Wednesday, December 18, 2019

Russia May Transform Itself from ‘Island of Stability’ into the Eye of a Hurricane, Blant Says

Paul Goble

            Staunton, December 16 – The Russian government’s pro-natalist policies, designed to boost the birthrate in order to eventually have enough workers to support the growing army of pensioners, may backfire by adding to the burden Russians of working age now and for the next two decades have to carry by increasing the number of children as well, Maksim Blant says.

            And that possibility may “at any moment” transform the Russian Federation from “the island of stability” the Kremlin likes to talk about into “the eye of a hurricane,” especially if Russians have children not because they want to have offspring but in order to collect money from the state (

            Nothing good will come from decisions made on that basis, the economist says, and in particular it will do nothing to improve “’the quality of human capital’” that Moscow officials like to talk about. Instead, when it turns out the regime can’t support the new larger generation it has brought into being, the social and political consequences will be “extremely sad.”

            As the Russian government seems to have forgotten, people including Russians give birth to more children when families are poor than when they are well off; and thus using cash incentives to get people to have more children will work only for a short term if at all, Blant continues. 

            He adds that he doesn’t entirely understand why the current Russian government is so obsessed with the birthrate, given that its economic and military plans require fewer people not more. The only rational explanation is that the regime is doing so in order to be in a position to support the increasing number of pensioners.

            But if that is the explanation, the government has had plenty of warning of the problems it is now facing. This demographic outcome was “well known already 20 years ago” and might have been addressed by the radical means of forcing people to save for their retirement rather than having the government continue to assume full responsibility.

            Taking such a decision then given default and other economic problems would have been difficult, the economist admits. “But now when the numerically small ‘post-default’ generation is coming on line and the government has put aside significant reserves, it would be possible” to make such a decision rather than try to boost the birthrate.

            If Moscow were to take this decision, it would not lose anything. The money working age Russians would put aside would be available via the banking system. And the interest the government would have to pay to use it would have the effect of boosting the amount available for these future retirees.
            But that isn’t what the Kremlin has decided to do. As a result, “the burden on workers will grow and children born today will begin to have a positive influence on the situation in the best case only in 20 years.” And the more successful the government is in boosting the birthrate, the faster and greater the burden on workers will be.

            Because it is they and no one else who will have to pay for all these maternal capital schemes, benefits and aid programs the government is talking about.

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