Why Putin’s Economy Survives

Why Putin’s Economy Survives

The Wall Street Journal

“Whoever does not miss the Soviet Union has no heart,” Russian President Vladimir Putin famously said in 2010. But he quickly added, “Whoever wants it back has no brain.”

Mr. Putin isn’t usually known as a savvy economic steward. Yet as we mark the 25th anniversary of the Soviet Union’s collapse this week, his famed comments sum up the increasingly clear results of an epic historical experiment. To run that experiment, first, take two authoritarian regimes based in Moscow, one rooted in state-run socialism, the other in crony capitalism. Next, expose them both to a series of shocks: low oil prices, costly military adventures abroad, confrontation with the West and a sluggish economy in which political dictates override market forces. Then wait several years to see which regime survives.

When the Soviet Union confronted this array of challenges in the mid-1980s, it promptly collapsed. But facing very similar forces today, Mr. Putin’s government has survived—even thrived. What has made the difference, above all, is Mr. Putin’s devotion to conservative fiscal and monetary policies, coupled with an authoritarian’s ability to implement austerity measures without consulting his population.

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