Russia Oppression Laws Freedom
Kennon-Green & Co. Global Asset Management, Wealth Management, Investment Advisory, and Value Investing

Those of you who study history will know that there can now be little doubt that the future of Russia is in serious jeopardy.  Personally, short of an unexpected event or political uprising, I don’t see how they escape from the cycle that has begun, which has been accelerating if you’ve been paying attention to the country over the past twenty four months.  The Russian people have been willingly submitting themselves to slavery, passing laws that restrict freedom of speech, freedom of conscious, freedom of religion, freedom of personal association, and much more.  It’s as if they simply cannot escape a culture of authoritarian rule, always sliding back toward despotism.

I’ve avoided writing this essay for a year, but the evidence continues to grow and I cannot see a way out of it any longer.  Russia has been on my radar for some time, but my study of it has increased exponentially because of the energy holdings I’ve been buying as many of those companies and partnerships hold ownership or operating stakes in Russian oil fields.  We are, I believe, past the point of no return.

[mainbodyad]The developments are merely a symptom.  The truth is the Russian culture has been sick for awhile based on the cold, logical data.  Whereas in the United States, murders, abortions, muggings, sexual assaults, and other crimes have been collapsing to all-time lows, Russia has been experiencing the opposite.  Russia and her sister countries, those that only recently broke out from under Russian rule or are still effectively Russian in all but name only, have the highest abortion rates in the world, suffer one of the highest murder rates on the planet, have a population with a rampant alcoholism addiction, as well as very high suicide rates.  The social conditions are abysmal; the demographics non-sustainable.

Consider the most recent case-in-point.  The Russian Duma is pushing through a law that makes it a criminal offense, with severe jail terms, for anyone who “insults religion”.  The problem in a modern, advanced economy?  Religion is, by its very definition, based upon revealed, not rational, knowledge.  There doesn’t have to be any standard of proof to support doctrine.  When Europe had these idiotic policies a very long time ago, geniuses such as Galileo were imprisoned for pointing out things that we now take for granted, such as the fact that the Earth is not the center of the universe.  This was followed on the heels of the same Duma pushing through laws that now make it a crime to “promote homosexuality”, meaning that if you are a foreigner who is married to a spouse of the same gender, you’ll be lucky if you are deported; if you’re a Russian citizen, simply acknowledging that you are gay could now mean an extended prison sentence.

These sorts of laws reduce a population to a pathetic sort of infantilism, where simply having your feelings hurt, or having to deal with reality as it is and not how you think it should be, is enough to take violent action against your neighbor by depriving him or her of life and liberty.  It perpetuates a cycle of denial and anti-scientific discovery.

The Culture of a Nation is Just as Important, if Not More Important, Than Its Natural Resources

Although Russia is often thought of as a world economic power, the reality is far different.  Russian standards of living are horrible compared to most first world economies.  GDP per capita is laughingly low, at $14,247, compared to nations like Australia at $67,723, Denmark at $56,202, Canada at $52,232, the United States at $49,922, Japan at $46,736, Germany at $41,513, France at $41,141, the United Kingdom at $38,589, Italy at $33,115, Israel at $31,296, and South Korea at $23,113.  Much of this has to do with the culture.  Russia certainly has the natural resources to exploit, so the problem is not in the ground, it’s in the minds of the Russian people.

Russia Oppression Laws Freedom

Creative Commons Attribution 3.0 Unported License by Wecameasromans, May 6th, 2012, English Trade Center in Moscow, Russia

Think of culture as a sort of software program.  It defines the parameters of what the system will accept.  It is made up of the individual preferences and traditions of the people, emerging as a sort of unified zeitgeist.  Culture, in a corporation or in a country, can overcome almost anything else.

That is why nations such as the United States, for all her flaws, continue to hold roughly 50% of the world’s wealth, and a vastly disproportionate percentage of the world’s technological inventions, patents, and discoveries.  It is not because it is somehow better, or her people are somehow smarter, than the rest of the world.  It’s the culture.  The software program, built upon a certain form of Protestant work ethic and free scientific discovery after the nation was birthed out of the humanist enlightenment ideals of the 18th century, resulted in a unique mix of beliefs and behaviors that has been a source of constant discussion since Alexis de Tocqueville penned the now classic Democracy in America, seeking to explain to the French why democratic self-rule worked in the United States but few other places.  He then took those lessons, and applied what he could to France, helping it rise from the ashes of the French revolution to become one of the largest and most prosperous economies in the world.

[mainbodyad]Here, in the United States, the very notion of hate speech is unconstitutional – you can stand at the White House gates with racist, bigoted signs, screaming about how much you hate the President of the United States and you can’t go to jail for it.  Here, in the United States, do you think the researchers at Harvard care whether or not they find something that will disprove or discredit a particular religion?  No!  They are interested in finding the truth, supported by facts and evidence.  Here, in the United States, Silicon Valley has a disproportionate percentage of gay and lesbian employees relative to other industries because they are interested solely in cognitive ability.  We just want your best ideas and for you to be happy.  Here, in the United States, women aren’t forced to cover their faces or be separated from men because we don’t treat them like animals, cutting off half of our human capital.  All of these things work together to overcome a lot of our institutional incompetence.  That is, the culture, and the forces it drives, has saved us from the gross incompetence of our own elected representatives.

In a country like Russia, you have a cultural code that is actively suppressing free scientific discovery, the ability to speak and debate about ideas, and throwing away a considerable percentage of the brain power because certain citizens aren’t deemed acceptable due to their personal characteristics.

All else being equal, a society that is repressed will always fall behind a society that is free.  That is because the free society can take advantage of all of its resources; all of its minds; all of its talents; all of its citizens.  They tend to be happier, more satisfied, and thus do better work.

If Russia were a stock, I wouldn’t be going long at the moment.  All evidence points to it falling further and further behind global progress, becoming less relevant and more miserable.  Were I a Russian citizen, I would be out of there right now, with my eyes on a nation such as Canada or Switzerland.  It’s teetering on the edge of a series of policies and laws that will create their own sort of self-reinforcing powers.  It’s a tragedy, but a self-inflicted one.  Personally, I think the tipping point has already been passed.  I’m not optimistic.