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Palaima: Unfettered capitalism damages a nation's economic soul

Austin American-Statesman Saturday, January 05, 2008

Steely-eyed Russian President Vladimir Putin was named person of the year for 2007 by Time magazine. Time's managing editor Richard Stengel explained that the award "is not an endorsement," but "a clear-eyed vision of the world as it is and of the most powerful persons and forces shaping that world - for better or for worse."

Stengel's statement invites us to ask the very question that the Time story avoids. Is the world better or worse because of the developments that we see under Putin's "bold earth-changing leadership," developments that were gained "at significant cost to the principles and ideas that free nations prize"?

My own reaction comes from experiences abroad: behind the Iron Curtain in the 1980s; in December 1992 in the newly independent country of Lithuania, birthplace of my grandparents; and recently in the underdeveloped country of Madagascar. We should think outside our own environments to see what is happening around our country and globally.

In December 1992, the Russians had cut off oil supplies in the dead of Lithuania's frigid winter. Still, many people were optimistic that everyone in the boat would rise on the waves of newly introduced Western capitalism. The families we stayed with all lived in Soviet-style state apartment complexes (which they compared to American housing projects), but they all thought that everyone would soon be better off.

Economically, Russia is better off. Contrast the massive foreign debt that is crippling the American dollar - various estimates put it at $5 trillion or more - with the fact that Russia has paid off its $200 billion foreign debt. But while Russia's new billionaires "play on the foreign stage," newspapers and television stations have been shut down and political opposition suppressed. According to polls, if they are legitimate in such an environment, Russians seem willing so far to make this trade.

Even so, what is the general picture? Time's article on Putin, "A Tsar Is Born," speaks of "the soul of modern Russia" being "decrepit Soviet-era apartment blocks, the mashed-up French Tudor-villa McMansions of the new oligarchs and a shopping mall that boasts not just the routine spoils of affluence like Prada and Gucci but Lamborghinis and Ferraris too."

Likewise the true soul of the modern capitalist United States is the official Census Bureau report for 2005 that 17.6 percent of children under 18 live below the poverty level while American Express Platinum card members recently were invited to plunk down $395 for a tour and lunch at exclusive restaurants in New York, Los Angeles and Miami and $450 per person for rare single malt scotch at Morton's. Two card members paying to lunch and drink scotch would exceed the cutoff level of monthly income for a family of four in poverty. One card member doing both will spend more than the average income per year - $800 - of the 18.6 million people of Madagascar.

The economic souls of the United States and Russia look very troubled.

In Lithuania, we saw a dealer from New York negotiating with two desperate young men to buy a precious family icon for $10 dollars and then turn around and put a $500 price tag on it for visitors to buy and smuggle out of the country. He proudly told us how friends of his with contacts in the international Red Cross smuggled to him coffee and chocolate in shipments that were supposed to be used for medical and other urgently needed supplies.

Unfettered capitalism does not lift all boats. Those who rise do not do so according to any moral principles of social meritocracy.

My questions, then, are these.

While a few can afford Lamborghinis and McMansions, what happens to the many in Soviet-style apartment complexes and American housing projects? Are mega houses and $300,000 sports cars a mark of progress in any society while families live below the poverty level, eight million in our own country, and our world's energy resources are strained?

And who would be your person of the year?

Contact Palaima, a classics professor at the University of Texas, at

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