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The resilience of Russian economy was a bit of a surprise to be sure [1], [2]. A year ago Russians found that no enterprise in the country made nails. Nails! It's not wonder that our experts expected the whole economy to unravel.

But on this topic, I'm concerned about something else: when Russians (re-)started production of previously imported goods, they received a product that is both of a better quality and cheaper than the one before. I know of at least 2 examples that are 100% not a fake news: cat food and bricks.

Leave the war aside for now and ask how this is possible. Why is it that the international trade and markets did not settle onto the best product. How did it stay unbeknownst to consumers, so that their cats only received better food when trade links were broken by force. My inner libertarian cries very much while seeking answers.

Something like this happened in America too. When Trump chose to focus on regulation and protectionism, a legion of experts expressed grave concern that he was about to damage the well-being of Americans by destroying our foreign trade. But the result was an incredible economic growth and the longest period between recessions ever.

Honestly I suspect that thanks to the sanctions, Putin's regime is experiencing a bit of unintentional Trumponomics. The global elites made him a favor by destroying some of the worst of rent-seeking, wealth transferring schemes that were burdening Russian economy. Oft evil shall evil mar and all that.

Keep in mind that sanctions absolutely work in targeted areas. For example, Russian space industry is hurting greatly. Their GPS system is in jeopardy, teetering on the brink of coverage gaps, while the launches of all-domestic satellites keep being postponed. I'm not arguing against sanctions (although I'm against the overuse and abuse of them). But there's certainly more to the story than just some kind of weird failure of the sanction regime to bring Putin to his knees - something that has a lot of import to our own lives in America.

Posted by: Pete Zaitcev at 09:03 AM | No Comments | Add Comment
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