. Last Updated: 07/27/2016

Look to the Last Century for Economic Advice

In response to "Russia's Great Economic Boom," by Simon Baker, concerning the spurt of economic growth Russia experienced in the 1890s under Finance Minister Sergei Witte.





Editor:


Baker neglected a better lesson in Russia's economic history: tax reform in the early 1880s, before Witte came to power. Russia's economy had begun to boom in the mid-1880s thanks to Finance Minister Nikolai Bunge's tax reductions. By overturning Bunge's reforms, successors like Witte, exacerbated deficit pressures and fed social unrest.


Before Bunge became minister in 1881, Russia was an economic basket case. When he left in 1886, industrial growth rates and foreign trade were gaining by leaps on bounds. Bunge's main achievement, according to economic historians, was in greatly reducing the tax burden on a section of society which had often been ignored by the ruling elite: the peasants. In Bunge's view, this would best serve the interests of the country by making peasants better producers of crops and wealth, as well as more active consumers. At the same time, Bunge tried to keep spending in check by fighting the War, Navy and Transport Departments, each clamoring for increasing appropriations.


Bunge's successor, Vyshnegradsky, was bent on creating budget surpluses -- and took it out on the peasants, by raising taxes on consumption and imports. The industrial production rate, which had risen rapidly during Bunge's final three years as minister, fell in 1888. "Let us starve but export," Vyshnegradsky maintained. (The flavor of this remark was recently echoed by the Russian Federal Bankruptcy Department's Pyotr Karpov. In reply to oil companies arguing that their tax burdens, which can total 90 percent or more of revenues, are too high, Karpov huffed, "When oil workers are dressed in rags, the government may think about some tax exemptions.")


The experience of the Russian economy in the 1880s suggests that, rather than trying to achieve deficit targets by putting an ever tighter squeeze on the people, the government would do well to free the investment resources needed to develop Russia's infrastructure. Government revenues depend most on whether an economy is growing -- and this is usually best achieved not by public decree, but by private initiative.


Alexis Zarechnak


Templeton International


Moscow


Patriotic MBAs


In response to "Brain Drain: Youths Shun Russia for Life in West," by Carol Williams, L.A. Times.


Editor:


I work on a university campus and talk to Russian business students all the time about their experiences abroad. Interestingly, while most enjoyed their study in the West, they prefer Russia.


No doubt many young people with money are going to the West for a quality education. There are some very good business schools appearing here, but not enough to handle this new profession. Still, if a reporter is to get the story right, all sides of the equation should be explored. Believe me, not all young people all looking for a ticket out of here.


Jim Vail


Morozov Project


Moscow





Dear President Yeltsin


The Committee to Protect Journalists (CPJ) condemns the killing of Oleg Slabynko, producer of the Russian Television talk show, "Moment of Truth."


The murder of Mr. Slabynko follows a number of similar murders of Russian journalists in the last year. On Dec. 27, 1995, Vadim Alferyev, a crime reporter in Krasnoyarsk, was beaten to death at the entrance to his apartment building. On March 1, 1995, Vladislav Listyev, the well-known executive director of the new public television station, ORT, was shot dead as he entered his block of flats. And on Feb. 17, 1995, Vyacheslav Rudnev, a freelance journalist in Kaluga who frequently wrote about organized crime, was found with a serious skull injury in the hallway of his apartment building. He died four days later. In 1994, world opinion was shocked by the murder of Dmitry Kholodov, an investigative reporter for Moskovsky Komsomolets.


Almost as disturbing as the murders themselves is the fact that none of them has been solved. A November 1995 fact-finding mission to Moscow by CPJ concluded that no serious effort to solve these crimes is being made. The failure to apprehend those responsible for the murder of journalists can only encourage further assassinations


William A. Orme, Jr.


Executive Director


Committee to Protect Journalists New York, NY