Chairman Putin Burns Up. Inflation for the Time Being

While real powers of president Medvedev just a little differ from the powers of princess Anna in a film "The Roman Vacations" (if one forgot it, in fierce struggle against servicing apparatus she won to herself the right not to eat cookies with milk before night and to admit Rome became her favourite city), all conversations about his policy - including his economic policy - remain pointless.

Certainly, power - is not a suitcase with a bribe, it's impossible to transfer it simply from one building to another but till the time president Medvedev started "to take his dribs and drabs back" getting back powers of the head of the state from Chairman Putin, the last would continue to define development of the country and namely of the economy.

His applications still have defining character.

A number of officials has already declared the impetuous Russian inflation which has left from under control of the state "import" one.

Yes, the growth of world prices for the foodstuffs beats Russia, which management obviously lacks time to get interested in the development of agriculture in practice instead of chatting (since the  year 1990 - the last before Catastrophe - farmland were reduced more than in 1,7 times!)

But the scales of "import inflation" are not so great as the guilty of its shocking and long growth try to make us believe (by informal estimations of the officials - 14 % in 2008).

The main reason of inflation is based in other things - in total arbitrariness of monopolies, first of all natural, infrastructural.

What does Chairman Putin say in this occasion?

He says that it is necessary to make investments in infrastructure profitable for business and for this purpose to raise tariffs. And tariffs really grow - by accelerated rates.

It's not only display of bureaucratic laziness - what is the reason to work, if there will come abramoviches with bendukidzes and will make everything. It's also a display of scandalous economic illiteracy.

In fact infrastructure, almost without exception, demands very much greater investments which are often basically excessive to private business, for very long term as a rule excessive to business. Long term means high risks which cannot be completely predicted. And it means that at making a choice, for example, between housing and communal services and trade business will go into trade - simply because "will pay back" there in some times more quickly.

Even if we shall provide with dizzy growth of tariffs identical profitability in housing and communal services and trade, business all the same will go into trade - capital intensity is lower, dependence on policy is less.

It means to make infrastructure rather attractive to business growth of tariffs should be absolutely mad and excessive for economy. Putin hasn't even recollected about that "possible ness" - as though the electric power industry exists in air, in vacuum and not for other economy.

It's not because of thoughtlessness but because of basic misunderstanding of the essence of infrastructural branches. They are unusual, they by their mere nature are not market ones and not because of natural, technological character of monopoly in them but because they define conditions of development for all other economy. Higher profit there are the worst conditions of existence of other economy, it's not only suffocation of the poor population (making 84% of people of Russia now) but also of all economy as a whole.

It's been calculated long time ago that the growth in infrastructural branches making 1 rouble - or one dollar - means reduction in all economy as a whole on 4-6 roubles or dollars. Therefore infrastructural branches should be supervised rigidly by the state and be developed by it: freedom of a market arbitrariness of monopolies cost a lot to market economy.

Thus Putin does not recollect about necessity of maintenance of a financial transparency of natural monopolies at least before the state. May be he sincerely trusts that he knows their internal "kitchen", may be he is ashamed to admit that he does not dare to understand even the finance of the structure which is being considered as his own "purse" - these are his problems.

While inflation which he untwists is our problem.

It seems that he is really indifferent how his words about decrease in inflation correspond with his business on its inflating.

Putin already was going - in the year 2003 - to lower inflation up to 3% but he never repeat that nonsense since than, while the country at that time laughed at "doubling of gross national product", he was not simply heard.

Now he returned to this nonsense. The matter is not even that his own rate is objectively directed on untwisting of inflation and not even that real inflation now is about 30%. The matter is that an official one has left from under control, it has not been happened since default and nobody from among putin's servants has ideas what is possible to do - for any effective measure will undermine corruption becoming the true basis of a new political mode.

However, what for do they need to reduce inflation? It beats the poor and middle class, while there are no, obviously, among Putin's friends and all ruling bureaucracy as a whole even "not so rich".

They are not stabled.

When inflation will really start causing mass discontent and to undermine their authority, they will pass from its kindling to kindling of something else.

They have wide experience - both in connection with oligarchy and in connection with "the Russian fascism".

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