Russia’s economy has entered the death zone

From The Economist

Over the past four years the Russian economy has bifurcated into two distinct metabolic systems. The first comprises military and military-adjacent industries: the vital organs that receive priority blood flow. These sectors are hiring and investing. They get first access to labour, capital and imports. The second system contains everything else: private enterprise, small businesses, consumer industries. These are the extremities left in the cold.

The most dangerous feature of this new structure is the fuel it burns. Russia’s economy now runs on “military rent”: budget transfers to defence enterprises that generate wages and economic activity. Functionally, this resembles the oil windfalls of the 2000s. But there is a difference. Oil rent came from outside the system, foreigners paying for a tradable asset, and the money circulated through the economy with real multiplier effects. Military rent is internal redistribution towards assets designed for destruction. The body is metabolising its own muscle tissue for energy.