From John Ray's shorter notes

Notes about Belarus

January 31, 2019

Is Belarus ("White Russia") another East Germany?

Belarus gets a bad name in the West because of its authoritarian government. They do have elections there which are not a total sham but President Lukashenko always gets big majorities. So we tend to expect only bad things from the place.

I was talking recently to a lady of Belarusian heritage who still speaks Russian and who still has close family in Belarus. She reports that people who know Belarus are often very complimentary about it. It seems well-organized and orderly with very little crime. It is not a rich country (average income of $8,000 pa) by Western standards but most people eat well and products from all over Europe are to be found in the shops. Some people who know the place say that Belarus is the best country in the world to live in.

There are occasional big demonstrations about the government but that is true of the USA as well. Demonstrators will demonstrate.

That is such a different view to what I had expected that I did a little research to see what support I could find for it. Belarus is however not a place of much interest to the rest of the world but I did find a few interesting facts.

* It is heavily industrialized but is also about 40% primeval forest. Greenies should love it. It has about the same population as Sweden -- about 8 million. It lies between Russia and Poland so was the most "Western" part of the old Soviet Union. It is now an independent country.

* The capital city, Minsk, has a population of about 2 million. It was completely destroyed during the Second World War, but, following the example of Warsaw, it was rebuilt in the same place and now is an attractive city

* Minsk is a very green and clean city. In addition to numerous parks, here is the third largest botanical garden in the world.

* Minsk is a very safe city. In the list of 378 most dangerous cities from Numbeo, Minsk was on the 351th place in terms of danger and became the safest city among the former Soviet Union countries. Belarus itself is one of the safest countries in the world according to statistics.

* Compared to many large cities, there are very few traffic jams in Minsk.

* It is also surprising for big cities that it's relatively quiet at night, relatively few nightclubs and bars.

* Public transport is always on time. Surprisingly, but it's true: the schedule is maintained with a possible deviation of a couple of minutes. The American Green/Left wants to get people out of their cars and onto public transport. Belarus shows it can be done.

So you see what people mean when they find a lot to like about Belarus. What it reminds me of is the old East Germany. After German reunification, some East Germans moved to the West and a lot visited the West. They were mostly not very impressed. They liked the higher salaries, larger apartments and the up-to-date technology in the West but were very scornful of the social life there. The old East Germany had a generally fraternal feel while the West is definitely a dog-eat-dog society. East Germans called it an "elbows" society, where people had little care for one another.

So it should not be a surprise but it is clear that socialism does have an appeal for a lot of people. Living under an authoritarian government that organizes everything can be fairly relaxing as long as it provides a reasonable level of prosperity, which East Germany did and which Belarus does.

So an intriguing possibility which exists is that some Germans could return to a society like the old East Germany. Very little remains -- even in the Eastern lands of modern-day Germany -- of the old Eastern system but Belarus has something similar. Even the language would not be a problem for many Easterners. Russian was taught in the schools of the old East Germany.

If you don't speak Russian, however, forget it. Russian has about twice as much grammar as German and German is frustrating enough for English speakers.

August 26, 2020

Belarus ("White Russia") may be better than you think

Belarus and Poland. Belarus shown in Green

Some Russian friends of mine who still have relatives throughout the former Soviet Empire and who live well there speak favorably of Belrarus.  And I have myself noted some desirable aspects of Belarus elsewhere. That all becomes of particular interest at the moment as the world is noting protests in Belarus against dubious elections maintaining despot Alexander Lukashenko in power

So it is interesting that Economic historian Martin Hutchinson (below) says Belarus is much more capitalistic than either California or China.

Matin makes two points that many would jib at. He likes it that  Belarus has no lockdowns against the coronavirus.  That however is pretty close to becoming the informed medical opinion now

He likes that Belarus has much higher interest rates than Western countries.  That may seem perverse but history is on the side of Belarus.  Past great capitalistic flourishings worldwide have been accompanied by similar rates.  And present historically low rates in the West have mainly sufficed to create the punishingy high real estate prices we see in the USA and elsewhere.

Something he does not note that many people might like is that the roads are good but traffic jams are few. Belarus has an extremely good and comprehensive public transport system. So people get more exercise by walking and can do so without wading through vehicular pollution. It's a Greenie dream in action. Greenies would also like that over 40% of its 207,600 square kilometres (80,200 sq mi) is forested.

Many conservatives would like that Belarus is also the only country in Europe officially using the death penalty.  It is a Christian country.

Climate skeptics would like that most of its electricity is thermal generated and that they have a nuclear power station under construction.

The population of Belarus is almost wholly white so there is no disgruntled black minority to go on city-wrecking sprees, something of interest in the current American context.

The world economy has come a very long way from the small-government, unregulated free-market model so celebrated by Adam Smith and other classical economists. Today, even in countries that claim to be committed to capitalism, taxes, monetary policy, regulations and state spending have produced huge distortions. To illustrate how huge, I thought I would compare the economic models of three jurisdictions: California, the high-tech Mecca supposedly a beacon of freedom, China, the state-controlled behemoth that claims to have a new and better economic model, and the universally despised “Communist” dictatorship of Belarus.

It must be very difficult to be a true capitalist in California. Yes, you have a support system of a myriad of other capitalists around you, and if you start with a remotely plausible business plan venture capitalists will throw money at you, but actually running a business, as distinct from merely financing losses, is extremely difficult. Real estate costs, both corporate and personal are extremely high if you are in the San Francisco Bay area, so you begin with a huge cost disadvantage against those of your competitors who are located somewhere else. The most important cost disadvantage, of course, is that you must pay people far more money than they may be worth so they can live in the Bay area.

High accommodation and staff costs are a natural economic disadvantage, but California also abounds in unnatural ones, entirely contrary to free market principles. For a start, the state has the highest tax rates in the United States, with a top income tax rate of 13% on top of the Federal 37% plus a Medicare tax of a maximum 3.8%, for a total of 53.8% marginal income tax rate. The state is in the process of voting to increasing the state income tax further to 16%, which would give a top marginal tax rate of 56.8%, a level at which it becomes barely worth working at all (I speak from experience of the high British marginal rates in the 1970s and 1980s). With the state keeping more than half its richest citizens’ marginal earnings, California’s claim to be a capitalist economy is already quite weak.

It becomes weaker still, when you realize that the state is also likely to introduce a wealth tax at 0.4% per annum, payable on all wealth above $30 million. Now you may think that $30 million is “riches beyond the dreams of avarice” but you are out of date, at least if you live around San Francisco. $30 million just about buys you an upper-middle-class house in that area, and then you must pay the state property taxes on the damn thing. In any normal jurisdiction, $30 million would be enough to retire on in considerable luxury, but not around San Francisco. Moreover, 0.4% per annum may not sound like much, but I would remind you that today 10-year U.S. Treasuries yield only 0.67%. That leaves you only 0.39% after Federal income tax (oh bliss, no state income tax) so your California wealth tax is robbing you of 105% of your remaining income – even before you account for inflation’s effect on your capital. Yes, you could put your money in riskier, higher-yielding assets, but those Argentine bonds and Neiman Marcus private equity investments did not turn out so well, did they?

Then there is regulation. Depending on your business, you will have already found out that U.S. regulation, when combined with that of an “activist” state like California, is among the most user-unfriendly in the world. German, British or Japanese regulators are well-organized pussycats by comparison. The recent Uber decision means you cannot employ contractors, they have to be full-time employees, with all the costs involved. And heaven forfend you should be in any business with global warming implications – if you’re an offshore oil driller you’re out of luck, and have been since 1969 in terms of getting new leases on state-controlled waters. And it’s not just the environmental regulations imposed on you, but the effect on you of those imposed on others; California regulations on electric utilities are so severe that the main utility has filed for bankruptcy, and many areas have been subject to brownouts in a recent heat-wave, because the heat-wave happened on a calm night, thus putting all the state’s solar and wind electric capacity out of action. Now I grant you, the early industrialists did not have electricity at all, but if you think California will let you set up a good healthy coal-powered steam engine to solve your energy problem, you’re dreaming!

Then there are the social restrictions. In California, you no longer have free speech, at least not if anyone records you; you will lose your job for even the mildest hate speech – and if you’re self-employed, the Twitterati will still find a way to make your life a misery. You may stay out of prison, but will still destroy years of your life and millions of your dollars in court cases.

Like California, China has restrictions on free speech – you cannot criticize the government, if you want to stay out of jail (in California, you can criticize the government, but there are innumerable other things you cannot say, and it is not always clear in advance what they are). China also has fairly high taxes – a top marginal rate of 45% — though not as high as California.

The main difference is that in China, you must include a committee of Party members in your company, who have the right to second-guess all your business decisions. In California, you do not yet have to do this, but the mandatory “diversity officers” and such are getting ever closer to this level of intrusiveness. Still, there are advantages to China – for one thing, you don’t need to worry about environmental regulation – it’s pretty clear most Chinese companies don’t, as they emit vast quantities of CFCs, for example, a pollutant removed from Western supply chains two decades ago.

In Belarus, you don’t have to employ Party members within your company, though you certainly have to clear management decisions with your local Party boss – who may come expensive. As in China or California, you have no rights of free speech, so there is only a modest differential between the three locations in that respect. Of course, Belarus and China are notoriously not democracies (Belarus has rigged elections, China doesn’t bother having them at all) but then if you’re a Republican living round San Francisco you might as well not have democracy either – none of your local legislators will be dedicated to the things you believe in.

On Covid-19, China has almost certainly falsified its statistics, and given it the opportunity to spread to humanity in the first place, while California has imposed all kinds of niggling restrictions on individual freedoms. On the other hand, Belarus’ president Alexander Lukashenko has suffered from the virus, played ice hockey throughout its prevalence, and recommends sauna baths and vodka as a cure. Advantage: Belarus, I fancy.

Tax-wise Belarus (like its neighbor Russia) is a truly capitalist state; the country has a flat income tax rate of 12%, and even offers a discount to 9% for workers in the tech sector. This is much more important than people think. Both Belarus and Russia are dominated by a few very large companies, mostly in natural resources, with heavy state involvement and part ownership by cronies of the long-term President. They are not very attractive as investments, even where you could invest in them.

However, below the radar screen, where the state is uninvolved beyond local payoffs, there are a large number of small entrepreneurial companies that do well because of the low corporate tax rate (18%) and low individual tax rates on the entrepreneurs who created them. Belarus being deeply unfashionable, there are no Western venture capital companies crawling over the country. What’s more, monetary conditions are more favorable for the creation of truly productive small companies than in either California or China; inflation was 5.2% in the last 12 months and the National Bank of Belarus’ refinancing rate is 7.75% — healthy levels and relationships between the two that we have not seen in the U.S. since the early 1990s.

Since Belarus has a highly educated workforce, especially in technical areas, and very low costs indeed – far below those of even China, let alone California – it is potentially a highly attractive place to start a business, if you can tolerate the local political system and its corruption. Oh, and the power grid works, at least better than California’s.

Belarus is a nasty dictatorship. But so is China; on balance, rather nastier (I prefer rigged elections to none at all). Even California these days is hardly the land of the free that it used to be. However, in terms of economic climate for a local business there is really no comparison. None of the three countries is a truly attractive free-market environment, but by far the closest to that ideal is Belarus.



28 September, 2020

Belarus (“White Russia”) impresses again

What can we learn about lockdowns from the country whose dictator told them to fight Covid by drinking vodka?

As the sun slid from the evening sky over Minsk, clusters of people thronged the imposing entrance of the Bolshoi Theatre of Belarus clutching their tickets for the ballet.

Many had dressed up to attend one of the city’s landmark buildings, a legacy of the Stalin era that was inspired by Roman amphitheatres.

‘We don’t want our theatres closed,’ said Darya, an elegant 25-year-old heading in to enjoy the performance of The Creation Of The World with friends Igor and Nadia.

‘You need art to live a full life, despite anything else that is happening in the world.’

Minutes later, I watched in the imposing auditorium as the large orchestra struck up, five dancers appeared and 800 people sat back to enjoy the show.

Darya is right about the ability of art and culture to lift spirits in dark times. Yet in Britain, as in other parts of the world, theatre doors remain shut with live entertainment among the sectors hit hardest by pandemic.

But things are rather different in Belarus.

Alexander Lukashenko, the last dictator in Europe who has ruled the country for 26 years, swept aside fears over the disease and scoffed at the concept of lockdowns.

He claimed the planet was being swept by ‘psychosis’, suggested his people drink vodka to ‘poison the virus’ and poked fun at the idea of protective measures.

The nation’s professional football league played on through the pandemic’s peak as all Europe’s other leagues closed down and countries went into lockdown.

Yet this maverick despot’s bizarre stance means this little-known land – a strange hangover from Soviet times, with huge state-run factories and KGB agents prowling the streets – offers an intriguing glimpse of what happens if a state leaves Covid unchecked.

For the country has ignored dire warnings of doom from some experts but, curiously, death rates from the virus do not seem all that different from places that imposed strict lockdowns.

‘The measures in Belarus, like in Sweden, were diametrically opposed to your country but the numbers seem similar, which is weird,’ said one senior epidemiologist.

Their fatality figures may actually be significantly better than in the UK – whether through good luck or the measures taken by alarmed citizens on their own.

At the very least, Belarus offers an unusual perspective on the pandemic, and although this secretive nation currently in political turmoil could not be more different from a serene Scandinavian democracy, it has shared Sweden’s avoidance of a lockdown. Lukashenko’s daft actions included denying the existence of viruses as death numbers began to mount from the disease. ‘Do you see any of them flying around?’ he asked in March. ‘I don’t see them either.’

The strongman disdained border controls, predicted the pandemic would pass by Easter, said the first victim was responsible for their own death and refused to cancel a presidential election or events involving elderly veterans to mark the end of the Second World War.

‘It’s better to die standing than to live on your knees,’ he said at one point.

Later, having caught the disease himself, he claimed it was planted on him and carried on ignoring suggestions adopted elsewhere to slow the spread, apart from urging social distancing. ‘In no case stay at home,’ he said last month. ‘Move more in the air, run, jump, play sport.’

Lukashenko’s refusal to accept medical reality fuelled furious protests that followed his blatant theft of last month’s presidential election. Big demonstrations have led to thousands of arrests, brutal beatings and horrifying torture by his security squads.

Dimitri Ivanovich, a data analyst whose mother is recovering from Covid in hospital after two weeks of intensive care, said people had died due to misinformation. ‘There were no public health measures, no help for businesses. People were left alone with the virus.’

Several people I met told me the dictator’s stance starkly exposed his contempt for citizens. ‘Society is more solid than ever before and it started with Covid,’ said Victoria Fedorova, chairwoman of a leading human rights group.

She believes this defiance began with people joining forces to raise funds to buy protective gear for frontline staff. One medical insider told me that 30 doctors have died from the disease; another said all those in his large hospital near Minsk caught the virus.

Officially, there have been just 813 Covid deaths and 77,289 cases in this country of 9.5 million people – among the lowest rates in Europe. State-controlled media bragged of success in contrast with ‘sadder’ data from nations such as Britain with fatality levels about seven times higher.

A far more reliable figure emerged after the government supplied data to the United Nations that revealed 5,605 excess deaths between April and June, when the pandemic peaked, compared to the previous year.

Doctors confirmed such figures. Mikita Salavei, associate professor in the infectious diseases department at Belarusian State Medical University, estimated there have been 8,000 deaths from the virus as the second wave emerges. ‘We are very similar to Sweden in terms of cases and fatalities,’ he said. ‘Our results are not any worse than several other countries.’

Indeed, they may be significantly better than the UK. England and Wales recorded 55,529 excess deaths between April and June, almost two-thirds higher per head of population than the figures from Belarus.

International comparisons are tricky with this disease. There are differences in data collation. Britain is one of the world’s most globalised nations whereas Belarus is more isolated and has much lower population density, despite Minsk’s crowded suburbs .

The two countries have similar proportions of elderly but Belarus has few care homes and far more hospital beds per head of population – a legacy of its Soviet heritage. Yet estimates based on the infamous Imperial College, London, modelling in March that panicked the British Government into lockdown warned of a total of 66,800 Covid deaths in Belarus by the end of next month without any preventative measures.

It predicted a possible 32,000 deaths by October if only mild actions were taken to slow the spread of infection, and 15,000 fatalities if there was strong suppression of social contacts. But the current death toll is actually only about half that.

Officials have found it hard to act independently in this autocratic state, yet some preventative tactics were imposed by local leaders. ‘No one called it “quarantine” but measures were taken,’ said one epidemiologist.

Dzmitry Markelau, a Minsk surgeon, put it more bluntly. ‘The president was stupid in what he was saying. So everything was left to us. Hospitals were repurposed to focus on Covid and people around the elderly started wearing masks.’

Alarmed citizens also started taking their own action. This is a nation with a thriving digital community plus well-grounded suspicions over state duplicity after suffering dreadfully from the Chernobyl nuclear disaster.

Many stories I heard in Belarus were similar to elsewhere in Europe: shortages of protective gear, concerns over surging cancer cases after hospitals were retooled to focus on Covid, and economic carnage.

Bars, beauty salons, cafes and shops all told me that although they stayed open, their takings crashed as people stayed away when infections started soaring in April, and they have not fully recovered. ‘People stopped going on the streets and eating out,’ said Artsiom, a manager in a small chain of pizza restaurants that had to dismiss some staff. His lunchtime sales still struggle as people work from home.

The nation’s footballers may have played on after being told to wash their hands, but fans stayed away. Dynamo Brest filled its stands with mannequins in club colours after attendances plummeted from 10,000 to just 800.

Yet there seem few signs of fear about the disease, especially with mass protests each weekend and most people not wearing masks – as shown by the Bolshoi Theatre’s reopening earlier this month. It closed in April after many performers, returning from events abroad, caught the disease, although they continued rehearsals while halving salaries. ‘We are like happy kids to be open again,’ said Tatiana Alexandrova, head of marketing.

Berlin, a leading music venue in a dingy Minsk basement, was shut down briefly by officials. ‘They closed us because of coronavirus but after a week they did not seem to care so we reopened,’ said director Pavel Yurtsevich. His venue has been hurt by the lack of foreign bands on tour but was preparing for a heavy metal festival on Friday night.

‘We see the UK with its lockdown but it did not seem to solve anything,’ he said. ‘It is all about individual responsibility, and as employers we have responsibility for our staff.’


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