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Thursday, March 01, 2007

Russian Economics for Dummies (a/k/a Russophiles)

Certain Russophile bozos in the blogosphere, whose names are not even worth mentioning, are suggesting that a "strong rouble" and a "weak dollar" are "good for Russian self-esteem." This is one of the stupidest, most ignorant statements to issue from the blogosphere. So naturally, it comes from the Russophiles.

When the value of the US dollar falls against the Russian rouble, this means that US goods become cheaper for Russians to buy and Russian goods become more expensive for Americans to buy. Now, Americans already don't want Russian goods even when they are cheap, because everyone knows they suck. And Russians already want American goods (and Japanese, and German, etc.) because everyone knows they are better than Russian goods. So when the price of Russian goods goes up, those goods become lepers, and when the price of American goods goes down, they become irresistible.

The result? Far fewer Russian goods are purchased and far more American. Russian workers aren't needed, and their wages are reduced or they are fired. American workers are essential, so they are hired and given raises. Money flows out of Russia and into American hands. For this reason, it's official policy in Russia for the Kremlin to spend roubles to prop up the value of the dollar artificially. Ordinary Russians wouldn't know that, of course, because Russian TV doesn't tell them anything real about what the Kremlin is doing or why.

If the rouble were falling against the dollar, then the opposite would occur.

The only benefit to Russians of a rising rouble, other than presenting an opportunity to stoke the fires of their self-destructive, irrational, crudely ignorant, hate-mongering nationalism, is that they get to acquire more foreign goods. They get to have Levi's on their butts and Sonys in their living rooms and drive VWs. The cost of that acquisition is unemployment and depressed wages in a country where the average person already works for a pathetic $2.50 per hour. Real Russians should hate the sort of Russians who want to make this kind of exchange far more than any foreign enemy.

In other words, a rising rouble is a catastrophe for Russia, and anyone who is proud of the situation or encouraging it to continue is an enemy of Russia far for dangerous than any other kind.

And that's to say nothing, of course, of the possibility that Russians are right. Because if a falling dollar really were bad for America, then the entire global economy would be in jeopardy. If America's economy were to implode, it would drag the whole world right down with it, and Russia's feeble excuse for an economy would be one of the first to collapse. The fact that Russians would feel good about themselves because of that really does show how far they have to travel before they reach Rationality Island.

1 comment:

TinyTornado said...

well said. I know someone who threw all her money in a Russian bank during the crisis, because "the banks won't survive if we don't support them." When she lost everything I found it really difficult to feel sorry for her. Idealism and economics just don't mix most of the time.