Daily Bread for 8.2.22: The Russian Economy’s Not “Bouncing Back” (and What That Means for Local Policymaking)

Good morning.

Tuesday in Whitewater will be mostly cloudy with a high of 87. Sunrise is 5:48 AM and sunset 8:13 PM for 14h 25m 26s of daytime.  The moon is a waxing crescent with 20.5% of its visible disk illuminated. 

 The Whitewater Common Council meets at 6:30 PM

 On this day in 1932, the positron (antiparticle of the electron) is discovered by Carl D. Anderson.

Does a post about Russia’s economy have meaning for public policy is small towns like Whitewater? Oh, yes: in a local context, public policy that’s based on false assumptions (boosterism, toxic positivity) and bad data (or no data) leads to policy mistakes. In the international context, superficial press accounts of Russia’s experience with sanctions show what happens when reporters don’t think soundly or don’t assess evidence. 

It’s been half a year since Russia’s February invasion of Ukraine, and America and other liberal democracies have imposed strong sanctions on Russia. (This collection of liberal democracies was once called the Free World, and considering Russian and Chinese dictatorial ambitions, now would be a good time to bring back the term.) 

Merely concerning economics, without reference to military action, how’s Russia faring since her invasion? Headlines here and there (often posed as questions) imply Mother Russia is managing well, and perhaps ‘bouncing back’: Is Russia’s economy bouncing back from Western sanctions?, Smugglers’ secrets: How Russia can beat EU sanctions, and Russia is winning the economic war

Oh, brother: both a sound grasp of Russian economic life and a review of economists’ analyses leads to the same conclusion: the Russian economy is suffering and will continue to do so. The Motherland hasn’t bounced back; she’s having trouble walking. 

Of a sound grasp, consider: Russian is neither as economically independent of the West as the Soviet Union was, nor as robust as a modern, liberal democratic economy. As a solid initial assumption, Russia’s dependency and weakness would suggest trouble managing sanctions. 

Of an economic analysis (beyond a few clickbait headlines), consider: one finds evidence  that sanctions have been debilitating for Russia. A recently published study from Yale economists finds that Business Retreats and Sanctions Are Crippling the Russian Economy. 

From the abstract: 

As the Russian invasion of Ukraine enters into its fifth month, a common narrative has emerged that the unity of the world in standing up to Russia has somehow devolved into a “war of economic attrition which is taking its toll on the west”, given the supposed “resilience” and even “prosperity” of the Russian economy. This is simply untrue – and a reflection of widely held but factually incorrect misunderstandings over how the Russian economy is actually holding up amidst the exodus of over 1,000 global companies and international sanctions.

That these misunderstandings persist is not surprising. Since the invasion, the Kremlin’s economic releases have become increasingly cherry-picked, selectively tossing out unfavorable metrics while releasing only those that are more favorable. These Putin-selected statistics are then carelessly trumpeted across media and used by reams of well-meaning but careless experts in building out forecasts which are excessively, unrealistically favorable to the Kremlin.

Our team of experts, using private Russian language and unconventional data sources including high frequency consumer data, cross-channel checks, releases from Russia’s international trade partners, and data mining of complex shipping data, have released one of the first comprehensive economic analyses measuring Russian current economic activity five months into the invasion, and assessing Russia’s economic outlook.

From our analysis, it becomes clear: business retreats and sanctions are catastrophically crippling the Russian economy.

See Sonnenfeld, Jeffrey and Tian, Steven and Sokolowski, Franek and Wyrebkowski, Michal and Kasprowicz, Mateusz, Business Retreats and Sanctions Are Crippling the Russian Economy (July 19, 2022). Available at SSRN: or

A serious person begins with well-considered assumptions, thereafter adjusting those assumptions, if necessary, to experiences both physical (like economic data) and intellectual (as with new algorithms or paradigms).

New Haven, Palo Alto, or Whitewater: a person can think as clearly, and plan as well, in any of these communities. 

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