Jihad vs. McWorld – Benjamin Barber
Friedman is in the middle of the globalization argument, not taking sides.
Perestroika aimed to break the hold of the oligarchy on the economy and the political
Boris Yeltsin succeeded Gorbachev as the president of Russia in 1991.
Yeltsin was popular with the people.
However, Yeltsin didn’t have a clue about economics.
By 1992, things had gotten bad. 20% inflation and 10% unemployment.
The government rationed many commodities but eventually gave up on some of that
because there wasn’t enough of anything.
Igor Gaidar – prime minister under Yeltsin
Anatole Chubais – fairly young Russian government official that wanted to cut
Government spending was cut and they started to ease price controls, which only made
Russia was in a depression.
Yeltsin and Chubais turn to the US and Japan.
Some Harvard economists went over to Russia to advise Yeltsin. They told him they
needed to make the immediate transition to capitalism.
Jan 1992, Russia took all price controls off, and took the government out of certain
Yeltsin needed financing and the media to say nice things about him. He turned to the
oligarchs (nomenklatura). Yeltsin wanted their support in exchange for some state
Overnight, these big empires started showing up (oil, media, banking, etc).
By 1995, these oligarchs were more powerful and rich than the government.
In 1997, an Asian currency crisis started to depress commerce and markets. It hit the
oligarchs hard. Gas and oil became really cheap here in the US and in western Europe.
Many of these oligarchs’ wealth was tied up in commodity exports from Russia so they
were losing money.
They pressured the govt to issue bonds to improve their state industries. They used repo
notes (repurchase agreements). These notes were becoming due and they didn’t have the
money to pay them. This sent the Russian economy into a crisis.
They cut government