Who finances Navalny? Yes. Repeal all Putin’s amendments. I’m aware of Putin’s purpose. Today economists say the world has never been that rich, but then you look at the Africans living on $2 per day. Well, to be honest, I don’t think so. All the developing countries, in fact, remain developing. Under the guise of combating poverty worldwide, exactly colonization 4.0 is taking place, indeed. Big countries’ interest, ok, let’s do this way, basing on the genome, simply, basing on the human nature. Expansion doesn’t strive at all to make the world equal but does strive to the following: to survive and thrive yourself, to dominate the food chain. As for the others, they don’t croak from hunger and that’s enough. Meanwhile, rich Americans, how to say, will be two times richer, yes? – Yes. And the Africans will live not on $2 but $4 per day. Igor Rybakov – alumnus of Moscow Institute of Physics and Technology, billionaire, philanthropist in education, lives in Russian. Here is a question: will it change anything in the world? – I’m not sure. Still, it will tick the box of fighting for, so to say, improving well-being, which is good, isn’t it? Igor, I think there’s a big difference between $2 and $4. Sergei Guriev – alumnus of Moscow Institute of Physics and Technology, one of the most outstanding Russian and world economists, lives in France. You know, this is one thing when you say: “I have 9 or 18 million”, – this is one thing; but $2 or $4, this is an absolutely different standard of living. Here I’d like to say, it’ll be great if nobody in the world lives less than on $2 per day. I’m all for it. And it’s likely enough to happen in the upcoming decade. I’m all for it. – Yes. If we’re speaking about $2 per day, forty years ago, people living on $2 per day amounted to 45%. Moreover, I’ll tell you one very important thing. If we’re speaking about $2 per day, forty years ago, people living on $2 per day amounted to 45%. Now their amount is less than 10%. This is a huge progress, huge progress. Form the following point of view only. – Right. However, news doesn’t really cover this. People who control value chains, look, thanks to efforts and labor of those who work for $2, will earn $200. I’m speaking about justice. That’s true. How do rich countries benefit from poor countries becoming richer? Recalling what happened in Europe over the past few years, the refugee crisis was the strongest strike on it. A million of Syrian refugees arrived in Europe – it was a huge strike. So, the Europeans started to think what would happen if, put it crudely, there were not a Syrian refugee crisis, but a Nigerian one. The point would be not about one million but about tens of millions of people. Therefore, today the European Union is thinking what to do to create jobs in Africa, to increase income in Africa. It’s in the Europeans’ interest. Actually, some countries have become rich, e.g., South Korea, Chile, Japan. Poland is a rich country now. Many Central European countries have become rich; and so on and so forth. At present, everybody is keeping an eye on Africa; what will happen to Africa. Jeff Bezos. Beneficiary of one of the longest and widest value chains. One person, Jeff Bezos, now controls a trillion of the economy – tomorrow he will control 10 trillion of the economy, undoubtedly. This is the so-called rare case of the absolute consensus, isn’t it? – Yes, it is. So, the global economy is estimated, so to speak, at about $100 trillion. Several years won’t pass, well, 10 years, when Jeff Bezos will control 10% of value chains. One person. A specific question to you: Do you think it necessary to impose control, public or a kind or regulatory control, on Jeff Bezos? What to do? This is one of the central issues of the today’s economic policy,A specific question to you: because, under the current globalization technology development level, the situation is really that to the victor go the spoils. Indeed, today the value of some companies is a trillion. They are Amazon, Google, Facebook and Microsoft, yes; from time to time one is higher than the other. Apple. Value of 4 or 5 companies is close to a trillion. Well, there’re more of them now. – Yes, more. In fact, they are monopolies of such a size that have never existed before. Today there are strong concerns that antimonopoly agencies inefficiently regulate American technological companies. There’s an ongoing discussion what to do in this regard. The situation in Europe is absolutely different. There are no big companies in Europe that control The Directorate-General for Competition of the European Commission. Nothing similar, i.e. Europe regulates competition much better. Google, Amazon, Facebook, Apple. – Yes. Maybe, you’ve heard about GAFA-Alliance. – Yes. What is the role of modern economists as these four, excuse me, people, four beneficiaries or four groups of beneficiaries, actually, directly, through their direct actions, today has power stronger than ten countries all together. I suppose, if you think that, in Russian he is Zuckerberg, right? Mark Zuckerberg, Facebook owner. If you think he has enormous power, you’d better watch his performance at the Congress, where members of the Congress, popularly elected politicians, ask him respective complicated questions, and he doesn’t feel like the world ruler at all. He understands that despite he is a very rich and powerful man today countries operate differently. They can introduce taxes, they can introduce regulations, they can dismember Facebook. Europe is discussing possible introduction of GAFA-tax. France has already announced it. The French say: “Wait, you earn money in France, your customers are here, your data are generated here but you pay taxes in Ireland or on the Caribbean”. Accounting business really prefers technological companies more and more. This is relevant not to Facebook only. At present, the most successful start-up in Europe is Revolut. This start-up was established by an alumnus of Moscow Institute of Physics and Technology By Storonsky. – By Nikolay Storonsky. It is neither a bank nor a Facebook, it isn’t a social network. It’s just an accounting fintech. It operates successfully and, indeed, threatens, bank accounting business. Facebook hasn’t launched its cryptocurrency yet. So far, what we see is, in fact, a weirdly contradictory offer in its nature, i.e. the offer hasn’t been formed yet. That’s very interesting because GAFA-companies have a lot of economists, and they’ve done a lot to make Amazon more efficient, to make Google more efficient. In this context, renowned and talented specialists work there, but these companies haven’t launched their cryptocurrencies yet. Even if they launch them, even if they push, for example, Revolute or other fintech companies, out of the market. They’ll buy Revolut – Right, maybe they will, ok. By the way, this is a challenge for the antimonopoly policy, too. I mean partly why today Facebook, Amazon and Google are so big. The reason is that they are so rich that they can easily buy potential competition. In November 2008, I’m reading a news bulletin now, Queen Elizabeth II during her visit to London School of Economics and Political Science, asked economists how they overlooked bank crisis risks, well, why nobody could predict it. So, a group of lead specialists sent the Queen a letter apologizing for their disability to predict financial crises. As the main reason of the failure, they indicated a collective imagination that the greatest minds in both Great Britain and the world lack, which could have helped them to realize existing system risks in general. Please, comment on how all the economists could overlook that. There’re several answers to your question. Firstly, Economics is a young science. Secondly, the economy really has problems: people’s minds are similar, that’s why it’s difficult to express an opinion different from the mainstream. We can’t say there’re no such opinions expressed, i.e. there are people who spoke out such opinions and these people aren’t unknown freaks, but the most high-ranking professionals, e.g., Robert Shiller, a person who later was awarded the Nobel Prize, said that the value of American real estate is overestimated; Raghuram Rajan, a professor of the University of Chicago, former IMF Chief Economist and former head of India’s central bank, said the same thing as early as in 2005. Economics isn’t Physics, Economics studies people while crisis is a collective expectation of people-market participants on assets value. Once economists can convincingly tell market participants that assets are overestimated, a crisis will break out immediately. Thus, to predict any crisis is, by its definition, impossible – it isn’t the weather, independent of forecasters. Assets estimation depends on what people think about the former’s future, so crisis prediction is what economists can’t do. Economic recommendations. Giving recommendations to its clients, Invest Analytica company said: “Guys”. Well, you’ve said people wonder how markets are going on, what will be growing. Economists tell them that this and that, here and there will grow but at the same time, they sign a document actually exempting them from any responsibility if their forecast doesn’t come true. Do you think it’s fair that some people or some companies, some institutions make profit of giving advice or posing as those who are good at it, actually they sell their services, but later, when their recommendations fail and people lose money or get into various trouble, they bear no responsibility? So, when you take advice, there’s always a disclaimer in the small print: “Please, note, we bear no responsibility”. Therefore, analysts always bear it in mind but there’s a problem you’re posing right: sometimes these analysts face a terrible conflict of interest while 10 years ago regulations changed. When your investment analyst works at the investment bank selling securities, while profit of the latter depends on it, and when this investment analyst says: “Well, look, what a wonderful security, please, buy it, it will be always growing”, -this is the very conflict of interest. Today, issuing banks in America are facing a Chinese Wall phenomenon, division. It’s necessary to make investment analysts understand that their advice should be independent of, at least, what securities sellers do within this very bank. This an important thing and there should be many such things. As a researcher, I’ve studied Enron’s case, for example. That is a very interesting case, too. There were a great many clever and smart people but at a certain moment, they decided they were free to do what they wanted. Well, many of those people are behind bars now. The Company’s founder had a heart attack. He didn’t last till his trial, he died before it. Generally, of course, I really studied how it all was developing inside the Company. In the beginning, it was a rather reasonable interesting business company, , but then they decided just to sophisticate and sophisticate their financial tools to stumble investors. Alright, Enron. Arthur Andersen was its auditor, a very credible company that ceased to operate. That ceased to operate. – Nevertheless. This is a vivid example of the conflict of interest, too. Well, nevertheless, wait. Yes. When something went wrong – just a conflict of interest and “ah, we’re sorry”. Wait, we’re talking about democratic institutions that can be trusted; so, let’s keep to this point. Arthur Andersen that doesn’t operate anymore but then was a pillar, that everybody trusted, that signed all those reports and told that everything was fine to its investors. Finally, people lost enormous money and not only rich people, I’d like to say. First… – Pensioners… – Absolutely right… – Poor people, various people, middle class, it doesn’t matter, well, look. So, don’t you think that it’s unfair to say that in “democratic communities”, there’re trustworthy institutions, if later they turn out to lie and deceive, only later, when people lost money? There’re criminals in any community. At first, we really believe we can trust people, but later it turns out we have to combat the conflict of interests. The point of Enron and Arthur Andersen’s case was that Arthur Andersen sold Enron both auditing and consulting services. The idea was the following: we sell you auditing services if you don’t like our audit opinion, maybe, you’ll stop buying our consulting services. However, for us, that won’t do. Therefore, Arthur Andersen’s auditors were, in fact, participants of those crimes committed by Enron’s top-management. Fortunately, it ended up so that Arthur Andersen ceased to operate as well as it ended up so that now auditors can’t do what they used to, i.e. sell one and the same client both auditing and consulting services. During the next crisis of 2008-2009, we learned a lot about rating agencies. Today there’re more regulations on rating agencies that rated with AAA papers which shouldn’t be rated with AAA. All in all, any crisis lets us understand how else we can combat the conflict of interest. However, in general, you’re right, crimes really take place. Is your wife engaged in the same field? Yes. Well, Economics. It’s clear that, well, you exchange information, or you don’t do it within your family? Yes-yes, we do, and… Do you compete with each other? No, we work together, we collaborate: we have several joint scientific articles Actually, she is a more successful economist than me – I’m a person of a more practical nature. So, as a scientist, she is a more successful economist than me. And… More cited? – More cited, right-right. This is also a very important role model for our daughter because, as you know of course, Mathematics isn’t popular among girls and there’s a stereotype that Mathematics isn’t a feminine business. Thus, the fact that my wife is a scientist… Is your daughter engaged in Mathematics? – Mathematics, right-right. Of course, you know Elon Musk. I know. His… I follow his Russian twitter. – Wow, cool. Elon Musk has a twitter account where he writes in Russian. – Great. I mean the very hype Musk always uses to communicate with the world. So, right, let’s figuratively call it “noble” hype. Hype that makes everybody write about some cybertrucks, about something, about loops, hyperloops. He has a dummy in his garage, and to all the investors, he says: “So, I’ve spent, well, your money on this dummy”. Nonetheless, I’m speaking about noble hype Do you think it’s normal to use noble hype in the modern world to attract attention to Tesla’s stock that won’t comply with fundamental indices? You know, I think it’s normal to use such hype if you write your disclaimer in capital letters that are big enough. – Clear. And if you don’t try to foist it on, don’t try to, I mean, foist it on illiterate pensioners. Don’t smoke weed. I suggest that nobody should take drugs and I don’t take them, either. Still, if you work with qualified investors and give them a comprehensive disclaimer, their trust in you is their own problem. If you don’t try to foist something on unqualified investors such as, I don’t know, pensioners without higher education, I think this is business relations between adults. Let’s talk about comfortable suffering. The humanity has never been that rich, on the average. Well, it’s Bezos who is now becoming a hero, the leader of humanity’s sufferings. Recently he has granted $10 billiard to fight against an unknown climate enemy nobody has ever seen. However, two summers in Europe, as you say, were hot and so on. I mean everybody suddenly started to notice, well, some anomalies. Why? Well, the press started to cover it, everybody suddenly became numerologists, so to say, all these. This phenomenon isn’t new. Right. Noble hype. We’ve agreed it’s a strategy but maybe comfortable suffering is a much cooler strategy since Jeff Bezos is the only beneficiary: he is obtaining more value chains, right, under the pretext of fighting against an invisible climate enemy while comfortable suffering and these very potential warming and tragedy, they bother everybody, i.e. all people can get scared that tomorrow glaciers will melt and water will inundate everything. And this implies a possibility to report endlessly on victories and defeats, right? To breed political protest, to make a wave, so to say, right? So, under this pretext, to increase that trillion of the economy Jeff Bezos possesses now up to 10 trillion. Igor, first, may I disagree with you regarding the global warming. Being an economist, I consider numbers – the temperature is growing. I don’t know, you’re not a poor man, I think, you go skiing. I used to. Right. If you go skiing, you see there’s less snow than before. Each year. Really, each year you go to the same place – there’s less snow than before. You go to Chamonix, there’s a glacier that is retreating. I’m a physicist – I’ve studied statistics. Yes, statistics. – The temperature is growing In addition, I’ve read… – It isn’t the press, it isn’t the press. I’ve read a Pushkin recently, he writes, writes only January 6 snow fell in Moscow or St. Petersburg. – Right-right. I don’t remember where it fell. The winter was warm and late. – Warm and late. I don’t remember where it fell. The winter was warm and late. – Warm and late. It turns out that 119 year ago a temperature chart was more or less similar to the today’s, to the current one, well, for example, in Russia. As it was 119 years ago. So, statistical fluctuations are the following; here’s a certain cyclogram, and I’ve noticed nothing strange over these 119 years. I-I-I-I will say you’re right that the Earth has seen many various fluctuations: there was both cooling and warming. Over the past few decades, we’ve witnessed a temperature growth trend. Indeed, past few years were the warmest ever. Today you can’t but notice it not only because you watch TV but because if you walk along European streets, you know the temperature is 40 degrees, for example, in the Netherlands, in France. Can it be caused by factors, other than anthropogenic ones? It can be, it can be. Scientific consensus of climatologists whom I trust and physicists whom I trust, this consensus is that, after all, it’s connected with anthropogenic factors. Can they mistake? They can. Well, but, after all, there’s such a consensus in the scientific society today. It’s far away from populism. Unlike other anti-system parties, the greens rely not on illiteracy but on science. This science can mistake, but they trust assessments, nevertheless. Do you mean the science can mistake? – Of course, it can. Fix it. – It can. – Fix it. Any physicist can mistake. If the science didn’t mistake, there’d be no scientists, i.e. you’ve reached the knowledge terminus, what else… So, you mean they are those who should mistake. – Yes-yes-yes. Okay. In the middle of the last century, somewhere in the 60s there were… There were huge scandals about asbestos in the 60s and 70s. In America, Johns Manville is a company that I know very well because we were going to buy… Just the moment when it was brought to chapter 11 by a public lawsuit for the damage caused by asbestos causes. It’s a clause…Yes, yes. It’s an anti-bankruptcy clause. You know, scientists have never proven a direct connection: that asbestos fibers affect the emergence of cancer. There’s no evidence! However, a dozen of the largest companies in America and several companies in Europe were, so to say, dismembered and changed their shareholders. Yes, after that, everything was quiet, and it was so to say peace and quiet. But these shareholders have changed, the new shareholders were fine. How do you view the following? Redistributions that take place in democratic societies through class action lawsuits based on far-fetched things that some scientists have made mistakes about. How can justice be achieved for shareholders who have lost their shares? Look, I am a scientist, and I know very well that I shouldn’t talk about things that I don’t know. Building materials is your occupation, so I can’t comment on anything about asbestos, although, in fact, in the last few years I have seen houses in Paris that have been completely rebuilt because there was asbestos in them. That is, in France they continue to believe that asbestos is bad for health. You can say that this has not been proven. I don’t know; it’s not my area. I am not going to talk about what I do not know, but speaking of justice and injustice… There are conflicts of interest in democracies, including the fact that politicians do not act in the interests the voter, but in the interests of their donors, lobbyists and so on and so forth. And we should fight this. Such episodes should be revealed. Such politicians should be punished one way or another, either by reputation mechanisms or by legal mechanisms. For example, in France, a man like Nicolas Sarkozy still suffers in one way or another from scandals related to lobbyist financing, money from Muammar Gaddafi and so on and so forth. All this… It’s such a process…
…process. It takes a lot of time, but I will tell you, when President Macron became president here was a feeling that the center-right party would win the election, but in this center-right party all three candidates were tainted by corruption scandals. There is an article about Indonesia; there was such a president, Suharto, before 1997-1998, and many companies … half of the companies on the Indonesian stock exchange were somehow connected with him. And there is a study that looks at the fact that when he has some health problems the shares of these very companies become cheaper, that is, it is possible to determine the value of the connection to Suharto. Therefore, if your company is associated with Suharto, Suharto goes to the hospital – the investor ells your shares because they know that the capitalization of young campaigns is connected with Suharto. The same work has been done for companies associated with Dick Cheney. There was such a vice president. He had health problems, too. So it turned out that in America it is considered “Yes, the companies are associated with Dick Cheney”, but this is not the most important element of their capitalization and it was not possible to find statistically significant effects from the fact that Dick Cheney was in the hospital. The Halliburton Company continues to exist; everything is fine. And in this sense, there are different gradations in the degree of political ties. there is dishonesty of politicians in Indonesia; there is dishonesty of politicians in America. These are completely different levels. I know what you’re talking about. Of course, it’s just that the size of the American economy is much bigger, and Halliburton on the landscape of the entire American economy is still… in Indonesia the economy is not that big, so… it’s clear that it’s probably, such is a situation. Today we can rather say that rich countries are those that have democratic political institutions. If we look at rich countries around the world… the rich countries around the world are either democratic countries, oil-rich Middle Eastern monarchies or Singapore. That’s it. There are no rich countries in the world anymore. And what about Singapore?
Singapore is one important exception…
Autocracy? Autocracy is yes, not democracy. It’s moving towards democracy, but it’s autocracy. China is not a democratic country, but it’s not a rich country yet. Maybe it will not be able to become rich without becoming a democratic one. And do you visit Russia? Not now, because… when I was at the EBRD, I had diplomatic immunity, and I visited Russia. And now, well, I don’t have any reason not to. And now I’m just an ordinary professor, I have no immunity, and I am recommended not to do it That is, I am not a defendant, not even a witness, not a suspect. Well, they somehow don’t recommend it This is also part of the story about Navalny, if you communicate too much with Navalny, then you have problems. I do not know whether Sergei Petrov financed Navalny in recent years or not, but Sergei Petrov no longer visits Russia. Okay. Fiztekh (Moscow Institute of Physics and Technology) is everywhere. I saw that according to the Forbes rating, unexpectedly Fiztekh is not the largest university, not the largest, but in terms of participation in the top … in the top activities in the business Fiztekh occupies a very prominent place. And as I now understand not only in business, but also in economics and so on. And in some political issues, even. Ashurkov. You know him, too Yes, I know Ashurkov. And he studied in my class, and one day I found out that he was the man who was acting next to Navalny, making this whole story. Let’s dig this topic: Who finances Navalny, anyway? I know you finance him, too.
Yes, I financed him, too.
How much? Ten thousand, I think. Well, I’ve been donating money ever since. Still, it’s impossible to run such a powerful media company for 10,000. Who finances Navalny? So, you mean they are those who should mistake. – Yes-yes-yes. Besides, if you read newspapers of 2012 when Navalny’s first donors appeared, there were sixteen people there, including me and my wife, and there were other people there, including relatively wealthy people, and some of them continue to fund Navalny. And Navalny himself, as a still working lawyer, continues to sell some of his services. He himself does not live on the money that is raised for the Anti-Corruption Fund, but earns his living by selling his services. This, of course, is not a profitable business now that people who are Navalny’s clients aren’t welcome in Russia. But he still has his own personal income when he sells his lawyer’s services or legal services: his services include representation of Russian citizens in the European Court of Human Rights, and there is a fundraising for the Anti-Corruption Fund, which includes the people who were on that list of sixteen. Additionally, most of the Anti-Corruption Fund’s income is retail donations. How can there be a mouthpiece in such a strong or dominant autocracy like Russia? How can there be a mouthpiece that constantly exposes its government by, essentially, making such films about palaces and castles, about some provocative things that greatly damage the reputation of the current government and so on, and make the ratings drop? This is the first question. The next question, what do you think, or maybe you know… after all, maybe this is a homeopathic dose of revealing what is there, or maybe it’s preparation, as it is with the Overton window Please, I need a specific answer from you. So you want to ask the question: is Navalny a Kremlin agent? I can definitely say that the answer is no. How can such a situation come to pass? Well, there is no red carpet. You mentioned Vladimir Ashurkov. Vladimir Ashurkov is a political refugee; he had to leave Russia; he’s lost his career in business; he had to build his life from scratch in London. Navalny’s brother has spent three and a half years in prison for a case that the European Court of Human Rights considers unjust. Navalny himself has been physically injured twice; one time he has almost lost his eye. That is, such a life is not a pleasant one, and the fact that he was allowed to leave Russia is precisely due to the fact that doctors in Moscow said if he did not go to Europe for treatment, he would have one eye less; it was when someone splashed some chemical brilliant green paint into his eyes. As for why the regime tolerates him. The regime does not approve of him; you will never hear Vladimir Putin say “Navalny”. He always says “that man”, “that citizen”. So it is obvious that Navalny is a unique opponent for this regime, but nevertheless Navalny is not in prison today. He has been under house arrest, under suspended sentence. He’s not allowed to run for office… How’s that?
…he spends a lot of time in prison, two months a year… Kazakhstan, Belarus.
Yeah, that’s right.
I can’t assume that… But in Kazakhstan, in Kazakhstan, there was an opposition candidate in the most recent presidential election and he gained, if I remember it correctly, 15-20 percent. Many Navalny’s employees spend a lot of time in prison. One of his employees is serving on Novaya Zemlya today; he was simply kidnapped and taken to Novaya Zemlya without taking the oath. That, too, is rather an unpleasant story. One of the problems with autocracy is getting feedback. In order for you not to be overthrown, you must introduce censorship. There is a lot of censorship in Russia, but there are some channels for feedback. There is Ekho Moskvy (Echo of Moscow), Dozhd (TV Rain), The New Times magazine. What is most important is that general public do not read these magazines, but you would like to obtain some dirt on your own subordinates, you have to manage them, you need to know who steals more. And this function is performed by independent channels. The Kremlin’s biggest problem today is what happens when Navalny’s channel gains in significance thus becoming something more than a TV channel. What’s that? I don’t even know what it is.
Take courage. They’re probably going to pour more soup now. It’s a haute cuisine. Sergey, we’ll tell you how one day after this, we went to find a Russian restaurant in Paris and ordered borscht there By the way, I’m not sure that I know a Russian restaurant in Paris. I know a Georgian one.
We found it in the guide there. According to the “Dissernet” analytical group, of the approximately three and a half thousand falsified dissertations defended in Russia in 2014-2015, about 40 percent are the economics theses. What do you say about this? Russia is not quite a conventional country in terms of social sciences. In Russia, social sciences have been in isolation for 70 years, and mostly today’s Russian economic science cannot be viewed as a part of world economic science. There are some examples of universities, faculties of economics that one can count on the fingers of one hand or two hands that are built into the world system. And so, on average, as you have correctly said, if you take a median doctor of Economics or a candidate of Economics, then most likely it will be a person who wanted some kind of status, prestige, respect. He knows that his parents respect people with academic degrees, so he decided to buy himself an academic degree and, indeed, it is easier to obtain one in economics than in physics, mathematics or engineering. That’s how it works, unfortunately. Obviously, it’s a great disaster for economic profession as a whole, because if you’re an official, you want to get a dissertation because your parents know that a person with a degree is considered more prestigious. What kind of dissertation do you want to get? Not a mathematical one, but an economic or legal dissertation. My parents were candidates of sciences, too, and when I studied in the MIPT I told them: I’ve already stopped studying. My dad told me this: «My son…»
Are you sure? No, he said, “Do what you want, but graduate with a diploma.” “I’ve already understood that you won’t defend your dissertation, although we had some hopes, but please graduate with diploma.” I said, “Okay.” This was our sort of a social contract. I, as a person who is very fond of occupying oneself with preschool education, and have read the works of… . What’s his name? Heckman? Heckman. James Heckman from Chicago The works of Heckman. About him, where they won the Nobel Prize, they have proved that the investments during preschool age have a profound impact. Of course, now I know; after that, I understand why America isn’t doing this. Because it’s expensive. They simply buy children that are ready at the stage when they’re already going to higher education institutions and universities. They claim that America is an intellectual power; in fact, they are very good at buying what they need at the right time. It’s more like this. Essentially, you can imitate it, you can also do it, but I find something else interesting. Namely, the Heckman curve. Look! What do you think? Could it be that you, me, and other entrepreneurs, public figures, and autonomous public figures will be engaged in preschool education, patronize our kindergartens and preschool institutions, that is, bring them to a certain level, so that it is in preschool age, all these, let’s say, individual creative skills, collective skills of co-creation, flow, collective elaboration of rules. Could this be a solution to the challenges of our time? If you want to ask me: will this solve all the problems? The answer is no. Today, there is still a debate in economics. What is the source of long-term prosperity for countries? And the answer to this question, as a rule, comes down to four factors. The first factor is geography; it is good if you have a good climate, natural resources, and so on. In this sense, Russia, by the way, is well located: there are values, culture, relationships of trust that are social norms. This also applies to what you’re talking about, because the basis is laid down at preschool age, at school age, and between 18 and 25. And institutions. Institutes are, roughly speaking, the rules of the game. From this point of view, Russia uniquely lags behind countries with similar income levels. Well, roughly speaking, a country like Kazakhstan is considered a corrupt one, too. And in this sense, I would say that if you want to guarantee prosperity, peace and freedom in Russia, it’s important to invest in human capital at all levels. But if you want to guarantee that Russia will be a prosperous rich country, it would be good to have an honest, accountable government, a democratic political system, no corruption and so on. I read somewhere that your father used to tell you that… why do you even have to go to the MIPT? Well, if you don’t go to the MIPT, everything will be fine, but if you do, it will be better. Something like that. So, I’m reading your father’s quote directly or somewhere you said that, “those who study at the MIPT will have a good life, and those who do not study there will not be second-class people, but their life will be harder.” Somewhere you quoted it like that.
I guess I did. That’s probably what I said. My parents are engineers, technicians. My father is a doctor of technical sciences, and for them the MIPT has always been such a major university in the Soviet Union, the most prestigious university. Where your success depended on your talents and efforts. And in one way or another in the Soviet Union, although the system was probably unfair, but there was an understanding of justice. This understanding of justice, which was written down on paper, it was read as follows, “every person can succeed by working hard and having a talent for what they do.” This was certainly not the case, if you were born into the family of a person who was closer to power, you had more opportunities. But it was written down on paper. And there was more meritocracy in the natural sciences, and this was, of course, primarily due to the fact that the Soviet Union considered it important to win the arms race or at least not to lose; this required high-quality personnel, including those studying in the MIPT, and so it was possible to imagine that the MIPT was the path on which you could, for the most part, believe that your success depended on your efforts. My parents told me that I should study in physics and mathematics school; we studied in Kiev at that time and somewhere since the fourth grade, they somehow thought that I should do more mathematics. I studied maths, then I entered the eighth, ninth, tenth grade, then there was a ten-year school, the best physical and mathematical school in Kiev. There is a very important reservation about equality of opportunity. As you know, there was a so-called intellectual genocide. At Moscow State University, Jews could not enter the Faculty of Mechanics and Mathematics or, more precisely, the admission barrier for them was higher. I was told that there was the same thing in the MIPT. And apparently, there the barriers were not as high as in the Faculty of Mechanics and Mathematics. But if you didn’t belong to a discriminated ethnicity or nationality, it was considered to be a meritocratic path. Well, I passed the exam and entered the University. That’s what happened to me. And for me, it was a very important lesson of justice. You work hard, I work hard. I passed the exams, I entered the university, I studied well, and everything worked out well in my life. And it seems to me, in general I have a feeling that – you may have probably already noticed – that the world as a whole is functions normally, that and … If you are doing what you believe in, it will be more or less fine. When did you graduate? In 1993? That is a good question. I got in in 1988 and graduated in 1993, because I finished one year earlier. That is when Karlov was rector. And Kudryavtsev? Was he rector at that time? No, he was not. Nikolay Kudryavtsev says he has been heading the MIPT for about 25 or 20 years and he managed to preserve the University. I strongly believe that he has let us say canned MIPT, creating canned thinking. Fine. He preserved it but in 20 years, a lot has changed and the world has changed. But the University remains unchanged. When I look at the employment rate or where the MIPT graduates work, I see that only 30% of them are employed. 30%. Although there are second-class German universities that have nearly all graduates employed. What is that? What do you think needs to be done? Based on your experience not as an economist, but as a physicist and rector, as an expert in higher education. Could you explain it step by step please. You are right when you speak about the conservation of development. In fact, Nikolay Kudryavtsev did a lot, including when some money were given to higher education. He also managed to convince some graduates, including Alexander Abramov, o establish the endowment fund, to make scholarships, to use the programme of mega grants, in the creation of which I also participated. I was on the mega-grant board. A lot was done in that sense. I would like to tell you a story. When Skolkovo was created, there was a project with MIT and the MIT executives came to Moscow, visited Russian universities to discuss the state of Russian science and teaching. In general, they said very good things about MIPT. However, the also said it was a place where teaching research was just at the level of the mid 1980s and the late 1980s. That was the end of the 2000s and that answers your question. Unfortunately, it is really about conservation, the status quo, but the world has changed drastically. Again, MIPT’s mission was not to train people who work for Yandex. And again, cooperation with Yandex is a good thing. MIPT’s mission was to train people who can construct intercontinental ballistic missiles. The demand for such experts is much lower today. And that is a huge problem. That is, you need to think about the development and the answer to the question what you really need to do is the Skolkovo Institute of Science and Technology itself. When MIT experts were thinking and speaking about it, Russian officials were thinking and speaking about it and then built Skoltech. It has a lot of problems and shortcomings, but it is created as a modern university, which looks at what today’s engineering companies need, trains people and is very open to international cooperation. Perhaps MIPT has no money for this, perhaps there are too many traditions that are difficult to break but in general, of course, you cannot see the university that will remain at the borders of the 80’s. At the same time, the selection is working and this is an important achievement of the University. What Navalny or Anti-Corruption Foundation is doing is truly a public activity to fight corruption. He would like to be an opposition politician and participate in elections. They completely unfairly deprive him of the right to participate in elections after 2013 when he turned out to be a popular opposition politician. When I say unfairly, I speak of the Russian legal system. In the Russian legal system, the highest judicial body is the European Court of Human Rights. This Court has overturned the Kirovles verdict that forbade Aleksei Navalny to run for office. And it will overturn it again and again. Do these courts have authority in Russia? According to Russian laws, they do. And according to the new constitution? According to the new constitution, a special decision of the Constitutional court will be necessary. That is the decision that will say the European Court has no authority anymore. Navalny would like to be an opposition politician on the one hand. On the other hand, as an expert in autocracy, I will tell you that such a regime is based on first-person ratings. The activity of Navalny obviously lowers the rating of the first person and in this sense it is the main opposition activity. You have said somewhere that if Navalny is in office that is the lesser evil for Putin compared to somebody disloyal. The more peaceful the transition of power is, the more chances the outgoing president has to live the rest of his life peacefully. This is an empirical fact that we show in our study. Let me give an example. The president of Korea, the father of the Korean economic miracle, a very successful president, still considered by many to be an outstanding president killed by his own counterintelligence chief, having survived yet another assassination attempt in which his wife was killed. If you ask what Putin’s plan is, that is where you start to ask questions. I am a physicist, I am a cybernetician, I am a big entrepreneur and I have created many complex machines. There is never a plan in there, there is a multi-agent system. There are so many influencing factors. There is a plan, so I know the plan of Putin. What do you think Putin’s plan is? Now I am going to tell you the plan, and we will start arguing again. You have your own idea of the Putin’s plan. Everybody in Russia thinks now what amendments to the constitution should be made. What kind of amendment do you propose? We will write it down. What kind of amendment could you propose? In general, I would suggest that all Putin’s amendments be removed. Keep the one with two consecutive terms. I agree with that. Let us not discuss what you would remove but rather what you would add. What amendments are necessary? I would certainly make Russia a more parliamentary republic. In fact, there are not many successful democratic presidential republics. These are the United States and to some extent France. The rest of the developed countries are parliamentary republics. Unfortunately, in a country without a legal and democratic political system people cannot feel safe. Even if you only do what is important, useful and fair. The story with Calvey has hit me so hard, because Calvey has always avoided all these protests and so on. He did useful things for the country, too. He was what you would call a freelance Kremlin agent. He invested in non-resource companies and ended up in jail. He is not in jail now, he is on house arrest. I only know one thing. When there is a double solid line on the road, and there is also a quadruple solid line, and that is what we have. You have not seen the line but you have crossed it and when they show that you have crossed it, you have a feeling. You were not moving. I mean there is no quadruple line for you there, but a man comes to you and says: “Wait, you just do not see it, but it is here”. That is where a question arises. It is not just about Calvey, it is about everybody. We always live in our own world and sometimes we can miss something, but there are people with a different world. They say: “Wait, you have crossed the line” Yes. I am in the law and I am the law.