November 27, 2010

Azarov's Tax Code Causes Public Protests

Ukraine's parliament passed the Tax Code proposed by Prime Minister Azarov (Party of Regions) and his government. Now the Tax Code waits for President Yanukovych's (Party of Regions) "approval". In brief, the Azarov's Tax Code is draconian. It offers tax incentives to the corporations and high-income households while it shifts a tax burden on small- and medium-size businesses and middle-income and low-income households. The bill was passed quietly without any public discussion. The Azarov's Tax Code, however, caused massive public protests when the legislation became publicly available. It consists of several chapters written by both local and foreign experts. Chapter 14 of the Tax Code is the most controversial. If it remains unchanged, it will drive the small-size business (e.g. sole proprietorship) to a brink of bankruptcy. When the government faced public protests, Mr.Azarov (Party of Regions) played the nastiest political trick. He said that the small- and medium-size businesses would bankrupt the welfare and social security system if they opposed the new legislation. Despite his provocative announcement, Ukrainians seem to be united. If President Yanukovych signs the bill, protesters promise to repeat the Orange Revolution. 
Here are links to videos featuring public protests:
http://glavnoe.ua/video/v643
http://glavnoe.ua/video/v640

     

November 23, 2010

The 2010 Best Economics Blog

My colleague, Olga Nicoara, won the 2010 Best Economics Blog Award from the Marketing Degree. I highly recommend her blog for my readers interested in the political economy of the Soviet and post-Soviet countries. Congratulations!!!

November 19, 2010

The Political Economy Of Hurricane Katrina And Community Rebound

I am excited to inform you that The Political Economy Of Hurricane Katrina And Community Rebound (November 2010, 272 pp, $ 99) featuring the chapter that I co-authored with Dan Rothschild (The Mercatus Center) came out finally. Go ahead and buy it online!
The book is edited by Emily Chamlee-Wright, Elbert H. Neese Professor of Economics, Beloit College and Affiliated Senior Scholar, The Mercatus Center, George Mason University, US and Virgil Henry Storr, Senior Research Fellow and Director, Graduate Student Programs, Mercatus Center, George Mason University and the Don C. Lavoie Fellow, Program in Philosophy, Politics and Economics, Department of Economics, George Mason University, US. Contributors include E. Agemy, J. Bleckley, E. Chamlee-Wright, D. D’Amico, J. Hall, S. Horwitz, A. Kashdan, L. Krasnozhon, P. Leeson, A. Martin, E. Norcross, D. Rothschild, P. Runst, E. Schaeffer, D. Skarbek, A. Skriba, R. Sobel, V. Storr

Here is an abstract: In 2005 Hurricane Katrina posed an unprecedented set of challenges to formal and informal systems of disaster response and recovery. Informed by the Virginia School of Political Economy, the contributors to this study critically examine the public policy environment that led to both successes and failures in the post-Katrina disaster response and long-term recovery. Building from this perspective, this book lends critical insight into the nature of the social coordination problems disasters present, the potential for public policy to play a positive role, and the inherent limitations policymakers face in overcoming the myriad challenges that are a product of catastrophic disaster.

November 15, 2010

UTA Students Visit the Bureau of Engraving and Printing

I am serving as a faculty adviser to the student organization, the National Association for Business Economics - UTA chapter, affiliated with UTA Economics Department. Last Friday we went to the Bureau of Engraving and Printing in Fort Worth, Texas. There are only two BEPs in USA: one, in Washington, DC; and two, in Fort Worth, TX. Tour was really interesting. UTA students get a chance to see the money creator as well as the inflationary machine with their own eyes. The most interesting fact is that the BEP works 24 hours a day, Monday through Friday, and now it is printing $386 million a day or $16 million an hour. Given the recent announcement about the quantitative easing, it will take the BEP-FW 1550 days to print $600 billion that FED will use to purchase the US government bonds. If the BEP-DC prints at least at the same rate, it will take both BEPs 775 days or more than two years to print $600 billion. Unless my calculations are wrong, the whole situation around the quantitative easing seems to be very interesting.

Life under Yanukovych

I would like to explain why I disagree with the Economist on the local elections in Ukraine (“Life under Yanukovich”, November 6-12, 2010). The Economist writes that President Yanukovych cannot mirror Putin's policy because, "unlike Russia, Ukraine does not have enough resources to carry on without (economic) reform." If there is a resource requirement for a sustainable autocracy, I am not aware of it. The Economist argues that President Yanukovych has to implement economic reforms to remain in the office for the second term. If reforms fail or stall, President Yanukovych will be tempted to hold on to power by repressive means. But it is exactly what is going on in Ukraine now. The local elections show that the Yanukovych administration is the ruthless repressive bureaucratic apparatus. The state prosecutes and interrogates political opponents. Many allies of Mrs. Tymoshenko are arrested or under investigation. The government ruthlessly manipulates election laws and thuggishly rigs the elections. The official results contradict the exit polls for the first time since the Orange Revolution. If local elections happen to avoid falsification, the Yanukovych administration forces the democratically elected mayors or members of city councils to join the ranks of the presidential party, the Party of Regions. The list of repressive means goes on and on.


I agree that the Orange Revolution serves as the reminder of the failed repressive regime of President Kuchma. The Yanukovych administration that mainly consists of the Kuchmists remembers really well those events. But Niyazov’s Turkmenistan, Nazarbaev’s Kazakhstan, Aliev’s Azerbaijan, and Lukashenka’s Belarus tell President Yanukovych that Ukraine can carry it on without the resources of Russia. Is there life under the repressive regime of President Yanukovych? No.

November 8, 2010

Is There Life Under President Yanukovych?

The Economist has great article "Life under Yanukovych" about the local elections in Ukraine. Here is a link to the article. And here is a link to my opinion. The article is very optimistic. Its central message is the following: given the elections are falsified, President Yanukovych cannot lead Putin's policy because, "unlike Russia, Ukraine does not have enough resource to carry on without reform." I strongly disagree.