Comments by "Nattygsbord" (@nattygsbord) on "How the Resource Curse Will End Russia Economically" video.

You want to go beyond just selling raw materials, and also sell more advanced stuff. Learn from Sweden development in iron ore and timber. Sweden have iron ore that it can mine → around that Sweden built a steel industry → from the steel industry did Sweden start to also make machine tools → from the machine tool industry did Sweden begin to also make ships, airplanes, cars, trucks → this led to more demand for steel from the Swedish steel industry so it expanded even more → the ovens in the steel industry needed electricity, so Sweden decided to build hydroelectric power dams and nuclear plants → the know-how in electronics made Sweden a world leader in civilian nuclear power in the 1960s → and from electronic products did Sweden move into making mobile phones from Ericsson Sweden have timber → But instead of just cutting down a tree and selling the tree to another country, did Sweden decide to make more money from the tree. So Sweden began making paper from trees. And that paper could be sold to other countries for a higher profit → Paper production needs lots of chemical to make, so this led to the creation of a chemical industry in Sweden → During World war 2 was Sweden neutral, but could not import medicine from other countries because the war had cut off all trade, so in a desperate situation was Sweden forced to make its own medicine and the government asked the chemical industry for help - and that led to the birth of Swedens pharmaceutical industry with companies like Astra, Pharmacia and Kabi. So today as you see have Sweden got a very diverse and knowledge based economy. The demand for medicine is nearly endless. Sweden makes worldclass weapon systems with everything from fighter jets to submarines to tanks. And as a world leader in nuclear energy was Sweden close to making its own atomic bomb. The country was also the largest shipbuilder in the world after World war 2. Losec made by Astra did become the worlds most sold medicine when it was introduced in the 1990s. Ericsson grew to the largest company on the Swedish stock market surpassing Volvo during the same time. So the country have constantly tried to develop further and further up the value chain instead of just being content with selling timber and iron to other countries. Sweden export gigantic amounts of iron ore. 90% of all iron in the EU comes from Sweden. Just the mine up in Kiruna alone produce enough iron each day to make 13 Eiffel towers! But despite this do this industry only make up 1% of Swedens economy today. So if Sweden had not diversified its economy would it certainly have been very much poorer today.
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Natural resources can be a great aid of economic growth if they are used correctly - as in the case of USA and Sweden. The problem for russia is that they have never bothered to climb up the ladder of industrialization to make manufactured goods. Simple ones in the beginning like perhaps beer, toys, milk and such. And then make a bit more technologically advanced stuff once they have learned to master the simple levels of industrialization. And then the final step is to become a world champion in making high tech products that few other countries can produce.. like jet engines or nuclear reactors and be a world leader in those fields. Russia needs to use mercantilism to create those new companies. 144 million consumers is a good start. Paying for importing machinery and new production technologies can be done with fossile fuels, that is a good start. Corruption is a problem, but on the other hand did corruption not stop China from growing into the workshop of the world. But the oil income must be invested for the benifit of the country, and not for the benifit of the corrupt and incompetent ruling elite and wasted on wars and military spending. Industralization is key in lifting a country out of poverty. Because the industrial sector have much higher productivity levels than agriculture , mining or service sector jobs. During the industrial revolution could the cotton industry increase its output 400 fold. A skilled worker could produce maybe 2000-3000 cigars per a 16 hour workday. Today do we have industrial robots that can spit out 6000 cigarettes per minute. Such productivity level increases cannot be done in other parts of the economy. If you tell a hairdresser to cut 400 times more people per hour, you would probably not end up with good haircuts. A chef could probably not make 400 times more meals per hour. And a hen could not lay 400 times more eggs in a year, and there is a limit how much you can increase milk production from a cow, or how much wheat you can reap from an acre of land in a single year. Another benifit with manufacturing goods is that when you make products that people wants but not many got the know how or the ability to produce it - then you have less competition and can charge higher prices for your products. While competition is very hard on the world markets when you try to sell a ton of salmon, coal or copper. But not every country knows how to make a smartphone or a patriot missile. Russia cannot perhaps compete on world markets today with their inferior products. So increasing exports is hard for now. It is however easier to cut imports of foreign manufactured goods if they learn to make some simple manufacturing goods themselves and sell it to russian consumers and block imports from foreign countries with tariffs. That will help russia improve its balance of trade. And it would help to nurture new companies. And when they have grown large and strong enough to fight conquer shares of world exports, then can the government cut down on its subsidies and tariffs and let the companies stand on their own feet. And instead can the government focus on creating new high tech sectors.
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I think industrialization was doomed to take a long time for Russia. The population density was low and the population was scattered over long distances. Transportation of goods was made difficult. And in the pre-industrial age was it for example cheaper for the Romans to transport wheat from a ship from Egypt from one end of the mediaterranean to Spain, than what it was to transport a cart of goods on land 100km. Russia could have used its rivers and water ways someone might say - but the problem with that was that they were covered with ice for something like 5 months of the year. And using hydroelectric power to run industries was also inpractical when the water had frozen into ice. So this problem could only be solved by using the steam engine then. However russia had the same problems as the northern half of Sweden, there was lots of natural resources there with much iron and wood, but no way these resources could be transported away and exported for a profit due to high transportation costs would have made it unprofitable. And only the construction of railroads in the 1800s could have solve this problem. Contrast this to Norway which only had 25% as much forest as Sweden, and yet in the early 1800s did it produce 4 times more timber than Sweden because all of its forests laid closed to the coastline so transportation costs wouldn't eat up all profits. And the salt in the ocean water prevented it from freezing into ice. And finally did russia have serfdom. I mean extremely harsh serfdom that was just as opressive as slavery. And this and the poverty among the masses it created prevented the creation of any industry, as mass production requires mass consumption. So the only way for russia to create any industry at all during this time period was through state-led industrialization. So the government built railroads in the 1800s, because no private enterprise would have seen any oppurtinity for profit for building any railroads in such a country with low population density and a poor population. State-led industrialization does not mean that the country is doomed to failure. Prussia in the 1700s was Germanys most succesful economy I would argue, with its state-led industrialization around military goods such as textiles, iron, and weapons.
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I do not get the impression that Russia was a society with high levels of trust from Fyodor Dostoevskys books, rather are all caracthers there immoral and criminal, and the book have a cynical and negative view on humanity. It regards humanity as flawed and that nothing could be done to improve it. And from the russian bots you read that every other country, is corrupt, and they assume that USA must be as corrupt and unequal as russia, and that the elite abuse their power, lie and start illegal wars. And their message is that two wrongs makes 1 right. So I think this mindset have a longer history than just from the time of Communism.
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Bitcoin is an idiotic system with a suicide mechanism built into it. The system gets it energy from its users that are giving up CPU (computer power) to it, and in exchange do they get Bitcoins in a process known as "Bitcoin mining". Fanboys of this currency means that just like with real gold and silver you have to sacrifice energy to dig it up from the ground. All the computer power the system gets are then used to enable people from moving Bitcoin money from one Bitcoin account to another. But if people no longer do any Bitcoin mining, then will the system slow down so much that moving Bitcoin money from one place to another cannot be done fast or easily. And that will make people even less interested in being involved in Bitcoins which will kill the interest for this currency even more, and possibly even make the situation worse with fewer Bitcoin miners. And if energy prices goes up, or if the price of Bitcoins falls low... then will it simply not be worth mining any new Bitcoins. You will not make any profit from mining any new Bitcoins as energy costs are higher than any profits you make from Bitcoins. So the system is idiotic, and built to self-destruct. It is of course hilarious when people think that all inflation is caused by money printing and nothing else, and that a fixed amount of money would protect your wealth and provide price stability that will make economic calculations more predictable and thus encourage long term economi growth. Face is that Bitcoin is jumping up and down in price with enormous upswings and rapid downward crashes. Good luck having a company and try to make any long term planning with Bitcoins when the costs for buying raw materials all of a sudden can increase with 500% just like the wages for your workers. And then little more than a month later have the price of Bitcoin crashed, and you cannot get much paid for the products you sell despite you had bought them at previously high prices that was 5 times higher. So now your company is runned at a loss, and its a matter of time before it goes bankrupt. The system is totally unsubstainable. And Bitcoin do today consume more energy than all solar panels in the world produces combined. All for this useless piece of crap.
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They desperatly tries to keep the inflation out from the country. They have their national wealth fund (Statens pensjonsfond Utland (SPU) that owns 1.3% of the shares of stock market companies around the world. They use their money to buy companies in other countries so not all oil money stay in Norway and push up prices on almost everything. But despite this, are things very expensive in Norway. Wages are good but prices are high. So Swedes like to travel to Norway to work, and Norwegians drive to Sweden to buy stuff because everything is so much cheaper in Sweden.
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I think most improvement reforms in history have taken place after disasters, and when people are angry and will not take it anymore and the working class and middle class demand for example the right to vote and universal healthcare and veterans benefits in exchange for fighting for the capitalists against USSR or Hitler. In France it was 1789 that led to the French revolution and the end of the ineffiecent parasitical feudal state. The disasterous defeat of Denmark in 1658 led to the end of the corrupt rule of the nobles, and a strong Danish state was created with a permanent tax system that could support a standing army. In the past did Denmark not have any peace time army since the nobles did not wanna pay taxes for it. And as a result did the Danish army not have any well trained regiments, and the armies were quickly put togheter in times of war against Sweden who had a well trained army with men who had trained togheter with each other for years and therefore knew each other well and would fight and die for their best friends. That team spirit did not exist in the Danish army before a new army was created that existed both in times of peace and war. Likewise did Swedens military setback against Poland at Kircholm in 1605 force drastistic military changes to how the military was organized. And the defeat against Denmark in 1613 forced Sweden to make drastic changes to its tax system and resource mobilization. And the result of these changes made Sweden the strongest military power in Europe of the 1600s, capable of conquering Moscow in 1610, defeating Denmark twice, occupying all of modern day Germany in 1630 and defeating the might Polish-Lithuanian Commonwealth. And the rise of corrupt nobles that put self-interest before national interest and refused to spend taxes for a strong military led to the disasterous Scanian war for Sweden in 1679. And the result became strong public anger, and the King, the people, the clergy and the mechant class united against the nobles and forced them to resign much of the wealth they had gained the last decades. And the result became good government finances and a strong military. The catastrophic defeat of Japan 1853, forced the country to make drastic changes to its society. It modernized it military according to German model, its navy according to the British model, its education system to the american model and later on German model, its banking system and legal system was modelled after Belgium and France and so on. And soon would Japan rise as a great strong economic power and a military power. So necessity seems to be a mother of innovation.
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The country was the home of the industrial revolution. It was skilled at new innovations like the steam engine, spinning jenny and it have produced many excellent chemists like William Henry Perkin. Also in modern times have the country been innovative creating everything from tanks, to radars, touch screen technology and the harrier jet. The countrys over-sized banking sector and free market dogma have harmed its economy a lot. But I am convinced that it will rise one day. Its just unfortunate that it have had a long series of bad governments for the last 40 years.
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@D.von.N I think British innovation fell behind the curve during the second industrial revolution when German and American industry grew and outclassed Britain in the new growth industries such as electro-mechanics, chemicals, combustion engines (cars etc), petroleum, and steel. Britain got outcompeted. And its free trade dogma prevented it from protecting its own industry from foreign competition like the Germans and Americans had done, so its industry got crushed in foreign competition after the 1860's. But Britain itself never fell into ruins because it had two other large sources of income: Banking and the merchant marine. The majority of all goods in the world was transported on British ships and Britain got an income for that from other countries. And British banks did give out loans to other countries, like Latin America to build railroads and the interest from all those loans flowed into Britain and helped to keep Britains economy afloat while its industry was doing so poorly. The overseas income from loans from colonies and dominions was of course also important. However the unwillingness to deal with Britains weak industrial performance did become harmful to Britain in the long run. I also don't think exploitation made Britain rich. Rather was it the early adoption of thought-through industrial policy that made Britain the workshop of the world. Edward III (1327-1377) is believed to have been the first king who deliberately tried to develop local wool cloth manufacturing. He banned the imports of foreign wool clothes and encouraged home based production of such clothes. The Netherlands was a world leader in this industry at that time - it was an industry considered the ultimate high tech industry of its time, so the Netherlands was considered the Silicon Valley of that time period. However the British wool industry was protected from being outcompeted and destroyed by foreign competition thanks to the protective tariffs. So the British wool industry could grow larger, and more effiecent. And later on would it become strong enough to outcompete and destroy competitors from the Netherlands, and Britain become the high tech economy of the world.
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I think a problem with Spains Latin American empire was that it was exploitative. Native americans was enslaved. Many died from diseases, and some died from harsh treatment and in violent uprisings. So many died that Spain felt it was better to transition towards a semi-slavery/semi-paid labor workforce. So the native Americans took a forced labor job for spain and got underpaid, over-taxed, over-charged for the food and other stuff they were forced to buy from their slave masters, and the Spainish crown and the local rulers got very rich, while the native americans became very poor. Society became unequal, and this prevented the rise of a mass consumer economy and therefore could no mass production economy rise either when people were too poor to buy good that were produced. And when England began to rule the waves it became difficult for Spain to rely on their old economic model of selling things to Asia and maintain division of labor. And when the silver mines ran out of silver, then did the economic engine that kept all other industries alive also die out. And places like Mexico deindustrialized. So sucking the value out as much as possible and letting the rich benefit at the expense of the many is a recipy for economic stagnation. However economic resources can be a big help to make countries rich - USA and Sweden shows that. But thankfully can also countries witout much natural resources also become rich thanks to innovation and manufacturing - like Japan, Prussia, Taiwan, Singapore, South Korea. Countries that are cold can become rich like Scandinavia and Canada. Countries that are hot tropical climate can also become rich like Singapore. Landlocked countries like Switzerland and Austria have also became rich. So I think that geological determinism belongs to a time of the past.
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