Libertarian Jackass

"Life is short, but truth works far and lives long; let us speak truth." -- Schopenhauer

Saturday, October 18, 2003

A Land Too Cold For The Free Market?

Apparently, climate is now a factor in determining whether an economy should be organized on the basis of the market or on the basis of force. For instance,

"Today, people and factories in Russia still languish in the places where communist planners put them - not where common sense or market forces would have attracted them. From the 1930s to the 1980s, the Soviet Union defied nature and the market to launch huge industrial and urbanisation projects in Siberia. The costs are now apparent. The mass settlement of this vast, resource-rich but inhospitably cold territory means that almost 40m people live and work in cities where the average January temperatures range from minus 150C to minus 450C. Of the world's coldest cities with more than 1m people, the first nine are in Russia."

"So Mr Putin is right. Deregulating domestic energy prices and raising the cost of utilities would prove catastrophic. In Siberia, heat is literally a life-or-death issue. No Russian government could let utility companies punish millions of non-payers by turning off the heat. As it is, most municipalities and many industries fall short on utility payments."

My opinion: Oh well, eventually this situation will collapse as the article acknowledges saying "the state cannot afford to subsidise Siberia. The dilemma is how to downsize Siberia's cities and industries and move people and economic activity back in from the cold. This will be a far greater challenge for Russia than any other structural reform of the past decade."

Why must there be another central plan to reverse the horrible results of the first central plan?

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