Mafia Economics

An interesting thread on Russia's situation. I think this insight is important:

Why old oil and gas tycoons were expropriated, while metallurgy oligarchs were spared and largely remained rich through the entire Putin's era? Because metallurgy is too complicated for Putin's friends to control it directly. They spared it, because they are too mafia to run it

 

The closer you are to the seat of power, the more mafia like and thus simpler you are. You are just unable to administer anything complex. That's why the highest-ranked and the simplest interest group took oil and gas - something they could rip off without destroying. immediately

1990s oligarchs are more complex but lower in dominance hierarchy. They took something that they could administer without ruining it immediately - the metallurgy. Ofc they're ruining it slowly. They're depleting old deposits without developing new ones. But it will take time

And only really complex stuff like competitive machinery is left for nerds like a nengineer Skurov - the owner of that mining machine producing factory I talked about. That's very important. Complex machinery is administered by guys who are very low in Russian dominance hierarchy

That's quite important for understanding the economic prospects of Russia. Complex industries, especially hardware industries are run by very weak interest groups. Higher-ups tolerate the nerds because someone should do it, but they'll milk those miserables dry 

I imagine it's like the banker in this scene:

It's probably easier to navigate. The banker in that scene thinks he lives in a place where there's rule of law; the nerds in Russia don't have any such illusions.