Coming two terms with it: Putin’s power grab

Hello and welcome to The Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. If you're sick, stay home. As the coronavirus crisis makes sick pay a sticking point around the world, we look into how different attitudes and incentives can keep everyone safer. And some new research digs into decades' worth of data from the daytime television classic "The Price is Right." For an ever-increasing fraction of contestants, the price is wrong, and that reveals a lot about economic trends in America. But first— Russia's constitution currently says that Vladimir Putin must leave office at the end of his current term in 2024. He's already the longest-serving leader since Joseph Stalin ruled over the Soviet Union. But for months, there have been hints that he wants to extend his tenure further. On Tuesday, Russia's parliament unanimously passed a constitutional amendment that would reset the clock on his leadership. It should sail through the constitutional court equally easily, and if If or when it's voted into law, Mr. Putin would be able to rule until the year 2036.

So in 2000, when Vladimir Putin became president for the first time, there was a film being made of him and the camera was following him.

Arkady Ostrovsky is Russia and Eastern Europe editor for The Economist.

And the interviewer asked him whether he thought about the central issue in Russian history, the one of succession. Putin said, "Yes, I have thought about it. In fact, I have been thinking about it a lot." And looking out of the window sort of pensively, he said, "I very much hope that one day I will manage to go back to normal life and that I'll have some private future." And from people I talked to around him, a lot of them say that when he first strolled in the Kremlin, he actually thought he was only going to stay there for one term.

But what we're seeing is that Vladimir Putin, who once wanted out of office, is increasingly distant in history. He wants to stick around. I mean, what's happened this week that underlines that?

Basically what happened this week, Vladimir Putin strolled into building on the Russian parliament, into the Duma, being queued up by an 83-year-old MP, Valentina Tereshkova, who was a Soviet cosmonaut, the first woman to go into space. We said, you know what, why are we making it all so complicated? The world is a very dangerous place. Wouldn't it be better if Vladimir Putin could just carry on as president? That was effectively the meaning of her words. And the MP said, well, we better ask the president if he actually wants that. And on cue walked in Vladimir Putin. The essence of what he said: there will be no more term limits. He will be able to stand, should he so desire, again when his current and constitutionally last term expires in 2024. But everybody in Russia understands that basically what Vladimir Putin said is presidency is for life.

And so this constitutional amendment, how will it become law?

Well, in some ways it has already become law. This last amendment about resetting the clock on the terms was not even discussed or written by anybody. There was no document. It was simply said by Valentina Tereshkova, this cosmonaut and MP. It was immediately voted on. And now it's been passed by the Duma, the Russian parliament. It still has to be signed by the president, but there is very little doubt he'll sign it since he's the one who proposed it. And then on April 22nd, Russia will hold something called "all people vote," where people will express their approval or disapproval. Now, legally, this is very dubious because this vote will be neither a referendum nor an election, and I suspect it will be a sort of televised expression of people's love for Vladimir Putin and affirming their mandate.

And how much of that is a reflection that that is in fact what the Russian people want versus a suggestion of how complete the control is that Mr. Putin has over them?

Well, what we've seen over the past 2 years is Vladimir Putin's ratings actually sliding. The trust that Russian people have in him has almost halved from 2018, from 60% to 35%. Half of the country don't want to see him as president anymore. And until this week, only 20 5% of Russian population were ready to vote for those amendments. Of course, in Russia, as ever, the question is how you count, not how people vote. I suspect there will be a lot of voting at home, particularly with the outbreak of coronavirus, and there will be few polling stations. It will be done very much for media effect.

And so in that sense, it sounds as if it's already a done deal. We're just waiting for the pieces of the story to play out. I mean, there has been talk in recent years of a sort of strengthened, emboldened opposition in Russia. Is there no opposition coming from them?

The opposition faces a very difficult task. Does the opposition sit down and play the game, the rules of which have been set by the Kremlin, which is almost certainly there will be sleight of hand, and do they participate in this spectacle? Do they ask people to come out on the streets? Now, again, the outbreak of coronavirus provided a very convenient excuse for Moscow city authorities, for example, already to ban any big public gatherings of about 5,000 people. So the opposition has to decide, does it challenge the Kremlin by effectively participating in its own game, or does it just ignore it?

And you mentioned the coronavirus, that that's certainly a source of instability everywhere, but certainly Russia's in the news also for being part of this oil price war. Is this bringing the kind of instability that will strengthen Mr. Putin's case or weaken it?

Well, the crisis in the oil market actually is very much of Russia's own making. It was Russia who in the end decided not to stick with the agreement with OPEC on prices and And when Russia said it's not going to stick to that agreement, then Saudis dumped the prices. Russia was very much ready for it. I think this sort of general sense of instability, crisis in the world, the outbreak of coronavirus, the sense of the troubles in the West, etc., all this is providing certainly background for Putin to argue that, look, the sea is just too stormy, the world is too unsafe for me to abandon the steering wheel at this point, and I'm no deserter. One day perhaps the power in Russia will become less personalized.

'But for now, you need me, I need to deliver a safe and stable Russia.' But why, with all of this bluster and all of the work that's going to need to be done to secure it, do you think that Mr Putin is working so hard to stay in power?

The main reason is Vladimir Putin and his cronies have, I think, done enough of bad things and enriched themselves to the point that it's just simply unsafe, physically unsafe, for them to leave office and abandon their position. Particularly for his entourage. And the entourage has been, and the elite has been very unnerved by the sense that this is his last term. They don't have any legitimacy of their own. Everything they own and have and their position is dependent on him. So the question is, how does the Kremlin ensure that legitimacy? And a lot of commentators in Moscow these days are saying, actually, there is only one last tool and they will use it. And that tool is going to be Sheer force.

Arkady, thank you very much for joining us.

Thank you.

America's Congress is expected to vote today on a sweeping coronavirus aid bill. It'll include free virus tests for those who can find one, tax credits for businesses, and notably, for a country with stingy labor protections, a promise to pay workers affected by COVID-19. A paid emergency leave with 14 paid sick days, very essential as we deal with this public health challenge that we have. As the pandemic has spread, companies have banned nonessential travel, told the symptomatic to isolate themselves, and encouraged working from home. But what about those who can't afford not to go to work?

It creates a dilemma for workers, particularly in countries where sick pay rules are not very generous.

Philip Coggan writes The Economist's Bartleby column on work and management.

If you're going to lose out in monetary terms by taking sick leave, you're going to turn up to work, and that's going to spread the virus more quickly.

What are the facets then of the dilemma?

The first difficulty is this is a new disease, and the initial symptoms are quite mild and resemble a cough or perhaps a cold, so people aren't sure they have it. Many people will think, well, it's not— it can't be the virus, I haven't been to Italy. Italy or China, so it's not me. And they're more inclined to think that and turn up to work if they will be penalized in terms of poor sick pay or no sick pay at all in countries where the rules are more generous to employers than they are to workers.

Because the provisions for sick pay vary quite a lot between countries.

They do. So some countries are very generous. You get 100% sick pay. Those tend to be in Europe. You won't be surprised to know in America, about a quarter of all workers in the private sector have no right to sick pay at all. In Britain, there is a right to sick pay, which has just been made slightly easier to do. You now get it on the first day you don't turn up as opposed to the fourth. But statutory minimum of sick pay is just £94 a week, and that's about a fifth of average earnings. And you don't get it if you are a part-time worker who hasn't earned enough in the preceding weeks. So again, if you're in the kind of gig economy, if you decide not to turn up with relatively mild symptoms, you might not be able to pay the rent or feed your family. And that's a really nasty place to put people into.

I mean, one of the issues that comes up when these kinds of things are discussed is the degree to which it could be abused. People could simply check those incentives and realize that sick or not, they can just stay home.

Yes. And the countries with the most stingy rules, Britain and America, do have the fewest sick days off, 3.6 for America, 4 for Britain. But there's not a huge difference. Most countries with generous rules have fewer than 10 days off on average. France has 8 days off on average, and there you can get 50% to 100% of your normal earnings if you're off sick. So companies may think they're saving money by avoiding generous sick pay rules, but if it ends up with more of their employees being off, they actually may lose money in the long run.

And I suppose it's not just the outbreaks of COVID-19 that point out that some people kind of regardless are going to go into work sick or not.

Yes, we've all met them, the good soldier person who turns up with a stinking cold and covers their desk with tissues and say, look how good I am for turning up to work despite my illness. And if you ring up and say, I'm staying at home with a cold today, they go, oh really? But actually all they're doing probably is infecting people, and we need to change change the attitude in a world where pandemics are probably more likely. Global travel is more likely, diseases will spread from one part of the world to another very quickly, as we've just seen. So maybe you shouldn't view the worker who turns up as the sort of good soldier, but actually as a social nuisance.

I mean, these debates must have played out with prior outbreaks. What can be learned from those?

Yes, so the H1N1 outbreak in 2009, which was called swine flu, that was quite severe for a short time. We didn't see the kind of global shutdown that we have this time, but a lot of workers turned end up in America with the symptoms, and it's estimated around 7 million coworkers were infected as a result. If they'd stayed at home, many fewer people would have been taken ill, and the outbreak would not have been as severe.

Until the incentives are right and until the person who wants to be seen to be powering through is told that's a bad idea, we're going to have to cope with this. Are there other changes people could make besides simply just staying home as they should?

Well, we're noticing that people aren't shaking hands anymore. They're bumping elbows or touching feet. I think we need a bit of work on that. It looks awkward when people do it. But maybe you could just nod your head when you see someone. Definitely not kissing.

Tip of the hat.

Yeah, tip of the hat when you have a hat, exactly. Also, maybe fewer people will go to conferences. You know, conferences being cancelled, maybe people will discover they won't need them anymore. And the three most dreaded words in the English language: post-event networking. Maybe that will stop as well. And we won't have to have as many meetings.

Something I know that preoccupies you even in the time before coronavirus.

Absolutely. Bartleby's Law: 80% of the time of 80% of people in meetings is wasted. And if it's both wasting your time and making you sick, all the more reason not to go.

Phil, thank you very much for your time.

Thank you, Jason.

Thanks for keeping a meter apart. Here it comes, television's most exciting hour of fantastic prizes.

The Price Is Right is a daytime staple of American television.

And now here's the star of The Price Is Right, Bob Barker! Oh, thank you. I didn't know, I didn't know I could get that much applause without giving away a refrigerator.

For more than 9,000 episodes, it's been inviting contestants to come on down for the chance to win a dining set or even a brand new car.

What is the next one that he has right? He got the car! He won the car!

He won the car!

The game show is built on a simple premise: guessing how much household items cost. But new research shows that over the years, contestants are getting worse at the game and hearing this sound— a lot more.

The Price is Right, in a way, is more than just a game show. If you look at the way in which people have been answering questions over the past 50 years, it turns out that it actually reveals some sort of quite interesting things about how the American economy has changed over that time.

Callum Williams is The Economist's senior economics writer.

And there is a new paper that's just come out from someone at Harvard Kennedy School, which suggests that over time, Americans have been getting worse and worse at guessing prices. So in other words, the bids they make are lower and lower relative to the actual price of that good.

And why do you suppose the guesses are getting worse?

Well, there are potentially dozens of reasons why this is. I mean, some people just say, well, maybe it's the case that people who appear on the prices right now are less smart than people who appeared on The Price Is Right in the '70s. I can't see why that would be true. I think more plausibly you might look towards things such as the fact that people these days have smartphones, for instance. You know, no one remembers telephone numbers anymore. People don't really need to remember numbers. They can put their brainpower towards better uses. And so there's an argument that perhaps that applies to prices as well. So people don't really need to remember how much things cost. If they go to a shop and want to check it, they can just bring out their smartphone and check it themselves. But there are lots of other potential explanations for what's going on.

Like what?

One explanation is that people are richer. So if you imagine, you know, there's that kind of saying about rich politicians who don't know the price of everyday goods because, you know, they live in a bubble and they've got lots of money and they don't need to worry about how much a loaf of bread costs or a pint of milk or whatever. So that logic would suggest that as people are getting richer, they are sort people are basically becoming worse at budgeting. And there is actually some other research which suggests that in years when the economy is doing quite well, people become worse at remembering prices and guessing prices.

And conversely, when the economy is tanking, people get better again.

So when the economy isn't doing so well, the results of the paper suggest that people kind of get a bit better at guessing prices. So people got marginally better at guessing prices of stuff after 2010, which is, you know, coincides with a period where wage growth was pretty weak and the economy wasn't doing too well.

That seems to have plenty of explanatory power then. Is that not the answer as to why people are getting worse?

So I think there's a sort of final group of interesting potential explanations, and it's really to do with the kind of strategies of retailers these days. So if you think back to the '70s or '80s, back then people didn't really have that many goods to choose from when they were buying something. So if you wanted to buy a coffee maker, there was kind of one or maybe two brands of coffee maker you could buy, and that was it. Whereas these days, uh, if you want to buy a coffee maker, there are literally hundreds of different coffee makers you could buy. They all do very different things, and they're all at very different price points, crucially. So, you know, if you say to someone, what is the price of a coffee maker, they'll say, well, it sort of depends on what coffee maker we're talking about. So it's harder to guess prices as a result. And I think a sort of related issue is to do with the pricing strategies of particularly online firms, but also bricks-and-mortar firms have responded as well. So if you think of a company like Amazon, their prices are changing pretty frequently online. And that, you know, that's a response to surges in demand or surges in supply. So the price of a given good can fluctuate quite a lot from day to day. And there's actually good research on this to suggest that across the economy as a whole, prices change both upwards and downwards a lot more frequently than they used to. And so as a result, knowing the price of a good becomes a bit tricky.

And pretty much all of these trends suggest that what's going on with the contestants' guesswork is only going to get worse with time.

Absolutely. So, you know, as more and more of consumer spending goes online and as more and more bricks-and-mortar companies respond to that and as people get richer and so on, yes, that would suggest that, you know, in future years, people are going to get even worse at this.

Okay. How about we test your skills right now? Are you ready for your own personal Price Is Right?

Yes.

Okay. Let's play a game that we're calling Higher or Lower. You need to guess if the real price of an item is higher or lower than the one that I gave First one up: electric blanket. Higher or lower than $25? Higher. Higher it is, $48. Price of a 3-burner propane barbecue with a pizza oven conversion kit. Higher or lower than $900?

Higher.

Lower, $750. A milk frother. Higher or lower than $75?

Lower.

Higher retail price, $99. And finally, a beard trimmer. Higher or lower than $59?

Um, lower.

It's $75. I'm afraid you're gonna go home empty-handed to the embarrassment of your family and friends.

Yeah.

Now that you're living out in California, are you gonna try to become a contestant? You know, all you have to do is write in.

Uh, well, I'm no good, am I? Judging from that, what happened just then. So, no.

Thanks very much for, well, for playing.

Well, thank you.

That's all for this episode of The Intelligence. If you like us, give us a rating on Apple Podcasts, and you can subscribe to The Economist at economist.com/podcast. Radiooffer. 12 issues for $12 or £12. See you back here on Monday.