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Russia's socioeconomic stability: Amazing or just okay?
Everyone on the internet understands the US economy is basically a massive Ponzi scheme kept afloat by endless paper-printing and Netflix; only a petrodollar shill would deny this.
But what’s the deal with Russia?
Yes, Russia’s Central Bank has a giant mountain of cash and shiny metal. Another fun fact about Russia: its government doesn’t run up insane deficits so it can drone-bomb ten different brown-people countries simultaneously. Frugal and shrewd.
A casual observer would conclude Washington is a teenage TikTok star who maxed-out her dad’s credit card, while Moscow didn’t go to college (which is a scam), got a job as a plumber, and has been quietly and prudently stacking delicious rubles. And there is certainly some truth to this statement.
But does any of this translate into socioeconomic stability for the average Russian? One would think it would—but people have a tendency to think all sorts of nutty things, like Sputnik V is safe and effective. (It’s not.)
The below article, written by economist Vladislav Zhukovsky, argues socioeconomic conditions are extremely unsavory in Russia right now—so much so that they could potentially trigger “protests and riots” similar to the upheaval witnessed in Kazakhstan.
Notably, our friends at Katyusha.org made a very similar observation. However, Katyusha’s analysis focused on how COVID measures could exacerbate already existing socioeconomic troubles in Russia. Zhukovsky, on the other hand, provides some depth to the severity of the current situation in his country, irrespective of cattle tags or compulsory injections.
We are open to running a counter-argument to this piece, by the way, if anyone can recommend one. But we found the below analysis quite sobering and thought, “this would be interesting for the blog.”
Truth is, we’re seeing more and more of these kinds of warnings while browsing the Russian Internet. How seriously should we take these warnings, though? This is obviously open to debate.
The population is rapidly impoverished. Do you want it to be like in Kazakhstan?
Sberbank has published the results of a survey from which it follows that less than 8% of citizens save money for old age, that is, only one in 13. Taking into account the statistics that Sberbank collects on money, deposits, transfers, transactions of the population, this is one of the most representative surveys. Although I think that even here the figures are embellished, in reality everything is much worse.
The result of this survey is a verdict on the socioeconomic and financial policies pursued by the ruling regime. By and large, the figures show that the population lives in absolute poverty, it is not even poverty. Because if 92% of Russians cannot make long-term savings, on the horizon of 30-40 years, at the time of retirement, then this means that people live from paycheck to paycheck, and at best they can save up for the treatment of their parents, the education of their children, the purchase of durable goods. And that is far from all—there are no more than 20% of them.
More than 65% of Russians have no savings at all, according to the Central Bank of Russia and independent sociological services. Therefore, 8%, which can be put off on a horizon of 30-40 years, is, of course, a sign of how depressed the economy is, how low our incomes are.
The real standard of living of Russians has been falling steadily since 2014, in 2021 it officially fell by more than 13.5% by 2020, and now the purchasing power of citizens’ incomes is below 2010. And in terms of foreign currency—below 2009. In this situation, when prices grow annually not by 4-5%, not by 8.5% (as Rosstat officially writes), but in reality, apparently, 2-4 times faster, people simply do not have the opportunity to save something for themselves to retire. God forbid to feed the family, pay for a communal apartment, pay a mortgage, buy more expensive potatoes (by 67% last year), cabbage (by 115%), chicken (by 32%), eggs (by 25%).
And people are simply in a state of constant struggle for survival, this is an eternal war not to starve to death, not to end up on the street. This is a terrible, terrible situation. The same Sberbank survey showed that pensions in the country are, in fact, some beggarly crumbs from the master's table—15-17 thousand rubles, although in the regions it can be in the region of 12-13 thousand, sometimes 10 thousand rubles. On this money it is impossible in principle to survive.
This suggests that, on the one hand, more than half of Russians do not trust the state pension system, they understand that the state is not able to provide them with a normal standard of living after retirement, and they themselves cannot save anything. They hope their children will be able to break out of this circle of poverty and be able to support their parents.
In general, our pension system is degrading before our eyes, the retirement age raised in 2018 is far from the limit, secondly, pension savings that have been frozen indefinitely since 2014 have been confiscated, for the eighth year they have been extending the freeze, and thus almost 4 trillion rubles were taken out of the pockets of the Russian people. The annual extension of the “freeze” takes almost 700 billion rubles that should have gone to individual pension savings accounts, but in fact they go into a common pool for current payments to pensioners. Plus, they raised the necessary minimum requirements for seniority, increased the period of survival in retirement. […]
And we will again be told that there is no money, but it exists. Over 70 billion dollars are exported from our country annually. Unofficially—about $ 150 billion through all channels. Plus, we need a progressive income tax scale, taxes on the super-rich, offshore, on dividend payments—this is a real modernization of the economy, the development of small businesses, entrepreneurship, and it is also essential to fight monopolies, oligopolies, reduce taxes on domestic production, on investments—all this can give huge revenues to the budget, but it is necessary to change priorities and step on the pocket of very big business, oligarchs and officials.
The authorities need only look at the events in Kazakhstan, because you can talk as much as you like about 20 thousand international pianists, guitarists and gangs [a reference to the Islamic State jazz pianist who was captured by Kazakh security forces], but, firstly, no one showed us these 20 thousand, no one took responsibility for this alleged invasion. Not a single country has confirmed that as many as two divisions of militants were deployed through their territory. That is, everyone understands that these rallies were originally of a peaceful national character, they began in industrial zones.
We are told that there is no money, but you hold on, tighten your belts, here you are raising the retirement age, raising taxes, VAT, excise duties, duties, and at the same time, the richest billionaires, oligarchs, earned more than $68 billion last year. The capitalization of their companies has grown, their wealth, their assets have risen in price by almost 5 trillion rubles, corporate profits have grown 2-3 times, according to official data from Rosstat. It turns out that a minority of the super-rich, these new feudal lords, are getting richer, while the rest of the population is getting poorer, although foreign exchange reserves have already exceeded $630 billion and are renewing historical highs.
The state, the budget, the oligarchs, exporters of raw materials, and state-owned banks are swimming in money, but the ordinary population is living worse and worse. The situation is frankly provocative, it can create an absolutely revolutionary situation in the country and cause protests and riots.