Professional Protesters

Alexander Motyl has another interesting blog about civil society in Ukraine. He writes that political apathy of Ukrainians is a myth. He writes that:

" Meanwhile, Ukrainians are protesting like there’s no tomorrow. According to a study by the Center for the Study of Society, Ukraine has experienced 100 to 300 protest actions every single month of 2010 and 2011. The numbers are usually highest, between 200 and 300, when you’d expect them to be highest—during the spring months of March, April, May, and June and during the fall months of October and November.
Now that’s a helluva lot of protests, especially in a country that’s supposedly disinclined to protest. In the social sciences, you’d say that the evidence disproves the “passivity hypothesis.” In any case, it certainly doesn’t support it.
The numbers for this year are especially impressive. There have been about 100 to 150 more protest actions per month in March, April, May, and June than for corresponding months in 2010 and 2011. A more recent study (by the same center) of protests in July shows that, at 404, they exceeded the previous month’s 330 by 74. That’s a record, sparked largely by the Regionnaire-controlled Parliament’s adoption in late June of a law on languages that is as stupid as it is supremacist. Significantly, July also saw another record: the number of repressive responses went up from 70 in May and June to 101—a 44 percent increase."

According to the Center for the Study of Society, number of protests increased by 22% just in one month. Also, it is very interesting to know that there are at least 200 protests per month in Ukraine. All these facts are pretty cool except that their data sample is pretty biased.
They collect their data from mass media coverage. Well, it's the first bias in their sampling method because the media coverage is very biased in Ukraine. Another issue is their definition of a protest. Is it only political? People protest for other reasons too. Is there a cut-off number of people for an event to become a protest? Do they differentiate between small- and large-scale protests. Let's say that five people yelling near mayor's office is not a mass protest even if it's covered by media. Also, I wonder how they control for paid protests that are very commonplace in Ukraine.       

Nowadays people doubt sincerity of protesters because everyone assumes that protesters are paid. Most of time the assumption is correct. It was not like that before the Orange Revolution when both sides of the conflict paid their supporters.

When I was in Ukraine two months ago, I saw how hard it was to organize unpaid protests. Actually, the issues that caused several NGOs to protest were very important for majority of population. Nonetheless, the NGOs didn't pay their protesters because they wanted to avoid the negative publicity.
So what happens when you don't pay your protesters? NGO that had a network of 5,000 members was able to recruit only 25 members, including 20 board members. It was very disappointing. Another protest that several NGOs organized in five major cities had total of 150 protesters or 30 protesters per city, on average, when their network had at least 30,000 members. 

Living Economics Is On My Reading List

If you haven't done it yet, you should read Living Economics by Peter J. Boettke. It's that kind of book that you wish that you read it before. The book is amazing. It's available here in hardcover or paperback and here in Kindle version. 

"The passion of the teacher is often the inspiration for a student. This lively book illuminates how economics affects all walks of life, whether in the marketplace, voting booth, church, family, or any human activity. Boettke believes that economics is not merely a game to be played by clever professionals, but a discipline that touches on the most pressing practical issues at any historical juncture. The wealth and poverty of nations are at stake; the length and quality of life turns on the economic conditions individuals find themselves living with.

So teaching and learning economics are high stakes ventures. Along the way he introduces us to major thinkers: from Smith, Say, and Bastiat of the Classical School, to Neoclassical and Austrian scholars (Menger, Mises, Hayek, Kirzner, and Rothbard) on to New Institutional economists (Alchian, Coase, Demsetz, North, Ostrom and Williamson) and Public Choice theorists (Buchanan, Tullock, and others). This engaging and reasoned book is a must-read for economists, students, and everyone else who wishes to better understand economics"

The TVi Case: TVi Scores while the Ukrainian Government Loses..

Ukraine's Tax Administration dropped the tax evasion charges against TVi's chief editor Mykola Kniazhytsky. It was a bit unexpected after all recent events. President Yanukovych allegedly ordered the Tax Administration to drop charges when the United Opposition offered Mr. Kniazhytsky a place in their party list for the upcoming parliamentary elections. I guess that the opposition television station TVi wins this battle. Does it mean that TVi and opposition win the upcoming major battle?

On the sad note, Ukraine's Department of Justice announced that the Klementiev homicide case was closed. Investigative journalist Klementiev went missing two years ago in Kharkiv where he was collecting material about several members of the Party of Regions. The Department of Justice says that former detective of the local Organized Crime Unit is the suspect in the Klementiev case. It starts reminding the infamous Gongadze case. 

TVi and LB.UA Are Under Fire

The World Affairs' Alexander J. Motyl writes about the most recent government crack down on independent media: one, independent television station TVi and, two, independent internet news portal LB.ua (Levyi Bereg or Left River's Bank). Each story is interesting. But it's nothing new. Putin has already done it with NTV mass media group and there are many similar cases in other non-democratic countries. I think that the main issue is that civil society remains very apathetic to ongoing events.

LB.ua is under investigation for breaching confidentiality of state issues because the internet portal published personal text-message correspondence of MP Volodymyr Landik (Party of Regions - Luhanks). In a nutshell, their photographer snapped pictures of MP's cell phone screen while Mr. Landik was texting during the parliamentary session.  The correspondence relates to Mr. Landik's son who was videotaped beating a young girl up in a restaurant in Luhanks more than a year ago and subsequently imprisoned. The infamous video was made public on YouTube, Facebook, and other social networks. When the criminal charges were pressed against the LB.ua,  the chief editor Sonya Koshkina fled the country fearing for her life. The criminal charges are bogus. If someone has to be charged here, it must be Mr. Landik for wasting tax payers' money by doing personal business while he is in his public office.

TVi that is the only television station supporting the political opposition was pushing buttons of the Party of Regions for a long time. TVi was provoking the Party of Regions methodically. The last
straw in the conflict between TVi and the state authorities was a genius of political journalism, Mr. Portnikov. He did excellent job by raising public awareness about values of democracy and government embezzlement of power.The Party of Regions and its leader, President Viktor Yanukovych, took the bait. Now the Party of Regions' political capital is bleeding while the Yanukovych administration is cracking down on TVi with another bogus charges of tax evasion.

It's really nothing new or unexpected. If TVi or LB.ua really wanted to avoid the conflict, they could be based somewhere in Europe close to their partners like Voice of America and Radio Free Europe. They pushed buttons of the Party of Regions and Mr. Yanukovych effectively. The state authorities unleashed their fury by violating all norms of democratic society. Civil society, however, remains very apathetic to all events. In the light of the upcoming parliamentary elections, it is a bad signal to the opposition leaders.

Black Harvest

The Ukrainian government announced that grain harvest was 20% lower than it was anticipated. Though bad news came as a surprise to the Ministry of Agrarian and Food Policy, the UN's Food and Agriculture Organization (FAO) talked about it for a couple of last months. In June the FAO predicted that Ukraine's grain production will fall to 46 mln tons, 18% below the previous year, because of unfavorable weather conditions. 

I am sure that Ukraine's total grain output will be lower than it's anticipated now due to drought and lack of irrigation system. Needless to say, most Ukrainian farmers still rely on the two-rain rule to harvest their crops despite all advancement in the modern agricultural technology. They rely on favorable weather conditions because they lack funds to rebuilt irrigation system that was dismantled in the early 1990s during the transition period. 

But I am afraid that Ukrainian farmers suffer more from lawlessness than from the current drought. The main issue is the so-called black harvest. In a nutshell, small-scale farmers are forced to load trucks with their grain for free. It's the so-called black harvest. The black harvest trucks operated by thugs, allegedly from Donetsk region, show up when a farmer harvests his crops. Thugs take grains by force and load them in their trucks. Farmer is left with nothing. If farmer cannot recuperate his losses, he will go bankrupt. 

If you wonder why farmer doesn't call police, the answer is quite simple. It does not change anything. If the local police receives this call, they have to check with their headquarters whether someone is behind the stickup operation. Their headquarters has to check with other law enforcement offices at district level, city level, and province level. By the time they are done with the so-called background check, thugs are gone. But you cannot blame cops for their inefficiency. Cops and farmers have to play by the same rules.If cops arrest well-connected thugs, they will loose their jobs and they will be also fined. 

What causes these unfavorable business environment? It's also drought. Other kind of drought. The Ukrainian elite is running short on cash that it needs for the upcoming parliamentary elections. To get cash, they do what they do the best - rob hard-working people.

Anti-Ukrainian Western Propaganda or Another One Bites the Dust

Have you read Adam Swain's op-ed yet (Kyiv Post, July 15, Western Propaganda War Falsely Frames Ukraine Authoritarian)? It's a must. If you follow Ukraine's political life closely, you are in for some treat. I am sure that each of you will find something dear to your heart in this article. I would like to highlight three main points that caught my attention.

The first point that Swain makes is that there is a propaganda war against "democratic" Ukraine led by the western mass media.  The western mass media dishonestly describes Ukraine as a country lacking democratic norms. Moreover, there is no reason to believe that President Yanukovych wants to establish an autocratic rule of governance. 

Sure, President Yanukovych wants to build a nation with a consolidated democracy and free market economy. And he does everything to achieve these goals. First, he rigs the elections. Second, he throws dozens of opposition leaders in jails where they are deprived of their human rights and beaten up like Mrs. Tymoshenko. Third, his family takes business from opposition businessmen like Avakov, Fel'dman, Burda, Nemirovsky, and many others. And this list can go on. 

None of what President Yanukovych does has something to do with a democratic rule of governance. Instead, he is reversing Ukraine's history of political and economic development when Ukraine went from kin-based society to feudalism and then to capitalism. Ukraine is sliding back to the kinship system of governance where political and economic power is only kin-based. 

The second point that Swain makes is that the criminal case against Mrs. Tymoshenko is not politically motivated because it's legit. If a definition of legitimacy means different things in different countries, her case could be legit. But I doubt it that it's the case. The legitimacy of the Tymoshenko case is the last thing that comes to mind of anyone who has been following it. President Yanukovych used his kinship connections to push the Tymoshenko case through the judicial system. Should we even talk about how the judicial system works in Ukraine? Look, it does not work for regular people. And it cannot work when President of Ukraine has vested his interest in the case.    

Finally, Swain writes that the international pressure from western political leaders on the Tymoshenko case undermines the rule of law and the independence of judiciary in Ukraine. 

To make it a reasonable claim, you need to have the rule of law and independent judiciary in place. None of them exists in Ukraine. Cops are thugs and thugs are cops. Any court room is for sale. Any criminal sentence has its price.

To make democracy work, you need to have at least these democratic values in place: protection of individual rights, respect for the rule of law, independent judiciary, accountability of government, trust in government, and respect for tolerance and pluralism in civil society (ht Larry Diamond). To make capitalism work, you need to have freedom of contracts, property enforced and protected private property rights, constitutional rule of law, and independent judiciary (ht to Francis Fukuyama). So what does Ukraine have now? Nothing. That's why Ukraine's needs more attention from world mass media, international political community, and human rights activists.

 

Ukraine's Democracy is in Pain

I got back from Ukraine couple weeks ago. I was there for quite some time. But I can't still make up my mind about what I expected to see there and what I really saw there. I kept my expectations very low. But I was still shocked with the extent of cronyism and illegitimacy of government. The executive branch of power usurped other two branches of power. The constitution does not mean anything anymore. The Party of Regions and their puppets, including the Socialists, the Communists, and other twenty five parties make amendments to the constitution without calling for a national referendum. The number of the politically-motivated prosecutions is sky-rocketing reaching its peak with a physical abuse of the former prime minister Tymoshenko. 

What has happened to Mrs. Tymoshenko must send shivers down the spine of everyone who is a firm believer in human rights. The physical abuse of the political inmate # 1, the unmasked violence against the queen of the political opposition, and the blatant use of the prison guards' knuckles against the body of the Ukrainian woman draws a line between two stages of political life in Ukraine: one, with weak human rights and, two, without human rights. The second stage started on the same day when the pictures of Mrs. Tymoshenko's bruised body were revealed.  

Look I am not even mentioning the D word (i.e. democracy). I doubt that anyone has ever understood what the D words means in Ukraine. Neither Schumpeterian nor Przeworskian definition of the democracy can explain what is happening in Ukraine. According to Larry Diamond, democracy needs protection of individual rights, respect for the rule of law, trust in government, accountability of government, and respect for tolerance and pluralism in civil society. None of these democratic values exist in Ukraine.


Moreover, people are very confused about how democracy and rule of law must work. Everyone understands that you must report any kind of crime. But if you do it, you are a snitch. How can I tell on someone if I don't want to be a snitch? It's very confusing. So what do people do? They hide behind their smartphones, YouTube videos, and twitter accounts. Who gets these messages? Does anyone really trust a virtual social network in Ukraine?

In Europe and USA people talk smack about government on Facebook. In Ukraine a similar social network Odnoklassniki gives you impression that people do not care about what's happening with their democracy or they prefer to distance themselves from political events.  Are people apolitical in Ukraine? I do not think so because they talk about politics in private all the time. Once again, it's confusing. The civil society is either very weak or inexperienced. It could also be that the Yanukovych government's thuggish aggressiveness sent the whole nation in a very deep knockout. Well, sooner or later you need to get back on your feet, make pain go away, and fight back.

To Transplant or Not: Charter City in Georgia

   The ISET's Michael Fuenfzig has a great post about Lazika, the planned city near Zugdidi, on the Black Sea coast of Georgia. The New York Times also covered Lazika. While the New York Times focused more on investment, planning, and environment issues associated with the new city, Professor Feunfzig raised a very important question of charter government (ht: Paul Romer's charter city). If President Saakashvili's promise of new city comes through, can a city government start from scratch too?
So far President Saakashvili has been very successful in promoting democracy and capitalism in the former Soviet nation, Georgia. Rule of law is getting stronger. Corruption is on decline. Organized crime is nearly eradicated. Georgian's democracy is reviving after the Shevardnadze non-democratic regime.The Georgian economy is also recovering from the Russian protectionist trade policy by redirecting trade flows towards other countries. Overall, Georgia remains a middle-income democratic country with a lot of potential for economic growth.
   President Saakashvili pursues several goals by building a new city. First, he wants to increase urbanization rate in Georgia. Advocates of the modernization theory will give him a high five because from their point of view urbanization and modernization promote democracy and its consolidation. Second, Lazika will follow a concept of the Chinese urbanized economic areas. By building a new city with a world-class infrastructure, the Georgian government expects to attract foreign investors. This strategic move seems to be a part of the bigger plan of capital flow diversification and decreasing a share of the Russian investors in the Georgian economy.
   All these ideas sound great. To deliver these promises, the Georgian government will have to solve a political economy problem of commitment and credibility. The new city will need a world-class government that will be credible and committed to protect capitalism and democracy. Will the world-class buildings and infrastructure transplant a new political culture? We shall see it eventually.

EURO 2012: Quid Pro Quo or Not

      It turns out that only three national soccer teams out of sixteen will reside in Ukraine during the 2012 European Soccer Championship, co-hosted with Poland. So who is staying Ukraine? Of course, the Ukrainian national soccer team will stay in Ukraine. The Swedish team and the French team will also stay in Ukraine.

      I am sure that you wonder about Russia. Where is our big brother? Well, the big brother has very low expectations about infrastructure in his small sister's homeland. That's why the Russian national team prefers democratic and capitalist city of Warsaw, capital of Poland, to any sketchy urban area in Ukraine.

      It also turns out that all teams that have group stage games in Kharkiv and Lviv still prefer to stay in Poland rather than in Ukraine. I assume that Sweden and France decided to stay in Kyiv and Donetsk because they had to play their group stage games there. So did Ukraine. The English soccer team, however, prefers to stay in Krakow and commute to group stage games in Kyiv and Donetsk.

      So where is quid pro quo? As a matter of fact, Poland will get a lion's share of hotel revenues from the EURO 2012 because Ukraine get to host only three teams and their fans. Wait a sec! Will the Ukrainian national team need a hotel to stay in Ukraine? That's a tough one. Will the Ukrainian fans need hotel to stay in Ukraine? Another tough question. It looks like Sweden and France will be the only two teams to foot the bill for staying in Ukraine. What about their fans? And what about all other teams? I really wonder why they do not want to stay in Ukraine? I just can't find a good answer.

       It's so unfair after everything the Ukrainian government and the Ukrainian philanthropist Akhmetov did. Common, Beyonce, Shakira, and Rhianna who were personally invited by the wealthiest person of Eastern Europe, Mr. Akhmetov, performed in Donetsk in front of thousands of factory workers and coal-miners who didn't receive their salaries for months and had to work in illegal and unsafe mines.

       The Yanukovych administration also did so much to promote EURO 2012 in Ukraine. Their original ideas of cutting this school year short by a month and kicking out students from dorms so that foreign tourists who pay a humble price of $100 per day can stay in rodent- and insect-infested rooms with shared utilities (if they work) and rolling blackouts. Another original ideas of cutting down public parks and demolishing historical sites like the 16th-century-old synagogue and building roads and hotels there should have also showed everyone that the Yanukovych government welcomes everyone to Ukraine for the EURO 2012. Personally, I am still puzzled what stopped thirteen national teams from staying in Ukraine.   

   
Here is a list of all teams and their locations:  

•  England - Kraków - Hotel Stary
•  Croatia - Warka - Hotel Sielanka nad Pilicą
•  Czech Republic - Wrocław - Hotel Monopol
•  Denmark - Kołobrzeg - Marine Hotel
•  France - Donetsk
•  Greece - Jachranka - Hotel Warszawianka
•  Spain - Gniewino - Hotel Mistral
•  Netherlands - Kraków - Hotel Sheraton
•  Republic of Ireland - Sopot - Hotel Sheraton 
•  Germany - Gdańsk - Hotel Dwór Oliwski
•  Poland - Warszawa - Hotel Hyatt
•  Portugal - Opalenica - Ośrodek Remes Sport & Spa
•  Russia - Warszawa - Hotel Bristol
•  Sweden - Kiev
•  Ukraine - Kiev
•  Italy - Kraków - Hotel Turówka

After 18 Years of Transition: Are We There Yet?

Ukraine and other post-Soviet countries started their transition from socialism in 1991. Other former socialist countries like Hungary and Poland started their transition in 1989. The Czech Republic and Slovakia stepped on the path of socialist-capitalist transition in 1990. Overall, the former Soviet countries and the former satellites of the USSR started their economic transitions in almost the same period of time. Nonetheless, former socialist countries have achieved different levels of economic development since then. 

To measure a level of economic development, we can look at per capita GDP (measured in 2005 purchasing power parity (PPP) dollars) compiled by the World Bank. And what do we see? Slovenia and the Czech Republic started their transitions with the first and second highest per capita income among post-socialist countries and retained their status of high-income countries.  If the initial economic conditions matter for future economic development, a successful transition of the Czech Republic and Slovenia make this point. Both countries are members of the EU. 

But we can also see that many post-socialist economies with less favorable initial conditions outperformed others with the more favorable ones. A case in point is Russia that lost its economic position in eighteen years of transition from the sixth to the ninth highest per capita income among the transition economies. Poland, Lithuania, and Estonia outperformed Russia while their initial per capita income was much lower than Russia’s.  

 

Unfortunately, Ukraine is among countries that still have their per capita income below the pre-transition level. After eighteen years of transition per capita income declined in several post-socialist economies like Serbia, Georgia, Ukraine, and Tajikistan. Of course, economic performance of Serbia, Georgia, and Tajikistan was distorted by civil wars. For example, Georgia’s economy was severely devastated by the civil war. The Balkan war conflict also had a devastating economic effect on several countries of the former Yugoslavia. Thus, initial economic conditions can only partially explain differences in transition economies after eighteen years of transformation. Weak rule of law, civil conflict, and other political economy factors have a significant effect on a path of economic development. 

But what happened to Ukraine?  After 18 years of reforms Ukraine remains an upper middle-income country. However, per capita income has declined by almost 20% percent since the start of transition in Ukraine. What is Ukraine's excuse?