On Tue, 4 Jun 2002, Bradford DeLong wrote:
Brad, you wrote up a very strong 19-point bill of defense. The only point I don't understand is the first one, which may just be due to a typo, but seems like it might be important. The market bolshevik guys say:
> 1. Summers's 1997 call on the Russian government to revamp the tax
> system, combat crime, and combat corruption "reflect[ed] a lack of
> understanding of the direct links between corruption, crime, and mass
> tax evasion, on the one hand, and the path of economic transformation
> chosen in 1991 by the Yeltsin regime with Western approval on the
> other."
You answer:
> (1) seems to be a complaint that Larry Summers believes that
> corruption was the setting and not the product of Russia's reforms in
> the 1990s. Since the one thing that my colleague the "gradualist"
> down the hall Gerard Roland and my ex-roommate the "big banger"
> Andrei Shleifer agree on is that in Russia corruption was the setting
> not the product of reform, I cannot accept this.
Maybe I'm being dense, but I don't follow this argument, i.e., I don't know at the end of the paragraph whether Larry Summers believes corruption was the setting or the product of Russia's reforms. And I have no idea what bearing the fact has that Roland and Schleifer agree or disagree with him.
Also, is this an either/or question? If corruption was the setting, and the reforms operated as if that were not the case, thus allowing the corruption to metastasize, wouldn't that make corruption both the setting and the product of reforms?
The non-trivial question here seems to be about the loan for shares program. The market bolshevik guys seem to assume, like all critics of the Russian reforms, that this was the centerpiece of market reforms -- that this was the really-existing big bang which wouldn't have happened without IMF intervention. And thus all the enormously bad effects that flowed from it is marked down to the US/IMF/market reform account. It flowed more from their political theory -- i.e, that Yeltsin was essential -- than from their economic theory. But even if some of your colleagues didn't think loans for shares was a great idea, it happened on their watch, in their name, and they could have stopped it. And in an alternate world where the US had never intervened, it wouldn't have happened. So all the blame for its enormous consequences is laid at their doorstep.
Some people (like Talbott, I gather?) argue that the consequences of the loans for shares programs couldn't be foreseen until it was too late. But your Chrystia Freeman quote seem to implies the opposite, that the consequences were completely predictable by any sensible and informed person before it happened. And yet you still seem to treat loans for shares program as something accidental that the IMF and market reforms can't be blamed for -- as if it were something the Russians did when the US advisors weren't watching, which they can't be blamed for, and which shouldn't be identified with market reforms. Is that a fair reading? If so, could you elaborate how you get them off the hook? Especially since my understanding is that the Russians who pulled it off seem to have been the IMF's proteges, and never could have accomplished it had the IMF not placed and then maintained them in position.
Michael