Monday, May 15, 2006

Instability unavoidable

[Update 1]

Experts have calculated that Russia is one of the worst countries as far as inequality between the poor and the rich is concerned, something which points at an inherently instable system where populist rhetoric is likely to play an important role in the coming years.

  • The real Moscow 2004 Gini Coefficient (the higher the number, the bigger the income inequality) at the 0.63 mark (0.64 for 2003).
  • State-sponsored figures range from 0.28 for Moscow to 0.40 for Russia.
  • For comparison Brazil’s Gini Coefficient is 0.61 and the approximate USSR figure was 0.29.

It has to be noted that it is increasingly difficult to calculate earnings as many are hiding their real income. It’s not unthinkable that the real figure in Moscow is more than 0.70 and the situation outside the capital likely to be even worse.

This inequality could mean that Russia is stuck in the perpetual policy change from the right to the left. Further re-nationalisations are also likely, although they will not reduce the inequality which points to further cycles of populist politics, similar to Latin America.

Historically speaking Russia is now at where the United States were 100 years ago, with the Gini Coefficient at 0.6 and a group of extremely rich individuals which is despised by the general public.

When is the instability likely to affect the political system? Experts affirm that while the oil prices are high, Russia is going to conserve political and economical stability, as the money windfall makes it possible for the average citizen to earn money beyond their immediate salary.

Vedomosti, RC

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