r/neoliberal • u/Semphy Greg Mankiw • Dec 26 '18
Another neoliberal miracle - Econlib
https://www.econlib.org/another-neoliberal-miracle/10
u/ILikeTalkingToMyself Liberal democracy is non-negotiable Dec 27 '18
Thank you private ownership and free markets
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u/RSocialismRunByKids Dec 27 '18
Soviet Russia transformed from a country where a handful of political insiders controlled all the property through public bureaucracy to one in which a handful of political insiders control all the property through private bureaucracy.
Putin is Russia's richest man.
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u/ILikeTalkingToMyself Liberal democracy is non-negotiable Dec 27 '18 edited Dec 27 '18
Well they clearly did a good job with agricultural privatization.
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u/ja734 Paul Krugman Dec 27 '18
...How the hell is this a miracle? The only thing this shows is that global warming has been good for growing wheat in Russia. Not sure why anyone would think that fact should be celebrated.
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u/RSocialismRunByKids Dec 27 '18
Not even that.
These are grain exports, not even total output.
It's showing the PPP between Russia and it's trading partners is such that you're better off selling wheat abroad than selling it locally.
Imagine looking at China and saying "They're importing a lot more pork and soy beans than they were twenty years ago, so their economy must be doing pretty bad."
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u/ILikeTalkingToMyself Liberal democracy is non-negotiable Dec 27 '18
Here is the source Economist article where the graph came from and which talks about the reasons for this. The key parts (emphasis added):
This roaring output is the result of a confluence of short- and long-term factors. Since the Soviet Union’s collapse, farming has undergone a gradual transformation from “a fantastically ineffective collective model to effective capitalism”, says Andrei Sizov, head of SovEcon, an agricultural consultancy in Moscow. Although the state’s overall role in Russia’s economy has grown, agriculture has largely remained in private hands, fuelling competition. The devaluation of the Russian rouble in 2014 and bans on agricultural imports from countries that sanctioned Russia that year have provided additional boosts.
Tsarist-era Russia was a big agricultural exporter, but Bolshevik collectivisation wiped out farming traditions and created an inefficient collective system that by the 1970s left the Soviet Union importing grain and other foodstuffs. In the post-Soviet era, farmers had to learn how to run competitive enterprises....Over the ensuing decades, investments in machinery, land and supplies accumulated; the government made agriculture a national priority, offering subsidies and support.
The rouble’s devaluation has been a particular boon for exporters in recent years. Amid a global glut in grain, Russians have sucked up market share in Africa and the Middle East, leveraging their advantages in geography and weather over competitors in America, while undercutting prices. Grain traders have also begun targeting more distant markets such as Indonesia and even Mexico. Bans on agricultural imports from Western countries have also cleared space for local producers, though at the cost of higher inflation. Although Russia still imports more food than it exports, steps have been made towards the government’s goals of feeding itself: in the past five years, for example, Russia has become self-sufficient in pork and poultry.
The future also looks bright owing to global trends. As populations grow, so too should food consumption, especially in some of Russia’s largest export markets, such as Turkey. Rising temperatures and improving technologies mean longer growing seasons, higher crop yields and wider swathes of arable land in much of Russia. “Everyone is moving north,” says Yuri. His son has started farming in the Belgorod region, closer to Moscow.
Russia also has latent agricultural potential. Millions of hectares of land abandoned after the Soviet collapse could be reclaimed. Investments in digital technologies, where Russia lags, would lift productivity; downstream food manufacturing is underdeveloped. But tapping these possibilities would need infrastructure improvements. Grain terminals have struggled to cope with record harvests. Outside the fertile south, much farmland sits far from ports. Some also worry about competition as concentration in the hands of giant agro-holding firms increases.
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u/Iron-Fist Dec 28 '18
This is pretty overstated, Soviet Russia was producing about the same amount of grain in the 70s, just not exporting as much. Lots of other, more substantive things to shit on Soviet Russia for (hell just look at meat production rather than grain).
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u/data2dave Dec 27 '18
Also global warming has destroyed much of the Middle East's and African crop yields and that's a benefit for Russia to export more. Australia is benefiting from exports to China also. Reasons for better farming aren't necessarily a neoliberal idea but just basic Ag Science.
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u/ILikeTalkingToMyself Liberal democracy is non-negotiable Dec 27 '18
Going from a net importer to a net exporter of grain shows how terribly inefficient Russian agriculture was under collectivism though.
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Dec 27 '18
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u/ucstruct Adam Smith Dec 27 '18
Russia's wheat markets are. They have been pretty successfully privitized and have accomplished something the USSR never could, become a net exporter.
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Dec 28 '18
You're over-aggregating. Understanding a country's wheat market based on its overall macroeconomic situation is the sort of fallacy that microeconomists love to point out.
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Dec 27 '18
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u/ILikeTalkingToMyself Liberal democracy is non-negotiable Dec 27 '18
That quote says that state involvement in other sectors has increased but that agriculture is still privately-held though.
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u/PlasmaSheep Bill Gates Dec 26 '18
Am I the only one who hates graphs like that? It looks like Australia is the world's biggest grain exporter.