Report: 110 people own 35% of Russia's wealth

http://bigstory.ap.org/article/report-110-people-own-35-pct-russias-wealth

by ddeck • 13 years ago

192 165 13 years ago

bigstory.ap.org

tipiirai• 13 years ago

Disgusting tendency allover the world.

Schools need to empower and educate young people as to how to create wealth, and not just how to fit into a predesigned hole the labor market has ready for you.

Until that happens the relatively few people that 'get' wealth creation will always have the biggest slice of the pie.

guard-of-terra3• 13 years ago

Most of those people did not create any wealth, they just got chunks of Soviet wealth in early 90-s.

camus2• 13 years ago

Irrelevant! these wealthy russians stole anything they could,they did not create any wealth.

Mikeb85• 13 years ago

This is what happens when you privatize massive industries without proper processes in place... Most of these people inherited billion dollar businesses when the Soviet Union crumbled.

kutakbash5• 13 years ago

The irony of this is that lack of 'proper processes' occurred because the new government had to do this ASAP, before the 'red managers' (actual management of properties in question), backed by labour collectives, assume control over the means of production in the country and reverse the 'democratization', privatization and whatever new shiny things reformists intended to do.

PeterisP2• 13 years ago

Now that is "1% of 1% of 1%", literally.

taybin• 13 years ago

We are the 99.99%.

hedgew2• 13 years ago

The six Walmart heirs have more wealth than the bottom 42 percent of Americans combined.

softbuilder• 13 years ago

How much of America's wealth is that?

eck• 13 years ago

Not much. A fraction of Americans have negative net worths. If you have no debts and a nickel in your pocket, you're worth more than all of them put together. It's an oft-used misleading statistic.

omonra• 13 years ago

I would urge readers to refrain from the kneejerk reaction 'it's happening all over now'. What is happening in the Western world (rise of inequality due to skills being prized higher owing to technological change) is very different to what happened in Russia.

There a band of people connected to the government (first it was party apparatchiks, then friends of Putin) plundered resources owned by the state. And almost all of them have to do with stuff being pulled out of the ground.

gaius2• 13 years ago

It's fascinating that so many of them are ex-KGB. These guys would have been painstakingly vetted for their impeccable ideological purity before being recruited in the first place, let alone promoted. These were the ultimate guardians of the Communist system, and they turned hyper-capitalist overnight. I guess it's like we see in the West when holier-than-thou politicians are enmeshed in a corruption scandal but like everything Russian, executed on a grand scale. Have you seen the size of their novels?!

delinka2• 13 years ago

"... vetted for their impeccable ideological purity ..."

Rather, vetted for their impeccable ability to wax lyrical about "ideological purity." I'd suggest that these guys are personalities that learn how to survive in the current climate regardless what that climate happens to be.

ecdavis• 13 years ago

There was a lot of tension between the KGB and the senior party officials in the USSR. In fact, in an interview I watched recently a KGB defector described them as "hating" each other. It's not necessarily true that all KGB operatives would have been die-hard communists, particularly members of Putin's generation - i.e. those that were born and grew up in the USSR rather than actively participating in revolution.

Someone• 13 years ago

I think they were less vetted for their impeccable ideological purity than filtered out on basis of their ambition and utter pragmatism ("If that is what it takes to become part of the establishment, so be it")

vidarh• 13 years ago

The prominent communists in the Soviet party had largely been murdered after the Moscow processes, left the country, or been exiled to Siberia, by the mid '30's. To the extent there were any communists left in the party by then, it was people who were too afraid or too weak to stand up to the regime.

To the extent the KGB were selected for ideological purity, they were initially selected for adherence to the ideals of a Stalinist party machine that was mostly concerned with the protection of privilege.

It's totally unsurprising that they "turned hypercapitalist overnight" - you had a group that was built on accepting that using pretty much any means necessary to maintain power and privilege was perfectly ok.

mseebach3• 13 years ago

Enriching yourself on stolen goods - even when you've enlisted state power to legalise the stealing - isn't very accurately described as capitalism, hyper or otherwise.

Being super-rich in Russia is all about receiving privileges from the regime in exchange for loyalty. Ceasing your loyalty has consequences:

http://en.wikipedia.org/wiki/Mikhail_Khodorkovsky

http://en.wikipedia.org/wiki/Boris_Berezovsky_(businessman)

rdtsc3• 13 years ago

There is interesting book called "Spy Handler: Memoir of a KGB Officer" written by this guy:

http://en.wikipedia.org/wiki/Victor_Cherkashin

He talks how KGB agents after the fall of the Soviet Union were in the best position to get into high power positions, plunder and pillage the best stuff available. They went from supposed devout communists to the most ruthless capitalists.

They (KGB agents) were really a different class of people. They had knowledge and understand of all the details, they were also selected to be the smartest, then trained on top of it.

adventured2• 13 years ago

They turned the opposite of Capitalist. Cronyism via leveraging the state via force to plunder assets is not Capitalism.

tsotha• 13 years ago

It's fascinating that so many of them are ex-KGB.

It's not that surprising, really. Positions in the KGB were highly prized, and the organization only took people with high intelligence and demonstrated competence. They really were the best and the brightest the USSR had to offer.

znowi3• 13 years ago

painstakingly vetted for their impeccable ideological purity

You watch too many Hollywood spy movies :)

turned hyper-capitalist overnight

What happened in the 90s had little to do with capitalism, though some may argue it did :) It was mass theft of state property (with a fair amount of murder) out in the open among chaos and disarray.

First, there was the gang of "liberals", who heroically put an end to the Soviets and stole what they could on the ruins of the collapsed Empire. Then in 00s with Putin came the KGB gang, who took away the loot from the "liberals" and put private sector under control. They recently ousted the opposing military gang in a big embezzlement scandal. They're the ruling elite at the moment.

mrcactu5• 13 years ago

  What is happening in the Western world (rise of inequality   
  due to skills being prized higher owing to technological 
  change) is very different to what happened in Russia.

We are currently in a period of technological change and - as we see on HackerNews everyday - skills are being prized. Ostensibly we are supposed to be helping the economy. Now it sounds like we're making income inequality worse since we know things that other people don't.

I had no idea what to Google for more information but I found this outdated paper from 1998 in the Quarterly Journal of Economics http://economics.mit.edu/files/3809 We get supply-demand analysis like

  the unprecedented increase in the supply of college   
  graduates during the 1970s may have been causal for both 
  technological developments and the changes in the 
  structures of wages in the past two decades

That paper was written in 1998, I wonder if there's more recent discussion on relationship between valuation of skills and wealth inequality.

mseebach3• 13 years ago

Reducing equality is not the only measure for helping the economy. Software driven automation has made enormous sections of the economy more productive and there's plenty more to do.

But yes, as comfortable middle class jobs are largely automated away, inequality increases. "Average is over" by Tyler Cowen is largely about this shift. It's not a particularly comfortable read, but I struggle to fault his analysis.

nrmilstein• 13 years ago

What is happening in the Western world (rise of inequality due to skills being prized higher owing to technological change) is very different to what happened in Russia.

Is this really the source of inequality in the Western world? Technological change leading to different desired skills seems like something that's been around long before our current inequality troubles. In any event, I thought average wage in the US hasn't risen since the 70s, before the information age. I would guess it's more a combination of several factors, perhaps the college no-college gap, changes in the finance world, and political changes.

return0• 13 years ago

So it's a lot like the west.

masklinn2• 13 years ago

By comparison, the top 400 people in the US have 2.5% of the US's wealth (using Forbes's 2010 numbers of $1.37 trillion for the top 400 households, and the Federal Reserve Board's $54.9 trillion US net worth)

jschulenklopper2• 13 years ago

This is an interesting presentation (and told in a powerful way) on the wealth distribution in USA: http://www.upworthy.com/9-out-of-10-americans-are-completely...

simias• 13 years ago

This is a terrible website tricking me into liking it on facebook. Here's the video on youtube:

https://www.youtube.com/watch?v=QPKKQnijnsM

grannyg00se• 13 years ago

"All we need to do is wake up and realize that the reality is not what we think it is"

Somehow I don't think a sudden realization is going to make a whole lot of difference. To make any difference we're going to need a complete upheaval of the mechanism and culture of the country. And not just any one country. The entire global financial system is geared to support and further this kind of imbalance.

tedunangst3• 13 years ago

Here's a fun experiment: Graph what you think wealth distribution should be. Take the derivative to see what you think income should be. Take the derivative again to see what you think your raise should be.

kutakbash5• 13 years ago

The problem with this comparison is that choice of size of the wealthiest share of population (top 110, top 400, top one family, top 20%) greatly influences the outcome of comparison. Why won't we all just refer to good old Gini coefficient and call it a day.

nether• 13 years ago

According to the Gini, Russia has more income equality:

https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...

I can't imagine it being true though given this story, my experiences traveling across Siberia, and those of my roommate who is from Russia (he's been in the US for six years). You pretty much have to be a one percenter to get potable tap water (every restaurant charges for water because it's always bottled, never tap).

masklinn2• 13 years ago

The problem with this comparison is that choice of size of the wealthiest share of population (top 110, top 400)

I found it fitting because it's pretty close to the same percentage of total population in either case (1 in a million)

Why won't we all just refer to good old Gini coefficient and call it a day.

Although you can use Gini for wealth, the "usual" Gini coefficient is income.

tokenadult3• 13 years ago

China has a similar problem.

http://www.forbes.com/sites/kenrapoza/2013/01/20/the-china-m...

http://www.bloomberg.com/news/2013-02-05/china-approves-inco...

This is frightening to social scientists in China who analyze society from a Marxist framework, especially those who have noticed that regional wealth gaps in China are greater than those in Yugoslavia before Yugoslavia disintegrated.

selmnoo2• 13 years ago

America has a somewhat similar problem. One family right now has more wealth than the bottom 40% of the American population combined.

http://articles.latimes.com/2012/jul/18/business/la-fi-mo-wa...

Shivetya• 13 years ago

it was a stupid study done to score points with specific groups, basically another bash Wal-Mart to appeal to those bobble heads who rally around that sort of stuff. It takes a lot to ignore all the other wealthy individuals and groups to zero in on that family.

Throw out the negative equity people and the numbers were not as bad, use median income and the numbers are better. I doubt the comparisons made in China and Russia are the same as this study you cite was.

Besides, most importantly, the Waltons earned it, most of the wealth locked in China and Russia are either ex political power players or their friends.

Still, when it comes to China and even Russia, what has really changed? The same people ruling and having control of the wealth when they were not "open" markets are basically the same now.

rayiner3• 13 years ago

It's not quite that similar. The 400 richest Americans control $2 trillion, or about 3-4% of total U.S. wealth. That means wealth in the U.S. is a lot less concentrated at the top than in Russia. To match Russia (accounting for population), the 200 richest Americans would have to own $19 trillion in assets, the average wealth would have to be about $100 billion and you'd see some trillionaires.

Looking at the net worth of the bottom 40% of the American population doesn't tell you much about the level of oligarchy in American society. You would expect a big chunk of the population to not have much in the way of assets, simply because the trajectory of peoples' lives is to build up assets as they age over time. See: http://en.wikipedia.org/wiki/Wealth_in_the_United_States#Sta.... Indeed, things that are ostensibly good, say more people getting higher education or more job mobility, can push out the time when people settle down, buy a house, and start saving, thus increasing the number of people who don't have substantial assets.

The median family net worth of a household headed by someone under 35 is $10k, while it's over $230k for a household headed by someone aged 55-65. The "bottom 40%" category is also heavily skewed by education, with households headed by non-high school graduates having a median net worth of $30k versus $250k for households headed by college graduates.

The statistics indicate that the "bottom 40%" starts around $40k. How many people under 30 do you know that have a net $40k? With student loans and sky-high rents, I bet lots of silicon valley engineers are in that "bottom 40%" for reasons that have nothing to do with oligarchy.

nimble• 13 years ago

more wealth than the bottom 40% of the American population combined.

Sounds like a statistic designed to rile people who don't understand the difference between wealth and income. You can be living quite comfortably but with no wealth accumulation (no savings or property). If you're also in debt, your wealth is negative. That bottom 40% probably includes a good number of people making over $100K per year.

yummyfajitas2• 13 years ago

30%, not 40%, according to your article. In the same year (2007), I had just finished my Ph.D. and finished grad school. My income went from about $18k to $50k.

In that year, I had more wealth than the bottom 25% of the American population combined. You probably did too.

http://blogs.reuters.com/felix-salmon/2011/12/13/how-alice-w...

zackmorris• 13 years ago

It actually went up to 60% because most of the gains since the great recession began in 2008 have gone to the top 1%:

http://www.youtube.com/watch?v=D6b27nnmdGg

malandrew2• 13 years ago

If I controlled that much money and was determined to be charitable after accounting for my own personal comfort, I'd love to perform the following experiment, give away $833 to every person in that 41.5% each month for the next 12.5 or so years. IANATL, but at $833 per month you stay just under the $10000 per person you can give each year.

The economic impact of such an act would be a huge direct stimulus to the economy and would change the lives of everyone for the better.

ZeroGravitas• 13 years ago

It reminded me of this history of the Congo, particularly the more recent stuff like the 100 Million dollar palace in the remote Jungle with a runway built specifically for Concorde, which was used for shopping trips to Paris:

http://www.bbc.co.uk/news/magazine-24396390

tanzam752• 13 years ago

This is frightening to social scientists in China who analyze society from a Marxist framework, especially those who have noticed that regional wealth gaps in China are greater than those in Yugoslavia before Yugoslavia disintegrated.

I don't see what Yugoslavia has to do with it. Yugoslavia was a very different situation, in that each republic was populated by a different ethnic group, with a history of squabbling.

Slovenia and Croatia were wealthier than the other republics, and they resented the fact that Serbia held the reigns of political and military power in the federation. It is not accidental that these were the first two republics to break away -- and also that they managed to break away successfully. In contrast, Bosnia had a large Serb population, and they weren't about to let go without a fight.

China is different, in that most of the rich provinces have a majority-Chinese population, and most of the poor provinces are also majority-Chinese. The only provinces they're worried about are Xinjiang and Tibet -- and that's an ethnic problem, not an economic problem.

The reason that the Chinese Communist Party is worried about the distribution of wealth is that they don't want a grassroots communist revolution. They know all too well how those things get started ...

tokenadult3• 13 years ago

China proper has a 2000+ year tradition of unification.

No. China is a divided country today, if you believe the official view of both the P.R.C. and R.O.C. regimes about Taiwan as a territory of China, and China was divided into territories ruled by warlords as recently as my own parents' childhood. There have been many periods of Chinese history when the territory that is now known as the country of China was ruled by multiple, warring regimes, and interregional ethnic tension among nominally "Han" people in China is well known to anyone who speaks Chinese (as I do) or has studied Chinese history (as I have). I referred to Yugoslavia in my comment to which you kindly reply because this is an example that has been pointed out to me by Chinese social scientists. If one accepts a Marxist framework of economic determinism, as many social scientists in China continue to do, the break-up of Yugoslavia was all but inevitable once regional economic disparities became as great as they were in Yugoslavia in the 1990s. But regional economic disparities in China are now greater, and not least in the large swaths of territory that historically have been part of Tibet and eastern Turkestan.

The reason that the Chinese Communist Party is worried about the distribution of wealth is that they don't want a communist revolution, such as the one that originally brought them into power.

Yes, the current leaders of China have violent regime change as well as territorial dissolution to worry about. I'm agreed with you there.

Jun8• 13 years ago

Although it is true that Hans are the majority in all major regions of China, still there are significant ethnic concentrations in regions, e.g. see ethnic autonomous areas listed here (http://en.wikipedia.org/wiki/Autonomous_entities_of_China) other than Tibet and Xinjiang. History shows that large empires with regions of diversity can catastrophically divide up after long periods of being a single entity.

felipe2• 13 years ago

I understand the problem of rising wealth gap in China, but I missed the part in the articles you linked where it says that a very small and tight group of connected people owns a substantial part of the country.

Obviously guanxi and party membership are unfair and create such inequalities in China, but it seems to me that in Russia the issue is a mafia-like situation, while in China it's more of a system-related issue. (I am not trying to minimize the problem in China, I am just not sure whether they can be compared)

tokenadult3• 13 years ago

My quick Google search at that moment didn't turn the last news story I read directly on the issue you mention. The story I found just now

http://www.scmp.com/comment/insight-opinion/article/1217811/...

isn't the same story either, but it is familiar to persons who follow news from China that the concentration of wealth at the top of the ruling party clique is very extreme--and unknown in its full extent, for lack of a free press.

cold_reset• 13 years ago

Those rich are personal friends of Putin or are connected to him. They don't produce any goods, they just exploit Russia's natural wealth. Russian economy survives just because of its oil and gas. It will completely lose its weight when it ran out of its black gold.

rjzzleep• 13 years ago

isn't that what happened when the IMF tried to transition the former sovjet union to a free market in record time?

also, isn't that why putin is so liked among a large portion of the people, because he brutally stripped away some of these guys wealths?(probably adding some to his own in the process)

VladRussian2• 13 years ago

Tzar transferring wealth from (and publicly humiliating and stripping them of all the privileges, etc...) non-110%-loyal to him rich people (who built their wealth by "stealing from people" - in Russian mentality there is no other way to build a wealth) to the loyal ones is the national reality show in Russia. People there just love a "strict, yet just tzar".

marknutter• 13 years ago

So when people say that our growing wealth inequality in the US will lead to economic ruin, does Russia and China not refute that premise?

antonioevans• 13 years ago

20 years of Capitalism is a small amount of time to refute a premise. They need decades more of booms, busts and bubbles till you can see the financial and political results of such socioeconomical imbalances.

camus2• 13 years ago

Would you want to live in Russia or China?

tiatia• 13 years ago

Well, I have a US passport (naturalized).

Yes, I want to live in China and I am actually going to.

gesman• 13 years ago

Lenin tried to push his "fair wealth distribution" ideas. We are all aware of results.

dkuntz2• 13 years ago

Not really. Leninist ideals went out the window when Stalin took over. The results you're citing aren't due to Leninism, but Stalinism.

lutusp6• 13 years ago

Much like here. Different country, similar distribution of wealth. This supports an old adage about the difference between Russia and the U.S. -- in Russia, it's dog eat dog. Here, it's the other way around.

whiddershins• 13 years ago

To my mind,this highlights a flaw in free market theory. Obviously this scenario was not created by market forces. But now that the inequality exists, does anyone seriously believe a perfect free market economy, if implemented in Russia tomorrow, would act to substantially undo the resource distribution issue?

hartator• 13 years ago

It proves the opposite at contrary.

Corruption is the enemy of free market. The article explains that this situation is due to Vladimir Poutine giving away taxpayer money in huge amount for control and loyalty. Doesn't sound like free market.

kenster07• 13 years ago

There are lots of "flaws" in free markets, if you're using econ101 bullet points as a blueprint.

patmcguire• 13 years ago

In Ukraine, the richest 50 people own 85%. Which is way more eye-popping.

http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_n...

valtron• 13 years ago

Well, because of the population difference, it's not "way" more eye-popping, though still more uneven than Russia.

Ukraine: 45.6M; 50 people = 0.0000012% own 85%

Russia: 143.5M; 110 people = 0.0000007% own 35%

pavanky• 13 years ago

It doesn't matter what the percentage of population is at those numbers.

AJ007• 13 years ago

Bloomberg has a good rebuttal about the measurements used in this "study": http://www.bloomberg.com/news/2013-10-10/just-how-rich-are-r...

Additionally Russia's gini coefficient (income rather than wealth) puts the US as more unequal than Russia.

adventured2• 13 years ago

Perfect income equality is not an ideal, it's a marxist fraud used as ideological cover while the elites keep the "proletariat" held in intense but semi-equal poverty.

You should not get paid the same thing for different work.

If I work twice as hard as you at the same task, you should not make as much as I do.

rplacd• 13 years ago

Complete income inequality isn't even orthodox Marx - "From each according to his ability, to each according to his need" goes the standard quote by Marx; but that was his study of a specific utopia. (The rest of the cited work in fact goes on to rip its jaws into a transitional programme wrought out of "effective politicking" - pointed stuff.) The official CPSU line was then "To each according to his contribution" in the "transitional" period - through Trotsky and Lenin; so goes the degeneration.

I wonder how long it then took to get to imposed equality.

james10712• 13 years ago

You could move some of the words around and it would make just as much sense.

e12e7• 13 years ago

If I work twice as hard as you at the same task, you should not make as much as I do.

If you're struggling to program something and I do it easily, you should be compensated for your incompetence?

Work shouldn't be defined by effort but by results -- and that isn't always reasonable to quantify (which would be needed if it was to be the basis of a (fair) reward system).

I agree that "perfect equality" isn't an ideal (in pretty much anything). I do thing equal opportunity is a worthy goal, though.

Sagat• 13 years ago

Why use the word "should"? Nobody is entitled to anything in our world. Working hard is not valuable in itself. The only reason it is encouraged is that it has the potential to bring about positive results. A world where people are rewarded based on how much they "tried" or worked would be highly dysfunctional. There is no moral basis on which to justify rewards without results.

znowi3• 13 years ago

Most, if not all, of these people are criminals in the past, who'd been given decades in prison if properly investigated, but are now respectable gentlemen.

ansgri• 13 years ago

That's more than logical, considering that thousands of respectable gentlemen were serving decades in GULAG.

bostonpete• 13 years ago

The 35 percent of wealth that Russian billionaires own is equivalent to $420 billion.

According to Wikipedia, the wealth of Russia is $5.61T. What am I missing...?

http://en.wikipedia.org/wiki/National_wealth#Statistics

Gormo2• 13 years ago

Those 110 people would seem to own 100% of their own wealth; what makes any of it "Russia's wealth"?

wavefunction2• 13 years ago

What a ridiculous thing to post. Most of these billionaires have epic mining or extraction concessions from the government of Russia, concessions that are the result of political favoritism and crony and nepotism. Many are former KGB who leveraged their political positions to profit off the chaos and rise of the greatest KGB opportunist of all-time: Putin.

These are the exact sort of people you should be attacking if you at all believe in a free-market and capitalist meritocracy.

Gormo2• 13 years ago

Most of these billionaires have epic mining or extraction concessions from the government of Russia, concessions that are the result of political favoritism and crony and nepotism.

The article is pretty terse, and doesn't go into detail on how anyone in particular acquired their wealth. It doesn't enumerate the particular 110 people and attempt to sort the ones who acquired their wealth via illegitimate methods from those who didn't.

It simply implies that there was some unified pool of wealth owned by an abstract aggregation called "Russia", and these 110 people have claimed tremendously disproportionate shares of this wealth, without any substantive evidence being offered that this is what actually happened.

Sure, perhaps the Soviet state controlled most of the wealth within its territory while it existed, but the Soviet state acquired control of that wealth by simply seizing it from its previous owners; can we be absolutely sure that none of those 110 were simply using the corrupt institutions of the subsequent Russian state to reclaim wealth that was properly theirs in the first place?

I'm not making any apologies for the Russian government here; it's entirely possible and quite probable that many people in Russia do indeed manipulate a corrupt political system in order to capture other people's wealth for themselves. What I'm criticizing here is the article, which presumes, without arguing the case, that people owning large amounts of wealth is somehow itself evidence that abuse has occurred, and which implies through its wording that wealth originates, initially unowned, in some kind of aggregation.

JackFr• 13 years ago

In Soviet Union 35 people own 110% of the wealth.

Report: 110 people own 35% of Russia's wealth

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