A comedian who improbably becomes Ukraine’s president on a hit TV show has just improbably become Ukraine’s president in real life. Which, when you think about it, really shouldn’t be too surprising when the country’s economy has been a joke for 99.9 percent of the people for 25 years now.
Indeed, even more than Venezuela, Ukraine has been the poster child for how politicians can mess up an economy. That’s clear enough if you compare it to what should be a comparable country in Poland. The two of them, after all, are neighbors that both not only faced the tough task of trying to create a free-market economy from the ashes of a communist one, but also did so from very similar starting points. Ukraine’s income per capita was, according to the International Monetary Fund, about 90 percent of Poland’s before communism collapsed in either one of them, which, because this painful process started a few years earlier in Poland, meant that Ukraine was actually the richer of the two as recently as 1991.
Since then, though, things couldn’t have been more different. While it only took Poland six years to make up all the ground it had lost during this chaotic transition, Ukraine never did. The combination of corruption, economic mismanagement, the ongoing civil war against Russian-supported rebels, and did we mention the corruption have all left Ukraine’s economy in worse shape today than it was when the U.S.S.R. still existed. It seems almost impossible to believe, but Ukraine’s GDP is actually 24 percent smaller now than it was in 1993 — the first year we have reliable figures for it — and its incomes are 17 percent lower. Poland, meanwhile, has seen both its economy and its incomes grow by about 200 percent during this period. Which is why it should be no surprise that so many Ukrainians have left home to go work in Poland if they can.
Ukraine’s entire post-communist history, then, can pretty much be summed up as follows: Power has alternated between pro-Western and pro-Russian oligarchs who have focused on appropriating as much of the economy as possible for themselves, rather than growing it for everyone else, and not even the country’s periodic revolutions against too-Kremlin-friendly leaders has been able to change this. Although the corruption, of course, hardly stops there. It permeates the whole economy. In fact, it’s a way of life. Ukraine, you see, is best understood as a mafia state where the government and organized crime, insofar as those two are distinguishable, bury business under an avalanche of so many bribe demands that it’s almost impossible to make a profit. To give you an idea of how bad things are, even the country’s newly-created anti-corruption prosecutor seems to have been caught, yes, corruptly protecting high-profile people accused of corruption.
Which is to say that they’re not so much worried about killing the golden goose as killing it before anyone else can.
These are the type of “extractive institutions” that are the reason, as M.I.T. economist Daron Acemoglu and Harvard political scientist James Robinson put it in the title of their book, why nations fail. There’s no incentive to build a business or try to come up with a new idea when you know that barely-disguised gangsters are just going to steal everything from you. Ukraine is an extreme case in this regard, but it’s a lesson that’s broadly applicable wherever class differences start to calcify into caste systems, where success becomes more about connections than ability, and where elites are regularly saved from the consequences of their own bad decisions.
It’s the kind of thing that makes putting a comedian who only has the vaguest of political platforms in charge of the country seem like a semi-reasonable decision. What’s going to happen, things are going to get worse?
Now that’s funny.