Against the Russian Economic Model in Rhode Island

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Listening to Jay Nordlinger, of National Review, interview Hoover Institution democracy fellow Larry Diamond, I couldn’t help but think of Rhode Island when their conversation turned toward Russia.

Nordlinger asks why the Russian people, who “are so talented — famously so, historically so — in the sciences, in the arts, everything,” seem beset in their leadership by  “this constant desire to muck around in other people’s countries” rather than focus their energies at home.  If they were to do so, he speculates, “they would zoom, they would zoom up” in the global competition.

Diamond’s response is that “the environment of corruption, criminalization, and concentration of power and absence of the rule of law” has empowered Vladimir Putin to concentrate  around himself “all the crony capitalist relations that took shape in the 1990s.”

Clearly, Rhode Island isn’t at the Putin stage, yet, but we do have reason to be concerned about the build-up of crony capitalism and centralization of authority over it within the state government.  Diamond goes on:

… when you’ve got concentration of power like this in an authoritarian elite and authoritarian strongman — I’d say a virtual dictator, Vladimir Putin — then the diffusion of innovation and honest capitalism through, to use shorthand, a start-up nation, like they have in Israel, where you’ve got similar levels of scientific and technical innovation and energy, but all used in stunningly creative and broadly wealth-generating purposes — for agriculture, for industry, for commerce, and even for democracy — this has diffusing and democratizing impacts in terms of power, and Putin doesn’t want diffusing and democratizing impacts.  He wants concentrating impacts. So, he wants to keep control over all this stuff, and it’s taken a corrupt, criminal, and state-aggressive form, rather than the burst of creativity and economic growth and modernization that could have happened under a different scenario.

While we don’t yet have the dictator, we do see clear signs that the ruling elite of our state — the politicians, the labor unions, the welfare bureaucracy, the insider-complicit non-profits, and so on — have as their primary objective not to disrupt any of the arrangements that keep them unjustly rich and influential.  In an attempt to defuse our sluggish economy as a political liability, they’re now attempting to use crony capitalism to spur the economy in harmony with our corrupt, insider system.

The most likely scenario is that this strategy doesn’t work, and Rhode Islanders look up in five-to-ten years to the realization that we’ve wasted hundreds of millions of dollars and are in no better position than we were at the onset of the Great Recession.  The worst-case scenario, though, is that it works just well enough to grow the corruption and consolidation until it is ripe for the dictator whom we cannot yet identify.



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