Wednesday, April 02, 2014

Which Oligarchs Are Better

Putin and those evil Russian oligarchs. Not the oligarchs that Western interests push for release from jail to then go to the Ukraine to help the situation, but the bad ones that Putin defends. Keep being angry at those oligarchs and how a few men control Russia. The media beats that drum consistently and keep silent on America's oligarchs because our oligarchs own the media. We will not call our elites oligarchs but they function in the same way. They fund our politicians, our social causes, hold most of our assets and live lives of luxury commoners never will. Here is a difference: Russia's oligarchs have allowed the rest of Russia to enjoy the rising tide of their economic growth.

Russia has enjoyed a large natural resource boost since the commodities bull market began, but their Gini Coefficient is 40. It is reportedly 42 now but was 39.9 in 2001. Not much movement compared to the move from 41 to 47.7 (pre-taxes) in the US. Part of this may be the source of wealth as America's gains since 1995 have been through multiple bubbles in financial and land assets. Russia had a hyperinflation that wiped out debts with most Russians living rent free for years. As the linked article below states, while oligarchs hide money in foreign accounts the common Russian avoids banks as 25% of Russians do not have a bank account. The key is that the Russian economy has grown, but not all spoils went to the top 1% or 1% of the 1%.
However, the recent decade-long economic boom meant the poor also gut much richer. In dollar terms, Russia's GDP increased 7.5-fold over the last decade from around $200bn to $1.5 trillion; at the same time, nominal average wages increased 14-fold over the same period from $50 to around $700 a month. 
This transformation has created a burgeoning middle class in Russia. When Putin launched his long-term reform plan, he called for moving 60pc of the population into the middle class by 2020. But according to a report released by Russian investment bank Troika Dialog in August, Russia is already there: Troika claims the middle class (defined as income/capita of more than $6,000 a year) already makes up 68pc of the population, against Brazil's 31pc, China's 13pc and India's 3pc.

Now Russia has allowed a middle class to develop and watched as middle class wages have grown with the oil boom. The pie has grown as has everyone's share. That is the dream US politicians sell to Americans, but it somehow does not happen. Evil Russian oligarchs have allowed this to happen. The same cannot be said of the American elites. Median household income in America is the same as in 1997. The wealth gap is a growing concern in the media. Funny how the NY Times makes no mention of immigration depressing wages for the common man or any ideas for wealth taxes. The Sulzbergers are part of the 1% and do not want to share.

Are Russia's oligarchs perfect? No. Are they corrupt? Sure. Is their corruption overt whereas we call ours political donations and patronage? Yes. Billionaires like George Soros do not supply the left with millions to not see their economic rent seeking ideas and insider deals go unfulfilled. There are nations to break, vulture funds to assemble and markets to rig for more money. Zuckerberg netted another $3.3 billion in stock options, so let us light the fire of another stock bubble and import more coders rather than tax wealth above $10 million and end immigration for a decade. Shhh, he designed Facebook, which only has "like" buttons and a female COO who wants to ban bossy. He is not a ruthless Russian who may or may not have arranged a killing to gain control of a gold mining operation. That is a bad oligarch. Zuckerberg, Soros, Steyer are elites and most importantly, good guys because they support the same moral crusades that the media tells you are good.


The Social Pathologist said...

The problem isn't just who governs, rather, how smart they are.

Smart oligarchs are always going to beat stupid democrats.

sykes.1 said...

Clinton went from being literal trailer trash to owning tens of millions of dollars in assets. Obama is on the same path.

Our Ruling Class is as corrupt as any. And considering that it claims the right to murder American citizens without trial (and has done so), it is as violent as any.

Well, maybe not as violent as Idi Amin. They don't eat their victims.