Our Man in Haiti

Following the devastating earthquake in Haiti, economist Robert Murphy volunteered to spend a week in Haiti. Back in May, he wrote up his experience, from an economics point of view. His report is a great read that applies basic economics to what he witnessed in the country.

You can read his report here.

More from "Our Man in Moscow" (and His Russian Wife)

Richard Ebeling emails:

Bob:

I only noticed this comment today -- rather late, I know.

But let me say this, there were KGB tank units around the Russian Parliament, as well as regular Soviet Army tank units.

Yes, foreign political leaders rained praised on Gorbachev. Here was the "good" socialist they had been waiting for all their lives. Now, finally, socialism would develop in its finest form in the homeland of the "dream" that so many Westerners wanted to believe in for so many decades.

As my wife, who is Russian and lived her life in Moscow, expressed it. "Gorbachev gave us a longer leash from the end of which we were now allowed to 'bark' louder." She, too, was amazed when one morning not long after Gorbachev came to power she opened the "Moscow News" and found on the cover a story about the previously taboo crimes of Stalin.

But, as I said, there were limits to how far Gorbachev and those around him would allow the truth to be revealed. Lenin, as the builder of the Soviet socialist state, was off limits.

What the economic reforms soon demonstrated was that you cannot be "half-pregnant." Central planning combined with limited small private enterprise and some foreign joint ventures merely generated contradictions and even more corruption and imbalances in the Soviet economy.

The system was rapidly falling apart -- imploding -- with either an impossible attempt to return to the old system or the end to central planning. By spring and summer of 1991, the state retail stores in Moscow (the "center" and showcase of the system) were often bare.

Having given a degree of freedom to people to say and write things previously forbidden, a growing number of the national subject peoples wanted their independence.

Those in the Soviet hierarchy saw the system slipping away, their power base and privileges threatened. The hardliners actually understood the nature of what was happening far better than Gorbachev.

He really lived in a dream world in which he thought there could be some "middle way" of preserving the system. The hardliners explained in their attacks on Gorbachev that the road he was following was leading to the demise of Soviet power.

The hardliners initiated the coup attempt in August of 1991 precisely because they feared the breaking up of the Soviet Union with Gorbachev and Yeltsin and other Soviet republic leaders planning to sign a document giving more autonomy to the respective Soviet republics. And if, under Yeltsin, "Russia" was no longer the controlling corner stone of the Soviet state, then that did mean the end of the U.S.S.R.

Gorbachev's vision for a new Soviet State and what actually happened is another stark example of the unintended consequences of human action.

Now It Can Be Told: Our Man in the old Soviet Union was Debriefed by the CIA

After Richard Ebeling sent me this email, which include reports of his activities in Lithuania and Moscow during the collapse of the Soviet Union, I emailed back to him:

I'm beginning to think there is a secret libertarian wing of the CIA and you are heading it.

With his permission, I reproduce his reply to me:

Bob:


Actually, when I returned from Lithuania in January 1991, I was contacted by the CIA and they sent an agent to Hillsdale for a "debriefing."

I was willing to tell them what I had observed and my interpretation of the events. But I was firm that I would not give them the names of any of my Lithuanian friends and associates with whom I had been interacting while I was there during the "troubles."

They did not press me on that, and were seemingly pleased enough to have the impressions of an economist who had been there "on the ground."

Richard

Our Man in the Old Soviet Union

Recently a commenter raised a question on my view of Mikhail Gorbacev. To gain greater insight on the question, I turned to Richard Ebeling, who spent time in what was then the Soviet Union. Below is my email and Richard's response:

Dear Richard,

In a recent post (here) a bit casually I wrote that Mikhail Gorbachev took the "noble" way by letting the Soviet system collapse.

The first commenter to the post took me to task and said Gorbachev cut a deal with the international banking elite.

I don't recall this happening. Perhaps it did. But the sense I always had was that at various points during the collapse Gorbachev could have used troops in an attempt to hold together parts of the old Soviet Union, but he did not. I often thought this was somewhat remarkable in that I think many other Soviet leaders would have attempted to use much more force in a naive attempt to hold the Soviet Union together.

I know you spent some time in Russia in roughly this period and am wondering what your view is of Gorbachev. Should he be viewed positively for his restraint in not using the Soviet military? Or was his hand forced in this direction by events? Or did he cut some kind of deal with banksters that I am not aware of?

Thanks for any light you can shed on this.

Best.

Bob

Ebeling's reply:

Dear Bob:

Gorbachev is neither "black" nor "white." First, he actually believed in socialism -- but he wanted a socialism "with a human face." He looked back to the "good" Lenin, the Lenin who introduced the "New Economic Policy" (NEP) in the early 1920s following the Bolshevik victory in the Russian Civil War (1918-1921). The Lenin who permitted limited private commerce after the failure of "War Communism" during the Civil War. And the "good" Lenin who permitted a wide degree of cultural freedom in the arts.

But it was also a Lenin who kept the "Commanding Heights" of the economy -- heavy industry, foreign trade, and banking -- in the hands of the government. And all monopoly political control remained in the hands of the State.

Gorbachev considered this a model to revive the economic and social status of the Soviet society. Thus, he introduced economic liberalization with small private enterprises and some limited joint ventures with foreign companies. And he permitted some of the "blank pages" of Soviet history concerning the Stalinist years to be filled in. But any significant criticisms of the Leninist period were "off limits," since this would have challenged the foundations of the existence of the Soviet State.

It is true that Gorbachev was willing to allow the "captive nations" of Eastern Europe to leave the direct control of the Soviet Empire.

But he was not as willing to accept the break-up of the Soviet Union, itself. He approved the use of Soviet force against nationalist movements in Azerbaijan and in Georgia.

The most dramatic instance of this was in January of 1991 in Vilnius, Lithuania, when the Soviet security forces and military attempted to crush the democratic freedom movement in that country, a freedom movement that also demanded a restoration of the national independence that had been lost as a result of the Hitler-Stalin pact of 1939 that divided Eastern Europe between Nazi Germany and the Soviet Union.

I was in Lithuania at that very time doing consulting work on market reform and privatization with the government of Lithuania. I was on the streets of Vilnius with Lithuanian friends, and personally witnessed some of the 13 people killed that day by Soviet forces, three of them crushed under tank treads. I was in a crowd at the radio station when the Soviet forces opened fire on us.

Gorbachev was not willing to preside over the demise of the Soviet Union. The coup attempt of August 1991 was under taken by those who were fearful he was already going too far and that things were getting out of his control.

(I was in Moscow during the coup-attempt and was at the Russian Parliament building for most of the three days of the failed coup with thousands of Russians supporting Boris Yeltsin's defense of Russia's budding democracy. We faced down a ring of KGB tank units surrounding the Parliament building.)

Gorbachev set in motion a chain of events that he could not control. He wanted to save Soviet socialism, but in a world of "unintended consequences" his attempt at reform in the spirit of his concept of "true" Leninism led to the end of the "evil empire."

Richard

Our Man in Haiti

Economist, and good friend, Bob Murphy has just returned from Haiti.

He writes that he will be posting about Haiti, and his experiences there, for months. Bob is a top flight economist and I think his training in economics will result in some pretty unique observations about the earthquake ravaged country. It's a series of posts I am really looking forward to.

Here is his first post.