Here are some simple lessons on how to grow your economy from a country that essentially has no dog in the Republican/Democrat fight:
…Mr Medvedev laid out a series of new initiatives that aim to boost its attractiveness as an investment destination. “Russia needs a real investment boom”, in order to achieve its modernisation goals, he said.
Contrast that with the attitude in the USA that investment is dangerous, unequal and untrustworthy.
To stimulate that, Mr Medvedev announced Moscow would introduce zero taxation on capital gains for companies working on long-term investments starting from January next year and said Russia was improving the legal system to provide better protection for businesses against the long arm of bureaucracy.
Are you aware that Obama is trying to do the opposite, raise investment taxes to reduce business investment?
He added Russia had already simplified migration procedures to help attract “highly-qualified specialists” working in investment and high-tech sectors into the country.
Here in the USA we are trying to attract the lowest echelon of labor.
Responding to criticism that Russia’s approach to building an innovation economy was driven from the top down and state interference could hinder development, Mr Medvedev said the state would concentrate its efforts on fostering a good business climate. “No matter how many state-owned companies we have, modernization will happen, above all, through private business…”
Again contrast that with the climate here in the USA where modernization is expected to occur best under the direction of administration appointees.
Mr Medvedev said he was cutting the list of strategic enterprises five fold in order to reduce the role of the state in the economy and foster more private initiatives.
Interesting. Here in the USA we are trying to expand the reach of government appointees into private initiatives, especially “green technology” at the expense of all other business.
http://www.ft.com/cms/s/0/81a0…
kbusch says
Russia’s economy is so much better than our own, too, right?
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p>Well, it isn’t. So I don’t know what “lesson” we are to derive from Mr. Medvedev’s policy decisions.
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p>That we’d all be happier under a corrupt oligarchy?
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p>That crony capitalism is better than its reputation?
mr-lynne says
… imagine the most perfectly desirable place for an investor to invest in, what would it look like? Little or no regulation? A taxpayer base willing to accept any externality business want’s to offload?
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p>The irony of course is that these things that investors would love eventually undercut economic progress. GDP growth works best with a strong middle class that isn’t undercut with the taxpayer burdens of when the risks associated with externalities like addressing oil spills, acid rain, and such. Also, the circumstances that foster cheap labor also lead to wealth stratification.
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p>The truth is that investors don’t really know what’s good for them because the limitations put on them actually help strengthen the society they invest in and a lot of what investors really want eventually undercut the society and it winds up hurting the investor as a secondary effect.
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p>The problem is that its all competitive. So if you can unload an externality that your competitor can’t, your at an advantage. Once everyone tries to get an edge up this way, it turns into a perverse sort of anti-collective action problem… exactly the kind of collective action problem that would be well addressed by regulation.
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p>At some point we need to wake up from the 80’s and realize that while businesses certainly exist toward their own ends, society can encourage/tolerate/foster/regulate them toward its own ends. If we continue to enact rules as if business were intrinsic goods rather than instrumental goods, we’ll keep enacting the rules that the business community wants rather than the rules the business community needs, because ultimately business instincts are self defeating… and understand that we really do know this because if they weren’t there would never be a such thing as a bubble. Imagine if we were more of a ‘business paradise’.
seascraper says
It just shows that certain geographies are so desperate that they are willing to do the right thing sometimes.
kbusch says
This is circular reasoning. You’re celebrating policies the liberals here think are bad. If you think the liberals here are wrong, you have to prove to us why these policies are the “right thing”. As it is, you’ve actually given negative evidence. The endorsement of the oligarchic Russian leadership is not going to convince liberals — it shouldn’t even sway conservatives.
mizjones says
The history of the US income tax rates between 1945 and the late 1960s contradicts the assertion that taxes on the rich must be low in order to encourage investment. That period experienced explosive growth in the GDP and in the average standard of living. During that time, income tax rates for the very rich were much higher than they have been since. Capital gains taxes were also higher than they were after the Bush tax cuts.
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p>Some of the investment that produced this explosive growth was made by the government in the form of infrastructure.
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p>Conservatives have argued for tax cuts regardless of the state of the economy. If the Bush tax cuts were that wonderful, I would expect our economy to be booming by now.
seascraper says
The rates were high but hardly anybody paid them, because the bracket was so high.
kathy says
That would certainly bolster your argument.
kirth says
From this asertion, I conclude that you are totally unacquainted with our immigration policies. I’m not talking about The Illegal Alien Menace®, but the legal requirements for say, someone from China to get a work visa.
sabutai says
Obviously, the ideal investment locale is Somalia, which is free of that trademark chocking regulation we see in Russia.
edgarthearmenian says
in Peter, you would have noticed the constrained smirks of many of the ruling oligarchy in attendance. Medvedyev may indeed be sincere, but those tax free capital gains are unlikely to make up for the bribes that will be necessary to set up the business and take care of everyone (from police to the courts, from the cartels to the mafia bosses) who is looking for a free handout. And don’t think that the Germans, French, Italians et.al. are not quite aware of this situation. In short, if you want to piss away your money in Russia be my guest.
marcus-graly says
“Contrast that with the attitude in the USA that investment is dangerous, unequal and untrustworthy.”
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p>Where in the world did you get this idea? The USA is the world’s leading recipient of direct foreign investment and has been for a long time. Developing markets may be attractive for a certain type of investor, but overwhelming foreign capital flows into developed economies and into the United States more than anywhere else.
seascraper says
Your friend a few comments up said that investors don’t know what is good. That means he is unwilling to trust investors and would rather put power to decide in the hands of regulators.
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p>I agree that the USA has had an attractive investment climate however it is not set in stone that this will be the case forever. These things can turn quickly.
kbusch says
My, are we indirect — and a bit presumptuous. I have no idea whether Marcus Graly and Mr. Lynne are friends.
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p>I think you’re misreading Mr. Lynne’s point. In fact, it’s not unusual for some industries to seek out regulation to protect them from themselves. Think about drugs. Each pharmaceutical company would like the FDA to overlook adverse effects associated with its compounds. However, if the FDA did that for everyone, no one would trust drugs. The market would collapse and we’d go back to snake oil and traditional herbal recipes.
centralmassdad says
to establish the enforceability of simple contracts before it worries about capital gains taxes.
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p>Do you really expect anyone to invest, attractive capital gains rates notwithstanding, when any investment could be expropriated at any time without recourse?