Education and academic degree
In 1995 he graduated from the Faculty of Mechanics and Mathematics of Moscow State University named after M.V. Lomonosov. He graduated from graduate school at Moscow State University and received a PhD in physics and mathematics in 1998.
Labor activity
Since 2001, he worked at the Center for Economic and Financial Research and Development (CEFIR), before that he worked at the Russian-European Center for Economic Policy (RECEP). He is a visiting researcher at the Center for Economic Policy Research (CEPR) in London.
In 2000-2001 academic year was a visiting postdoctoral fellow at Harvard in 2004-2005. - visiting researcher at the Institute for Advanced Study, 2009-2010. - visiting professor of management at Kellogg Business School, Northwestern University (Illinois, USA).
From September 2001 to December 2008 he was an associate professor, and from January 2009 to August 2013 - a full permanent professor at the Russian economic school(NES). From 2011 to August 2013, he was vice-rector of the Russian School of Economics.
Since 2007 he has been studying at the Higher School of Economics. On August 1, 2013, he, being the director for microeconomic research, professor of the department of institutional economics at the National Research University Higher School of Economics (since 2010), was appointed to the position of vice-rector of the university. He is a co-founder of the joint undergraduate program at HSE and NES.
From August 2013 to December 2014, he was vice-rector of the Higher School of Economics, however, according to journalist Masha Gessen, he was forced to resign for political reasons.
In May 2014, he was a visiting researcher at the Becker-Friedman Institute of the University of Chicago.
In May 2015, he announced his transfer to the position of professor at the University of Chicago from September 2015 and his move to Chicago, USA.
Conducts extensive scientific and journalistic activities and is a member of the Council Russian Association Researchers in Public Sector Economics (ASPE). First of all, he is interested in modern political and institutional economy, development economics, information and auction theory.
Publications
The expert's scientific works have been published in leading international journals - Quarterly Journal of Economics, Review of Economic Studies, American Political Science Review, Journal of European Economic Association, Journal of Law, Economics, and Organization, Journal of Comparative Economics, Journal of Economics and Management Strategy and in Russian journals - “Problems of Economics”, “Economic Journal of the Higher School of Economics”, “ Social Sciences and modernity." In addition, he writes columns in the newspapers Vedomosti and The Moscow Times, his journalistic texts were published in New Literary Review, Emergency Reserve, Esquire, Ogonyok, New Times, Kommersant, Le Banquet.
Awards and titles
In 2002 and 2003 it was recognized Russian Academy Sciences "Best Economist of the Russian Academy of Sciences".
In 2004 he was awarded gold medal Global Development Network and the World Bank, and in 2007 they were awarded the II Ovsievich Prize.
In December 2012, he was awarded a Certificate of Honor from the Government of the Russian Federation.
In 2016 he became the best teacher High school economics according to the vote of HSE students.
Konstantin Sonin is one of the few Russian intellectuals, well known in the West. Furthermore- he is perhaps the only economist in today's Russia whose assessments and forecasts are presented vividly and clearly. He is neither in power nor in opposition, he teaches in Moscow and Chicago, he does not console or intimidate - in general, he does not lose his adequacy among Russian and world absurdity.
- It seems to me that we can talk about Putin’s economic miracle: sanctions, two wars - but the economy, as he said, adapted, and no catastrophe happened...
— If we were talking in 2009, yes, the term “Putin’s miracle” would be appropriate. Based on the results of his almost twenty years in power, the indicators are very average. Over the past ten years, growth has been almost zero. But a catastrophe is also not in sight, since the current system is generally very stable. What distinguishes it from the Soviet one is that it is, albeit to a limited extent, regulated by the market.
— What does “regulated by the market” mean?
- The fact that you have to pay for everything. In order to maintain an army of guardsmen, they need to be financially stimulated. What, do we have some structures, organizations, people who support the government unselfishly? I haven't heard of these. It is difficult to imagine any kind of mobilization scenario in Russia because there are few Russians compared to the territory and the amount of resources. There is no one to mobilize.
— Could some sanctions bring down the economy - an oil embargo, a shutdown of SWIFT?
“This will make it worse, there is no question, but even this would not be a disaster, at least for the authorities.” Sanctions work according to the principle from the joke: “Dad, now will you drink less?” - “No, son, you will eat less.” The population will become somewhat poorer, but it is impossible to fall to the level of the eighties and nineties.
— Can’t savings go to zero, like in the early nineties? The state will take away or ban dollar savings, and then...
- First of all, why would he do this? Extra hassle, and also expensive. Taking away property is impossible without violence. In 1992, the savings of the money that could not be used to buy anything were reset to zero. However, if such a weaning had happened, the uprising of the masses would still not have happened.
—What needs to happen for the masses to revolt?
“I’m afraid to disappoint you, but I can’t imagine such a reason.” Introduce exit visas? Ban foreign currency? Conscript all children into the army? If the country did not rebel in the eighties, when, in a good way, a catastrophe was already happening - I simply do not know a case in world history when such a decline would have occurred without a war - then it is now difficult to imagine large-scale protests. The plasticity of the population is another factor of Putin’s stability, and therefore in the coming years we will experience more or less, with minor variations, the same thing.
“And he won’t go anywhere, of course.”
— No, in such a system power is not given up voluntarily. The only scenario for a change of power that I can imagine is something like the State Emergency Committee, that is apical coup, which, like the State Emergency Committee, will provoke mass discontent. That is, the president himself will begin to do things that are clearly absurd; and judging by the idea of publishing a correct Russian atlas, where all our sonorous territories are required to be given names, there is such a risk; but I wouldn't overestimate it. There will be a reformatting of power for its actual preservation, with some decorative successor, so I would not consider 2024 as a milestone date.
“But you yourself probably understand that such a system needs new tightening, bullying, reasons for nationwide hysteria - if this bicycle does not move, it falls.
— And in this regard, you can endlessly inventively vary the TV. Creating the appearance of a thaw, playing something back, then toughening it up - who knows? Over the past ten years, it seemed to me every time that we had reached the bottom ideologically and psychologically, but every time they knocked from below, well-known formula Letsa. I don’t give forecasts now, because there is no bottom, and the chatter between bad and very bad can be endless.
“The USSR could have been saved in 1975”
— You mentioned the collapse of the USSR and the subsequent decline in the economy as biggest disaster: Could it have been avoided?
— It’s possible, but not in 1985. The economic decline began when Soviet power, deficits arose under the late Brezhnev - perestroika had nothing to do with it, it rather ideologically formalized an already accomplished catastrophe. And in 1975, I think, the final fork was passed. If there had been a change of power, we would have smoothly moved on to the Chinese version: China retained the ruling Communist Party, the government changed normally twice - I don’t know, however, how it will be now - probably the USSR was quite tenacious and remained buoyant.
Or another option: even with the difficulties that existed in the 1980s, the Union could have survived in 1990 if it had been possible to part with the Baltic states and some other republics more decisively - but speaking completely cynically, without touching anyone’s patriotic feelings, the annexation of the Baltic states and Western Ukraine was Stalin’s greatest stupidity. Simply beyond any moral assessment - stupidity. Because the Germans crossed the Baltic states in five days - it did not give any strategic advantage. After the war we would have gained much more by trading with the Baltic countries, just as we would have gained more from Finland by trading with her. And the mine is under Soviet Union founded by Western Ukraine - if it had remained part of Poland, would there have been talk about the independence of Eastern Ukraine in 1991?
— Remember, the eighties were marked by an explosion economic thought- Shmelev, Selyunin, Pinsker, Piyasheva, Yavlinsky... Was any of the recipes of that time feasible?
“All the programs of that time were similar in that they described fantastic scenarios for the future development of events, without taking into account real problems and, as is now clear, without knowing about them. The “reforms” that took place did not follow these programs (because the programs were divorced from reality), but actually described what was already happening.
It was not Yeltsin and Gaidar who abolished the State Planning Committee. Gaidar canceled it after the State Planning Committee ceased to influence anything and, in fact, did not act. Gaidar generally had the rare ability to explain everything very clearly, sometimes too simply, so that both his comrades and his superiors understood. As a result, Yeltsin bet on him. Pinsker, Piyasheva, Selyunin tried to outline soft ways of transition to the market, but did not imagine that private property requires not only laws, but also courts with competent judges, but also armed people who will carry out the decisions of these courts. That these armed people need to be stronger than those armed people who will take away property as soon as it appears. That is, all this talk about the market economy was a completely toy game of soldiers, where wherever you put a soldier, he stands there. Of course, there was a positive effect that at least they started talking about the economy. This in itself was encouraging.
— Will it be better or worse after Putin? Because there are different versions about open fascism, let’s say...
— Immediately “after Putin” it can become better. There are already so many restrictions now that simply by allowing businesses to breathe, investors to invest money, people to earn money, and not waste time bypassing censorship and demonstrating political loyalty, things can get better. For how long is another question. And, of course, immediately “after Putin” there will be negative factors: For example, again, as in the early 1990s, there will be many unemployed (or employed but underpaid) from those who now work in the over-inflated security industry.
- Which of the modern Russian economists seems the best to you?
— If we take the practical sphere, then this is not important. Key positions are occupied by competent and knowledgeable people. No matter how competent the people run the Central Bank or the Ministry of Finance, they are part of Putin’s government. Let’s say the chairman of the Central Bank does everything right, the Central Bank is an important detail in the public administration system, but not everything depends on it: if the clutch works perfectly in a particular Zhiguli, it’s still a Zhiguli. Economists do not determine the economic course of a country, just as mechanics and stokers, even the most professional ones, do not determine the course of a ship. In a technical sense, the best prime minister in Russian history could be Nikolai Ryzhkov - what other government in the world controlled every carriage in a huge country? — but his government carefully led the country to a severe economic disaster.
— Was Voznesensky, whom Stalin seemed to even be preparing to be his successor, really a great economist?
- Who can say this today? My answer is predictable, since two of my grandfathers and grandmothers worked in the State Planning Committee. According to their stories, in the late 20s and 30s, issues of large-scale planning were an intellectual front for the whole world. The State Planning Committee really managed to gather the fastest, smartest and bravest. There was, if you like, the economic brain of the system. Height industrial production in the late 1920s and 1930s was high, primarily due to the fact that it followed a record recession, but Voznesensky was the politician who led this machine. It is not surprising that he had a reputation as a "great economist."
— I wonder if the planned economy could have been preserved?
“That’s how it has been preserved: here in America it’s about forty percent planned, and in Russia, let’s say, it’s about sixty percent.” Deripaska is not an oligarch - he is the Minister of Non-ferrous Metallurgy. This area was given to him for management. And, as a Soviet minister, he cannot cut down an inefficient enterprise - because then the monotown will die. What is the main merit of many oligarchs of the 1990s? The fact is that they were able, in new market conditions, to regain control over large production chains. Including driving out the bandits using bandit methods. After that, they built management more rationally and established external Relations.
- Which of them is the best manager?
— It seems to me that the late Kakha Bendukidze, who managed to carry out large-scale and courageous reforms in Georgia.
- And Abramovich?
— Abramovich’s main talent lies in his phenomenal loyalty and ability to negotiate. As a lifelong football fan (since my childhood days as a passionate Dynamo Kiev fan), I can't help but admire the way he manages Chelsea. And no one, of course, will take this team away.
- Won’t the World Cup be taken away, now that we’re talking about it?
- No. And I consider this championship to be a great achievement of Putin. And no comparisons with the Berlin Olympics of 1936 are needed here, because the world championship is always good for the country, it always opens borders, it gives happiness to millions of Russians who do not have much happiness. And to say that all this is in support of the regime... Shostakovich did not write in support of the regime, and Chaliapin did not sing for the Tsar, and the Soviet chess school did not exist for the sake of the leaders. Anything that contributes to the greatness of a country is good.
“The only lesson learned is Novocherkassk”
- What do you think? main feature Putin as a politician?
— If you speak without judgment, that is, as if scientifically, this is a very precise reliance on the people, an understanding of what they want. Putin stands on a very solid background. He most accurately represents the “average citizen” of the country. This does not mean that he is a great charismatic. How can I say this? is not his strategy, it is what he is.
— Does he have principles in economics?
- Two taboos, and both inviolable - this is some kind of imprinting from the nineties. Firstly, he hates debts, first of all, after the oil boom, he tried to give them away - and gave them away - and now, although it would be easy to borrow, he does not do this. And secondly, printing money: he remembers the inflation of that time and is not at all willing to repeat it. As for the rise in prices - well, it will probably be, but within certain limits. Because all Soviet and post-Soviet leaders since 1962, from Novocherkassk, have in their genes the memory of how it ends. The main, if not the only, lesson learned.
— How do you see Russia’s place in the global division of labor?
— We have always supplied three things, with which there are no interruptions now. Raw materials - and the need for Russian raw materials will not go away under any political situation; literature - and in Russian literature today there are several world-class authors; and mathematics. The Russian, and later Soviet, school of mathematics is recognized throughout the world and regularly supplies specialists - not only abroad, but also to the Russian economy.
—Have you ever thought that economics, in general, is not a science, that it is a cross between mathematics and psychology?
— Quite the contrary, it is the mother of all sciences. Geometry, for example, has come out of economics - you need to cut up the earth; I think even philosophy comes from the same place... Economics is served by all disciplines, they leave it and return to it.
- IN scientifically he never had much authority - except in the USSR, where he was imposed by force. All these productive forces, production relations, formations - it is unlikely that a modern economist today can consider this seriously; he gave detailed description the situation of the English working class in the middle of the 19th century, in this sense the first two volumes of Capital retain historical interest.
— In Russia, is there capitalism, feudalism or multi-structure?
— In Russia there is pure capitalism.
- Finally, since we are talking about math school: you studied in the famous - now also notorious - fifty-seventh. What's going on there now?
- There now new director, who came from Sirius - although he himself is a graduate of the same fifty-seventh, new administrators and teachers came there - also graduates. The school is alive, working and seems to have everything sorted out. In any case, our alumni association issued a statement regarding those former teachers who were accused of harassing students. One of the problems of the great schools in Moscow is that the director - like the head of the theater, like the rector of the university - is practically doomed to die in office: it is difficult with the change of power here, as in any group of authors. Perhaps if the director had been replaced a few years earlier - say, after 25 years in office - this crisis would not have happened.
— Can we say that today’s Russia is Putin’s team of authors?
- No, that’s exactly what cannot be said. The team simply chose a leader who most closely matches its spirit; but I wouldn’t be mistaken about the author’s will. I don’t think that Putin—and Brezhnev, for example—had their own will. But Khrushchev had it, and of all the Soviet leaders he seems to me the most likable. And the most unlucky - in terms of reputation in the eyes of descendants.
Konstantin Sonin graduated from the famous Moscow school No. 57 in 1989 and the Faculty of Mechanics and Mathematics of Moscow State University in 1995. In 1998 he received a Candidate of Sciences in Physics and Mathematics from the Faculty of Mechanics and Mathematics of Moscow State University. M. V. Lomonosov.
Since September 2001, K. I. Sonin has been an assistant professor (Assistant Professor), and since January 2009 - a full permanent professor (tenured Professor of Economics) of the Russian Economic School (NES).
Konstantin Sonin has been working at CEFIR since 2001, before that he worked at the Russian-European Center for Economic Policy (RECEP). In the 2000-01 academic year he was a Post-doctoral Fellow at Harvard, in 2004-05 - a visiting member at the Institute for Advanced Study at Princeton, in 2009–10 - visiting professor of management at the Kellogg School of Management, Northwestern University(Illinois, USA).
Scientific activity
The field of research of K. I. Sonin is modern political economy, development economics, institutional economics, auction theory and economics of information.
His scientific works have been published in leading international journals such as Quarterly Journal of Economics, Review of Economic Studies, American Political Science Review, Journal of European Economic Association, Journal of Law, Economics, and Organization, Journal of Comparative Economics, Journal of Economics and Management Strategy and in Russian journals - “Problems of Economics”, “Economic Journal of the Higher School of Economics”, “Social Sciences and Modernity”.
Selected scientific publications
- Determinants of Expropriation in the Oil Sector: A Theory and Evidence from Panel Data (with Sergei Guriev and Anton Kolotilin) Journal of Law, Economics, and Organization, in the press.
- Why the Rich May Favor Protection of Property Rights, Journal of Comparative Economics, 31 (4), 715-731, 2003, symposium issue on Appropriate Institutions for Growth. (Reprinted in M. Henrekson and R. Douhan, eds., The Political Economy of Entrepreneurship, Cheltenham: Edward Elgar, 2007.)
- Why Resource-Poor Dictators Allow Freer Media: A Theory and Evidence from Panel Data (with Sergei Guriev and Georgiy Egorov), American Political Science Review, 103 (4), 645-668, November 2009.
- Businessman Candidates (with Scott Gelbach and Ekaterina Zhuravskaya), American Journal of Political Science, 54 (3), 718-736, July 2010.
- Dictators and Their Viziers: Endogenizing the Loyalty-Competence Trade-off (with Georgiy Egorov), Journal of European Economic Association, in the press.
- Political Selection and the Persistence of Bad Government (with Daron Acemoglu and Georgiy Egorov), Quarterly Journal of Economics, in the press.
- Coalition Formation in Non-Democracies (with Daron Acemoglu and Georgiy Egorov), Review of Economic Studies, 75(4), 987-1009, December 2008.
Expert and journalistic activities
He writes a weekly column in the Vedomosti newspapers and, once every two weeks, in The Moscow Times; his journalistic texts have been published in the New Literary Review, Emergency Reserve, Esquire, Ogonyok, New Times, and Kommersant. , Le Banquet. His expert opinions often quoted by Russian means mass media.
Social activity
Member of the Council of the Russian Association of Public Sector Economics Researchers (ASPE).
Awards
In 2002-2003 was recognized by the Russian Academy of Sciences as the “Best Economist of the Russian Academy of Sciences.” In 2004 he received a gold medal from the Global Development Network and the World Bank. In 2007, he was awarded the 2nd Ovsievich Prize (the 1st Prize was never awarded).
The results of the first round of presidential elections in Ukraine confirmed the exceptional competitiveness of the political system. If we choose “one sign of a democratic structure of power,” then this is, of course, the possibility that those who are in power at the time of the elections are deprived of it as a result of the elections.
Strictly speaking, President Poroshenko still has a chance to remain president, but the fact that the current head of state gains 17% of the votes in the first round is a sign of democracy. This fully fits into the Ukrainian political tradition- in 28 years of independence, only once (in 1999) the president managed to be re-elected for a second term. (In 1994 and 2010, the incumbent presidents lost; in 2004, the incumbent’s “successor” lost; in 2014, the incumbent president did not have the opportunity to participate.) Given the low results, it is not surprising that citizens preferred to change power rather than maintain it, but it is surprising that they have all the time this remains a possibility.
It is useless to compare the 2019 elections with the elections of 1994-2014, because the “composition of voters” has seriously changed due to the departure of voters from Crimea and Donbass, which, of course, changes the relative weight different parts countries. In any case, to win in the second round, Poroshenko needs a miracle - I can’t remember an example of an election in the world where a candidate who took second place in the first round would win back such a lead. (Kuchma won back 7 percentage points in 1994 - he had 31% after the first round against 38% for Kravchuk.) Even if all the other candidates unite to help Poroshenko (and uniting, for example, with Tymoshenko is both difficult and politically dangerous), it is not a fact that this will be enough.
Boris Johnson, as you know, imagines himself as Churchill, but behaves like anyone but his idol. Over the past three days, he managed to change his position on Brexit three times - against Theresa May’s plan, for the plan, against and, it seems, “for” again. I really want to become prime minister, but now a gap has opened. May's plan is that those who don't like Brexit because it's not a big enough break with the EU will vote for her plan because otherwise they might get nothing at all, no Brexit. (At the same time, she threatens supporters of a “soft Brexit” with an abrupt exit without any agreements.) As an additional bonus, she promised Johnson and Co. to resign if her plan is approved, leaving them control over the exit itself.
It was here that Johnson saw the crack leading to the coveted premiership. Churchill, who was not only a powerful and stubborn politician, but also a wonderful writer, had a joke about Johnson. Boneless wonder, he once said. My parents took me to show the “gutta-percha miracle” at the circus, but now I see this miracle right in front of me among members of the government. This was said about Ramsay MacDonald, who headed a government that relied on a small faction in his party and a large faction in the opposition, but Boris Johnson stands before our eyes as if alive.
And the reality of Brexit remains complex. A foolish move by Conservative leaders who knew that leaving free trade and the single market would be a disaster for the British people but decided they could risk a popular vote has sent the country into a trap from which the government cannot escape. Citizens, having voted for Brexit without thinking about the real consequences, took away the mandate from May’s government by not supporting her in the 2017 elections. But they didn’t give it to anyone else. As the “indicative votes” in parliament this week showed, there is no majority for any plan of action. But Churchill is not there. There are, behold, gutta-percha miracles.
Regarding the “Mueller report,” the special counsel investigating possible collusion and cooperation between the Trump campaign and someone from Russia. It has changed little and will not have a significant impact on the outcome of the 2020 presidential election.
Democrats were wrong to think that if the Mueller report had concluded that the Trump campaign was collaborating with Russian agents, it would make a radical difference. Republicans are now mistaken in thinking that the Mueller report, which dropped the collusion charges, changes anything radically.
The main thing you need to understand about political struggle in America in the 21st century is that it occurs in conditions of exceptional, by historical standards, polarization. 40% of Americans support Republican candidates, no matter who they are and no matter what positions they take. 40% support the Democrats, no matter who they are or what they say. This 40% has always been there, but now it is unusually stable.
The Republican 40% would support Trump no matter what the Mueller report said. Democratic 40% are against Trump, regardless of what is actually written there. It is difficult to understand what influences the remaining 20%, whose votes decide the election. But it is definitely not a question of “do they trust Trump”, do they consider him a worthy leader, etc. And so it is known that they do not count. And in 2016 they didn’t count. That didn't stop them from voting for him.
Trump's chances in 2020 are at least 50%, because 2+ years of his presidency mean 2+ years of sustainable economic growth, employment, wages, income, etc. It seems that not a single president in the last 100-150 years had this in his first term - to inherit sustainable growth and go through the entire first term without a recession.
Trump's chances in 2020 are no more than 50%, at the moment, because he was and remains a record unpopular president. It is unknown how great the negative effect "personally Clinton" was, but it is difficult to imagine that the next Democratic candidate will be so personally unpopular. Democrats won elections with a margin in Wisconsin, Pennsylvania and Michigan in the fall of 2018, and these three states, if everything else remains as they were, are enough to win in 2020.
So, regardless of the volume of hype about the Mueller report, unjustified expectations before and unjustified exhalation after, it did not change anything fundamentally.
Seven and a half years ago, I wrote how hard it was to watch Nazarbayev at the St. Petersburg forum - an elderly man with halting speech resembled Brezhnev, the elderly Soviet leader from the time of my childhood. This looked especially unpleasant for those who, like me, remembered Nazarbayev as one of the young leaders of the USSR just before its collapse. Then he seemed the most sane and reliable.
However, that’s how it turned out. Today's voluntary resignation to a greater extent lives up to the expectations of thirty years ago than the economic successes of these thirty years. They're impressive too. Of course, the “success story” of Kazakhstan is the story of a country with a small population and large oil reserves. But Kazakhstan’s GDP per capita shows much less dependence on world prices than that of the seemingly more diversified Russian economy. This means that decisions were made of a higher quality.
Regardless of economic success, authoritarian leaders - and Nazarbayev was a typical authoritarian leader - almost never leave office voluntarily. They starve the population just to stay in power (like Ceausescu or Maduro), they organize civil wars (like Pol Pot or Milosevic) or, at a minimum, wait until the crowd approaches the palace and the lights are turned off in their office. At best, they die in office after several years of stagnation. Nazarbayev, surprisingly, walked away victorious. Just because he left on his own.
Remember in 2016, immediately after the failed military coup, I compared the Turkish president to Hitler in one specific way? Not because of the cruelty of the regime, foreign policy aggressiveness, etc. This has nothing to do with it. At the speed with which Erdogan is possibly destroying Turkish science. Hitler killed German dominance in world science, and, apparently, forever, in two and a half years, by 1936. This partly followed the global trend - already in late XIX century the ascent began American universities, but if not for the fascist policies immediately after coming to power - before the Jewish pogroms, before the concentration camps, before the seizure of neighboring territories, before crimes against humanity - in the 21st world the scientific language would probably have been German.
So, about Erdogan. Two and a half years passed - emigration, almost pure form"brain drain" has almost doubled. Europe and America are actively hiring scientists of Turkish origin (in my science, especially in the highly technical part, they are very seriously represented - it is possible that stronger than anyone another European country). That is, even if Erdogan does not commit any crimes against humanity (I repeat, there is no reason to compare him with Hitler “in general”), and in general does not do anything bad, it seems he will already negative character Turkish history.
Rosneft CEO Sechin explained the fall in oil prices by increasing the Fed key rate and was wrong. Rosneft needs to hire a competent macroeconomist so that they don’t talk nonsense to management. Or consult with someone - there are competent people at the HSE economics department, at Sberbank, Alfa, Minek, etc.
However, this is an extremely common misconception. The most common form among commentators on my blog is the belief that QE operations (the Fed is buying securities, to increase the "monetary base", cash, roughly speaking) led to higher stock prices, etc. Of course not. Prices - both oil and stocks - are influenced by “money”, “money supply”, and their volume has been growing for many years at a constant pace. This constant rate is determined ultimately by two things: (a) the long-term growth rate of the US economy and (b) the US central bank's chosen inflation target (2% for many years).
These constant rates of fasting are clearly visible on the graph of the amount of money. For those who can’t see the constancy of growth rates, here they are, in logarithms and with a straight line for clarity (cool, fed, that you can now draw functions and add trends directly on the site!).
Theoretically, the Fed's actions with the key rate could affect prices #right now if what they did was a complete surprise to the market. And even then, the reaction would not be to what happened to the money, but to the fact that the Fed suddenly did something unexpected. But in the last ten (twenty? thirty?) years there have been no, no surprises in the actions of the Fed. Actually, they can be boiled down to the following: the Fed simply keeps the blue line on the straight graph, reacting to changing circumstances. Attributing any short-term fluctuations to the Fed's actions to fulfill its promises is like being surprised at the maneuvers of a driver who chose a route and speed and turns in response to turns in the road.
12 years ago, in the fall of 2006, I mentioned Senator Barack Obama from Illinois as a candidate for US President in the 2008 elections. The first time I mentioned him seriously was only six months later, a year and a half before the elections - when his seriousness as a candidate was clearly visible. So, is it possible to predict at least something about the Democratic candidate now?
The difficulty is that the list real candidates, explicitly or implicitly leading the campaign, is very wide this time - 40-50 people at least. Surveys at this stage are practically uninformative. So I simply divide the candidates into several categories and, with all conceivable reservations, predict from which group I expect a president.
(A) “New generation” - all kinds of leaders-representatives of small subgroups, of which, as patchwork quilt, is now a member of the Democratic Party. Kamala Harris, senator from California, and Cory Booker, senator from New Jersey, are representatives of the establishment, but, like Obama in 2008, completely new, little shabby political life. American presidential politics traditionally has a “premium for novelty” like literally nowhere else in the world, and the last two presidents are the best illustration. Citizens deliberately hand over executive branch inexperienced, new politicians promising changes and new horizons. It is possible that the craving for novelty will be so strong that the Democratic candidate will be Texas Congressman Beto O'Rourke, who most closely resembles Obama ten years ago - from raising tens of millions in small donations to inspiring rhetoric, and - professionals do not forget to mention this - Michelle Obama, the popular non-politician.
(B) “Traditional Democrats,” middle generation. In 2016, Donald Trump lost to Hillary Clinton by nearly three million votes nationwide, but his lead was rural areas was so huge that it ensured his victory in precisely those states where Democrats had been strong for decades - Pennsylvania, Wisconsin, Michigan. Any candidate who is really strong in these states is the Democrats' best chance against Trump. These names aren't exactly household names, but Sherrod Brown was just re-elected - and by a landslide - to the Senate from Ohio (Trump beat Hillary by 8% in 2016). This is an ideal “insider” for those Democratic voters who supported Trump two years ago. Amy Klobuchar is another such candidate. Trump is very popular in Minnesota, and she just won a strong re-election there. If the Democratic Party had a centralized leadership, it would nominate one of these candidates - it will be easier for them to deal with Trump in 2020. But whether they will be able to win the primary elections is not so clear; candidates from group (A) have more chances.
(B) “Veterans” are candidates of the same generation as the president. Joe Biden, Obama's vice president, an unsuccessful candidate in 1988 and 2008. Elizabeth Warren, a late-rising star on the party's left. Hillary Clinton is in this same category. For those who think it obvious that she will no longer be a presidential candidate, let me remember in what year last time did 1968 campaign hero Eugene McCarthy run for president? And the 1972 Democratic candidate McGovern, who lost by a landslide to Nixon? (Answers: 1992, 1984.) So far, it is Biden who is leading in the polls - due to recognition, but it seems to me that the time of this generation has passed. Yes, in American politics there is no strict sequence of generations (Obama is a generation younger than both his predecessor and the next president), and yet when should the end come.
I haven’t written even a quarter of the names here, but so far the forecast is this: it will be someone from group (A) rather than from group (B), and I don’t believe in (C) at all.
The American central bank, the Federal Reserve, raised its key rate by another 0.25, for the fourth time in 2018.
Although this decision was expected, the Fed found itself in a difficult position. President Trump, breaking all the unwritten rules of the last 40 years, tirelessly demands - via Twitter and other media - that the central bank not raise the key rate. It is clear that any president, without exception, would like the rate to be lower. This is why there are many institutional constraints, born out of the experience of high inflation coupled with the low growth of the 70s, that protect monetary policy from direct intervention by policymakers.
The US President cannot order not to raise or lower the key rate. The main channel of his influence is the appointment of committee members who determine the rate. As luck would have it, the people appointed by Trump, including the chairman of the Fed, are from, rather, the opposite cohort, the traditional Republican persuasion - that is, representatives, rather, of “rentiers and creditors” interested in a high rate. There, of course, all professionals and personal inclinations do not play a big role - the negative rate policy after the 2009 crisis was carried out by the Republican appointee (and Republican) Bernanke. Nevertheless, it turns out unusual - Trump first did not reappoint Janet Yellen, whom he criticized for too soft monetary policy (that is, a low key rate), and now criticizes her replacement, a person not from an academic, but from a banking environment (they are “more conservative”) for being too conservatism (raising rates).
And the Fed is in a difficult position because, although it is wrong to submit to political pressure - perhaps in this case there is a reason to slow down with the promotion. The markets are shaking - either in anticipation of another recession, after a record long period of growth, or just like that (due to Trump’s “trade wars”). A looser monetary policy would be reassuring.
There is an additional complication here. Of course, with an impending recession, the rate must be reduced. But! If it is not very close, there is a reason to increase it - precisely because during a recession it is very important to reduce it. And where can you reduce it especially if it is 2.5%? Nothing at all until zero, then in order to make “negative rates”, a new QE will be needed - so there are still 4 trillion assets left in the possession of the Fed from the past...
Be that as it may, a slight easing, compared to the previously announced rate, is taking place - now the Fed does not predict “three steps up” in 2019, but promises to “monitor the situation.”
This is how it is difficult to maintain a reputation for independence - even if you are really independent - when you are publicly pressured in exactly the direction in which you yourself have reason to lean.
British politics is shaking, and rightly so. Two years ago, someone might have thought that Brexit (a brief introduction to the subject) made some sense, some new perspective and new opportunities. Two years later and after hundreds of hours of negotiations and tons of written paper, it is absolutely clear - this was stupidity, behind which there is nothing but the irresponsibility of some politicians, the lack of foresight of others and, of course, citizens who, due to increased prosperity, have lost an understanding of where it comes from welfare itself is taken.
The event of last week was the presentation of a real Brexit plan by Prime Minister May, agreed upon with the European Union. The plan disappointed, first of all, the Leave supporters - precisely because it contains what they were warned about both before and after the referendum - leaving will bring nothing but losses, and in order to avoid large losses, they will have to “leave without leaving.” For several years, the unconditional subordination of British courts to European courts has been maintained, special conditions have been created for the part of Britain bordering Ireland, customs and many other unions have been preserved - and most importantly, in order to remove this subordination and these conditions, the consent of the EU is actually required. That is, according to the exit plan, Britain remains, in general, a member of the EU, only now without any rights to change EU rules (only representatives of members can work in its bodies) and even without the rights to speak out about these rules. Well, that is, in your parliament and in the newspapers you can speak out as much as you like, but no one listens to it.
Critics of Theresa May can say as much as they want that she was unable to agree on good exit terms with the EU, but what can a country with 2% of world GDP agree on with a country with 16% of world GDP? All such negotiations are, if not one-sided, then completely unequal. (Remember the agreements on oil supplies between Russia and China - approximately the same balance of forces, and approximately the same balance of results; in fact, unilateral dominance.) The EU from the very beginning - long before the referendum - clearly outlined its positions and why they had to give up anything - retreat? What was said was done.
What have two years shown - what was clear only to economists two years ago? It was already clear that free trade - the movement of goods, technology, money, people - is a huge, expensive benefit that brings great profits and improves living standards. What became clear during the real experiment on “exiting the free trade zone” is that free trade is a complex, delicate, long-tuning mechanism. Where the EU countries, half of the economically developed world, ended up beginning of XXI century - the result of continuous efforts over five decades. Every rule in the EU that seems unfair to the British politicians who campaigned for Brexit is offset by some other rule that gives Britain an advantage. Once the British tried to abandon the former, it turned out that other countries did not need the latter. Theresa May agreed to the EU conditions precisely because without these conditions things would have been much worse.
It is surprising that among those who reacted positively to Brexit were commentators who proclaim the importance of “free markets”. (The fact that Brexit was supported by those who do not understand anything about economics and, out of ignorance, believe that international trade is a zero-sum game, is not surprising.) But among the “liberal” public, interest in Brexit was simply paradoxical - there is nothing more important for economic freedom than free trade, and Brexit is simply a powerful step back to a primitive state, to a state without free trade.
Now the best scenario looks like a “second referendum” and the hope that the efforts of politicians who are interested not only in their own premiership, but also common good and the money of businessmen, who are now ready to sacrifice much more than two years ago, just to stop costly stupidity, will be able to explain to citizens what they themselves have finally realized...
As a result, the elections to the American Congress ended approximately as they should have, if you look at the picture “as a whole.” On the one hand, each party almost always loses the first midterm election after winning the presidential election. This time the Democrats took a majority in the House of Representatives - albeit a minimal one. On the other hand, in economically Trump's two years were very successful - these two years not only added to seven years of strong economic growth under Obama, but also led to faster wage growth. As a result, the Republicans managed to retain the Senate in their hands and even increase their majority there. Given that the initial conditions in the 2018 Senate elections were in their favor (of the 35 senators up for re-election in 2018, ten were in states that Trump won by a margin in 2016), this result is not particularly surprising.
The Democratic majority in the House of Representatives means there is no hope for any legislative reforms in the next two years. With such a minimal advantage in votes, the “ultra-left” will have great power within the democratic faction, and all attempts (and there will be none) to agree on something serious will run into the same resistance as Obama’s attempts once ran into resistance from the “ultra-conservatives.” members of the Republican majority. So for two years, politics will become even more of a TV show: House Democrats will launch several powerful investigations into the administration, which, amid the administrative chaos of the past two years, will guarantee headlines, and Trump will attack them full-force on Twitter. Winning the Senate makes it easier for Trump to confirm new ministers (who are burning out at record speed).
What do yesterday's results mean for Trump's prospects in 2020? If the economic recovery continues - and it is now a record-breaking one - it is difficult to imagine that the current president will not be re-elected. The last president who had steady growth throughout his first four years was Bill Clinton (and before him, it seems, Roosevelt) and he was re-elected quite easily. But for Clinton (and Roosevelt), growth began after a recession, and for Trump, after a seven-year rise under Obama, which, in terms of growth, is more difficult. In short, I can’t imagine the growth continuing for two more years without Trump being re-elected. But if there is a recession, then, of course, it will be more difficult, but the conclusion from 2018 is rather that nothing has changed fundamentally - the Democratic candidate needs to win Michigan-Minnesota-Wisconsin-Ohio, in which the Democrats won yesterday, but not by knockout, Pennsylvania, where the Republicans were defeated, Florida, where the Republicans took a new seat in the Senate. The same thing, in general, as it was before.
And perhaps there is some signal about what will happen in the Democratic primary. There are now about thirty-odd presidential candidates who are conducting preliminary campaigns. They can, very roughly, be divided into two generations - “veterans”, 60-70+ (Biden, Warren, Brown) and “new generation” (from Senators Harris, Gillibrand and Booker and Mayor Garcetti to Congressman O’Rourke). So, in American politics it is customary to live a long time, but it seems to me that this time everything is gradually turning towards the new generation. It is no more left-wing than the old one and no more aggressive, but it is more, well, diverse and more focused on a coalition of voters woven from different small groups than on the “poorly educated whites” that Trump took away from the Democrats in 2016. Elections 2018 showed that the Democratic Party is moving, albeit slowly, in this direction.
A few days after this publication in the magazine " Der Spiegel"The famous economist Konstantin Sonin was fired from his post as vice-rector of the Higher School of Economics.Economist Konstantin Sonin: “Putin will cling to power to the last”
December 11, 2014
One of the most famous Russian economists, Konstantin Sonin, does not believe that the current recession is caused by sanctions from Western countries that want to Russian President Putin, "to contain Russia's growing capabilities." “In fact, Russia has been heading towards economic collapse for a long time,” said Sonin, a professor at the Moscow Higher School of Economics, in an interview with the German magazine Der Spiegel. “The Russian economy has shown virtually no growth over the past seven years and is at the level of 2007.” At the same time, Russia is a developing economy, which “should add at least 3% per year more than, for example, the German economy.” Ruble devaluation , according to Sonin, also began before the Ukrainian crisis. “One of the reasons for this phenomenon is that investors refuse to invest in Russia,” the expert is sure. For example, in past years, “stock markets in all countries were growing, and the Russian experienced stagnation." Therefore, the current crisis, according to the economist, is very similar to the crisis of 1991: "In reality, it was also a gradual decline that began many years earlier."
Russia, according to Sonin, could have avoided this crisis if “Vladimir Putin, after his first two successful presidential terms, had refused to remain in power in 2008, since after 2008 he was not engaged in reforming the country, but in maintaining his power.” As a result economic policy had to fade into the background, reforms were suspended or forgotten, and many sound decisions of the first years of Putin's presidency were canceled. Western sanctions have no effect of decisive importance to the deterioration of the quality of life in Russia. “Our Russian response to sanctions has caused much more harm to the Russians,” Sonin believes. It was the ban on the import of products from the EU that “inflated prices, which hit low-income segments of the population who spend a significant part of their earnings on food.”
In Sonin's opinion, the history of all dictators and autocrats shows that they are effective only in the first ten years of being in power. Then they are more interested in saving own power, and stagnation begins. “Putin will also hold on to power until the last,” the publication’s interlocutor is confident. “Not a single politician leaves on his own initiative.” In Russia, Sonin believes, there will be a revolution. "I am not a supporter of the revolution, but I also cannot imagine any significant changes in better side under the current regime,” the publication reports his words.