pause for a second, about his security service. The economic culture at present is one fraught with real and present physical risk. As an up and coming man of business in Moscow you must be prepared to carry a gun, or hire a man whom does. Estimates put the level of GDP that passes through "Red Fella" (Russian mafia) hands as high as 40% - a staggering figure. But even short of actual gangsters, your plain old business rival does not exclude the prospect of physical intimidation if you're encroaching on his market - again, think about the scene from Far And Away in which they all raced to claim their stake, and the well known ranch wars that ensued. The ranchers, rustlers, et al weren't exactly criminals by profession, but they could wield a gun and bury a body if business dictated. Get my meaning?

The pharmaceutical billionaire was being pursued by Yuri, he wanted to be his real estate broker. They went to this guy's current residence and did a tour - "MTV Cribs", eat your heart out. This guy is an NBA nut. He built at the center of his home a regulation basketball court, and (now get this), each of the palatial bedrooms, dining rooms, etc were accessible as the primary entrance, court side! Ha! While his taste was questionable (including the massive portrait of him wrestling a bull to the ground, nude, in his office), the gold mine he would be to Yuri was not. And the transactions for a home purchase there was something out a KGB Intel drop. 80% (at the time of this documentary) of Moscovite homes are purchased in cash. Third party reps such as Yuri meet third party reps of the seller, cash is exchanged in paper bags. I guess after 72 years of the terror of communism you tend not to trust the government to know what you're buying and for how much.

Now I mention all of this because while watching I understood Putin a bit more. He created a business friendly atmosphere not necessarily because he believes in free markets (although he may), but rather this is what his population was demanding - "We want to get rich, get out of our way." And he did, at least economically (assuming you aren't a political rival, ahem). Soon after assuming control he restructured the massively bureaucratic tax code, making it a simple 10% flat tax. While Bush was talking "compassionate conservatism" Putin was practicing plain ol' conservatism - I'll let you guess which I prefer. In one year revenues to the Russian Treasury doubled, and for two reasons. People were less apt to hide their money after knowing they would be liable for a single, simple, fixed amount; and the new lower rate spurred economic growth. When combined with the "go West young man" mentality prevalent among Russia's ambitious, first generation of practicing "free-marketeers", you get what's described in your last post - capitalists with balls.

Much like you though I am very concerned this could rapidly morph into a "we need breathing room" foreign policy.