Government Mega-Projects vs. Opportunity and Private Initiative

“A slow, state-owned, ineffective and mostly non-market oriented company is, simply speaking, incapable of competing with SpaceX and other agile private space companies,” says Pavel Luzin, a space industry expert at Perm State University.

Moscow Times

Elon Musk, CEO of Tesla Motors Inc., introduces the Model X car at the company’s headquarters Tuesday, Sept. 29, 2015, in Fremont, Calif. (AP Photo/Marcio Jose Sanchez)

Opportunity vs. Mega Government: Alaska vs. Magadan; Musk vs. Russian Government Space Agency

Elon Musk’s small private space launch company is casting dark shadows over the mega-government approach of Russia. Musk’s family is concerned that Putin will order an assassination of Elon out of spite.

“My family fears Russia will assassinate me [first],” he [Elon Musk] told a Bloomberg reporter last year

… On April 9, just days before Russians celebrated the 55th anniversary of Yury Gagarin’s historic flight into space, SpaceX successfully landed one of its rockets on a barge in the Atlantic Ocean. It was a clear demonstration that Musk is on the verge of radically transforming the business of space exploration, an industry traditionally dominated by Russia. __ Moscow Times

A similar comparison can be made between the economic conditions of Alaska — once owned by Russia — and conditions in Magadan where Russia is still (for now) in control:

In both these places, the main economic activity involves extractive industries, but in Alaska, this is primarily for the American domestic market, while in Magadan it is for export. One product of this: per capita GDP in Alaska is more than 76,000 US dollars, while the same measure for Magadan is just over 10,000.

This difference and others related to it reflect the very different principles of development in the two places: “The eastern borderlands of Russia have always been subordinate to the logic of megaprojects while the distant territories of America were lands of opportunities and private initiative.”

One measure of this is the very different number of airports in the two places. In Russia’s Far Eastern Federal District, there are now only 91 airports, while in Alaska, there are 256 run by the government, about 300 private ones, and “almost 3,000” fields where private planes can land and take off.

That in turn reflects both the very different numbers of people who visit these regions from the outside and also differences in demography. “Over the past 25 years,” Inozemtsev points out, the number of residents of Magadan has fallen from 152,000 to 96,000 while in Anchorage alone, it has grown from 226,000 to 298,000.

The underlying reason for this decline in Russia’s borderlands is “the insane regulation of everything” by the center, he continues, something that can be seen even more clearly in the case of Kaliningrad at the other end of the Russian Federation which not only is developing less rapidly than the rest of the country but is in worse shape than it was before 1940. __ Russia Dying from Oppressive Hyper-Centralisation

Russia’s Borders at Risk Despite the Monomaniacal Emphasis on Defence over Opportunity

Finland

… for Russians in Moscow, “what is more important is not to develop territory but ‘to defend [the] country’ and therefore in Kaliningrad oblast almost 40 percent of the land is controlled by the defense ministry,” leaving little room for economic growth.

This same pattern can be seen on territories Moscow took from Finland in the 1940s and for exactly the same reason: Moscow’s control and its obsession with defense with than development. The standard of living in these places is today “on average six times lower than on the Finnish side of the border.” __ Opportunity vs. Megastate

But the people of Karelia are not content to sit in paralytic thrall to a corrupt Muscovy in decline. They want the same opportunities as their cousins in Finland proper, enjoy.

The people of Karelia are more interested in the development of political freedom than are most other regions of Russia, according to Rostislav Turovsky, an interest that arises not from concerns about defending a nation as in Tatarstan but rather from its location on the border of Europe and traditions extending back to Novgorod and a free peasantry.

… What Moscow’s governors are doing in the country’s regions and republics, Turovsky says, does not reflect any well-thought-out policy. Instead, they are acting in ways that they think Moscow will like, even though the center doesn’t always benefit from their actions and may even be the loser as a result of the tensions such gubernatorial moves provoke.
__ Karelia’s People Want Freedom

Time is not on Muscovy’s side. In the Caucasus, the threat of violent blowback is building as a result of Putin’s showcase photo-op pocket war in Syria.

As more and more fighters join the cause of globalized jihadi groups, most of all the self-declared Islamic State (ISIS), Moscow may find that it has only transformed and widened its war.

… Adding to the threat is the fear of blowback at home of previously dormant ISIS-inspired terrorist cells. This comes after a remarkable reduction of violence in Europe’s deadliest conflict since 2014. For two years in a row, the numbers of casualties in Russia’s North Caucasus insurgency have been halved each year. Security sector successes were partly responsible, but the insurgency was not entirely quashed, nor did the root causes of the anti-Russian upsurge in the region disappear.

Rather, a major ideological and operational transformation continues to change the nature of the insurgency, from an anti-Russian nationalist rebellion that emerged in the mid-1990s as part of the Chechen separatist movement, toward what its adherents saw as a regional jihadi project in the late 2000s and what today has become a global jihad under the leadership of the Islamic State.
___ http://www.worldpoliticsreview.com/articles/18466/russia-s-north-caucasus-insurgency-widens-as-isis-foothold-grows

While Putin whines about the Panama papers being an “anti-Russian plot,” he is shooting Muscovy’s wad on all fronts.

The more enlightened thinkers of the world understand that Russia was “born in fear” of invasion, and continues to wrap itself in the comforting furs of fear and national paranoia. In fact, the only reason Putin continues to be alive and nominally in charge of the Kremlin terror/murder state is that his propaganda meisters are able to strike a true chord of paranoid fear in the minds of most Russians, whose upbringing and education are insufficient to allow them to rise above quasi-serfdom.

Comparing Opportunity vs. Mega-State Thralldom

Comparing communist North Korea (friend of China and Russia) with capitalist South Korea (friend of the free world), a stark contrast emerges in economic, public health, political freedoms, and quality of life terms.

North Korea vs. South Korea
http://www.theguardian.com/world/datablog/2013/apr/08/south-korea-v-north-korea-compared

East Germany and West Germany likewise provided a relevant comparison of opportunity vs. mega-terror-state, prior to re-unification:

Household Income Comparison
http://qz.com/60481/why-the-former-east-germany-is-lagging-24-years-after-the-berlin-wall-came-down/

East Germany still lags behind the west, roughly 27 years after the fall of the wall.

With Putin’s Russia retreating into USSR terror-state form, a similar comparison might be made between Ukraine and Muscovy, should Ukraine ever slip the Russian terror noose. Russia is clearly in decline, and no one can predict what particular external or self-inflicted shock might topple Russia into the deepest hole from which escape is impossible. China is certainly interested in a large parcel of real estate east of the Urals.

Within the United States itself, Comparisons Between State Mega-Projects and Opportunity Enterprises are Instructive

The United States Postal Service has long been a laughingstock within the US, as a grand example of government incompetence — when compared with private enterprises which performed parallel functions.

The rise of the private space launch industries, and private space enterprise industries, will likely frame NASA in the same picture of incompetence as the USPS occupies.

Private prisons and private military organisations often demonstrate the same economic advantages that private garbage collection, and other private supply of critical infrastructure have demonstrated over centuries of comparison.

Opportunity Societies Tap Into the Human Desire to Get Ahead

Within opportunity societies, government taxation and regulation are kept to lower levels than in more centralised and typically corrupt societies. Civil and private organisations outside of government control arise naturally, as people express their rights to assemble and pursue common cause in their divergent plurality. This is not true in the hyper-central states, where the state controls (and limits) everything.

So it should come as no surprise that innovations — particularly disruptive innovations — take place within opportunity societies at a far higher rate than within the quasi-prison societies living under hyper-central, typically corrupt states, such as Muscovy.

Elon Musk, Peter Thiel, Bill Gates, Jeff Bezos, Richard Branson, Burt Rutan, Paul Allen, and other opportunity-driven entrepreneurs and venture capitalists create far more value for their societies (and societies around the world) than all the fat bum bureaucrats, apparatchiks, and functionaries warming the chairs of tyrannical bureaus and ministries around the world.

The deeper the spirit of opportunity penetrates into the society — commerce, education, medicine, infrastructure, finance, media, natural resources, etc. — the better the quality of the structures that allow ordinary individuals to climb the rungs of opportunity to prosperity and more.

What is Beyond Prosperity?

The next level. An abundant and expansive society of healthier, wiser, more intelligent, longer-lived humans who hop from disruptive technology to disruptive technology to the outer system and beyond.

But the Xis, Putins, Obamas, Clintons, Sanders, Hollandes, Trudeaus and the other usual suspects of government hyper-centralism do not have it in mind to allow for such opportunity — if they can help it. They and millions like them present a certain problem to the prospects for an abundant and expansive human future. We’re gonna need a lot more guillotines! 😉