POLI SCI 106 1st Edition Lecture 15 Outline of Last Lecture 1. Cabinet2. Legislature3. Duma4. Federation Council5. Executive-Legislative Relations6. Judiciary7. Russia: Economic Transition8. Political Economy9. Soviet Economic System10. Three Types of Political Economy11. Key Elements of State InterventionOutline of Current Lecture - 1. Economic Policy Tools2. Key Problems: Laissez-Faire Market Economy3. Key Problems: Command Economy4. Key Problems: Mixed Economy5. Soviet Union to Russia: Transition from Command to Mixed Market Economy6. Putin's Russia7. Independent Media8. Other Worrisome Incidents9. Is Russia a Democracy?Current Lecture - Russia IIIEconomic Policy Tools -1) Fiscal Policy -- govt. spending policies to influence economy - includes policies regarding tax rates and govt. spending 2) Monetary Policy -- central bank actions that determine the money supply - used in various combinations to direct a country's economy (move out of econ. slump, prevent economy from overheating)Key Problems: Laissez-Faire Economy - These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- resource inequality, econ. hardship- ruthless competition - indifferent to hardships of the less fortunate- increasing income inequality- production for profit, not need- needs of disadvantaged are ignored- severe econ. cycles- severe swings between busts and booms- no state intervention to counteract or ease the cyclesKey Problems: Command Economy - - limited incentives for productivity- absence of competition hurts innovation, efficiency, work attitudes, quality of goods- unresponsive production- consumer demands matter little- oversupply of some goods, shortages of others- over-centralization and inflexibility- see all of aboveKey Problems: Mixed Economy - - experience problems from above, depending on "mixture" of free market and intervention- but problems less severe- mixed economies = norm in today's world- continuum to different degrees of free market and state interventionSoviet Union to Russia: Transition from Command to Mixed Market Economy - - 1992: economic stabilization program - "shock therapy"- govt. abolishes most controls on prices, raises taxes, cuts spending sharply- program seeks to create incentives for producers to raise output and productivity- goal not realized.. Result:-increase in prices - sharp sudden drop in purchasing power; huge increase in inequality; people go hungry; bank savings vanish; prolonged depression- some say all shock, no therapy- meanwhile... small number of "oligarchs" explicit situation to amass huge fortunes- firms with political connections win cheat credits and govt. contracts - dampens incentives for productivity- tremendous amounts of illicit activities- goals of privatization: spur productivity, move economy to private ownership- "Loans of shares" program - small group of entrepreneurs persuades govt. to auction off control of state-owned companies in return for loans- if govt. fails to repay with 1 year - shares go to banks that made the loans- not surprising: govt. defaults on loans- allows oligarchs to acquire ownership of some of Russia's largest and most valuable companies- outcome: greater success on paper than in reality- few benefits, most sufferPutin's Russia - - Putin rebuilds state power- describes 1990s as an anarchic, chaotic period - his own "controlled rule" = legitimate counterpoint- attacks power of the oligarchs- replaces regional government with presidential appointees (back to direct elections now,but strong controls on who can run)- neuters opposition - forcibly, by appropriating their programs- great centralization of power- Putin basically unchallenged due to political dominance and public approval- Foreign policy - restore Russia as major world power; secure Russia dominance in diaspora- Economic policy - high, sustained growth; strategic use of energy resources; control of strategically important sectors (esp. oil and gas)- domestic - preserve framework of democratic institutions but control exercise of power- Put molds the state structure to favor his power- sheds doubt on Russia's democratic principles- "managed/sovereign democracy"- integrate Russia into international economic realm, but maintain state control of polity and economy- strong state = unbroken chain of executive authority from executive downward- accountability runs to the center, not to citizenry or societyIndependent Media - - legal system used to suppress political oppression - including maneuvers against independent media-police harassment, criminal prosecution, bankruptcy proceedings- Result: most autonomous TV companies no longer independent - respected liberal newspapers shut down- signal to media establishment: Don't mess with KremlinOther Worrisome Incidents - - alleged assassination of critics- incarceration of critics- other human rights violated- interruptions of oil supplies to Belarus, Ukraine, Europe- increasing state control of major economic assets, even at detriment of foreign investmentIs Russia a Democracy?- ultimate test: is it possible to remove an incumbent president by a simple majority vote of Russia's citizens?- current situation suggests that this may not be the case- difficult to tell given Putin's