Rotten Railways

TzRu_CommuterTrain.jpgOne interesting correlative of recent Russian and American history tends to go unnoticed: both countries are plagued by woefully inadequate national infrastructure networks. But in the wake of the financial crisis, Russia seems to be shelving its $1 trillion plan to upgrade national infrastructure, while Obama’s stimulus package provides $50 billion for such developments, a modest number compared to Roosevelt’s new deal, but, says the Council on Foreign Relations in a recent report, “a step in the right direction.”

In any event, what’s interesting about this disparity is the antipathy of many Russian bankers and economists to this Western model of investment. Today in Forbes, the head of state-owned Russian Railways, Vladimir Yakunin, is left scratching his head at the idea that the country’s railways should be allowed to fall further into disrepair, as a hedge against inflation.

“The approach of these financial experts is puzzling to us. Investment in infrastructure cannot cause inflation. It should be viewed as an instrument to avert the crisis, as a way of creating GDP growth, new jobs and a basis for future growth.”