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Economy

Russia’s New Economic Policy: Famine, Looting And Stealing? – Forbes

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In the 1920s, despair prompted Soviet leaders to adopt the New Economic Policy (NEP), an attempt at new policies to improve the economy. In 2022, facing sanctions and isolation from Western countries, Russian leaders appear to have adopted another new economic policy. In the 1920s, NEP was based on a greater use of market forces. Today, the policy appears based on force, a combination of stealing from Ukraine, facilitating looting by soldiers and inflicting famine on the world.

Famine: Since the invasion of Ukraine, Russian forces have blocked more than 20 million tons of grain from being shipped through Black Sea ports. The European Union’s foreign policy chief Josep Borrell has called Russia’s action a war crime. Given the quantity of grain blocked, United Nations personnel have warned a famine could take place in parts of the world. This is not an accident. Russian officials are open about leveraging the prospect of mass starvation to compel Western governments to lift sanctions harming the Russian economy.

In June 2022, at the Petersburg Economic Forum, Margarita Simonyan, editor-in-chief of Russian state-controlled RT, said she heard from people several times in Moscow that “All our hope is in the famine.” She continued, “Here is what it means. It means that the famine will start now and they will lift the sanctions and be friends with us, because they will realize that it’s necessary.”

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Preventing Ukraine from selling its wheat is not a side effect of the war. It is part of Russia’s economic strategy to leverage widespread hunger to help its economy.

Stealing: Russia is not relying on famine alone. It is also stealing wheat and steel from Ukraine. Russian media has openly stated Russia is selling wheat it stole from Kherson in Ukraine.

The Russian government is also stealing or nationalizing land from Ukrainian farmers in a parallel to Stalin’s expropriation of Ukrainian farmers’ property during collectivization in the 1930s, which resulted in millions of deaths from famine and saw the deportation of Ukrainian farmers who resisted.

“Moscow’s invasion of Ukraine has captured some of the most productive agricultural land in what is one of the world’s great breadbaskets, disrupting supplies and pushing up food prices,” reported the Wall Street Journal. “Russian forces have also stolen grain and equipment, the Ukrainian government and farmers say. Now, entire farms are being taken, some farmers say. . . Mr. [Dmitry] Skorniakov said that in May a group arrived at his farm in southeastern Ukraine claiming to represent the government of the self-proclaimed Donetsk People’s Republic, which broke away from Ukraine with Russian support in 2014. ‘They said, ‘Now it belongs to us and you work for us, everything is our property,’ Mr. Skorniakov said his workers had told him.

“Valery Stoyanov, 50, said Chechen soldiers took over his farm near the southern city of Melitopol shortly after the invasion began on Feb. 24, telling his farmhands that it now belonged to the unit’s commander. ‘This collective farm is now mine,’ the Chechen commander told workers whom he had gathered to address, Mr. Stoyanov said his workers told him. In the following days, the soldiers sold valuable equipment and shipped out 2,500 tons of grain that was stored at the farm.”

The Ukrainian government estimates Russia has stolen about 400,000 metric tons of grains and seeds, according to the Wall Street Journal. Russia has also bombed Ukrainian farms and grain operations outside of its control.

Looting: The Russian government has difficulty finding enough manpower to prosecute military operations in Ukraine, in part, because it has not declared war and must rely on contracts with troops. One enticement to service appears to be allowing widespread looting, which at least one Russian soldier said in an intercepted phone call was sanctioned by Russian leader Vladimir Putin.

Compensating soldiers via looting was common in medieval times. Widespread reports of looting by Russian troops since the war began shows looting has been permitted as an informal economic strategy to harm Ukrainians and incentivize Russians to serve in the military.

In the near team, the Russian government may achieve some successes with its current approach, but it shows how much the invasion of Ukraine has distorted Russia’s economy and its future. In the long run, Russia is unlikely to build a successful 21st century economy through famine, looting and stealing.

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Economy

Yellen Sounds Alarm on China ‘Global Domination’ Industrial Push – Bloomberg

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US Treasury Secretary Janet Yellen slammed China’s use of subsidies to give its manufacturers in key new industries a competitive advantage, at the cost of distorting the global economy, and said she plans to press China on the issue in an upcoming visit.

“There is no country in the world that subsidizes its preferred, or priority, industries as heavily as China does,” Yellen said in an interview with MSNBC Wednesday — highlighting “massive” aid to electric-car, battery and solar producers. “China’s desire is to really have global domination of these industries.”

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Opinion: The future economy will suffer if Canada axes the carbon tax – The Globe and Mail

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Open this photo in gallery:

Poilievre holds a press conference regarding his “Axe the Tax” message from the roof a parking garage in St. John’s on Oct.27, 2023.Paul Daly/The Canadian Press

Kevin Yin is a contributing columnist for The Globe and Mail and an economics doctoral student at the University of California, Berkeley.

The carbon tax is the single most effective climate policy that Canada has. But the tax is also an important industrial strategy, one that bets correctly on the growing need for greener energy globally and the fact that upstart Canadian companies must rise to meet these needs.

That is why it is such a shame our leaders are sacrificing it for political gains.

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The fact that carbon taxes address a key market failure in the energy industry – polluters are not incentivized to consider the broader societal costs of their pollution – is so well understood by economists that an undergraduate could explain its merits. Experts agree on the effectiveness of the policy for reducing emissions almost as much as they agree on climate change itself.

It is not just that pollution is bad for us. That a patchwork of policies supporting clean industries is proliferating across the United States, China and the European Union means that Canada needs its own hospitable ecosystem for clean-energy companies to set up shop and eventually compete abroad. The earlier we nurture such industries, the more benefits our energy and adjacent sectors can reap down the line.

But with high fixed costs of entry and non-negligible technological hurdles, domestic clean energy is still at a significant disadvantage relative to fossil fuels.

A nuclear energy company considering a reactor project in Canada, for example, must contend with the fact that the upfront investments are enormous, and they may not pay off for years, while incumbent oil and gas firms benefit from low fixed costs, faster economies of scale and established technology.

The carbon tax cannot address these problems on its own, but it does help level the playing field by encouraging demand and capital to flow toward where we need it most. Comparable policies like green subsidies are also useful, but second-best; they weaken the government’s balance sheet and in certain cases can even make emissions worse.

Unfortunately, these arguments hold little sway for Pierre Poilievre’s Conservatives, who called for a vote of no-confidence on the dubious basis that the carbon tax is driving the cost-of-living crisis. Nor is it of much consequence to provincial leaders, who have fought the federal government hard on implementing the tax.

Not only is this attack a misleading characterization of the tax’s impact, it is also a deeply political gambit. Most expected the vote to fail. Yet by centering the next election on the carbon tax debate, Mr. Poilievre is hedging against the possibility of a new Liberal candidate, one who lacks the Trudeau baggage but still holds the line on the tax.

With the reality of inflation, a housing crisis and a general atmosphere of Trudeau-exhaustion, Mr. Poilievre has plenty of ammunition for an election campaign that does not leave our climate and our clean industries at risk. The temptation to do what is popular is ever-present in politics. Leadership is knowing when not to.

Nor are the Liberals innocent on this front. The Trudeau government deserves credit for pushing the tax through in the first place, and for structuring it as revenue-neutral. But the government’s attempt to woo Atlantic voters with the heating oil exemption has eroded its credibility and opened a vulnerable flank for Conservative attacks.

Thus, Canadian businesses are faced with the possibility of a Conservative government which has promised to eliminate the tax altogether. This kind of uncertainty is a treacherous environment for nascent companies and existing companies on the precipice of investing billions of dollars in clean tech and processes, under the expectation that demand for their fossil fuel counterparts are being kept at bay.

The tax alone is not enough; the government and opposition need to show the private sector that it can be consistent about this new policy regime long enough for these green investments to pay off. Otherwise, innovation in these much-needed technologies will remain stagnant in Canada, and markets for clean energy will be dominated by our more forward-thinking competitors.

A carbon tax is not a panacea for our climate woes, but it is central to any attempt to protect a rapidly warming planet and to develop the right businesses for that future. We can only hope that the next generation of Canadian leaders will have a little more vision.

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Economy

Business leaders say housing biggest risk to economy: KPMG survey – BNN Bloomberg

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Business leaders see the housing crisis as the biggest risk to the economy, a new survey from KPMG Canada shows.

It found 94 per cent of respondents agreed that high housing costs and a lack of supply are the top risk, and that housing should be a main focus in the upcoming federal budget. The survey questioned 534 businesses.

Housing issues are forcing businesses to boost pay to better attract talent and budget for higher labour costs, agreed 87 per cent of respondents. 

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“What we’re seeing in the survey is that the businesses are needing to pay more to enable their workers to absorb these higher costs of living,” said Caroline Charest, an economist and Montreal-based partner at KPMG.

The need to pay more not only directly affects business finances, but is also making it harder to tamp down the inflation that is keeping interest rates high, said Charest.

High housing costs and interest rates are straining households that are already struggling under high debt, she said.

“It leaves household balance sheets more vulnerable, in particular, in a period of economic slowdown. So it creates areas of vulnerability in the economy.”

Higher housing costs are themselves a big contributor to inflation, also making it harder to get the measure down to allow for lower rates ahead, she said. 

Businesses have been raising the alarm for some time. 

A report out last year from the Ontario Chamber of Commerce also emphasized how much the housing crisis is affecting how well businesses can attract talent. 

Almost 90 per cent of businesses want to see more public-private collaboration to help solve the crisis, the KPMG survey found.

“How can we work bringing all stakeholders, that being governments, not-for-profit organizations and the community and the private sector together, to find solutions to develop new models to deliver housing,” said Charest.

“That came out pretty strong from our survey of businesses.”

The federal government has been working to roll out more funding supports for other levels of government, and introduced measures like a GST rebate for rental housing construction, but it only has limited direct control on the file. 

Part of the federal funding has been to link funding to measures provinces and municipalities adopt that could help boost supply. 

The vast majority of respondents to the KPMG survey supported tax measures to make housing payments more affordable, such as making mortgage interest tax deductible, but also want to maintain the capital gains tax exemption for a primary residence.

The survey of companies was conducted in February using Sago’s Methodify online research platform. Respondents were business owners or executive-level decision makers.

About a third of the leaders are at companies with revenue over $500 million, about half have revenue between $100 million and $500 million, with the rest below. 

This report by The Canadian Press was first published March 27, 2024.

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