Sun October 13, 2013
Russia Sees Staggering Income Inequality
Originally published on Sun October 13, 2013 5:12 pm
ARUN RATH, HOST:
It's ALL THINGS CONSIDERED from NPR West. I'm Arun Rath.
The Occupy Wall Street movement called attention to the huge gap between the rich and poor in America. But when it comes to wealth inequality, the U.S. has nothing on Russia where 35 percent of the entire country's wealth is owned by just 110 people. How on earth did a country go from communism to oligarchy so fast?
Lukas Alpert, who covers foreign investment for The Wall Street Journal, says to understand, you have to go back to the collapse of communist Russia 23 years ago.
LUKAS ALPERT: What happened right after the fall of the Soviet Union was the government needed to privatize quite dramatically and quite quickly because they needed revenue, and they were looking to just unload everything that they owned, which was everything. So many of the most prime factories and mines and very valuable sort of entities ended up in the hands of a few people who either had access to a lot of capital or had political clout. And these people ended up with these companies for very little money, and these companies generate billions of dollars a year in revenue. So they became very rich very quickly. And it's held that way since the end of the Soviet Union.
RATH: Now, people talk about a wealth disparity in this country, but it's nothing compared to what you describe. Can you give people a sense of the disparity there, you know, between these super rich people you're describing and the average Russian?
ALPERT: Well, according to the report, which was put out by Credit Suisse, basically 93.7 percent of the Russian population has wealth that's measured at less than $10,000. So that's almost the entire population. And then you have the, you know, the group that is worth more than a million dollars is literally .1 percent of the population. So you have 110 people who, according to Forbes, billionaires, and some of them go up to 18 billion, 17 billion. And you add them up, and that actually adds up to a substantial chunk of the overall wealth of the country, which is $1.2 trillion.
RATH: And how does that compare with the rest of the world? Is any country even close to that?
ALPERT: The only places where you could even see anything like this would be like a small Caribbean island, let's say, that had a resident billionaire, you know, which just threw off all the math. So, really, there's nothing like this. I mean, in the United States, you have, you know, people whose wealth is less than $10,000 is 30.7 percent. Between 100,000 and a million is 30.7 percent. So you see in those brackets the numbers are fairly similar.
It's only when you get to the hyper high ends when you have a few people who are worth $50 million or more that the pool starts getting very small. And you do see some disparity in the U.S. but not quite like in Russia.
RATH: Now, you mention that the vast majority, 93 percent of Russia's population is worth less than $10,000. How does that translate into quality of living, standard of living in a city like Moscow?
ALPERT: Basically, you do have people here who have not a lot of money, and there's quite a lot of them. And they struggle in a place like Moscow because, you know, costs are quite high. But overall, the standard of living has improved quite dramatically in, say, the last 10 years. So there doesn't seem to be overwhelming dissatisfaction over this point yet. But, you know, presumably, it could get there.
In history, when you look at these kind of disparities of wealth, it doesn't usually end well for the people who have all the money, you know? So it's hard to say when that, you know, if that - there's going to be a tipping point or, you know, maybe they can bring up the lower end of the population and balance it out over time. But, you know, at the moment, it seems like this can't sustain as it is.
RATH: Luka Alpert covers foreign investment for The Wall Street Journal in Moscow. Lucas, thank you so much.
ALPERT: You're welcome. Transcript provided by NPR, Copyright NPR.