The WEST, NATO, EU and the USA, has a strong security interests in the condition of Russia after Putin falls or dies.
The Russian state is designed for tyranny and it is unlikely that a democracy will appear. It is more likely that another tyrant will emerge unless the West takes action.
Actions should be on two fronts:
1. Financial support for the State and large scale private businesses with significant employees; and,
2. Insistence that the DUMA pass laws to protect the economic structure of the country. It will be difficult but it is necessary.
Here are the conditions and policies the DUMA must protect [www.miepa.net] :
GROUP 1: CRITICAL INTERNAL POLICIES
Economic policies in
Group 1 are policies critical to the well-being and security of the
nation-state. The policies in this group are a government's first priority.
Freedom from internal
control
Citizens are free from
positive or pro-active control by government agencies. They are free to move
about and engage in any activity that is not prohibited for good reason. This
freedom provides the maximum opportunity to create new enterprises and wealth.
Unfree citizens must obtain permission before undertaking any wealth creating
activity. Countries wherein citizens are free to move about at their own
discretion receive high marks.
Freedom of speech
Citizens are able to
express themselves freely without censorship or restriction. This freedom
provides potential entrepreneurs with maximum exposure to possible
opportunities. High marks to countries with no restrictions on speech or other
communication.
Effective, fair police
force
Citizens and enterprise
managers need freedom from fear of criminals; freedom from fear of crime
encourages maximum new enteprise creation.
A police force perceived
as fair by all members of a community allows all members to share a sense of
responsibility for the society's future. Minority citizens will be more likely
to start new enterprises if they feel they will be treated equally. Countries
receive high marks when the police force is efficient and fair.
Private property
Laws that protect
private property in conformance with local practices so that titles are
nationally recognized, instead of extra-legal titles that are recognized
locally only, create incentives for individuals to establish wealth creating
ventures, producing benefits for the entire economy. Countries where property
owning citizens and foreigners alike have clear and court protected rights
receive high scores, provided that all property (real, personal and
intellectual) is protected. See THE MYSTERY OF CAPITAL: WHY CAPITALISM TRIUMPHS
IN THE WEST AND FAILS EVERYWHERE ELSE, Hernando de Soto, Basic Books, 2000
Commercial banks
Commercial banks which
lend money to enterprises and in which most citizens leave their cash deposits
facilitate commercial activity and employment. Countries receive high marks
when the commercial banking system is sound and actively finances business
operations while limiting its activities in financial, non-business activities.
Communication systems
An extensive network of
communication facilities - telephone, TV, radio, FAX, newspapers, magazines,
computer networks and so forth - facilitates the introduction of new ideas and
business opportunities into a country. High scores are received when
communication facilities are ubiquitous.
Transportation
Good transportation
facilitates the movement of merchandise and people, thereby improving the
commercial activity of the country. All means are included: roads, rail, air,
and ship. All markets of the country should be available by at least two
transportation means. Countries receive high marks when all markets and
population centers are easily accessible to passenger and freight
transportation.
Education
Both the quality and
quantity of education is critical to wealth creation. All the schools and
universities in a country should prepare students to compete with students from
other countries as well as other students within the country. Most children
should receive an education sufficient to enable them to function in a modern
economy. Countries with high literacy rates, high percentages of children enrolled
in secondary schools and at University and whose Universities are world
renowned for excellence receive high marks.
Social Mobility
The ability of each
individual person in any group in society to advance in earning capacity is
critical to wealth creation; barriers to such advancement reduce the society's
capacity to create wealth. Jobs in all public sectors must be earned by ability
and not given to cronies. Additionally, the education system should provide
access by all persons to the tools needed by individuals from deprived
backgrounds to join the more elite classes.
Share of All Jobs in
Small Businesses
It is possible to use
the percentage or share of overall jobs in a national economy held by workers
in small businesses as an indicator of the openness of the economy to new
business creation. Small to Medium size Enterprises [SME's] are generally held
to be companies with fewer than 100 employees. Ideally, a country will have at
least half or 50% of all jobs held by employees in SME's. Data for the USA is
available from the U.S. Small Business Administration, Office of Advocacy,
based on data provided by the U.S. Census Bureau, Statistics of U.S. Business
and Non-employer Statistics.
GROUP 2: CRITICAL EXTERNAL POLICIES
Economic policies in
Group 2 are as critical to a country's well-being as the policies in Group 1.
An effective sovereign government manages its external policies as well as it
manages its internal policies.
Freedom from outside
control
Citizens of any country
should be free from control by any citizen or agency of any other country.
Countries wherein citizens are subject only to the laws of the home country
receive high marks.
Protection of Domestic
Enterprises
Countries which create
the most jobs, growth and wealth protect their domestic companies from foreign
competition with tariffs, quotas and other restrictions, while taking care to
enjoy the gains from trade wherever possible. [See Ian Fletcher, Free Trade
Doesn’t Work: What Should Replace it and Why; www.freetradedoesntwork.com for a
complete discussion.] The more effective countries create an industrial policy
- that is, they identify the industries they want to grow inside their country
and then encourage those industries - and then use trade policy to support it.
Foreign currency
transactions
Effective national
governments require that only the domestic currency is used as money in the
home country. All foreign currencies must be converted to domestic currency to
conduct business. This creates a single currency and enables the government's
fiscal and monetary policies to be effective. Countries in which all
transactions are conducted in the official, national currency receive high
scores.
Border control
Effective governments
have strong borders. The national government decides which persons and goods
shall enter and which shall not. Failure to control a country's borders leaves
the wealth creating process inside the country open to any disruption from
outside trends. Countries with effective control of smuggling in both directions
get high scores.
GROUP 3: IMPORTANT
INTERNAL POLICIES
Policies in this group
are almost as important to national security as are policies from the first
group.
Currency
Use of a single currency
as money throughout a country encourages commerce within the country. Use of
currencies issued by a variety of banks or other domestic bodies discourages
commerce. Use of a single currency allows the economic policies of the
sovereign government to have predictable effects. The difficulties are more
severe when one or more of the currencies preferred for commerce are foreign
currencies. Countries receive high marks when the only currency issued in the
country is the official, government approved currency.
Cultural, language
homogeneity
More wealth is created
among a population that shares common values, language and customs. Introducing
minority cultural groups increases the difficulty of conducting commerce and
raises the possibility of armed conflict. When minority groups remain
relatively small compared to the majority culture, wealth creation can
continue. The likelihood of problems increases when the cultural differences
are severe and when the various cultural groups are nearly equal in size. High
scores go to countries with cultural and language homogeneity.
There is absolutely no
justification here for any forced uniformity such as "ethnic
cleansing." Any such action is morally reprehensible on its face.
Countries with minority conflicts that remain peaceful create more wealth than
countries where ethnic conflicts become violent.
Political effectiveness
Good governments
recognize and solve problems. This improves the business climate when it
extends to all parts of the country, rather than remaining localized in the
major population centers. Countries wherein rural areas are governed as well as
urban areas create more wealth. High scores accrue to countries wherein the
political process does solve problems.
Institutional stability
Countries wherein most
organizations remain stable for many years create more wealth than those
countries where institutions change frequently. Countries with stable
governments, courts, schools, law enforcement and businesses receive high
scores.
Honest government
Good governments attract
leaders who truly wish to help their subjects while poor governments contain
functionaries who use their office for profit. Government leaders who work to
limit or eliminate corruption create high scores for their country.
Common laws
Good governments have
the same set of non-conflicting laws, justice and dispute resolution throughout
the population. Also, the administration and implementation of the legal system
is uniform in all parts of the country and for all parts of the population.
High scores result when the legal system is effective and when it is equally
fair in all parts of the country.
Central bank
Central banks are
required to manage the commercial banks in the country and the currency of the
country. These banks should be independent of political control and charged
with producing the most good for the economy in the long term. A country
receives a high score when the central bank manages the country's commercial
banks and monetary policy effectively and the central bank is independent of
political control.
Domestic budget
management
Good governments spend
as much money as they collect in taxes. Continuing or increasing budget
deficits indicate a weak government that caters to special interests. A
balanced domestic budget results in a high score for the country. However, if a
country attempts to reach zero inflation, it is likely that wealth creation
will be reduced; while inflation must be controlled, wise countries recognize
that zero inflation is impossible to achieve and allow limited inflation as an
incentive to job creation.
Government debt
Good governments manage
their debt to avoid any negative effect on economic growth. Debt paid to
foreigners is more of a drain on the economy than debt paid to citizens. It is
possible to manage debt to achieve a high credit rating while still producing a
negative force on the economy. Countries with total government debt as a low
percentage of GDP receive a high score. A country is considered excessively
indebted when the present value of its debt service exceeds 50 percent of its
GNP.
NOTE: Debt produces a
negative effect on the economy because debt service payments take money from
wealth creating activities. This is true even if the borrowed principal
produces wealth because the total repayment stream will be in excess of the
borrowed principal. While inflation reduces the economic cost of borrowed
money, inflation creates severe negative effects on the economy and borrowing
to finance budget deficits increases inflation. See CONCEPTUAL ECONOMICS.
Economic statistics
Accurate and plentiful
statistics produce increased awareness of business opportunities. Poor
statistics increase risk and reduce investment. High scores go to countries
where plentiful statistics are published, provided that independent observers
rate them as accurate.
Protection of public
health and safety
Good management of
waste, food inspection, infectious disease and other public health issues
increases wealth in a country. Countries receive high scores when their public
health statistics for indicators like infant mortality and tuberculosis
approach the highest world wide standards as collected by the UN.
High wage policies
Countries that encourage
high wages have larger domestic markets. Obviously, countries with high wage
policies must protect domestic workers from low wage foreign competition or the
positive effects of the high wage policies will be destroyed. Countries receive
high scores when most of the working people can afford to buy consumer goods
beyond basic living necessities.
Environmental protection
Countries that protect
their natural environment from harm preserve the value of their resources.
Countries which resolve conflicts between resource preservation and resource
development receive credit for sound policy making. Countries receive high
scores when they protect clean air, water and forests with effective
regulation.
GROUP 4: IMPORTANT
EXTERNAL POLICIES
This group of external
policies shares a high level of importance with the previous group.
Strong army
The national armed
forces should be strong enough to protect the country from armed attack by
likely hostile neighbors as well as from attack by revolutionaries or bandits
within its borders. Small countries do not require armed forces to protect them
from large countries; they rely on defense agreements with protector states
instead of diverting massive funds to military uses. Countries which have
sufficient armed force to protect the nation's borders from attack receive high
scores, provided that the cost of the forces is below one-third of the domestic
budget.
Foreign trade impact
Well managed countries
rely on foreign markets for a manageable share of their economic output. If
trade accounts for a majority of the nation's economy, the country is
vulnerable to outside forces. On the other hand, if trade accounts for almost
none of the country's economy then it is likely that the country will create
more wealth for its citizens by increasing foreign trade. Countries where the
total of imports and exports (foreign trade) is about one-third of the GDP
receive high scores.
Management of foreign
currency budget
Well managed countries
recognize that foreign currency surpluses and deficits have multiplied effects
on the economy because of the fractional reserve banking system; these
countries do not accumulate large surpluses or deficits of foreign currencies.
Either imbalance reduces the economy's strength. Countries receive high scores
when the combined balance of payments for goods, services and real capital
transfers is close to zero.
GROUP 5: BENEFICIAL
INTERNAL POLICIES
These policies benefit
wealth creation and national security although they are not essential.
Layers of collective
action
Countries with a wide
variety of collective enterprises develop a tradition of accomplishment and
leadership. Elected school boards, city councils and volunteer groups give many
people an emotional stake in the country's future and also provide a steady
supply of seasoned managers. Countries wherein there are many locally elected
bodies that are not dependent on the central government for funding or
appointed officials receive high scores.
Pro business climate
If the society places a
high value on business, then more people will consider enterprise leadership as
a career and more businesses will be created. When business persons enjoy high
social status and encouragement from the government the country receives a high
score.
Government enterprises
Government owned
businesses can contribute to the well being of a country, provided that they
are self-supporting. However, some governments establish and maintain
enterprises for other reasons; these enterprises destroy wealth when they
require government subsidies to continue. If the treasury pays few such
subsidies, the country receives a high score.
GROUP 6: BENEFICIAL
EXTERNAL POLICIES
These policies benefit
any country.
International security
agreements
Mutual aid treaties and
other agreements that increase a country's ability to counter an armed threat
help a country's security. Countries which enter such treaties to protect thier
domestic security from attack receive high marks when the treaties are
effective.
Protection of domestic
enterprises from government mandated costs
When any country imposes
costs on its domestic enterprises that are not uniformly imposed by other
countries, such as environmental taxes or worker safety regulations, those
companies will be at a cost disadvantage in the home market. Countries should
protect domestic companies from government imposed cost disadvantages.
Countries which impose tariffs to neutralize these costs receive high scores.
"©" copyright
1995, 1999, 2003, 2018 Mike P. McKeever
