Eat the rich

Since we're on the topic of big business and ethics, a post about an opinion column by Masha Lipman in today's Washington Post seems appropriate. I first heard the story of Mikhail Khodorkovsky earlier in the week as Moscow Times Index has basically been in free fall. He is an oil tycoon who was arrested earlier in the week on charges of tax evasion and fraud, and whose company Yukos had 44% of its shares frozen with the approval of President Vladimir Putin.

Lipman implies that the charges are politically motivated due to Putin's fear of a political challenger. Although I don't know the full details of the story, what I have read so far seems to indicate that the general opinion of Russians is that it was a politically motivated arrest.

The majority of the Russian public, meanwhile, may be pleased to see a fat cat in trouble with the state. But everyone in Russia is certain that the case against Khodorkovsky is politically motivated, and because of this the rule of law is undermined.

From other articles:

"The president should open his eyes and finally discover that prosecutors are destroying in one day what took years to create," leading business daily Vedemosti said in an editorial.

"I do believe the methods are absolutely wrong -- the way they were arrested, put in jail and so on," a senior Russian diplomat told Reuters.

The arrest was widely seen in Moscow as politically motivated. Khodorkovsky has been financing opposition parties standing in the December 7 parliamentary election.

"The real balance of power in the Kremlin has shifted -- to people in uniforms. For big business, this (Voloshin's resignation) means one thing -- pack your bags," Dmitry Oreshkin, of the Merkator think-tank, said.

I have often heard people say that a healthy balance between business and government should exist so that neither one becomes too powerful. Stories like this illustrate that, aside from issues such as limited liability, business operates in a fundamentally different manner from governments. The former relies on pleasing others through voluntary means to gain market share, while the latter relies on people in uniforms wielding guns to gain power. The message is being sent loud and clear to Russian entrepreneurs and businessmen: if you don't want to get hurt, listen to Don Putin and do what he says, or else 'bad things' might happen, and we don't want that, do we?

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I think we should be wary,

I think we should be wary, though, of ascribing the usual business ethos to Russian business and the Oligarchs, who probably operate more like Don Corleone than Ted Turner.

After all, a lot of the oligarchs used to be highly placed in the communist party as bosses, managers, and whatnot, and after the fall of communism used their connections (and mafia-like methods) to gain their fortunes and run rivals out of business by hook or crook, too.

Clearly what Putin is doing is wrong, and the Russian papers are pointing out (correctly) that even if Khodorkovsky et al. are crooks, the rule of law is more important to protect. But it may be a case of "sauce for the goose, sauce for the gander", except that Putin's actions damage the economy more.

This is the lead opinion

This is the lead opinion piece in this week's Economist. It confirms Brian's caution.