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Sunday, November 03, 2019

Grabblerism is not capitalism

The Saker interviews economist Michael Hudson, whose answers underline the increasingly obvious fact that as bad as communism is for a nation, grabblerism is even worse for it:

The Saker: The US propaganda often claims that the three Baltic states are a true success, just like Poland is also supposed to be. Does this notion have a factual basis? Initially it did appear that these states were experiencing growth, but was that not mostly/entirely due to EU/IMF/US subsidies? Looking specifically at the three Baltic states, and especially Latvia, these were the “showcase” Soviet republics, with a high standard of living (at least compared to the other Soviet republics) and a lot of high-tech industries (including defense contracts). Could you please outline for us what truly happened to these economies following independence? How did they “reform” their economies going from an ex-Soviet one to the modern “liberal” one?

Michael Hudson: This is a trick question, because it all depends on what you mean by “success.”

The post-Soviet neoliberalism has been a great success for kleptocrats at the top. They gave themselves the public domain, from key industries to prime real estate. But the Balts largely let their Soviet industries collapse, making no effort to salvage or reorganize them.

Much of the problem, of course, was that all the linkages to Soviet-era industry were torn apart as the Soviet Union was disbanded. With their supplier and final markets closed down from Russia to Central Asia, the Baltic economies had to start afresh – with a very right-wing tax policy and no government help whatsoever, as the government itself had become privatized in the hands of former officials and grabitizers.

Lithuania was marginally better in having some industrial policy. EU and NATO accession in 2004, along with easy credit, kicked off property bubbles in the Baltics, largely inflated by Swedish banks that made a bonanza off these countries that lacked their own banks or public credit creation. The resulting 2008 crashes were the largest in the world as a percent of GDP, with Latvia suffering the world’s biggest contraction.

The neoliberal western advisors who took control of these economies – as if this was the only alternative to Soviet bureaucracy – imposed crushing austerity programs to restore macroeconomic “stability” meaning security of their land and infrastructure grabs. This was applauded by Europe’s bankers, who thought the Balts had discovered a workable recipe allowing austerity governments to retain power in a seeming democracy. These policies would have collapsed governments anywhere else, but the ability to emigrate, plus ethnic divisions against Russian speakers, allowed these governments to survive.

It’s a historically specific situation, but Europe’s bankers promote it as a generalized model. George Soros’s INET and his associated front institutions have been leaders in subsidizing this financialization-cum-grabitization. The result has been a massive exodus of prime working age people from Lithuania and Latvia. (Estonians simply commute to Finland.) Meanwhile, their economies are buoyed by foreign bank lending, which sends profits back to home countries and can be reversed at any time.

Politically, the neoliberal revolution also has been a success for U.S. Cold Warriors, who sent over native Balts from Georgetown and other universities to impose “free market” doctrine – that is, a market “free” of domestic regulation against theft of the public domain, against monopolies, against land taxes and other income taxes. The Baltic states, like most of the rest of the former Soviet Union, became the Wild East.

What was left to the Baltic countries was land and real estate. Their forests are being cut down to sell wood abroad. I describe all this in my book Killing the Host.

The Saker: After independence, the Baltic states had tried to cut as many ties with Russia as possible. This included building (rather silly looking) fences, to forcing the Russians to develop their ports on the Baltic, to shutting down large (or selling to foreign interests which then shut them down) and profitable factories (including a large nuclear plant I believe), etc. What has been the impact of this policy of “economic de-Sovietization” on the local economies?

Michael Hudson: Dissolution of the Soviet Union meant that Baltic countries lost their traditional markets, and had to shift their focus to Western Europe and, to some extent, Asia.... The Baltic states, especially Latvia, have lost about 30 percent of their population since the 1990s, especially those of working age. In Latvia, about 10 percent of the loss were Russians who exited shortly after independence. The other 20 percent have subsequently emigrated.

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44 Comments:

Blogger Mr.MantraMan November 03, 2019 8:11 AM  

Sounds like they are colonies. I did notice that by some miracle the "paperwork" Balts have up and left after given some incentive.

Blogger Stilicho November 03, 2019 8:32 AM  

Lend, ruin, repeat. It's the MO of the bankster locusts. How many of those Baltics from Georgetown were (((Baltics))) whose grandparents got run out of the country due to their bad behavior?

Blogger Damelon Brinn November 03, 2019 8:34 AM  

I remember when the Berlin Wall came down, and it was going to open all sorts of new economic opportunities. We were going to sell them blue jeans and a million other things. My brother and many others at his engineering school studied Russian, because they were going to need a lot of engineers to help them catch up on modern technology.

Then that....didn't happen. Some people went over there and made a lot of money, but it wasn't middle class American contractors or businessmen. Now the kleptocrats who did make money on the situation want to bring back the Cold War. Guess that means they think they've squeezed all they can out of the place--and maybe out of us too.

Blogger Lucas November 03, 2019 8:37 AM  

The same is happening here in Portugal. Our youths are leaving and the neo-liberal elite, joined with the usual leftists traitors, are importing low-skilled labor.

"Good thing" that we are a poor nation because plenty of those New Portuguese just leave.

Blogger Dave Dave November 03, 2019 8:50 AM  

Death to grabbler economics. I am reading Schumpeter and he points out a lot of grabbling in his dry humorous style. The sooner we learn that money does not and can not create value, the sooner we can save our nations.

Blogger Johnny November 03, 2019 9:07 AM  

Don't know about the Baltic states, but I know about Russia and Poland. Poland did reasonably well in the shift to a more capitalistic economy and the shift is regarded as a success. The same sort of policies produced something close to a disaster for Russian. For about ten years everything got worse, and they came close to failed state status.

Along with the economy doing poorly, the government owned everything and the massive grab was for all those assets. Essentially they got sold to corrupt interests for pennies on the dollar. The involvement of our experts was not an assist. They became just one more vulture group feeding on the carcass of the old USSR. If I remember correctly, the Harvard people were notably bad.

Blogger Brett baker November 03, 2019 9:27 AM  

Why do you think the establishment considers Putin as Stalin, but worse?

Blogger andrisf November 03, 2019 9:33 AM  

I live in Latvija, here is what happened in short
1)USSR collapsed, as for Baltic states and specifically Latvija the so called "national front" leaders who lead the so called independence movement were mostly ex communist party bureaucrats many of whom were working directly for USA or for USA via proxies.
2)What was the true motive behind separation from USSR for Baltic states. For typical citizen it was so called independence(so called, because same retards then in 2004 voted to join EU and lose independence once more), but average citizen was and mostly still is exceptionally stupid and they have no influence on anything whatsoever, for the "elites" mentioned in 1. point motivation was not the independence, as they were utterly dependent on foreign powers, the real motivation was BLATANT STUPID, SELF ENRICHMENT HERE AND NOW, with no regard for Latvians or their future.
3)What was motivation for USA and lets call it EU? It was decided that there has to be done 3 things first and foremost
a)Russian influence has to be nullified as fast as possible
b)Baltic states has to be destroyed economically, because greatest sin is competition
c)For that reason it was necessary to support most evil, stupid and immoral people from get go, which was done very successfully.
4)How were these points achieved - in Baltic states in stead of maintaining friendly relations with Russia, there was GREAT EFFORT to portray Russians as evil force, to stir up bad things that communists did, as if it was Russia of post 1991. that has done it and EVERY POSSIBLE EFFORT was made to destroy every possible relations between Russia and Baltic states, which resulted in economic destruction for Baltic states, especially Latvija as Russia simply did not want to do business with this kind of people, all factories in Latvija, which had great potential for Russian market, because quality/price was better then what west was ready to offer and all these products were already well known in Russia from USSR time, so market was ready to accept them, but it was all destroyed (privatized with purpose to cut it in to metal) and also Baltic states could have gotten cheap resources, ENDLESS cheap resources from Russia, that was also destroyed.
5)Then, after destruction of economy next step started - preparation for EU. Media was brainwashing idiots 24/7 that EU will give Latvija rivers of honey and money will be thrown at people from buckets, all that was lies, but idiots will be idiots and independence that was basically gifted to Latvija in 1991. was thrown away in 2004. by idiot majority who voted for EU.
6)Results - after Latvija became part of EU inevitable happened. ALL good, highly qualified workforce left to EU, Latvija lost about 1/3 of population, in single market foreign companies who get huge subsidies (for example German farmer gets in subsidies 5 - 7 times more then Latvian) out-competed locals, BUT even worse thing started to happen - foreign banks started to heat up property market and people were forced to (some due to real need, others due to utter stupidity) take INSANE loans to buy apartment that was starting to catch up with apartament prices of places like Germany and when the collapse happened banks grabbled so much from so many(i could write a book about ways they did it), EVEN MORE people left to work in western EU.
Simply put in 1989 in Latvija there were about 2.4 - 2.6 million people, NOW realistic numbers are somewhere around 1.3 - 1.4 and declining every year.
Basically only capital city Riga now has some sorts of economy, outside Riga it is just ruin.
Different question is that staying with Russia in USSR 2.0 was not an option either, because Russia is fucked as well, but at least they have endless resources and 145 million people, so they can recover unlike Latvians who will be extinct in about 100 - 150 years and to be fair they deserve it.

Blogger David Ray Milton November 03, 2019 9:33 AM  

Here are some shekels for hard time. I give more shekels for daughter to go to college, too. We discuss pay back later. This is a great offer I give you!

(Rubs hands)

Blogger Dave Dave November 03, 2019 9:53 AM  

The Baltic states suffer at the hands of the EU, which the Germans turned into a scam to exploit Europe. This is what happens when you fuck with Germany. They fuck you back, and all your neighbours, too. France really should have learned their lesson after fucking with Germany the last 3 times.

Blogger Stilicho November 03, 2019 9:54 AM  

I will modify my earlier statement: lend, loot, lease back. Usurers end up owning everything while extracting perpetual rent. Roast them on a pile of fiat currency.

Blogger ArviK November 03, 2019 9:58 AM  

Well I'm from Estonia. So i can tell you how switch from communism to capitalism was made.

1. After we got independence from USSR occupation (yeah that's right, occupation), state issued everyone so called privatisation vouchers. You could trade them in market for cash, for your apartment, or for state companies, that were sold to private sector. To explain who eventually got most of real estate and companies, you have to know how USSR had class system. There was privileged class called Nomenclature, that included party members, factory directors, secret police etc. That class had special cafeterias, hospitals, vacation homes, pensions etc. That system goes all the way back to Stalin, and some even think back to Lenin. And that class was better informed when switch to capitalism was made. So Joe Worker traded privatisation vouchers for bread and vodka, Nomenclature traded them for companies. Or later sold companies to foreigners.

2. Nothing of USSR heavy industry, except mineral resources, forest, was usable. USSR heavy industry sold its products inside USSR, so it never really felt any pressures from marketplace. It was not competative with other world. Its products were, well generally really bad. That's why most of it was abandoned.

3. After independence, we had period of about 8-10 years of immense wild-west capitalism, and also freedom, and also poverty. Most people remember that time as time of freedom and poverty. Murder rate was one of the highest in the world, if I'm not mistaken. But I don't get why foreigners feel bad for us for that period, it was better than life under USSR.

4. After 2008 crash we lost over 100 000 working people, who travelled to foreign countries for work. I remember number 24% of all workers being jobless, that number right now is 5%.

5. Compared to other ex-USSR countries we are a success. Capitalism made life better. That has been my experience, and experience of everyone i know in this country. Life under USSR was mind-numbing.

Blogger Dave Dave November 03, 2019 10:00 AM  

Usury isn't even necessary. Germany's euro is undervalued and everyone else's euro is overvalued. Germany abused exchange rates to turn a quarter of Europe effectively into slaves. Britain made the right choice keeping the pound.

Blogger Johnny November 03, 2019 10:08 AM  

>>Media was brainwashing idiots 24/7 that EU will give Latvija rivers of honey and money will be thrown at people from buckets,...

Except for the EU part, sounds like our politics just now. Always a strain of that disease, but we are becoming more sick than usual.

Then there is the great white hope, Trump. I am a backer because there is no viable second choice. Even allowing for continued success, I suspect his impact will be transitory.

Blogger furor kek tonicus ( yo dou spook speener? figh hive! ) November 03, 2019 10:09 AM  

7. Brett baker November 03, 2019 9:27 AM
Why do you think the establishment considers Putin as Stalin, but worse?



because Stalin only murdered goys.

Putin is interfering with the grabbling of the Grabblers.


5. Dave Dave November 03, 2019 8:50 AM
The sooner we learn that money does not and can not create value


i prefer "Wealth", but you're going the same direction.


8. andrisf November 03, 2019 9:33 AM
b)Baltic states has to be destroyed economically, because greatest sin is competition



if this were actually true, China would never have gotten Most Favored Nation trading status from the US.

8. andrisf November 03, 2019 9:33 AM
all factories in Latvija, which had great potential for Russian market, because quality/price was better then what west was ready to offer


price, probably.

quality? GTFOOH. the Soviet economies were notorious both for their low quality and inability to supply quantity.

Blogger andrisf November 03, 2019 10:12 AM  

@12
I do not know much about Estonia, but many things built in Latvija were PERFECT for Russia and ex USSR republics. They were cheap, had decent quality and were a recognized brand. We produced cars, radios, trains, even ships etc. I know FOR A FACT they could have been turned in to very profitable businesses and i know FOR A FACT that there was direct order not to allow it to happen.
Life in USSR was indeed mind numbing, yet let me ask you this, when you will have 100 000 Estonians left in Estonia will you still call it success? I am not sure, but i think demographic situation in Estonia is about as horrific as in Latvija if not worse, what happens when generation of people born in 1980s(most people ever born in history of Latvija and i suspect Estonia) retire?
As mind numbing as life was in USSR and trust me, i hated much of it, i argue that what we have now is much, much worse, we, the Baltic states still do not have all the insanity of western EU, but when it will come and it will, and when the demographic reality will hit, you will reconsider you position, i am sure.
USSR had to be reformed, but sadly it was not possible, because people at helm were either utterly corrupt and wanted to earn billions from collapse, or they were just too stupid to even understand what is happening and why.

Blogger Johnny November 03, 2019 10:14 AM  

Amazing the way governments can waste assets. They own everything and burn through it in ten years at discount prices, and often sold to corrupt interests.

If I could engage in a wish fantasy, the way it should have been done was to keep the economy going and retain government ownership. Next you sell off the assets at a rate that the market can adsorb, lets say two to four percent of the gross assets of the country sold every year, and favor domestic buyers. That is, you take one two generations to shift to a private ownership society. Finally, use the funds collected to keep down taxes.

Blogger bodenlose Schweinerei November 03, 2019 10:24 AM  

Latvians who will be extinct in about 100 - 150 years and to be fair they deserve it

Quitter.

Blogger ArviK November 03, 2019 10:25 AM  

andrisf i can feel your frustration, and i don't have good things to say about loosing workforce and industry. But i think future will be better.
We are too poor (no welfare) and too skeptical (ex-USSR) that Germany style insanity can take place here.
You will always have good neighbors in us.

Blogger Felis Concolor November 03, 2019 10:25 AM  

"Unfortunately for him, Fat Freddy Freekowtski's grandparents never told him WHY they were forced to leave their ancestral homelands."

Gilbert Shelton, "The Idiots Abroad."

Blogger Section 8A November 03, 2019 10:37 AM  

He had me at "grabitizers" and "grabitization".

Blogger sammibandit November 03, 2019 11:14 AM  

It wasn't a bloc country but was and is in it's own bloc with cousin countries. After communism Denmark went through a bank bail-in in the 90s. The way banking is set up there the government just took money out of accounts. People high up in banking knew about the bail-in before it happened and some managed to transfer their monies into luxury assets like Louis Vuitton that held their value reasonably well, or send monies abroad.

VD posts about DK sometimes so their current situation should be known around here. I don't live there but have ties there. Last I heard, Denmark and Norway are putting pressure on Sweden to keep it together. Historically this has happened before with Sweden being stupid so the results should be interesting.

Blogger spinoza November 03, 2019 11:49 AM  

There is undoubtedly a conspiracy between the assessors and the lending institutions. Both parties use historical examples of order out of chaos like these to replace the science of value with the science of opinion.
Corrupt assessors and their fictional models are one of the most critical components to the elitists’ zero interest ruse.

Blogger Esmar Tuek November 03, 2019 11:55 AM  

The town next to me is a third Portuguese. It must be bad in Portugal for your youth to move to Cornwall for jobs! Portuguese and Eastern European Emmets are OK though, could be worse, could be English

Blogger Gen. Kong November 03, 2019 12:43 PM  

Grabblerism (usury, corruption, looting, strip-mining, slavery, etc. - popularly described as "free-market capitalism" by the Gaslight Gazette) is one of the greatest of the healing arts. The healers were right there to heal the Baltics when the USSR slid beneath the oil slick. Wait till the healers start re-populating the places with Africans for the final cure for what ails them.....

Blogger ~a November 03, 2019 12:45 PM  

Some Lithuanian perspective, somewhat disjointed:

After the breakup with the USSR, during the privatization period, a reasonable portion (although this is somewhat anecdotal, second hand knowledge) of native Lithuanians who were not part of the elite managed to take part in the privatization - snag parts of companies or businesses that were rebuilt and are successful till today. Sure, huge chunk of people didn't realize what they could do, and like andrisf said, just got their pennies and didn't think any further.

What you may define as "wild west capitalism" could be defined as period of power by mafia, apparatchiks and corrupt police forces - lots of these newly "privatized" companies or assets were then racketeered to the ground, and you had to know someone from either of the groups to provide you with "roof" or "security". Luckily, Lithuania being a small country, even if you were not part of elite, there was a good chance that your brother's cousin would be a chief of police of some region that had favors owed by someone giving you trouble (or someone capable of making your troubles to go away). Some weak hands folding, some stripping of asets, some killings, etc, until everything settled down before around... 2000? We still had a reasonable chunk of industries surviving.

The EU... man, when I was young, I was so naive and liberal. I believed the lies, and wanted to be part of EU too. The funniest part - our population wasn't really voting in large numbers, and it was looking like the referendum will fail.... so to boost voting numbers, if you voted, you'd get a token. That token could then be exchanged, I'm not kidding - into chocolate, washing powder, or beer. How is that not a bribery / legal, I'm not sure.


We got rid of our own nuclear power plant because of EU pressure (I think it was "safety" ?), if I recall correctly. "Economic" parnership, yeah right.

We too lost a huge portion of people that emigrated to Norway, UK, Spain... but there's actually a silver lining - the majority of people that emigrated were the bottom of the barrel types. The people who sold their vote for the beer, the people we are ashamed of when we are traveling to foreign countries and we hear stories about Lithuanians.

The people that are still in Lithuania - good portion of them are either hardworking/stubborn types, or smart and often nationalistic. The western/liberal rot has taken over some of our younger generation, but he impact seems to be still somewhat limited by our older generation that maintain most of the power positions, and with us being somewhat downstream from US/western culture, our "millenial" generation is much younger and so far not well formed. So, no boomers, and there is hope that millenials will be quickly super-seeded by the shitlords.

An important export is now our IT/technology sector - people often live in Lithuania, but work either in in US/UK/etc. company branches, or remotely. From personal experience, we're probably the scary case of outsourcing - hungry for money, often better than western specialists, but still relatively cheap (80K-90K usd/year for a senior software engineer is a soft upper limit these days).

It's leading to some other problems (people who work in IT are almost their own caste - there's a wide separation in salaries / luxuries afforded compared to other specialties, when IT sector salaries are, on average, at least 2x higher than general population), but we do keep these people in Lithuania.

Property prices... yup, crazy fast rise/developments.

Aaand, something that keeps my hopes up - we're stupid in a sense where we are proud that our lives are usually quite hard. Since we are part of the EU, we had to accept our quota of refugees. We even had to provide them with better conditions than our own citizens get. All refugees left to other EU countries, because, quote, "it was too hard to make a living here".

Blogger Bernard Korzeniewicz November 03, 2019 1:00 PM  

from Poland.

Do not let the GNP full you.The source of Poland's success (or something around it) is its size and location. Till 2004 Poland was the Playground of old Russia structures, grabblers located in Berlin and in Izrael. 2004-2015 the main Polish export were the young men going to work to the old EU countries - and economy flopped (yup, gov stats we're falsified; I was there I saw the facts first hand). In 2015 DoS of the USA organised support for their Maidan puppets and gave the Polish election to our current ruling gruop... and the Izrael grablers understood they can not plan to evacuate Izrael to USA any longer.
Poland (under the unofficial "Polin") name is currently being invaded by former Izraelis. And they bring money inflating GNP but not the production - hence creeping inflation.

Blogger Azure Amaranthine November 03, 2019 2:06 PM  

Capitalism as a word originated as pejorative Socialist rhetoric.

Then unsurprisingly the same people who were the driving power behind socialism picked up and wore the term capitalism too. "Ah, we're just the exemplars of what has always been, capitalism!" The term didn't exist before 1850.

Two lies, each partly true, eternally at odds with each other. Choose your side.... and it'll be the wrong one. Binary with two lies. "Let's judge value off how many heads can be moved. Heads of beasts, heads of men, who cares. Both are heads." Cattle and chattel are derived from the same root word as capitalism.

People heard the term and that socialists and commies didn't like it and assumed it was therefore good, not realizing that it's just more subversive word wizardry.

Blogger Doktor Jeep November 03, 2019 2:21 PM  

It's a grabblers strategy to let capitalism get blamed for their usury and then be sneaking off with the big cartoon bags of money when the gulags start getting built.

Blogger DeepThought November 03, 2019 2:24 PM  

Globalism destroys nations

Blogger DeepThought November 03, 2019 2:33 PM  

@andrisf Reading your post about Latvia was depressing. I am truly saddened for your people.

It just shows you why divide and conquer works. 1/3 of the people are nationalists. 1/3 are neutral and will go with the majority. 1/3 will always follow the money.

Blogger LSWCHP November 03, 2019 3:22 PM  

The same thing is happening in Australia. The traitors at the top are replacing us with third world slum dwellers from India and China. It won't end well.

Blogger DourCdn November 03, 2019 3:48 PM  

Its a poor nation, but a rich government. The political and judicial elites oay themselves well, as is expected in a socialist run government. The people are nice and easy going, but the language is hard, the culture traditional but no oppotunity for economic and social mobility. Which is good since the EU distributed migrants soon leave for greener pastures.

Blogger Jim the Curmudgeon November 03, 2019 4:36 PM  

This comment has been removed by the author.

Blogger van helsing November 03, 2019 6:45 PM  

Grabblerism is not capitalism - but it is crony corporatism.

Blogger Boaty Bear November 04, 2019 1:15 AM  

Classic Wizardry of the Left [r]

"Crony Capitalism" as the foil for "Corporate Socialism"

Classic inversion, getting easier to translate these days.

UNITED Nations
European UNION
SAVE the Chilltren.
FRIENDS of the Earth
DEMOCRAT Party
REPUBLICAN Party
CONSERVATIVE Party
LABOUR Party
BBC

Hiding on Plain Sight.

(Maybe I am bilingual after all?)

Blogger Boaty Bear November 04, 2019 1:22 AM  

This comment has been removed by the author.

Blogger Boaty Bear November 04, 2019 1:24 AM  

This comment has been removed by the author.

Blogger Philippe M November 04, 2019 6:17 AM  

With all due respect, I have lived in Estonia for more than a decade and I don't see that Hudson is correct with respect to this country. Of course we have a lot of problems, but this is hardly a failed economy, quite the contrary.

Blogger sammibandit November 04, 2019 11:31 AM  

For those in Baltic countries already commented on, if you're comfortable would you mind commenting on the likelihood of your nations joining to the Nordic bloc? Specifically would joining the bloc mean more soverignty or less?

Blogger Unknown November 04, 2019 3:07 PM  

I am from Romania and I am astonished at how similar the situation of the Baltic states and it's post communist history is similar to my own country. It is almost exactly replicated. Is this a coincidence? Did the grabblers just applied this exact scenario to each individual East European country?

Blogger Daniel November 06, 2019 6:05 PM  

Argentina here. Hi high europeans descendants fleeing, while being invaded by africans and bolivians.
We are screwed

Blogger Daniel November 06, 2019 6:10 PM  

Sorry to read that.
They are just about to rape argentina now.
Lets hope we can recover

Blogger Daniel November 06, 2019 6:34 PM  

High IQ*

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