Well, it appears as if Russian Prime Minister Vladimir Putin knows more about economics than President Obama. The following is an excerpt of Putin’s speech at the World Economic Forum in Davos, Switzerland (transcript courtesy of the Wall Street Journal). The full speech can be found here:
Esteemed colleagues, one is sorely tempted to make simple and popular decisions in times of crisis. However, we could face far greater complications if we merely treat the symptoms of the disease.
Naturally, all national governments and business leaders must take resolute actions. Nevertheless, it is important to avoid making decisions, even in such force majeure circumstances, that we will regret in the future.
This is why I would first like to mention specific measures which should be avoided and which will not be implemented by Russia.
We must not revert to isolationism and unrestrained economic egotism. The leaders of the world’s largest economies agreed during the November 2008 G20 summit not to create barriers hindering global trade and capital flows. Russia shares these principles.
Although additional protectionism will prove inevitable during the crisis, all of us must display a sense of proportion.
Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake.
True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent.
The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation.
In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.
Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.
And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.
That’s right, Prime Minister Putin warned against “excessive intervention in economic activity.” What do you think we’re doing right now as we spend trillions of dollars in bailouts? That, my friends, is excessive intervention. He’s absolutely right when he says, “There is no reason to believe that we can achieve better results by shifting responsibility onto the state.”
Honestly, this has to be one of the best things Putin has ever said. He deserves a heck of a lot of credit for this one. But honestly, did you think he’d say anything else? He lived through the economic disaster that was the Soviet Union. He understands that the path that the U.S. is going down is a DANGEROUS path, and he’s doing his best to warn us.
I only hope that the Democrats in Congress and President Obama heed his warning.
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