Mercantilism Works, Thank You EU

Mercantilism Works, Thank You EU

The West has done another great deed for Russia, it has forced Russia, against the will of its fifth columnist oligarchs and bureaucrats and many traitorous senators onto the path of Mercantilism. More on this fifth column scum later, and how most deserve a wall and a cigarette.....now on to the mercantilism.

I have written many times about Mercantilism, the only nationalistic economic form, the one that built all the great nations of the world and the one that is absolutely ignored in all economic classes and B schools. Both of which I know from personal experience and from speaking with countless others who had similar gaps in their education.

Mercantilism's first pillar is maximum utilization of your own resources and population. This does not mean a communist or fascist dictatorial economy. Internally a free market is a fine thing with competition...internally. What it does mean is that you need protective barriers to cut down on imports and thus produce everything that can be produced at home, buying, as per the second pillar, only raw resources and only if you need them and selling finished goods.

This worked with the auto industry in Russia, raising the number of automobile plants from 19 old ones, when stiff import duties were passed to 36 as of this year, including a few new home grown ones. So it was and is obvious that this is what is needed to take the Russian industrial production to the next great level.

However, knowing and doing are two very different things and with a bag full of foreigners, that is oligarchs, running large swatches of the economy, it would never materialize. Why are they foreigners? Because they do not give two cents of a damn about Russia or the Russian people. Because they consider themselves internationalists and are more than happy to run away from what ever they destroy in their wake. These are the same types of men who pushed out the Tsar and created chaos because they thought they could earn more, and then ran away from the wreck.

However, our enemies, the collective West, and enemies they are: have moved Russia down that path themselves. Thanks to sanctions, this has give the patriots in power circles incentives to push through localization. And guess what? It worked. In the months from Dec 2013 through July 2014, the industrial output graph was flat to negative, below the 50pt mark. Since

Industrial Production grew by 2.8% year on year in September - the fastest pace since 2012 as the domestic economy shows strong signs of recovery.
The most important segment which reflects overall business conditions is the manufacturing segment which registered a 3.6% gain for the month.
http://russia-insider.com/en/business/2014/10/17/02-55-52pm/russian_industry_expands_rapidly_september_hammers_expectations?utm_medium=RI&utm_source=Russia%20Insider

Retail Sales improved for a third consecutive month reaching the yearly rate of 1.7% beating consensus forecasts of 1.5%. The improving trend in Retail Sales is particularly important given how important Q4 is for the retail sector.
http://russia-insider.com/en/business/2014/10/17/10-07-31pm/september_data_smashes_expectations_russian_economy_accelerates

Mercantilism and the Case of the Russian Automotive Industry

Mercantilism and the Case of the Russian Automotive Industry

 

The year was 1999 and the Russian automotive industry was in its final death throws, or so it seemed. No new plants had been built in 10 years and the existing ones were rotting before our eyes. Used imports, many with right side wheels and of questionable quality and safety, were flooding in. It was at this point that President Putin, on his first term, convinced the Duma to pass a 25% import tariff.

 

The gurus of capitalism, the IMF (International Monetary Fund but better known as the International Mafia Front, tasked with destroying one economy of another, with its "advice" and "strategy") declared that this would be it, the final, final stake, driven into the vampire of Russia. Well, not so fast. Not only was this not a stake, but the "vampire" that is us, has come back to life and is enjoying the sun and garlic.

 

From 1999 to the present, a dozen automakers have set up shop in Russia, many with multiple plants and the trend has not stopped. Russia has become the fourth largest and most important auto market in the world and Russian assembled cars, both of Russian and Foreign makes, are exported to surrounding countries. These plants range from just assembling the body and motor, such as in Mitsubishi, to assembly and purchase of all Russian made parts, such as VolksWagen. BMW's production plant has even been rated as higher quality than its plants in homeland Germany.

 

The Great Shock of 2007-8, which saw the bankruptcy of GM, Chrysler and Saab, saw Russia raise its tariff to 35% on imports. The motor industry again adjusted and again upwards. Credit is given to pro-industry business policies, low taxes and very high barriers to entry for competitors with finished products. The first half of 2012 saw sales increase of 15% over same period 2011, with a total of 1.1 million cars being sold. This is at the same time that Europe, the US and China are screeching to a halt. A gradual increase of minimal domestic parts usage, has also spurred growth of secondary industries.

 

And the expansion is not stopping. Ford, who opened their first plant in 2002 and started their second as a co-venture in 2011 is waiting for approval from the government to open their 3rd plant, with a planned investment of $150 million. Renault has increased production at its AutoFramo plant by 17% to 180,000 vehicles. Mitsubishi will start full production of its new Outlander, in its new Kaluga (Russia's motor city) plant in November 2012 and plants on producing the Pajero Sport in 2013.  VW will bring production of Audis, also in Kaluga, in 2013.

 

Even ancillary industries are growing, such as France's Michelin, who has invested heavily, to a tune of $44M in Davydov to increase the volume and range of its tyre production, as well as construction of a new distribution plant.

 

By this point, my more astute readers will be itching to point out the fact that Russia is entering the WTO and is facing a sharp decrease in tariffs. To that I say, correct. However, the Duma passed a surcharge for imports to cover "decommissioning" of the vehicles, a scrap tariff. When a car is brought in for personal usage, depending on motor size (1-3.5 liters), the charge is between 2,000 rubles 3,000 rubles. However, when a car is brought in for business use, to include sale in a dealership, the charges go from 17,200 rubles for a 1 ltr engine to 110,000 for a 3.5 ltr engine. Used cars range from 106,000 to 700,000.

 

Sure the open borders, free traders are screaming mad, but honestly who cares? Mercantilism is roaring its "ugly" head in Russia and Russians are now working, earning good salaries and paying taxes. How "ugly" is that?

WTO is Poison For Russia

The EU's trade commissioner, recently stated, that the EU would not finalize a strategic trade pact until Russia joined the WTO. As the 6th largest economy and the only industrialized nation not a part of that uber national, socialist organization, Russia is a constant reminder to all the disaffected groups around the world, such as the US and British conservatives, that no only do they not need the WTO but it is a poison that robs them of their economic and, in the end, political freedoms.

Russia's economy has not only survived, but prospered under a mercantilistic protectionist system. Even this present Crisis has been relatively mild compared to most WTO members, as Russia has raised its walls and fallen back on its own companies and an internal demand to keep itself going. The lessons for this were learned after the disastrous 1990s, where Yeltsin opened Russia up to the flood of foreign goods that destroyed most Russian companies and helped plunge Russia into its own Great Depression.

Protectionism was instrumented by then President Putin and a reversal of fortune began, well before oil passed $25 per barrel. The Leftists like to "blame" oil for Russia's boom and avoid the fact that it was not until 2003 that oil prices shot off, some four years after a drastic turn around in Russia. Nor has Russia collapsed, a year after prices fell like an international banker from a high office window. The West's hatred and anger were and still are palatable, as they were first locked out of cheaply exploited Russian raw resources and then were forced to build and operate local factories in Russia, employing Russians, to continue playing in Russian markets. Even giant Western aggro business has been loosing ground as Russian farms and food companies, with protection from the state, have made great modernization strides.

This also undermines the West's control over the life of Russia and thus Russia herself., as they have had to face the starling reality that they need Russia much more than Russia needs them. This imbalance of power grows starker every year.

The EU representative Catherine Ashton, was quoted as stating: "Russia needs to demonstrate it really is keen to move to WTO accession and part of that is not imposing any new duties, which in any event damage business."

What she really meant was: damages the Western businesses, the mega international corporations, who own the governments in the West and care not a zilch either for their home countries nor for the concept of competition. They hate most of all, having to set up shop in Russia, rather then just flooding goods from their SE Asian factories.

Russia is the only major European and world economy that has stood up for its citizens, not bought into the Marxists Free Trade and has prospered. In this, she gives hope to groups of oppressed conservatives throughout the West and thus posses a direct threat to the body politic of the internationalists, who run those nations.

As we all know so well: hope must always be crushed.