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Lecturing on Economics

From Seeking Alpha:

We’ve just got ourselves a new economic teacher: Russian Prime Minister, nee President, Vladimir Putin. In his Davos speech he called on others not to allow too much government intervention into business, not to fall into protectionism, and a lot of other smart things. Other things were not that smart. For example the idea to have more reserve currencies and to make reserve currencies issuers accountable to other countries. Yeah, right. Putin has been talking for 3 years about making the ruble a reserve currency. He just doesn’t understand that you can’t appoint reserve currency, it becomes such in decades, if not hundreds of years. In all of history there were just a handful world reserve currencies: Roman, then Byzantine denarius, Venetian lira, English pound, US dollar. Maybe I missed one or two. Th yen and the euro both are gradually becoming reserve currencies now, but the jury is still out.

But the main thing is: Russia has just set huge tariffs for imported cars. So much for talking about the threat of protectionism. As for government intervention in business, Russia is a champion. Any businessman in Russia knows that whatever the government wants from him, it gets. Many give money, shares in their business, even abandon businesses to the government without a fight. Nobody wants to follow the steps of Khodorkovsky, who founded the best oil company in the country, was robbed of everything and sent to prison on fabricated charges. Niall Fergusson is absolutely right: “The idea of the Russians lecturing the West about how to run the economy is absurd,”

Of course, the best judge of economic ideas is the market. And what does Mr. Market tell us? The ruble fell another 3.5% against dollar on Friday.