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In his September 1, 2017 speech to incoming Russian schoolchildren, Putin made waves by proclaiming that whoever becomes the leader in AI will become “ruler of the world.” This provoked a variety of reactions, from Elon Musk commenting on his belief that competition for AI superiority will be the likeliest cause of World War III to discussions of the geopolitical aspects of the “control problem” at the more esoteric rationalist venues like /r/slatestarcodex. Many of the reactions were skeptical, citing Russia’s traditional weaknesses at commercializing its inventions. Nonetheless, Bloomberg columnist Leonid Bershidsky, who can hardly be called a Russia optimist, cautioned that Musk’s concerns be taken seriously, citing a range of civilian and military AI applications being developed in Russia.

But here’s another story that happened to unfold on the same day. Back in 2015, Sergey Chemezov, the head of Rostekh state technology corporation – one of Putin’s KGB chums from their time in 1980s East Germany – proudly presented the Russian President with one of his company’s latest “innovatory” offerings: A thin, double-screen, YotaPad-based tablet which was “of entirely Russian make”, meant to be used as an electronic textbook in schools. But they were actually made in Taiwan, and when the devices were distributed to some Russian schoolchildren at the start of the school year, it emerged that they took three minutes to start up, only worked with a stylus, and weighed 1.5 kilograms. According to an investigation by the online journal Znak, the device in question was actually a slightly rebranded version of the American device enTourage eDGe, an outdated and unsuccessful product from 2009 that could be bought wholesale for $20 apiece as of 2015 (you can still get it for $30 on Ebay today). Meanwhile, the official cost of the 8,000 tablets in the trial electronic textbook program was 24o million rubles, which translates to around $500 apiece. This isn’t even very impressive innovation so far as siphoning away taxpayer money into private pockets is concerned, to say nothing of technology.

So which of these stories best reflects the real state of Russian science and technology?

The one in which a technologically adept elite are seriously driving the development of things like strong AI and pondering on its world-historical consequences – or the one in which a clique of kleptocrats pay lip service to innovation while skimming off even the modest resources they bother investing into science and technology?

As per usual, I believe that the best guide aren’t anecdotes, which are the singular of “statistics,” but numbers, numbers, and more numbers in international comparison, as I did in 2006 with respect to China’s scientific/technological convergence with the United States in terms of indicators like published scientific articles published, the prevalence of industrial robots, and the number of supercomputers. I will repeat the same exercise, but with Russia.

Scientific Articles

The SJR maintains a database of scientific publications by country and subject for the past 20 years.


The Soviet Union in 1986 produced around 7.6% of the world’s scientific articles, which was a quarter of the American rate and comparable to other leading industrialized countries like the UK, Japan, West Germany, and France. In the wake of the brain drain and financial collapse in the wake of the USSR’s dissolution, this figure plummeted to below 3% by the mid-1990s and below 2% by the mid-2000s, in a drop made all the more remarkable by the absence of a “publish or perish” scientific culture in the erstwhile USSR. It was only in 2014 that Russia’s relative standing began to recover.

However, with 73,000 articles published in 2016, Russia remains far below the United States (602,000) and China (471,000), as well the bigger European countries like the UK (183,000), Germany (166,000), and France (113,000). As the 13th most scientifically productive country in the world, it is wedged in between South Korea and Brazil. This is true across the board. For instance, even in the sphere where Russia does best, in the Soviet mainstay of “Physics and Astronomy”, it is still only fourth in the world with 23,000 articles, well behind both China (79,000) and the United States (59,000).

Moreover, even the very modest overall figures conceal a yawning gap in some of the most recent and prospective spheres of modern science. Before worrying about the dangers of AI “eating us” – let alone fantasizing about “sharing this know-how with the entire world” – it would have perhaps served Putin better to first concern himself with the question of why Russia only published 552 papers in the field of AI in 2016, relative to 11,800 in China and 6,700 in the US. Another important sphere that is seeing blistering progress are the genomic sciences, some of whose applications – for instance, human germline engineering for higher IQ – will be world-transforming. Could Russia lead the world in producing “[genetically] spellchecked supermen“? With 690 published papers on Genetics to America’s 13,600 and China’s 9,600, 386 in Biotechnology to China’s 7,100 and America’s 6,400, and 350 in Bioengineering to China’s 6,600 and America’s 4,900, this question answers itself.

The state of affairs in the social sciences is even worse. While Russia’s two (sic) published articles in Women’s Studies in 2016 are nothing to worry about – sooner the converse – that’s about where the happy news ends. Not only do the social sciences suffer from all the other weaknesses of Russian science, but the Soviet legacy there is, if anything, negative value added.

For instance, one sphere that I am personally highly familiar with, psychometrics – the science of measuring mental capacities and processes – was declared a “bourgeois pseudoscience” in 1936, with research in it banned up until the 1970s (though they, unlike the geneticists, seem to have at least largely escaped Stalin’s murderous gaze). Consequently, pretty much all of it had to be re-imported wholesale from the West. While there are now some very good people working on psychometrics in Russia, they have to do it on ageing computers in a creaking building, and financed almost exclusively by European grants.

Far from atypical, this is a steady pattern in the social sciences. To take another example, consider Sinology. Many of the USSR’s leading Orientalists were executed in the late 1930s on spying charges (trumped up ones, I hope it goes without saying). Today, as China expert Alexander Gabuev explained in a couple of articles in Kommersant several years ago, which I summarized in a recent article for The Unz Review (The State of Russian Sinology: Past Chequered, Present Dismal, Future Uncertain), the field of China Studies in Russia is a minnow relative both to China Studies in the West, and to Russia Studies in China. And why should it be otherwise? As of when Gabuev wrote his overviews, the average salary of a docent at the prestigious Moscow State University’s Institute of Asian and African Studies was around $500. Consequently, there is a near total lack of expertise in the country that Kremlin talking points describe as Russia’s “strategic partner.” Though one can cite any number of amazing anecdotes from Gabuev’s articles, I will limit myself to just one. During the Russian-Chinese military exercises “Maritime Cooperation 2012,” the Chinese had nearly 200 young officers with a solid knowledge of Russian at hand to provide linguistic support; the Russians could only muster three translators, and presumably, the Russian GRU intelligence service’s sole China analyst wasn’t one of them. Consequently, not only is the Russian military’s degree of China expertise incomparably lower than America’s, but it is also likely far lower than the PLA’s understanding of the Russian military.

One observes a catastrophic lack of understanding of China across the entirety of the Russian ideological spectrum, not least as regards the extent to which their own country is falling behind.

Scientific Articles: Adjusted for Quality

But if Russia’s raw research output is nothing to write home about, it diminishes to near irrelevance when adjusted for quality.

Here’s one important thing you should know about our world if it were a Civilization playthrough: The Anglo-Saxons have won the Cultural Victory. The majority of cultural output in the world happens in the English language, and this rises to at least 95% so far as science and technology are concerned. The Germans were competitive earlier in the century, before the Nazis (and American demographics) ruined everything, and the Soviet Union maintained a technical mini-civilization partly secluded from the global mainstream, but since its collapse, the Anglo system has become the only game in town.

Most of the really important scientific research gets published in a handful of high-impact factor journals. If there is a proxy for modern day scientific productivity adjusted for quality, and without the generational lag problems that you encounter with the Nobel Prizes, then it is the number of articles an institution or country manages to publish in those elite journals, which are proxied by the Nature Index.

# Country Physics Chem Life Total
1 USA 4307 4567 6674 15157
2 China 1970 4025 795 6380
3 Germany 1411 1372 940 3593
4 UK 965 947 1126 3039
5 Japan 879 1116 581 2538
6 France 755 542 468 1811
7 Canada 315 421 483 1229
8 Switzerland 400 345 319 1019
9 South Korea 462 542 141 990
10 Spain 373 442 190 980
11 Italy 503 234 171 909
12 Australia 243 268 280 835
13 India 300 408 81 804
14 Netherlands 275 234 245 744
15 Sweden 152 140 181 452
16 Israel 175 132 162 442
17 Singapore 150 232 80 404
18 Russia 252 98 27 377
19 Belgium 123 114 112 336
20 Taiwan 134 157 57 332
21 Denmark 108 79 111 299
22 Austria 110 82 105 285
23 Brazil 144 34 57 246
24 Poland 114 74 18 204
25 Finland 70 42 52 160

Source: Nature Index, WFC 2016

The US absolutely dominates high-quality research, producing about a third of the world’s total, even though China has gained considerably ground, going from 9% of the global total in WFC 2012 to 14% as of today.


Despite modest improvements since 2012, Russia remains a complete minnow, accounting for less than 1% of elite global scientific research. It is worth noting that it lags China not only absolutely, but in per capita terms as well. In total, Russia produces as much elite level science as does Singapore, Belgium… and the University of Cambridge.

It is hard to imagine any plausible adjustment which would cardinally improve its position. Although it is possible that Russia’s scientific potential is somewhat underestimated by linguistic insularity and its incomplete integration with the global science scene, this is unlikely to be a major factor; since Russia is not actually a world scientific leader in any sphere but a few rather narrow areas of metallurgy and nuclear physics, much of the conversations that take place in exclusively Russian language journals will be outdated and useless. It is also likely that a significantly larger chunk of Russian scientific research relates to military applications than in most other countries, and is effectively “black.” That said, even we assume – very generously – that this underestimation is on the order of 50%, that would still mean that 146 million Russians produce fewer Science Points than the 8 million citizens of Switzerland. Even in Physics, its area of greatest relative strength, Russia barely manages to match Australia; as for the Life Sciences, it is nestled in between Czechia and Argentina.

This analysis is backed up by the performance of individual Russian institutions and scientists.


The most productive (and elite) Russian university, Moscow State University, is in 254th place on the Nature Index, alongside the likes of Oregon State University and the University of Liverpool; fine institutions though they might well be, they do not have a reputation as academic powerhouses. Although Russians tend to complain about the low positions of their universities on international rankings – and I will admit to having once espoused such beliefs myself – it is worth noting that since Moscow State University is 93rd on the latest ARWU Shanghai Ranking and 194th on the THES ranking, it would seem that if anything, the rankings overstate Russia’s performance.

There are a grand total of three Russia-based researchers in Clarivate Analytics’ database of highly cited researchers (of whom only one, Sergey V. Morozov, has his primary affiliation there; the other two primarily work in Spain and the United States). Amazingly, this means that there are as many Russian highly cited researchers in just one American university, U.C. Berkeley – Alexey Filippenko, Igor Grigoriev, Natalia Ivanova – as there are in the whole of Russia! In fairness, Russia’s BRICs rivals Brazil and India don’t do substantially better. However, China has long left its colleagues behind; there are almost 200 highly cited researchers who have their primary affiliation in the Heavenly Kingdom, who are producing 20% of the world’s high-impact academic publications as of 2016.

R&D/Academic Personnel

Russia spends a relatively low but far from catastrophic 1.1% of its GDP on R&D, which is similar to the Mediterranean and Visegrad countries. It also used to have one of the highest concentrations of researchers in the world, with almost 8/1,000 workers employed in R&D, which was higher than the equivalent figures in all the major OECD countries except Japan. Since then, this figure has declined to 6/1,000 even as the average OECD figures went up, so here Russia, too, now keeps company with the Mediterranean and Visegrad. Even so, this was hardly a disaster – the USSR overproduced “researchers” in the same way as it overproduced “doctors” and “engineers”, many of whom would have been mere nurses or technicians in the West. So the thinning out of a good fraction of those fake “researchers” should in theory have been a good thing, assuming that the system was purging itself of dead wood. But the reality was sooner the other way round. Due to the utter lack of prospects in Russian academia, the most talented either continued to emigrate West (with the bulk of that outflow occuring in the 1990s), or went into the private sector.

Many explanations have been proposed as to why Russian science has been in an unending death spiral. Some of the more ideological works cite factors such as the lack of democracy and human rights, and its estrangement from the West – as if Yeltsin’s Russia was a fount of innovation (or democracy, for that matter), while the scientific explosion in modern day China is a mirage (not to mention countless historical counterexamples, e.g. the most scientifically dynamic country in the world prior to World War I was authoritarian Wilhelmine Germany). In Becky Ferreira’s recent profile of Russian science for VICE, one researcher is quoted as saying the following: “If people really only went to countries which do not invade other countries and respect human rights, then they would stick to countries like Andorra or Bhutan… Maybe it sounds a bit cynical, but in my observation, most people in science are driven by opportunities. Regardless of whether such an attitude is moral or not, it is clear that science should be free of any politics.

No, the real reasons are much more banal: Money, or rather the lack thereof.

According to an exhaustive study of global academic salaries published in 2012, the average Russian academic received 2-4x less money than his equivalents in Visegrad, the Baltics, and even Kazakhstan, and an order of magnitude less than in the developed world.


Source: Paying the Professoriate by Philip G. Altbach et al. (2012).

Here is what the authors have to say about the practical consequences of this breadcrumbs-based approach to scientific funding:

In Russia, young faculty earn approximately 70 percent of the average wage in the workforce; professors’ salaries often fall 10 percent below the average wage of others in the workforce who have completed higher education. In most countries, a middle-class income generally depends on additional employment, either within the same institution, at another academic institution, or in nonacademic employment. All of this added pressure decreases the attractiveness of the academic career and will further deter the “best and brightest” from choosing academe.

Finally, it would be remiss not to mention the astounding prevalence of corruption in Russian academia. According to a Slate article by Leon Neyfakh, the Russian plagiarism detection project Dissernet has found improper borrowing in around 4% of all the dissertations defended in Russia. This doesn’t include plagiarism-free ghostwritten work: Ararat Osipian, a specialist in academic corruption, estimates that around a quarter of all dissertations written in Russia after the collapse of the Soviet Union were purchased.

There have also been private complaints of “ethnic capture” of certain Russian academic departments, primarily by Caucasians. To the best of my knowledge, this is an unquantified phenomenon (though it would not surprise me if this was true, since such a pattern has been confirmed in Italy, where as you go south – which is more corrupt – the incidence of identical surnames within university departments increases, indicating rising nepotism). However, consider the case of the Ingush. They produced six times fewer scientists per capita than Russians during the less corrupt Soviet period; today, their homeland is the highest unemployment, most subsidized region in Russia. And yet they somehow manage to have the highest concentration of postgrads per capita in all of Russia, around 50% more than in second-place Moscow. I will leave readers to draw their own conclusions.

As if the poverty level wages were not enough, the corruption and cronyism also cannot help but discourage the more talented and conscientious from academic careers.

R&D Equipment

The age when enthusiasts could jerry-rig their own scientific equipment are long gone. You need powerful supercomputers to simulate protein folding, climate change, and the integrity of your nuclear arsenal. You need high throughput sequencers to do serious experimental work in genetics.

But money isn’t any more forthcoming here than it is for salaries.


Twice a year, the Top 500 website compiles a list of the world’s five hundred most powerful supercomputers. Since 2010, China has exploded out of the margins to overtake the United States – as of November 2017, it had 202 top supercomputers to America’s 143, and that included the world’s most powerful supercomputer, the Sunway TaihuLight, which runs on entirely Chinese processors.


Table: Country Share of Top 500 supercomputers in November 2017

Russia’s performance is… rather underwhelming – its measly 0.6% global share of the world’s top 500 supercomputers is equivalent to Switzerland, and lower than that of Sweden, Ireland, and Saudi Arabia.


Nor are the trends encouraging. While there was an uptick in Russia’s numbers of top 500 supercomputers to around 2% of the world total around 2010-2011, those figures have been dwindling ever since.

High Throughput sequencers

James Hadfield maintains a reasonably up to date map of the world’s high throughput DNA sequencers. The current version of the map isn’t easily readable, but here is a screenshot from 2013.


This is a very typical picture: A modest cluster in Moscow, while the rest of North Eurasia is a scientific desert.


Russia’s performance in patent applications isn’t too bad by global standards – comparable in per capita terms to the UK and France, much higher than in the BRICS minus China (and it’s not exactly a secret that many East Asian patents are of a spurious nature).

Patent applications (2015)
China 968,252
United States 288,335
Japan 258,839
Korea, Rep. 167,275
Germany 47,384
Russian Federation 29,269
United Kingdom 14,867
France 14,306
India 12,579
Turkey 5,352
Poland 4,676
Brazil 4,641

But you can’t realize ideas without money, and despite growing by leaps and bounds in the past decade, the Russian venture capital industry remains tiny from a global perspective.


In 2016, VC funding in Russia (€295 million) was at the level of Ireland (€367 million) and Finland (€324 million) in absolute terms, though a bit above sluggish and overly bureaucratic Italy (€162 million).

And this is relative to Europe, a continent that grossly underperforms relative to its wealth and demographics. According to another source, the old continent had just $14.4 billion worth of VC activity in 2015, relative to $72.3 billion in the United States, $49.2 billion in China, and $8.0 billion in India.

In per capita terms, this means that VC funding in Russia it is at just around 5% of the Chinese level and 1% of the American level.

This expresses itself across the entire range of the hi-tech sphere, but we will just focus on one of the most important and “hip” applications.

Artificial Intelligence Startups

Let’s go back to artificial intelligence, the brains behind the coming wave of automation. How does Russia stack up?


It accounts for 13 of Europe’s estimated 409 AI startups as of mid-2017…


… or just 0.7% of the world’s 1951 total.

The US enjoys near total dominance in this sphere – with more than a thousand AI startups, it accounts for more than half of the world total. China is assuredly moving into second place position, hurtling past Japan and the major European countries.

Meanwhile, Russia is once again in the company of countries like Sweden, Finland, and Switzerland, who have less than 10% of its population.


According to a just released report by CB Insights, in 2017 China leapfrogged past the US to dominate global equity funding to AI startups. They are fast becoming the only two relevant countries in this sphere, with countries that are not China or the US accounting for a mere 13% of the global total.


For all the lunacies of the Soviet economic system, their planners did at least appreciate the importance of robotics and their role in enhancing productivity in manufacturing.


Source: International Federation of Robotics – World Robotics 2005

At the time of its collapse, the USSR had an operational stock of around 60,000 multipurpose industrial robots. In practice, this is a very inflated figure – a large percentage were simple, even hand-operated tools that would not have been counted as industrial robots anywhere in the capitalist world. Still, the Soviet level of industrial robotization in the 1980s was at least broadly comparable to the developed world, and several orders of magnitude higher than in a China just emerging out of its Maoist slumber.

Until the early 2000s, the publicly available databases generally didn’t even include the numbers of industrial robots in Chinese factories, so small and insignificant were their quantities. But from the late 2000s, the robotization of Chinese industry began to explode. As of 2016, it accounted for about 30% of the world industrial robots market, overtook Japan to become the country with the world’s largest operational stock of multipurpose industrial robots, and leveled with the United Kingdom in robot density.

Conversely, it has since become hard to even find any specific data for Russia… According to the World Robotics 2013 – Industrial Robots report, Russia had an operational stock of around 1,771 multipurpose industrial robots as of 2012.


Source: World Robotics 2013 – Industrial Robots


Source: World Robotics 2013 – Industrial Robots (2011 data)

Russia’s (total!) figures are slightly higher than in Slovenia, but lower than in Slovakia. In per capita terms, the rate of robotization per worker in Russia in Russia hovers between that of India and Iran, and is far behind middle-income industrial countries like Turkey, Brazil, and Mexico, to say nothing of a China fast gallivanting its way up to the levels of its super-automated East Asian peers.


Source: International Federation of Robotics – Feb 2018 press release on robot density (2016 data)

The state of affairs today isn’t any better. A 2016 report from the Russian robotics association NAURR presents two different datasets about the rate of introduction of new robots onto the Russian market in recent years.


Sales of robots in Russia, 2005-2014
Graph: World Robotics 2015


Sales of robots in Russia, 2011-2014
Source: FANUC

Although they diverge somewhat in their assessments, the underlying picture is clear – only around 500 industrial robots are introduced into Russian industry per year as of 2014, accounting for a dismal 0.25% of the global total. This is about thrice less even than Brazil’s 1,300, and two orders of magnitude lower than in China, where 57,000 were sold in the same year. It is likewise highly unlikely that Russia saw any improvements since 2014, considering that this was when it fell into a two year recession.

According to the NAURR report, the top five countries for scientific publications about robotics are the United States, followed by China, Japan, Germany, and South Korea. While figures for Russia aren’t given, it is probably safe to say that it is about as irrelevant here as it is in AI.

Machine Tools

It would also be worthwhile to briefly survey the machine tool industry – a sector of special interest not only because of this its inherent technological sophistication, but also because of its strategic importance as the only part of the industrial economy that actually reproduces itself and makes everything else possible.


Source: Gardener Research – World Machine Tool Survey 2016

As you might expect, the lists of countries that dominate industrial robots and machine tools production – Japan, Korea, the Germanic lands, Italy, and increasingly, China – are highly similar. Russia is not an exception, accounting for just 0.6% of world machine tool production.

As with elite level science and robots, China has left Russia in the dust not only in absolute, but even per capita, terms.


Global share of machine tool production 1913-1995 (Brown – USA; Black – Germany; Green – Britain; Red – Russia; Purple – Japan; Yellow – China)
Source: genby

The Russian Federation also massively lags even the late USSR. As an autarkic military-industrial empire, the USSR understood the necessity of being able to make the machines that make all the other machines, bequeathing the Russian Federation with 2.8 million machine tools in 1992 upon its dissolution. Since then, that machine tool stock has inexorably depreciated, and as of 2013 constituted just 760,000 pieces, with the average age almost doubling from 12 years to 21 years.


Since the end of the USSR, it has become clear that a chasm has opened up in in terms of scientific and technological output between Russia and the developed West.

This video juxtaposing the lumbering Robot Fyodor versus the agile Atlas built by Boston Dynamics seems like a good metaphor for what is perhaps the single biggest failure of Putinism in the past 18 years.

In comparison, any successes or failures in the Middle Eastern military adventures that pundits and commenters obsess over are basically irrelevant.

This is not to say that things are unremittingly bleak and getting worse.

The government has a strategic goal to get five of its universities into the global top 100 by 2020, to which end it has lavished significantly greater funding on its 21 most prospective universities. Consequently, academic salaries have greatly improved since 2013, at least in the elite institutions. They still don’t compare to the caviar feasts served up to Western professors, but at least they now constitute solid hunks of bread instead of the measly crumbs that were served up before.

There’s no very obvious reasons why Russia can’t succeed more at science. The average IQ relative to British norms is around 97, which might fall significantly short of Germanic and Anglo-Saxon (native!) averages, but isn’t really out of place relative to Mediterranean or East-Central European standards. Moreover, there are signs that Russia continues to enjoy a Flynn Effect, and besides, surely any minor disadvantage with respect to raw IQs is cancelled out by Russia’s traditionally very strong performance in international programming and mathematics contests.

Meanwhile, as regards industry, it is worth pointing out that Russia does consume around 2.7% of the world’s machine tools – it is, after all, the world’s eighth (or so) manufacturing power, not the gas station masquerading as a country of John McCain’s imagination. Infrastructure – roads, rail, airports – has genuinely gotten much better in the past decade, and with post-Soviet inflation finally tamed, Russia looks set for fairly vigorous growth.

But the problems holding Russia back are severe, and possibly intractable.

There remain strong financial and ultimately institutional barriers to unlocking Russia’s scientific potential. Putin and his clique seem to prefer lavishing resources on expensive status-signalling sporting events and white elephants as opposed to serious science and supercomputers. The former burnishes his prestige amongst simple people and provides endless opportunities to siphon away money to his Ozero chums – the latest lunatic project is to built a bridge for $10 billion to Sakhalin and its 500,000 people (a contract won by Arkady Rotenberg – who else?), which is about what the federal government spends on the Ministry of Education in a year – while the latter will only cause political trouble.

Ending corruption within academia would likewise seem a quixotic endeavor. While one can say much more on this topic, consider that PhD’s are no less a status symbol for the Russian elites than Mercedes cars and English boarding schools for their children. High-flyers found to have plagiarized their doctoral dissertations include no less than one in every nine members of the State Duma, and for that matter, Vladimir Putin himself. Waiting for these people to solve the problem of academic fraud is about as realistic as expecting them to solve corruption, or training foxes to guard hen houses. Nor is it possible to imagine a serious response to ethnic nepotism in academia in the land of Article 282, where you can be prosecuted just for arguing that the Caucasian republics should get fewer federal subsidies.

Finally, the absurdly low levels of robotization in industry raise serious questions about Russia’s political economy and its economic future. Why are Russian businesses loth to make serious moves towards automation in industry, even though Russia is, despite everything, a reasonably high IQ and well educated country? Is it because these require big capital investments that they are not willing to risk because of what they perceive as Russia’s environment of legal nihilism? It is correlated with Russian elites being the most apatride of any major civilization?

The importance of finding good answers and good solutions to these questions will only increase in the coming years and decades, as industry moves towards greater and greater automation. It seems likely that the countries that will be most successful at this will also be those who are succeeding at robotization today. Will Russia fall into a low-income trap where low wages preclude automation, and low automation preclude greater productivity and wages? At any rate, it doesn’t seem to be the case that anyone in Russia is seriously thinking about this, at least beyond empty electoral slogans – even as Putin runs for his fourth and hopefully final term, his promise to create 25 million hi-tech jobs during the 2012 Presidential elections has been conveniently forgotten.

Now this is not to say that the problem is with the Putin regime and that its removal will improve things. The pro-Western liberal elites are at least as rapacious as the kremlins, no less authoritarian in spirit, and far less patriotic to boot. Although this post was primarily about Russia, feel free to go back through the hyperlinks and study the case of the Ukraine, where liberal “lustrators” have repeatedly won; it is almost Sub-Saharan Africa so far as advanced science, native hi-tech (as opposed to offshored work), and any sort of capital-intensive manufacturing that wasn’t bequeathed to it by the USSR is concerned. Even the Visegrad and Baltic nations don’t have much to write home about. While most of them – especially, Czechia, Estonia, and Poland – do substantially better than Russia on most of these metrics, they still hugely lag the developed West and have been left behind in the dust by the Chinese juggernaut.

I don’t propose any great over-arching solution to these problems. “More money for RAN, less money for the Rotenbergs” might be a nice slogan, but as they say, the devil is in the details.

However, a solid start would be to look at the statistics and acknowledge that a very big problem exists, which, unresolved, will continue to degrade Russia’s economic, industrial, and eventually military competitiveness.

• Category: Economics, Science • Tags: Automation, Corruption, Russia, Science, Technology 
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The latest issue of the Knight Frank World Wealth Report will not make happy reading for those of us who thought they were seeing tentative signs that Putin’s Russia was making good progress on “nationalizing” its elites (e.g. multiple wealth amnesties, local Courchevel, local Hogwarts, etc).


First, Russia’s wealth structure remains extremely lop-sided. While there are ~100 Russian billionaires (about as many as in Germany, and twice the number in the UK), there are only about 2,620 Ultra High Net Worth Individuals (>$50 million), versus 8,070 in Germany and 4,580 in the UK.

UHNWI are a much better proxy for capitalistic dynamism than billionaire plutocrats, especially in a country like Russia, where most of them are made their wealth through their political connections.


Judging by their desire to emigrate and second passport possession rates, Russian UHNWI – we can comfortably use the term, since 2,620 of the 2,870 Russia and CIS UHNWI are specified as Russian – are effectively more comprador than the culture that gave the term its name.


Russian UHNWI don’t seem to want to buy homes in their own country: Russia isn’t a top property investment source for Russian UHNWI, whereas even for Latin Americans, Brazil and Mexico are.


The luxury consumption choices of Russian UHNWI are quite telling of their human capital, thrift, and patriotic investment priorities, or lack thereof.

Most popular flight routes: Moscow/Nice, presumably for the status signalling shopping, versus New York/Washington D.C. and Los Angeles/Las Vegas in the US, presumably for business and pleasure, respectively.

Russians have more yachts than anyone else other than the US, which has 10x+ as many UHNWI.

Moreover, the list of the world’s very biggest yachts is completely dominated by Russians and Arabs. The first white person on that list is at #12.

• Category: Economics • Tags: Elites, Millionaires, Russia 
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So this map has been sitting at the top of /r/MapPorn for the past day, and has been ReTweeted a bunch of times.

Of course this is measuring by nominal GDP.

Here is how the comparison would look like if you were to measure the Russian economy by PPP-adjusted GDP.


Question: Which one should you use?

GDP (PPP-adjusted) is better for proxying:

  • National power (inc. military power, if the country in question has a largely self-sufficient military-industrial complex)
  • Real living standards in its per capita version
  • Historical comparisons of the above

GDP (nominal) is better for proxying:

  • Financial power
  • Various debt burden calculations, where said debts are denominated in foreign currencies
  • Most importantly these days, “proving” that Russia is a gas station with nukes

These Russia = Spain/Texas comparisons are beloved tropes of anti-Russian Western politicians, done to demonstrate that Russia is supposedly really weak, and argue for a more “resolute” stance towards Russia in terms of sanctions, Syria, Ukraine, etc.

But the supreme irony is that it is the PPP-adjusted comparison that become even more relevant if their proposals were to be seriously taken up.

• Category: Economics • Tags: Russia 
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The Maddison Project is probably the world’s most comprehensive source of economic history statistics. Begun by British economist Angus Maddison, it was continued after his death in 2010 by an institution at the University of Groningen.

Recently, an update for 2018 has been released.

Background paper:

It was accompanied by a major introductory article at Voxeu – Rebasing ‘Maddison’: The shape of long-run economic development:

Compared to the traditional Maddison method of extrapolation from a single, modern-day observation, the new ‘cross-country’ measure gives substantially different relative income levels. …

The figure compares the level of real GDP per capita relative to the US for the year 1870 based on the new ‘cross-country’ measure and on an extrapolation-based measure. The extrapolation-based measure suggests that the UK and the Netherlands had substantially higher income levels than the US, but the new measure shows that the UK and US were at similar levels, and the Netherlands was much closer to France.
The figure also shows that the difference between the two measures varies considerably across countries, with hardly any difference for Argentina or China, a lower comparative level for Brazil, and a higher comparative level for India.

It was also picked up by commenter Polish Perspective:

The New Angus Maddison Database update (2018) is out! It is a big update with a lot of methodological re-working. It seems quite credible to my mind, for instance Turkey’s GDP per capita (PPP-adjusted) is 18K in 2016. The official Turkstat number on the same metric is closer to 24K, but that is largely because they cook their numbers. India’s GDP per capita is also lower, which is also congruent with criticism from many Indian economists about the unreliability of Indian GDP data. China’s number is also somewhat lower, but not nearly as much of a downward revision as for Turkey or India, which gels with I have written for some time now. They all cook their numbers but China does it less than Turkey(worst offender) or India(pretty bad).

The discrepancy between Maddison and their official numbers will be funny to watch.

What is more fascinating is that Russia’s GDP per capita was moving up very rapidly up until 1970s, this is common knowledge, but according to the latest database revision, Russia was actually quite close to Norway up until the 1970s after it had a period of stagnation and then of course the disastrous 1990s.

It makes you think: if Russia had moved to a Chinese reform system in the early 1970s, it’s per capita GDP could well be at Scandinavian levels. It was able to do very well up until the 1970s at the very least in PPP-adjusted terms.

This doesn’t sound very plausible to me.

Throwing up a few quick Excel graphs:


Russian GDPcc increases across the board, going from a consistent ~20% of US levels throughout most of the 20th century in the old revision, to ~40% during Tsarist times, and peaking at ~60% in the 1970s.

The highest academic estimates of Soviet GDPcc as a percentage of American I have seen prior to this are 50%, and that’s of course not adjusting for goods in centrally planned economies being less well tailored to consumer preferences (“consumers would sacrifice 12-15% of their income to get in exchange the possibility of choice in a free market” – Jose Luis Ricon, citing research).

It is also very strange that Russian GDPcc is essentially equivalent to Soviet GDPcc, whereas virtually all prior research I’ve seen suggests that the RSFSR was significantly (10%-20%) higher than the Soviet average. Though this wasn’t necessarily reflected in living standards, since the RSFSR and probably the BSSR significantly subsidized the other republics.


We are to believe that Finland was actually less developed than the Russian Empire as a whole prior to the October Revolution. This is complete nonsense.

The Austro-Hungarian Empire as a whole was more developed than the Russian Empire. But the graph above refers to just Austria, in turn the most developed part of the Austro-Hungarian Empire – and, consequently, far more developed than the Russian Empire.


The USSR was also supposedly slightly richer than Italy, at the level of countries such as Austria and Finland, and only marginally behind the UK, France, and Germany as late as the early 1980s.

This is highly unlikely what we know of Soviet consumer poverty, even adjusting for Soviet consumption being highly constricted by massive military spending, investment into the industrial stock, and the inherent inefficiencies of distribution under central planning.

The main point it has going for it is that it is far more in sync with current estimates of GDPcc (PPP) between Russia (around $28,000 according to the IMF) and the developed world (~$50,000).

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Convenient summary h/t Ivan Vladimirov.

Ireland and Iceland look to be in the best shape. While Ireland is one of Europe’s most religious countries, Iceland is one of the least (“0% of Icelanders aged 25 or younger believe world was created by God“).

Adjusting for fertility non-EU immigrants also substantially smooths – indeed, probably almost removes – the TFR differential between Western and Eastern Europe.

Note also that in countries with a long history of immigration, such as France, there will be a still small but rapidly growing – and presumably, still higher TFR than average – demographic of non-EU ancestry that are now getting counted as “native.”

How could Russia fare in this picture? Its TFR reached a local peak of 1.78 children per woman in 2015, the year of the above survey – that’s equivalent to the native rate in France and Sweden, the two highest TFR countries other than Ireland and Iceland. Its main group of non-natives are Central Asians, who don’t appear to be reproducing much within Russia itself (since immigration tends to be temporary and dominated by males), so they wouldn’t change the figures much.

However, certain small ethnic minority groups are substantially more fertile (primarily, Chechens, Tuvans, Ingush, Dagestanis) and will make a discernible if modest statistical difference. Based on census results, there is good reason to believe that the difference between ethnic Russian and total Russian TFR is around 0.08 children per woman, so ethnic Russian TFR would have been around 1.70 in 2015 – almost exactly the same as in Latvia and Lithuania.

• Category: Economics • Tags: Europe, Fertility, Immigration 
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While data from various IQ tests are useful for global scale analyses (e.g. GDPcc correlations), they are far less reliable for particular countries. That’s why I’m a big fan of the OECD’s PISA assessments, which are highly standardized, have large samples from similar age groups, take place concurrently once every three years, test those aspects of intelligence most intuitively relevant to economic success (i.e. application of numeracy and literacy skills in novel situations), and enjoy strong face validity (i.e. very few “strange” results).

However, there is also the temporal dimension. All these IQ maps that you see today are almost entirely based on testing children/teenagers from the current year to 1948, the earliest year on David Becker’s database as of now (although with attempts to correct them through reference to contemporary UK standardization samples). PISA and TIMSS are rather tidier, with large, representative samples of teenagers getting tested at set ages and at set years. Still, even this isn’t perfect, because countries vary in their educational and auxological histories, which will have varying knock-on effects on the intelligence of different cohorts.

The correlations between cohorts will still be very good (after all, IQ is strongly hereditary, and the quality of the environment will itself tend to be strongly correlated to average IQ). But there will be some interesting outliers, both positive and negative. For instance, the gap between the youngest and oldest cohorts can be expected to be greater in countries such as South Korea, which transitioned from the Third World to the First in the space of half a century. It can likewise be expected to be smaller in countries like the United Kingdom, which sprang off from a high base – it started the last century as the workshop of the world, and was less damaged by WW2 than most other European countries – but plummeted in relative terms ever since. Understanding cohort dynamics will also make it possible to do, say, more fine-grained analyses between national IQ and socio-economic success.

So it’s a bit surprising that hardly any attention has been devoted to another OECD program, PIAAC (Programme for the International Assessment of Adult Competencies), which tests a range of cohorts instead of just teenagers.

The first round of the assessment in 2012 covered the following 22 countries: Australia, Austria, Canada, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, Japan, Korea, the Netherlands, Norway, Poland, the Slovak Republic, Spain, Sweden the United States; Chile, Greece, Indonesia, Israel, Lithuania, New Zealand, Singapore, Slovenia and Turkey joining in 2014.

The following documents/dataset refers refers to the first round of PIAAC:

Unfortunately, I have been unable to find data for the later countries in one place, though I haven’t looked very hard. It appears that the next round of PIAAC will take place in 2020.

In the rest of this post, I will highlight some of the more interesting data from there. For comprehensibility, all numbers have been converted to the IQ scale, with the England/N. Ireland average set to its traditional “Greenwich Mean” of 100 and S.D. = 15.

PIAAC 2012: Literacy, Numeracy, Average IQ

. Literacy Numeracy Average
Japan 107.1 107.3 107.2
Finland 104.5 105.7 105.1
Netherlands 103.4 105.1 104.3
Sweden 102.0 104.8 103.4
Norway 101.8 104.6 103.2
Flanders (Belgium) 100.9 105.2 103.0
Czech Republic 100.4 103.9 102.2
Slovak Republic 100.4 103.9 102.1
Estonia 101.0 103.2 102.1
Denmark 99.5 104.6 102.0
Australia 102.4 101.6 102.0
Russian Federation 100.8 102.3 101.5
Austria 99.1 103.7 101.4
Germany 99.2 102.8 101.0
Canada 100.3 101.1 100.7
Korea 100.0 100.5 100.3
England/N. Ireland (UK) 100.0 100.0 100.0
Cyprus 98.9 100.8 99.8
Poland 98.3 99.5 98.9
United States 99.2 97.5 98.4
Ireland 98.2 98.3 98.3
France 96.9 97.9 97.4
Spain 93.8 95.6 94.7
Italy 93.4 96.0 94.7
Average 100.1 101.9 101.0

No surprises here, except perhaps Korea’s figures being a bit lower than expected. We’ll come to that.

Difference in Performance: Youngest (16-24) vs. Oldest (55-65)

. Literacy Numeracy Average
Korea 14.6 14.7 14.7
Spain 11.1 10.4 10.7
France 9.9 8.8 9.3
Finland 11.1 7.4 9.2
Poland 9.7 7.5 8.6
Netherlands 10.1 7.0 8.6
Flanders (Belgium) 9.0 6.9 7.9
Austria 8.4 6.5 7.4
Italy 8.2 6.6 7.4
Estonia 7.9 5.7 6.8
Germany 7.6 5.6 6.6
Australia 6.4 5.9 6.1
Ireland 6.0 5.9 5.9
Japan 7.8 3.0 5.4
Czech Republic 5.4 4.4 4.9
Canada 4.6 5.1 4.8
Denmark 7.1 2.3 4.7
Sweden 6.1 3.0 4.5
Slovak Republic 3.0 3.8 3.4
Cyprus 1.9 4.2 3.1
Norway 3.9 1.9 2.9
United States 2.6 0.7 1.6
Russian Federation -0.2 1.8 0.8
England/N. Ireland (UK) 0.2 0.0 0.1
Average 7.3 5.6 6.4

As hypothesized, Korea has the largest cohort Flynn effect; in age-adjusted terms, while its young perform as well as the best (Japan, Netherlands, Finland), its elderly are near the back of the queue.

Incidentally, Turkey – not covered in the first round of this assessment, but I found figures for it in its national report from the second round – has a difference of 13.8 IQ points between its oldest and youngest cohorts. This makes patent sense in the context of it going from a Third World country in the 1950s, to an upper middle-income one today.

In contrast, the UK and the US – already relatively well developed countries in the 1950s, when their boomers appeared – barely eked out any increase in the ensuing fifty years.

The big exception here is Russia. As I speculated in my mega-article on Russian IQ for Sputnik and Pogrom, this may have been linked to the alcohol epidemic that began in Russia from around the mid-1960s, when life expectancy plateaued and consequently stagnated for the next half-century. It is not a big stretch to imagine there were similar dynamics in the country’s psychometric profile, with any Flynn effects from continuing development being annulled by the flood of vodka of the late Soviet era.

On the bright side, Russia’s alcohol epidemic has more or less ended, and – as I predicted back in 2012 – IQ amongst the youngest cohorts has been going up for the past decade (e.g. from 95 in PISA 2000-2009 to 99 by PISA 2015; Sugonyev’s yet unpublished military data).

Sociological observation of questionable validity: The three laggards here, the US, Russia, and the UK, are all especially (in)famous for developing a sizable lumpenproletariat class during this period (respectively, white/trailer trash, gopniks, and chavs).

Difference in Performance: Men vs. Women

. Literacy Numeracy Average
Flanders (Belgium) 2.0 4.4 3.2
Germany 1.6 4.8 3.2
Norway 2.0 4.1 3.1
Netherlands 1.2 4.6 2.9
Spain 2.0 3.5 2.7
Sweden 1.6 3.8 2.7
Canada 1.3 4.0 2.7
Australia 1.3 3.8 2.6
Ireland 1.6 3.3 2.4
England/N. Ireland (UK) 0.8 4.0 2.4
United States 0.7 3.9 2.3
Korea 1.7 2.9 2.3
Austria 0.7 3.7 2.2
Japan 0.7 3.4 2.0
Denmark 1.1 2.9 2.0
Czech Republic 1.4 2.5 1.9
France 0.6 3.0 1.8
Finland 0.7 2.8 1.8
Italy 0.1 3.0 1.5
Estonia 0.8 1.7 1.2
Cyprus -0.3 2.0 0.9
Slovak Republic -0.5 0.7 0.1
Poland -0.5 0.5 0.0
Russian Federation -1.3 -0.9 -1.1
Average 1.0 3.2 2.1

The Germanic lands – or perhaps countries characterized by the authoritarian family model – are characterized by significantly brighter males, while the Latin and Slavic lands lean in the other direction.

In Russia, it seems women are brighter, not only on average, but even in terms of numerical skills. Possibly this is also a function of Russian men having borne the brunt of the 1965-2015 alcohol epidemic.

Difference in Performance: Natives vs. Immigrants

. Literacy Numeracy Average
Sweden 15.8 16.0 15.9
Finland 16.1 13.9 15.0
Norway 13.1 15.5 14.3
Flanders (Belgium) 14.5 13.9 14.2
Korea 16.2 12.2 14.2
Netherlands 12.1 13.2 12.6
Denmark 12.8 11.9 12.4
France 10.6 12.4 11.5
England/N. Ireland (UK) 10.3 11.8 11.0
Australia 11.1 10.5 10.8
Austria 9.4 11.2 10.3
Spain 10.2 9.4 9.8
Germany 9.3 9.8 9.5
Canada 9.9 8.7 9.3
United States 9.2 6.7 8.0
Italy 8.8 6.6 7.7
Ireland 8.7 6.2 7.4
Cyprus 7.8 6.0 6.9
Estonia 4.7 2.6 3.6
Czech Republic 1.0 1.5 1.3
Slovak Republic -0.5 0.4 -0.1
Japan . . .
Poland . . .
Russian Federation . . .
Average 10.1 9.5 9.8

No surprises here, I think. Seems to correlate with the PISA data (see “Not Sending Their Best”: World Map of IQ Drop Due to Immigration).

Difference in Performance: Skilled vs. Elementary Occupations

. Literacy Numeracy Average
Austria 7.9 9.4 8.7
England/N. Ireland (UK) 7.8 9.5 8.6
Canada 7.6 9.1 8.4
United States 7.5 8.2 7.8
Sweden 7.3 8.3 7.8
France 6.1 9.3 7.7
Norway 7.6 7.7 7.7
Czech Republic 6.8 8.4 7.6
Australia 7.1 7.7 7.4
Netherlands 7.0 7.2 7.1
Italy 6.0 8.1 7.1
Flanders (Belgium) 6.3 7.3 6.8
Germany 6.0 6.8 6.4
Poland 5.9 6.9 6.4
Finland 5.4 6.7 6.0
Denmark 5.5 6.0 5.7
Korea 5.7 5.6 5.7
Spain 5.1 6.1 5.6
Estonia 4.7 6.2 5.4
Japan 3.6 6.9 5.3
Cyprus 3.3 7.1 5.2
Ireland 3.8 5.0 4.4
Slovak Republic 2.9 5.3 4.1
Russian Federation 2.1 . 2.1
Average 6.1 7.3 6.7

To maximize output and social welfare, you want to cluster your brighter people in the skilled, complex jobs of the “O-Ring economy“, while simple, “foolproof” jobs can be done by pretty much anybody reasonably effectively. It doesn’t matter if a waiter is 145 IQ or 100 IQ, but it certainly does if he’s a CEO.

As Murray and Herrnstein showed in The Bell Curve, the effectiveness of this cognitive sorting mechanism has increased by leaps and bounds in the US since the 1950s.

The PIAAC data suggests Anglos and Scandinavians are the best at this, which might be one more factor that explains their unusual economic and scientific dynamism, even relative to their IQs.

The Japanese do worse at this, possibly being held back by cultural factors (deference to age and other elements of social status).

Russia is at the very bottom of the list, suggesting highly inefficient cognitive selection. The pessimistic but plausible explanation that comes to mind is endemic corruption and nepotism.

Parting Thoughts

1. In particular, we need a more serious, in-depth analysis of the PIAAC data. Conversion of disparate tables floating about in PDF and Excel format on the Internet into one database.

2. In general, greater focus on tracking IQ across all relevant dimensions (nations; subregions; time; cohorts) to enable deeper, finer-grained economic/demographic analysis.

• Category: Economics • Tags: Flynn Effect, IQ, Psychometrics 
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The Treasury has come out with its list of 210 Russian oligarchs and politicians, ostensibly in preparation for targeted sanctions.

It’s a pretty hilarious affair, basically a copy-paste job from the Forbes list of Russian billionaires and a page listing biographies at .

If I wanted to try to split the Russian elite, I would publicly target specific people who are close to Putin, to let them know that they will have to pay a price if they want to support the regime (no Courchevel vacations, no Swiss bank accounts, no English boarding schools, etc.). As Bershidsky points out, this list sweeps them all up willy-nilly, including oligarchs who no longer maintain close ties with Russia let alone Putin (e.g. Yuri Shefler, Yuri Milner), as well as oligarchs who have had some part of their businesses expropriated by the Russian government (e.g. the brothers Ananiev, Danil Khachaturov, Mikhail Shishkhanov).

Consequently, there are three ways in which you could interpret this:

1. We doesn’t care about your ties with the Putin regime. If you’re a Russian oligarch, you’re in for a world of hurt.

2. We are doing this for formality’s sake. Don’t worry, nothing will come of it.

3. We outsourced it to some lazy intern, because we don’t give a shit about this (in other words, #2).

Either way you look at it, this is a victory for Putin. In #1, Russia’s elites stand to lose their access to Western amenities, but they won’t have an incentive to drop Putin since they are all gonna get hammered anyway. If #2-3, it’s just business as usual.

There’s also a fourth theory:

4. This is just the open list, the “closed list” has all the juicy details of the targets’ connections to Putin, as well as the real targets of future sanctions.

This theory is being advanced by both anti-Putin liberals (Navalny) and nationalists (Strelkov, Sputnik i Pogrom), although for rather different reasons. The former because well, Navalny really really hopes that the US implements hardcore sanctions against Putin & Co. to the hilt (as opposed to using Navalny as an expendable pawn every now and then), the latter because they view this as the US exploiting what they view as Putin’s very weak responses to US meddling in Russia’s sphere.

I don’t really buy this version for the following reasons:

1. No point in keeping this secret, just as there’s no point in keeping a doomsday machine secret.

Doing so annuls the main point of the list – to signal to the Russian elite that they should think about throwing Putin overboard, or at the very least jumping off his ship themselves.

2. It is a complicated 4D chess conspiracy theory, which goes contrary to both Occam’s Razor and a general rule of thumb – namely, that the American government bureaucracies – just like the Russian ones – are staffed by morons.

Recall this?

Rep. Jackie Speier (D., Ca): Do you know anything about Gazprom, Director?
FBI Director James Comey: I don’t.
Speier: Well, it’s a — it’s an oil company.

So no, I’m not expecting any particular Kremlinological expertise from a culture where Russia experts who consider knowledge of Russian optional find guaranteed employment.

• Category: Economics • Tags: Russiagate 
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Population size doesn’t matter much if your goal is to live as a small, comfy, unambitious Switzerland or Singapore. But a large population, along with a sufficiently high IQ, remains of sine qua non of being a Great Power or superpower.

France went from having 20% of Europe’s population during the reign of the Sun King, when it was Europe’s preeminent Great Power with its largest armies, to being dwarfed by Germany (40mn to 67mn, and the Germans had twice as many young men) by the outbreak of WW1. Consequently, the French only managed to scrape out a Pyrrhic victory thanks to American intervention. And they would have been crushed in 1914 had Britain decided not to uphold its treaty obligations.

In the modern world, a large population also vital for fostering a strong, self-sustaining national IT industry. Since unit costs in software are minimal, countries such as US and China with large, unified markets have an advantage in this sphere well beyond the usual benefits of economies of scale. Furthermore, Switzerland and Singapore are never going to colonize space, or be able to embark on many other grand world-historical projects. The US, China, maybe even India might, with their populations in the 100 millions and GDPs in the tens of trillions. Russia or Japan, with their populations in the tens of millions and GDPs in the mere trillions – probably not.

Increasing fertility towards the upper bounds of what was historically observed in the industrialized world – e.g., TFR=4 in the US during the late 1950s – is basically a cheat code for massively augmenting your national power over the course of just a couple of generations.

Online simulation that you can play with:

For instance, assume the Poles decided to become really stronk, and raised their TFR to 4 children per woman with immediate effect. They’d approach Russia’s current population by 2100. Poland’s historical security problems with respect to their western and eastern neighbors would be definitively solved.

Meanwhile, if Russia were to do that, it would have half the population of China by 2100. This would be perfectly okay since North Eurasia can support at least 1-2 billion people, and an order of magnitude more with radical global warming.

The only developed country that is doing something along these lines is Israel. Steve Sailer recently wrote about increasing fertility there, which is driven exclusively by the Jews and now stands at 3.1 children per woman. If it just maintains this pace throughout this century – and it may even increase further, since the Haredim continue skyrocketing as a share of the population – then there may be close to 30 million Israelis by the end of the century. Israel will go from being outnumbered 1:10 by Iran to just a bit more than 1:2.

How to activate this cheat code?

1. Highly fertile religious minorities: Haredim, Amish, Mormons, etc. But they come with well-known problems, their rate of “defections” into the general population decreases as those of their progeny who find their lifestyle non-congenial “boil off,” and in any case Israel is the only country where they constitute a high enough percentage of the population to have a discernible demographic effect.

2. Recreating the 1950s: I.e., hardcore social conservatism + 5% annual GDP growth rates. Too intractable a task, but it doesn’t hurt to try. Just don’t go overboard with overly coercive measures because then young people will hate you, overthrow your regime, and undo everything anyway (see Romania).

3. Just wait a couple of centuries for breeders to literally outbreed the rearers.

4. Technology, again.

Obviously quantity isn’t everything. Average IQ plays an even bigger role. Switzerland generates approximately two orders of magnitude more elite scientific research than all of (non-RSA) Black Africa. Countries that start large-scale radical IQ augmentation programs through gene editing will enjoy a massive advantage, even if the gap is only a few years.

But why not both? Randall Parker suggests mature gene editing technologies will be highly pro-natal for a couple of reasons. First, gene selection for IQ and positive personality traits means no more disappointing children, which was always likely for high IQ parents due to regression to the mean. Second, since parents want grandchildren, many will choose genes that make their children have a stronger instinctive desire to have kids. So basically compressing #3 to within a single generation.

• Category: Economics • Tags: Demographics, Futurism, I.Q. genomics 
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Last year’s summary: Russian Demographics in 2017

Preliminary data for 2017 is in.



There were about 1,689,884 (11.5/1,000) births in 2017, a decline of 10.7% relative to the 1,893,256 (12.9/1,000) births in 2016. There were about 1,824,340 (12.4/1,000) deaths in 2017, a decline of 3.4% relative to the 1,887,913 (12.9/1,000) deaths in 2016.

Consequently, the rate of natural increase declined from 5,343 (0.0/1,000) in 2016, to -134,456 (-0.9/1,000) in 2017.

Unlike the pattern in previous years, the decline seems to have been concentrated in ethnic Russian regions; births declined by only 6% in Buryatia and Tuva, by 5% in Dagestan, and outright increased by 5% in Chechnya and 8% in Ingushetia.

The population was estimated at 146,877,088 as of Jan 1, 2018, up from 146,838,993 exactly one year ago. This implies about 172,551 long-term net immigration.


Russian fertility fell off a cliff in the second half of 2016, though there are tentative signs that it may have bottomed out in recent months.


Monthly births in Russia, 2006-2017, with yearly moving average.


Monthly births in Russia (percent change year-on-year), 2007-2017 , with yearly moving average.

Consequently, I calculate Russian TFR was ~1.61 children per woman in 2017, down from 1.76 in 2016.


Russia Total Fertility Rate (children per woman), 1946-2017.

Russian birth rates were long expected to start decreasing due to the demographic “echo” of the small 1990s cohort – that they managed to hold at a plateau through to 2016, despite strong downwards pressure accruing from the ~3% yearly collapse in the numbers of women of childbearing age, was actually rather impressive.

map-fertility-europe But this year, it’s as if the floodgates finally opened, and then some.

This is a disappointing development if it represents a new normal.

First, whereas Russia was doing significantly better than most of the rest of Eastern Europe (see the map right), and showed tentative signs of breaking out into the high-fertility category of European countries (e.g. Scandinavia, France, the British Isles), this has now been postponed – possibly indefinitely.

Second, whereas before Russia was firmly on my Medium scenario for natality (and High scenario for mortality)…

Medium (TFR=1.75 from 2010)The population grows from 2010, rising from 142mn to 148mn in 2025 and 156mn in 2050. The death rate troughs at 10.8 in 2034, before zooming in to 11.5 by 2050. The birth rate peaks at 13.6 by 2014, before plummeting to 9.7 in 2033, before recovering to 11.9 in 2046 and again falling, although less rapidly than before.

… It is now half-way back towards the Low scenario, which is considerably more pessimistic:

Low (TFR=1.5 from 2010)Population growth starts from 2011, going from 142mn to 143mn by 2023. Then it falls slowly to 138mn by 2050. The birth rate peaks at 12.5 in 2013, falls sharply to 7.8 by 2032, and then remains in the 8-9 range. The death rate troughs at 11.4 in 2032, then rises to 12.9 by 2050. Positive natural increase is never attained.

Curiously, this seems to be a global pattern.

  • American TFR fell from 1.84 in 2015 and 1.82 in 2016, to approximately 1.77 children per woman in 2017.
  • Births fell by 8% in the Ukraine this year, so its TFR will decline from 1.47 in 2016 to around 1.40 in 2017. Like Russia, the Ukraine had a recession – though a far steeper one.
  • Births fell by 6% in Latvia and 3% in Estonia.
  • Commenter Cicerone: “Big drops (my forecasts based on published birth figures): Norway 1.71 to 1.62, Sweden 1.85 to 1.78, Finland 1.57 to 1.49, Russia 1.76 to 1.60, Ukraine 1.47 to 1.37, USA 1.82 to 1.75, New Zealand 1.87 to 1.77, South Korea 1.17 to 1.05, Hong Kong 1.21 to 1.15, Macao 1.14 to 1.05 and Singapore 1.20 to 1.14. (For Korea at least there is a drop every 12 years because of the zodiac. For the Nordics and the Anglo countries, the drops are simply a continuation of the trend since 2008. No idea about the rest.) Only countries prob seeing a TFR rise: Portugal, Italy (recovery from crisis), Visegrad-5 and Germany. In most other developed countries, TFR will drop significantly. As the declines continue despite economic recovery, it seems to be a real cultural change. Probably fallout from the SJWs? Millennials in the West giving up on having children?
  • Annatar: “TFR also falling in France, Spain and Japan this year, though at slower rate, TFR falling in Kazakhstan as well, seems to be a wider trend, wonder what happened in 2016 to cause this.”

Abortion in Russia continues to decline to normal country levels.


Russia abortions as percentage of live births.

This is still about 2-3x higher than in most of Western Europe and the US, but Russia is longer the absolute outlier it once was.


Based on the decrease in mortality, I calculate that life expectancy was ~72.9 years in 2017, setting it way above its Soviet era local peaks in the mid-1960s and late 1980s.


Russia life expectancy, 1959-2017.

As has usually been the case, this was accompanied by continued strong decreases in deaths from external causes.


Russia mortality / 100,000 from external causes.

This includes deaths from murder, suicide, and deaths from alcohol poisonings, the latter of which drives a great deal of Russian mortality in general.


Russia mortality / 100,000 from murder, suicide, and alcohol poisoning.

What I wrote in my demographic update last year is as relevant as ever:

One way of looking at this is that mortality trends in Russia are basically tracking improvements in the ex-Soviet Baltics (and the City of Moscow) with a lag of ten years, so there is good reason to expect this trend will continue.

This is primarily linked to the big reduction in vodka bingeing during the past decade, which depressed Russian life expectancy by about a decade relative to what it “should be” based on its GDP per capita and healthcare system. This “alcoholization” began to soar from around 1965, and peaked in the 1990s and early 2000s. According to calculations by the demographer Alexander Nemtsov, something like a third of Russian mortality around 2005 could be attributed to it.

As alcohol abuse fell, so did all of the other components of mortality, especially those most strongly associated with it, i.e. deaths from external causes: which includes homicides, suicides, deaths from transport accidents (despite soaring vehicle ownership), and, self-referentially, deaths from alcohol poisoning.

Part of this reduction was due to cultural change, including the realities of life under capitalism (if you turn up to work drunk, you can be fired, unlike under socialism), part of it was due to economics (more diversity of choice), and part of it was thanks to specific Kremlin policies, such as steady increases in the excise tax on alcohol and restrictions on alcohol advertising.

Some comparative guideposts:

Russia’s average life expectancy of close to 73 years is equivalent to Poland in 1998 (which as of this year has pretty much converged with the US), Estonia and Hungary in 2005, Latvia and Lithuania in 2010.

Neither is Russia any longer outlier in terms of “deaths from vices”. Poland (18/100,000) and especially Lithuania (24/100,000) have more suicides than Russia (16/100,000). Homicide rates are at 6.0/100,000, having almost converged with America’s 5.3/100,000 in 2016. Though hardly anything to write about, considering the challenges of America’s demographic composition, this still probably marks an all time record (the homicide rate in the late Russian Empire was around 20/100,000; in the RSFSR from 1961-1990, it varied from 6-11/100,000).

• Category: Economics • Tags: Demographics, Russia 
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Well, we’re well into 2018 now.

Soros joins the many Very Respectable People – Anders Aslund has excelled in this regard more than most – who have predicted all several dozens of Russia’s past zero collapses.


• Category: Economics • Tags: George Soros, Russia, Russophobes 
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German tech guy notes that Europe barely has a presence in the tech sector.

  • Hardware dominated by East Asians; Europeans used to do this, but Phillips, Nokia had their heyday many years ago.
  • Internet infrastructure (e.g. cloud, DNS) dominated by the United States, though China has its own self-contained ecosystem.
  • Platforms (operating systems, social networks, search engines, app stores) are dominated by the United States. Europe has almost zero presence here.
  • Europeans do have some successful apps, e.g. some video game companies, various music and shopping services.

Most significantly, there are no European general purpose tech giants, such as both the United States (Google, Amazon, Apple, Microsoft, Facebook) and China (Alibaba, Baidu, Tencent) have in spades, which not only have one or two orders of magnitude more significance than any of the European app companies, but end up acquiring many of them; it is telling that of the nine given examples of successful European apps, Skype and Minecraft were both acquired by Microsoft, while Soundcloud has an uncertain future.

Some possible reasons he gives for Europe’s lack of success:

  • Regulation – Taxes, labor laws, privacy laws, red tape.
  • Investment climate – Harder for startups to raise money.
  • Geography and Demographics – The United States and China are homogenous markets of many hundreds of millions of people; Europe is a fragmented mess.
  • Attitudes – Could Europeans be just more pessimistic about tech and business? Which translates into subpar regulations. (In contrast, Chinese are highly technophilic).
  • Startup ecosystems – The US has Silicon Valley, China has Shenzhen; what does Europe have? Since it lacks giants, it is subject to a constant brain drain to Silicon Valley.

From my own observations this all seems to be pretty accurate true. Southern Europe is hampered by red tape; northern Europe is better for doing business, and has higher human capital, which is reflected in more tech companies (the biggest, Spotify, is Swedish), but is likewise hampered by higher taxes and strong privacy laws (esp. Germany).

With a mere $14.4 billion worth of venture capital activity in 2015, Europe lags behind both the United States ($72.3 billion) and even China ($49.2 billion) in this sphere too.

The US and China’s advantages in achieving economies of scale would seem obvious. It might also be the most important factor. Russian regulations are no better than Europe’s, and its level of VC funding is truly minimal, yet it does manage to have one general purpose tech company that is at least noticeable at the global level (Yandex). China has a far bigger market than Russia, and its web censorship doubles as protectionism in all but name (as the author notes in another video), so its major tech companies are now becoming more and more comparable to the American giants.

On the whole, so far as tech companies are concerned, Europe seems to serve as a mere human capital repository for Silicon Valley.

This would seem to be important for a couple of reasons.

1. It’s yet another demonstration of how the only two countries that really matter in the world today are the United States and China. Europe? I’m sorry, but US conservatives pegged it right. Museum cum retirement home that has nothing to teach anybody.

2. According to O-Ring theory, most value is generated through complex production chains, whose highly productive workers pull up the wages of workers in simple sectors far above the Third World levels they would otherwise be at. But few of those are forming in Europe, and many that do, end up bleeding off into the US anyway.

3. It’s interesting to speculate on what this means for the geographical location of the first artificial general intelligence (probably the most portentous event in all history). This might mean nothing much, but it could also mean a great deal. Anyhow, if this AGI requires large computing and technical resources, it will most likely appear in the US, followed by China; in contrast, there is a close to zero chance it will happen in Europe or anywhere else.

• Category: Economics • Tags: Europe, Technology 
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Guangzhou, China (/r/Cyberpunk)

Some time ago a commenter asked me about the state of China Studies in Russia, an issue that is pretty germane as they increasingly align with each other.

TL;DR – Catastrophic. Simply put, Russia does not have the cognitive tools to understand the country that Kremlin talking points describe as Russia’s “strategic partner.”

Longer answer: Alexander Gabuev, who has a BA/MA in Chinese History from Moscow State University, wrote a couple of comprehensive articles on the state of Sinology in Russia when he was deputy foreign editor of Kommersant:

This post is heavily based on Gabuev’s material.

History of Russian Sinology 101

The first Russian mission to China was in 1714, with contacts for the next 150 years dominated by religious figures (Illarion Rassokhin, Alexey Leontyev, Osip Kovalevsky, Nikita Bichurin). There was a faculty of Eastern languages at Kazan University from 1807-1855 (Nikita Bichurin, Palladiy Kafarov, Vasily Vasiliev), which relocated to Saint-Petersburg State University (SPBU) around 1854. The Eastern Institute was set up in Vladivostok in 1899.

The Oriental faculty at SPBU was disbanded in 1919 and was spread out across other faculties, but Eastern Studies continued flourishing during the 1920s. However, the Soviet Oriental Studies community was devastated by the late 1930s purges, with several prominent Sinologists such as Nikolay Konrad and Julian Shutsky being sent to the Gulag or shot on charges of being Japanese spies.

In the next 50 years, Sinology would recover and develop further, but strongly tied to the perceived needs of the state and, like all social sciences, under tight Marxist-Leninist ideological strictures. The collapse of the USSR brought ideological freedom, but also a collapse of funding (salaries for top Sinologists plummeted from a comfortable level of 400-500 rubles during the 1980s to $30-$50 by the mid-1990s) and spiraling corruption that preempted any flowering of Russian Sinology to this day.

“Sinology is dead”

In June 2011, President Medvedev was presiding over a state prize awarding ceremony. The only Russian social scientists to be recognized were a group of Sinologists, including Artem Kobzev and Mikhail Titarenko, for their work on compiling and editing a six tome Encyclopedia of Chinese Spiritual Culture: “Their work helps us better understand the traditions and spiritual culture of China, they deepen and enrich modern Sinology. Their work is read all over the world…” proclaimed Medvedev. Kobzev followed it up with a short history of Russian Sinology: The first Chinese-Russian dictionary was compiled under a 140,000 ruble grant from Alexander I, and the USSR also financed a Big Chinese-Russian Dictionary. This was a pointed comment; as he soon clarified in a smaller discussion with the President, the Encyclopedia had actually been financed by the Chinese Development Bank at the personal direction of its CEO Chen Yuan, in honor of his late father, who had warm feelings towards the USSR. According to Kobzev’s account, Medvedev was rather distraught by what he had heard, and the Sinologist soon got a letter from the Kremlin telling him that his suggestions were considered important. Soon after, the Russian Fund for the Humanitarian Sciences allocated a total of 6 million rubles [$200,000] in the form of five grants for the study of China. It’s unclear if anything useful was done with them; one of the five grants went to the Philosophy faculty of Saratov State University, which didn’t have a single Sinologist.

This anecdote appears to be pretty representative of the sorry state of China Studies and social science in general in Russia.

There are fewer than 200 academic Sinologists, of whom only about 50 can be considered active (he compares this with 15,000 in the United States, but apparently, this was a big overestimate; Gabuev says: “this figure appears to be wrong, my mistake. picked it up from an American colleague back in 2012 without critically assessing it”). The average age of these researchers is rising inexorably; the director of the Institute of the Far East RAS is 78 year old Mikhail Titarenko [he died in 2016]. Whereas there were 500 experts at that institution in the 1980s, there are now just 147 of them, according to Sergey Luzyanin, the Institute’s deputy director. There isn’t a single academic expert in Russia on the finances, law, or military of China.

This is linked to low academic salaries, even at Russia’s top institutions for Sinology. Here are some of the figures when Gabuev wrote his article:

  • 16,000 rubles ($500 at 2012/13 exchange rates) for a Research Fellow, 27,000 rubles ($900) for a senior researcher at the Institute of the Far East RAS.
  • 30,000 rubles [$1,000] for an Assistant Professor, 45,000 rubles [$1,500] for a full Professor at Moscow State University’s (MSU) Institute of Asian and African Countries.
  • Salaries are 20% higher at the Ministry of Foreign Affairs-affiliated Moscow State Institute of International Relations (MGIMO) than at the MSU.
  • Literally the only institution where Russian Sinologists get an internationally respectable salary is at the Higher School of Economics – salaries of 150,000-200,000 rubles ($5,000-$6,500) are not atypical.

Things are even worse outside the capital. Saint-Petersburg State University, the second most prominent China Studies center in Russia outside Moscow, had to close down a program on the Chinese economy around 2011 due to lack of financing, and the third center of Russian Sinology, the Far Eastern Federal University in Vladivostok, closed down its Eastern Institute, an organziation that traced back its lineage to Tsarist times, at around the same time.

Only a few dozen scientific articles on China are produced per year, and their quality lags English language output, even though the latter produces orders of magnitude more material. Many of their articles aren’t even open access; a significant percentage are merely reference works for the country’s leaderships, prepared whenever there are big summits or other major state events in China. Furthermore, many articles aren’t indexed by international databases. “We do not subscribe to the Journal of Contemporary China, it’s too expensive. From 1991 the state doesn’t finance any international scientific partnerships. Not a ruble on literature, on travel, only just the occasional grant for a conference or a book…” says Vladimir Portnyakov, another deputy director of the Institute. New literature is acquired by renting out the Institute’s properties, which have emptied out as a result of so many people leaving after 1991.

Consequently, there is large-scale brain drain amongst young researchers to the private sector, or abroad (it is noted that Israel has seen large improvements in its Sinology in recent years, in no small part thanks to immigrants from Russia – even though, I would add, other business sectors have to the contrary seen a “backflow” from Israel back to Moscow in the past decade). Even those those specialists who stay on have to spread themselves out across multiple institutes to make a halfway decent living, leaving no time for research.

This has also resulted in a generational chasm within the Sinologist community; there are hardly any serious middle-aged researchers. Although there are several respectable Sinologists over the age of fifty who were produced in the USSR: Alexander Lomanov, Sergey Luzyanin, Andrey Ostrovsky, Vladimir Portyakov, Viktor Larin, Alexey Voskresensky, Vladimir Korsun, Andrey Karneev, Alexander Lukin, Mikhail Karpov, Nikolay Samoylov, Alexey Maslov – the author could name only one significantly younger figure, Vasily Kashin, at the CAST thinktank.

The state of affairs is no better at the state level

The main source of China talent in Russia is in the Ministry of Foreign Affairs. Gabuev’s sources mention several particularly competent people: Deputy Foreign Minister Igor Morgulov, Thailand ambassador Kirill Barsky, China ambassador Andrey Denisov, and a few other members of the Russian diplomatic staff in China. (This makes sense; in one of my Twitter conversations with Chinese Russianist Xin Zhang, he pointed out that “one related problem is agenda for bilateral communication between specialists are still highly state-sactioned”). However, according to a business source, this doesn’t apply to people in the lower rungs: “The people at the top level can be okay. But the people on the ground are not the best, in the sense of helping out businesses or even as a source of expertise, they are quite useless.” This reflects the narrow focus of China experts in the Russian state structures, who focus on highly specific areas such as classic “high diplomacy,” nuclear non-proliferation, and the banalities of arranging Putin’s meetings with Chinese leaders. And this is the Ministry of Foreign Affairs. In contrast, there is almost a singular lack of Sinologists within Russia’s economics-related Ministries.

The situation in the “silovik” agencies is, if anything, even worse. In Russia’s military intelligence, the GRU, there is precisely one (!) analyst working on the Chinese military (before Serdyukov’s reforms, there were two). During the Russian-Chinese military exercises “Maritime Cooperation 2012,” the Chinese had nearly 200 young officers with a solid knowledge of Russian at hand to provide linguistic support; the Russians could only muster three translators. Evidently, the Chinese military has made efforts to build up a large base of Russia expertise, unlike Russia with respect to China. So do bear this in mind whenever you read the next Andrei Martyanov article about Russia’s supposed military dominance over China. Even if that is an accurate assessment – and I have my doubts – do note that there would be almost no-one to translate intercepted Chinese communications within the Russian Army (hopefully the Americans don’t block access to Google Translate).

I would note that many of these observations are backed up by the aforementioned Xin Zhang, who in 2014 corrected me on my prior belief that the state of Sinology and Russianology in Russia and China were similarly dismal: “… likely more Russian experts in China than the other way… In Shanghai, we held conferences & seminars in Russian, although translation is needed for some participants.”

No China expertise in the media

Both RIA and ITER-TASS only had around half a dozen journalists each in their Beijing bureaus as of when Gabuev wrote his articles. None of Russia’s major broadsheets, even the “serious” ones like Kommersant and Vedomosti, have a presence on the ground in China. For comparison, major Western news agencies have bureaus of 15-20 people in Beijing, as well as employees in the provincial centers. It also far less than the attention China devotes to Russia: There are 70 people in the Xinhua bureau in Moscow. Consequently, there is far less news about China in the Russian press relative to the other major countries. I would also add as an observer of both the Western and Russian media that much of it basically consists of reprints of Western coverage of China, as opposed to original journalism.

The business sector isn’t interested either

Despite China being Russia’s largest trading partner – and its main bulwark against more serious Western sanctions – Russia’s state corporations aren’t rushing to avail themselves of China expertise, with predictable consequences – Gabuev cites a $3.5 billion loss in Rosneft from an unsuccessful pipeline to China, and Gazprom’s repeated failed attempts to enter the Chinese gas markets. Neither is the situation in the private sector much better. There only partial exceptions to this dismal picture are nuclear power monopoly Rosatom and development bank Vnesheconombank in the state sector, and Deripaska’s En+ Group in the private sector.

Certainly there is nothing on the scale of Chinese business analysis of Russia, such as that of the Chinese state-owned oil company CNPC. Not only does it maintain a large in-house staff of Russia specialists composed of Chinese Russia experts, Russian China Studies majors, and catches from the Chinese bureaucracy and security services, but it even orders reports from thinktanks on topics such as the “prospects of Russia’s political system to 2024 and its influence on Russia’s oil sector.”

Can one imagine anything like this under Rosneft’s Igor Sechin? To ask the question is to answer it.

There are very few instances of state bureacracies or corporations ordering expert analyses from Russian academia, as is typical in both China and the West. “The state has simply left Sinology. And this is a huge mistake. In China, the opposite is happening – the state is developing Russia Studies,” says Alexey Maslov, dean of Oriental Studies faculty at the Higher School of Economics (and a shaolin master). On the other hand, business and bureaucrats aren’t too satisfied with the academic Sinologist community either. “There is no practical benefit from communicating with them. You ask them a simple question, and they start their answer from the time of the Yellow Emperor, and don’t end up clarifying anything. Typical professors,” says one federal bureaucrat.

The future of Russian Sinology

Alexander Gabuev wrote these articles four years ago. In the meantime, the author himself – who can be considered somewhat of a China expert himself – left Kommersant to work for the US-financed Moscow Carnegie Center thinktank, which also happens to be the most highly rated thinktank in Russia. One can consider this as just one more depressing anecdote in the context of all the dismal things he wrote about Russian Sinology and social science in general.

The following is based largely on my own impressions.

In the years since 2012-13, the situation of Russian academia has improved, especially in the elite universities that are part of Project 5/100 – the state program to get five universities into the world’s top 100 (currently, only Moscow State University qualifies, and that by a hairsbreadth). Salaries there are now quite respectable, and are at least minimally comparable to those at the Higher School of Economics. However, I suspect financing at the Russian Academy of Science, at least if my impressions of the Institute of Psychology are anything to go by, remains catastrophically low.

There has also been a massive increase in the numbers of Russians studying Chinese in the past two decades. Whereas there were just 5,000 Russians studying Chinese in 1997, by 2007 it was 17,000, and by 2017 there were close to 56,000 of them (this is not entirely bad by comparison with the 200,000 Chinese learners in the United States, many of whom I suspect are Chinese-Americans).

On the other hand, the average quality of Chinese instruction in Russia leaves much to be desired, so optimism is premature. As Alexander Gabuev also pointed out in 2013, quoting Alexey Maslov: “Today we have more than 160 universities that offer Chinese… But many of these people are almost impossible to use in real life. This creates the impression that we have a lot of Sinologists. But in reality, they are not Sinologists, their level of Chinese language knowledge is very low.”

Nonetheless, the overall situation does seem to be improving, even if at a slow rate and from a very low base. And there’s no obvious reason for things to get worse.

However, so long as Putin remains more interested in financing the Rotenbergs than RAN – for instance, the planned bridge to Sakhalin might consume about as much money per year as the entire federal budget for science – there can be no serious talk of Russia starting to produce a lot of world-beating research in Sinology or any other brance of science.

• Category: Economics • Tags: Academia, China, Russia 
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When finishing up yesterday’s post I realized that Transparency International has finished releasing its final version of the Global Corruption Barometer.

By far the most interesting indicator is the percentageof people who report paying a bribe in the past 12 months (more precisely, the percentage of households who paid a bribe when accessing basic services). It is as close to objective measurement as you can get in a sphere of life as indefinite and necessarily opaque as “corruption.”

You can take a look at a global interactive map here:

Access to the global data here in Excel format: Global_Corruption_Barometer_2017_Global_Results

More regional maps (where available), with a few comments comparing results to the GCB 2013.


Europe – Romania, Hungary, and Lithuania are the most notably corrupt EU countries; Greece, in fairness, has improved substantilaly since the last assessment in 2013, when 22% of Greeks paid bribes.

Ukraine didn’t budge relative to 2013; was 37%, now 38%. Both the Ukraine and Russia are much worse than Belarus. This confirms stereotypes, BTW.


East Asia – India has actually deteriorated further, from 54% in 2013. Taiwan’s figure is much more plausible than the anomalous seeming 36% in the last survey.


Latin America – What is going on in Mexico? It was 33% last time.

It appears that North America will not be covered in this round of the GCB. For comparison with its southern neighbors and Europe, the reported bribery rate in the US was 7% in 2013 (up from 5% in the survey before that, and 2-3% in the oldest surveys).

The bribery rate in Canada in the last GCB was 3%.


Middle East – This is pretty interesting – Tunisia is basically a European Mediterannean countries in this respect (Greece: 10%; Italy: 7%).

Algeria not bad either at 14%. Perhaps explains why there hasn’t been an Arab/Islamist “spring” there against its ageing rulers.


Africa – This concisely explains why Botswanans manage to maintain a pretty nice state despite very low average IQs (they have natural resouce rents from diamonds, ofc, but so does Equatorial Guinea – and far more of them – but that doesn’t translate into normal living standards for its 99%).

• Category: Economics • Tags: Corruption, Opinion Poll 
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The World Bank Enterprise Surveys are an invaluable source of information on the business climate across both time and space.

In particular, its section on corruption does for businesses what Transparency International’s Global Corruption Barometer does for individuals – it directly asks them whether they are expected to give bribes to bureaucrats to reach understandings on taxes, get permits, utilities connections, and to “get things done” more generally.

Now in general, people love to complain about corruption. It seems to be universal. Opinion surveys almost always show that perceptions of corruption are getting worse everywhere.

Good news! This isn’t really borne out by the statistics. Things really do seem to be getting better. (I excluded countries with information for just one year).



We have basically seen a halving in corporations reporting they need to grease public officials to “get things done.”


Ergo for dealing with tax officials.


Curiously, though, there was minimal change in the number of firms reporting needing bribes to secure government contracts.

Still, I don’t think that invalidates the general picture.

(1) Paying bribes to tax officials and to “get things done” is a more coercive form of corruption. I imagine many of these are “cough up or we shut you down” scenarios. Securing government contracts is nice, but not a life-and-death issue for most businesses.

(2) Perhaps the lack of change in securing government contracts merely reflects the fact that more and more countries have been opening up open bidding systems, whereas before they would have just been automatically channeled off to the Minister’s business buddies (without bribes).

Here’s an observation from commenter Twinkie to flesh out these statistics:

I remember the days when American defense contractors used to complain about the FCPA (Foreign Corrupt Practices Act) constraining them in competition against the Europeans in pursuing contracts in less-developed countries (“The Germans can tax-deduct bribes paid overseas!”).

Those days are long gone. It’s not to say that corruption is a thing of the past, but the absolute scale and public acquiescence (or lack thereof) of it have changed dramatically in many parts of the world.

This is evidence for my assumption in Our Biorealistic Future that in the long-term, we can expect institutions everywhere to get better, as different countries adopt established best practices, despite individual cases of backsliding.

• Category: Economics • Tags: Corruption 
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Inflation is now at 2.7% as of October 2017, down from double-digit rates three years ago and overshooting the Central Bank of Russia’s 4% target for this year.

This constitutes an all-time post-Soviet low.

This is in large part thanks to the hawkish monetary policy of CBR head Elvira Nabiullina, and indirectly of Putin, who gave her and the economic liberal bloc political cover in the face of populist opposition demanding lower interest rates and greater state invervention in the economy.

Once Soviet-era capacities, at least in those sectors where they were market-competitive, were restored by the mid-2000s, Russia’s high growth rate petered out (though irrational exuberance sustained it for a couple more years until the 2008 crash). The major problem, besides an atrocious business climate, was that high inflationary expectations had become embedded. High inflation discourages savings, which you need for investment. Consequently, banks were only prepared to lend to small and medium sized businesses at rapacious rates of interest.

But it now looks like Russia’s version of the Volcker shock since 2014 has finally succeeded in taming inflation for good.

This is especially significant since it comes on the back of three other major achievements that are of long-term relevance to growth.

1. A rise from ~120th (i.e. Nigeria) to 35th (i.e. Japan) position on the World Bank’s Ease of Doing Business since the start of Putin’s third term. Russia is still far from the best place to do business in, but it is vastly better than it was a decade ago.

2. A near halving in the numbers of Russian “pocket banks,” to the benefit of established and more transparent lenders (a consolidation that Nabiullina has spearheaded).

3. The beginning of semi-serious efforts to resurrect Russia’s moribund R&D capacities. (More on this later).

Finally, Russia has managed to do all this without the big budget deficits, yawning debt increases, and the unusual monetary experiments that have characterized Western policies since 2000.

Despite the political and foreign policy failures of Putin’s third term in office, and its more “embedded” problems such as elite rent-seeking and excessive state ownership, economic policy during this period is praiseworthy and, barring major geopolitical crises, stands Russia in good stead for a decade of solid growth.

• Category: Economics • Tags: Inflation, Russia 
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The World Bank has just released its Ease of Doing Business data for 2018 (report PDF; rankings; historical data in Excel)

I wrote about why good scores on this indicator are pretty useful two years ago:

First, elites pay a lot of attention to it. Several countries – including Russia, Kazakhstan, and India – have made climbing up the Doing Business rankings a matter of national economic planning.

Second, all else equal, more economic freedom really is “better” than less economic freedom. You do not need to be some kind of neoliberal hypercapitalist to appreciate that having more layers of bureaucracy, more hops you need to jump through to start a business or enforce a contract, as benefitting anyone other than the bureaucrats who create these rules in the first place. Indeed, when adjusted for differing GDP per capita levels, there is a strong correlation between a country’s place on the Doing Business rankings and its reported incidences of bribery/corruption, presumably because the more regulations you have the more opportunities bureaucrats have to shake businesses down.

It is also highly objective. You look at the legal documents, count the number of steps and/or days required to set up a business or enforce a contract, and tally the whole thing. Necessarily more subjective assessments of the degree of corruption or the prevalence of the rule of law – important, but prone to bias – don’t enter the equation.

Well, the good news is that Russia has continued its strong trend of improvement since the start of Putin’s third term, and is now in the uppermost quintile of all the world’s economies in terms of ease of doing business.


This is especially impressive since the entire world has been getting far more business friendly in the past decade, as institutions such as this very index spur on even the more recalcitrant nations to adopt First World best practices (fewer pointless regulations).

Russia’s immediate neighbors now – France, The Netherlands, Japan, Czechia – are no longer cause to be ashamed, as was the case around 2010, when it instead neighbored models of bureaucratic efficiency such as India and Nigeria.

As we can see, Russia is now fully within the “range” of First World – not as business-friendly as the United States, with its age-old reputation for free-wheeling commerce, but more so than Italy, with its reputation for bureaucratic tyranny.


Since the mid-2010s, Russia has been doing far better better than its fellow BRICS members.


Russia is now also doing about as well as the average for Eastern Europe’s successful reformers – worse than free trade entrepot Estonia and libertarian nirvana Georgia, but at about the same level as Poland, Czechia, Kazakhstan, Belarus; somewhat better than Hungary, which has lagged on reform; and far better than in the Ukraine or in Uzbekistan.

Analyzing by subcomponents, only two sectors where Russia still does quite badly – worse than the global median – are in “Dealing with Construction Permits” and “Trading Across Borders,” both notoriously corrupt sectors of the Russian economy. They urgently need attention.

But otherwise, this is the sort of quiet but very real “reform” that Russia needs at the micro level, but that remarkably few of Putin’s liberal critics seem to notice.

Although Putin has formally failed to fulfill his ambitious 2012 election promise of climbing into 20th position on this ranking by 2018, an improvement from around 120th position to 35th position is still more than respectable.

• Category: Economics • Tags: Business, Russia 
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Kulivets & Ushakov – 2016 – Modeling Relationship between Cognitive Abilities and Economic


We propose that problem solving is the mediator between human competencies and achievements. Creation of goods and services is based on problem solving in design, production and delivery. The quality of problem solving depends on human competencies and, in turn, determines economic achievements. More importantly, the choice of problems to be solved creates or does not create the possibility for application of highly qualified labor and, as a result, for full-fledged realization of human capital. We propose a mathematical model based on these assumptions. The simulation reproduces most important traits of Lynn and Vanhanen’s (2002) findings. The simulation shows a non-linear growth of economic achievements with national IQ growth as well as an increase of between countries variance. Thereby the proposed model can serve as a satisfactory explanation for empirical data on links between national IQs and economic achievements.

It’s well established that there is a very close correlation between average national IQ and GDP per capita, especially when corrected for resource windfalls and Communism.


(One such standard graph from Garett Jones).

However, there remain two additional results that correlational exercises cannot adequately explain:

  1. “First, the relationship between national IQs and income is not linear. As it was shown later this relationship can be well approximated by quadratic function (Whetzel & McDaniel, 2006). The mere assumption that more capable, competent and educated people produce better economic results is not sufficient to explain this specific finding.
  2. “Second, residuals of the regression of GDP on national IQ grow proportionally with the IQ. It means that in some high-IQ countries human potential leads to serious economic realizations while in others it is out of demand. So a comprehensive explanation of Lynn and Vanhanen’s data includes understanding of factors stimulating the use of highly qualified labor.”

So Sergey Kulivets, a mathematician at the Trapeznikov Institute, and Dmitry Ushakov, a psychologist at the Institute of Psychology RAN, created a model in which problem solving plays a central role to investigate these two puzzles.

They model a world composed of different countries, in which every resident has a “talent” with a bell curve distribution around different means. Each country has two types of people: Entrepreneurs and specialists. Entrepreneurs hire specialists to produce goods, the quality of which is determined by the talents of the specialists working on them. These goods are then sold on the international market, where any country can buy them. The “GDP” of each country is the sum of the income of its entrepreneurs, or the value of all the goods produced by the entrepreneurs within a country and sold in the international product market, during a set period.


Here is how the model works:

  1. Each entrepreur chooses a task for solving. There are two types of tasks: “Threshold” and “open type” ones. Threshold problems require a minimum competence level to complete, but additional competence beyond that threshold offers no further advantages beyond that minimal point; the value of the solutions to open problems increases with the talent of the specialists allocated to it.*
  2. The entrepreneur hires specialists from his own country to perform that task, attracting specialists by offering higher salaries for more competitive candidates.
  3. The entrepreneur produces goods. Quantity dependent on number of workers and money allocated to them; quality depends on the competence (talent) level of the hired specialists.
  4. The entrepreneur sells the good on an international market, competing with other enterpreneurs on price and quality.
  5. Income from this goes to entrepreneur, which in turn – after subtracting production costs and salaries – determines his budget for the next round of problem solving.

Consult the paper for the specific formulae used to describe task selection, the labor market, and the product market.

Towards the end, K&V compare their theoretical models against Lynn and Vanhanen’s. They match up near perfectly.


Competence: I; Development: D.
Left: Lynn & Vanhanen 2002; Right: Simulation results.

Also one can observe that K&V get a nicer fit than L&V, presumably because the Communist legacy (negative outliers) and resource windfalls (positive outliers) aren’t modeled.


Over time both consumers and entrepreneurs become much richer in competent countries relative to incompetent ones, as the “rise in entrepreneurs’ income influences the consumer income through salary rises.”

In this model, entrepreneurs choose tasks in a random way; unsuccessful ones are abandoned, while those that bring a return continue to be produced. As K&V note, if the quality of entrepreneur predictions as to the profitability of various tasks were to also depend on competence levels, then this cognitively-determined pattern of the wealth and poverty of nations can be expected to be even starker.

However, they do end with a cautionary note of some relevance to today’s political economy: Our model is based on the assumption that entrepreneurs’ income comes from organizing people to produce goods and services. This mechanismfunction is impaired if natural rent becomes the main source of profit.

* Incidentally, I would note that this division is justified by and reinforced by Garett Jones’ theory of the O-Ring sector: “I posit that there are two kinds of jobs: O-ring jobs where strategic complementarities to skill are large, and a diminishing-returns Foolproof sector, where two mediocre workers provide the same effective labor as one excellent worker… In a world where countries vary only slightly in the average skill of workers, these assumptions are sufficient to generate massive differences in cross-country income inequality while generating only small amounts of intra-country income inequality.

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The latest in our series of translations of Russian national-conservative thinker Egor Kholmogorov.

Translated by: Fluctuarius Argenteus; slightly edited by AK.



Socialism Not Dead: Paradoxes of an Unsolved Problem

It may seem strange that, at the turn of the 21st century, the word “Socialism” is back in the popular political idiom. The final decade of the preceding century seemed to have been the time of its complete (and, so it would seem, irreversible) annihilation.

Soviet-style “Real Socialism” ended in a pathetic disgrace, striking its colors at the sight of a sausage pointed at its heart. Who would have thought that churning out missiles, dams, and factories wouldn’t be enough to sustain a planned economy based on communal property? It was also necessary to grant the Socialist people access to consumer goods at least remotely comparable to those available under Capitalism; otherwise, falling behind not only in living standards but also in technology became inevitable. Soviet Socialism collapsed under the weight of this contradiction, while China enacted reforms so deep that, while looking at Chinese billionaires, one can’t help but wonder whether it’s still Socialism or a “Red Capitalist” oligarchy of the Chinese Communist Party – quite probably no worse than any other oligarchy in history.

Meanwhile, the Capitalist world with its triumphant Liberalism seemed to have scored a doubtless moral victory. Not only did it outpace Socialism, it completely consumed it. All more or less sensible Socialist ideas were incorporated into the structure of the “welfare state”, leaving “Real Socialism” with such dubious achievements as complete socialization of property or pedantic ideological censorship. Socialism appeared to have been entirely devoured and digested by a Capitalism that had reached in this struggle a new stage in its historical evolution.

A quarter of a century after this victory over Socialism, the foundations of the global Liberal order are more and more visibly shaken. Within the US Democratic party, Hillary Clinton’s Liberalism, oriented at racial and sexual minorities, has been challenged by “Democratic Socialist” Bernie Sanders who is cajoling White American workers into rising against the 1%, the Wall Street loan sharks. Socialist? US Presidential candidate? Early 21st century? It seems patently absurd. Meanwhile across the pond, the Labour party in the UK eschewed fine-looking bureaucrats in favour of Jeremy Corbyn, a Socialist, an anti-militarist, and general diehard Leftist. One of his first acts as leader of the Shadow Cabinet was creating a committee for a new economic policy, including such anti-inequality fighters as Thomas Piketty and Nobel Prize winner Joseph Stiglitz.

All of a sudden, we not only see a ressurection of Socialism in two of the leading countries of the Capitalist world, but positioning itself as a powerful political political alternative to the dominant Liberal mainstream. If we take into account that this mainstream is also under attack by right-wing populism of the likes of Donald Trump and Marine Le Pen (the program of the latter replete with anti-Capitalist and anti-Globalist vocabulary), the Liberal “end of history” seems to have ended quite rapidly. If this wave hasn’t reached us yet, it is only because both our Liberalism and our Capitalism are quite peculiar, and our political system doesn’t operate under Western-style rules. However, one cannot completely shut oneself off from a revolution of ideas, and it seems likely we will soon hear the march of a new Socialism here in Russia.

What is the cause of this 2010s Socialist re-revolution? The return of economic conditions that had caused the heyday of Socialism in the 19th century and were drastically changed in the 20th. The driving force of the Socialism of two centuries ago was a contradiction between the ideals of civil liberty and equality brought about by the French Revolution and the Enlightenment, and an absolute economic inequality typical of ancien régime Europe. The latter became more prominent and intolerable at the start of the Industrial Revolution, when hundreds of thousands of proletarians became concentrated in the stench and stuffiness of the working-class suburbs of developed countries.

Liberalism was faced with a monstrous and insoluble contradiction: why, after declaring human rights and liberties in thought and politics, giving equal rights to all social strata and doing away with the feudal ladder of estates, should it remain the guardian of a gap between wealth and misery, the protector of economic inequality? The situation of defending equality in the sphere of ideas, less important for most of the people, and championing inequality in the sphere of the stomach, of much greater everyday importance, seemed entirely ridiculous.

Excuses invented for explaining why some people are poor and some rich pushed those who considered this to be an injustice to certain solutions. “Private property is inviolable, you have no right to infringe upon it, therefore, you dare not touch the wealth of others,” said the wealth apologists. “It simply means that property is theft, and it must be destroyed or redistributed to close the gap between wealth and poverty,” replied the champions of the poor. “Liberty is not the equality of results but that of opportunities. We should be equal at square one, and then let each one gain according to his energy and talents,” said the wealth apologists. “Then we should socialize the work effort, and then we’ll have a common result: From each other according to their ability, to each other according to their needs. Also, let’s create truly equal opportunities, because the prospect of equal chances for millionaires and have-nots is a bald-faced lie,” replied the champions of the poor.

The ideas, methods, and moral high ground of the Socialism of yesteryear stemmed from a European yearning for equality, described by Alexis de Tocqueville, and the angst caused by the monstrous material inequality in the Europe in an age when the gaps between wealth and poverty were insurmountable. These gaps are the subject of a spirited dialogue between a young Rastignac and a cynical, conniving Vautrin in Honoré de Balzac’s Le Père Goriot. Vautrin explains to Rastignac, then a young idealist, that his chances of making good money thanks to learning, personal qualities, and industriousness are equal to zero. The only way of winning a fortune is getting it from somebody who already has it, by way of inheritance or marriage. The only way of becoming rich is being rich.

The world that spawned most Socialist theories, especially those of Saint-Simon, Proudhon, and Marx, was not a liberal world of free competition and equal opportunity. It was a polarized world devoid of a middle class: the 1% of haves and the 99% of have-nots.

What did this mean in practice? All talk of alleged opportunity in life granted by a Liberal version of Capitalism seemed naught but a myth. Big money was a magnet that attracted even bigger money. The lion’s share of national income, regardless of the pace of its growth, was distributed in the same proportion that was fixed in the structure of national capital. Simply put, those who controlled the majority of wealth gained the majority of income while making little to no effort.

America was the sole exception, with a lower concentration of wealth and a higher share of income distributed through free competition. Hence the image of the USA as a Promised Land, a land of opportunity, a magnet for migration. A good way of making money in Europe was moving to America (with the possibility of returning to the Old World with newfound wealth in tow left open).

No industrial growth, no Socialist attacks on the government or the bourgeoisie could change anything in the structure of this world until the start of World War I. This explains the revolutionary character of European socialism and the borderline utopian radicalism of its proposed solutions: Total socialization of industry, expropriation of the ruling classes, dictatorship of the proletariat, dreams of a World Revolution.


Source: Capital in the 21st Century by Thomas Piketty. Not part of Kholmogorov’s article.

This World Revolution did come to pass – but it started not in 1917, but in 1914. As brilliantly demonstrated by Thomas Piketty in Capital in the 21st Century, the Great War kickstarted a default of old European wealth. The horrors of war, the collapse of world trade, the Russian Revolution with its devastation and expropriation of the wealthy classes, the defeat and hyperinflation in Germany and Austria, the demographic crisis and budget deficit in the UK and France, the impeding dismantlement of colonialism – all of this led to a catastrophic decline in capital concentration in Europe.


Source: From Soviets to Oligarchs: Inequality and Property in Russia 1905-2016 by Filip Novokmet, Thomas Piketty, and Gabriel Zucman (2017). Not part of Kholmogorov’s article.

The revolutionary role of Russia, whose bourgeoisie was sacrificed at the altar of transformation, consisted not so much in socializing property and launching the Socialist experiment as in crashing the world rent. The enormous Russian debt that had fed millions of rentiers all over Europe turned into dust in the blink of an eye and doomed the rentier civilisation to extinction.

From the 1920s to the 1940s, the level of capital concentration in the world capitalist system continued its decline. Contributing factors included the Great Depression that had finally made its way to America, the devastation of World War II, the post-war wave of nationalisations, and tax deductions for national reconstruction. The ratio of capital to national income fell from 6:1 under the old regime to 2:1, i.e. the entirety of concentrated capital (be it in the form of real estate, shares, or foreign assets) became equal to only two years’ worth of national income.

What were the socioeconomic consequences of this Great Default? The grip of Capital loosened, its magnetic effect wasn’t as far-reaching, and the problem of economic equality was tackled within the framework of global Capitalism, without employing the radical recipes of fin de siècle Socialism. More precisely, those radical recipes were relegated to countries that were lagging behind in industrial development, such as Russia and China. The main goal of this radicalism was a wilful, determined achievement of an industrial breakthrough. Socialism in so-called Socialist countries was most concerned with productivity and not wealth redistribution.

Western countries, however, having no need for a “great leap forward”, were able to afford the luxury of a “Socialism sans Socialism”. Social Democracy, Christian Socialism, Swedish Socialism, Social Reformism all followed the same model. Without abolishing private property as such, without creating a dictatorship of Leftist parties, by limiting themselves to a selective nationalisation, they achieved economic equality by fostering a system of high wages and a well-developed social sphere, ushering in the welfare state. Essentially, it was a huge Ponzi scheme organized according to Keynesian precepts: The state took away a sizable portion of incomes via taxation in order to redistribute this money, also as income but under a more egalitarian distribution.

This was the zeitgeist of the treinte glorieuses of 1945-1975, when all Western governments followed, with slight variations, a single socioeconomic policy targeted at bringing social inequality as far down as possible, raising national income redistributed as salaries to the detriment of rents, dividends, etc., and widening the social responsibilities of the state. It was the age of a rising middle class, the 40% that follow the 10%-strong strata of the wealthy; this class laid claim to 30-40% of national wealth as opposed to just 5% before World War I. The 50% of the poor were stuck with the same 5% as before, but at least they gained a much greater chance of breaking out of poverty by dint of education, good work, entrepreneurial spirit and general savvy.

The social lifts seemed to be working. A peculiar anthem of the era is Chuck Berry’s tongue-in-cheek 1964 song You Never Can Tell, the accompaniment to John Travolta’s and Uma Thurman’s wild gyrating in Pulp Fiction. It’s the story of a young Black couple from New Orleans that makes decent money, buys a house, mail-order furniture, a fridge, a phonograph, even a used jalopy… New capital growth was slow but steady, not in the form of rent or foreign bonds but mostly as real estate, shares and equity.

The most positive Soviet-era memories of those who were impacted by the system are based on largely the same processes, just disguised with red banners and “Glory to the Communist Party” posters. The income levels of Soviet workers were incommensurably lower, as was the quality of consumer goods offered by the market (it took a long time to realise that the Western market of the era was just a mechanism for redistributing wealth that was gained through not entirely market-based means). However, the Soviet system was infinitely more helpful with regards to restoring and accumulating… capital. It was even explicitly called “capital construction.” Most Soviet citizens were granted, entirely free of charge, real estate that was worth many years of individual income and still commands an impressive market price. And so construction proceededly rapidly apace to build the cosy, even slightly bourgeois world of 1970s Soviet comedies.

The Socialist system, like that of the West, followed the route of reconstructive capitalism. Meanwhile, Socialism as an idea gradually fell out of favor over the 20th century as its main raison d’être, inequality, disappeared. The semi-Socialist policies of Western countries created a perfect model village of Capitalism: Low inequality levels, broad opportunities, intensive social lifts, high levels of welfare, a wide availability of consumer goods thanks to a developed and flexible market. All of it seemed like a brilliant alternative to Socialist experiments: Socializing not wealth, not industry, but revenue, redistributing it so that everyone could decide where to spend it within a wide spectrum of options.

An ideal world of freedom and equality finally seemed to be within grasping distance. It also had a place for racial and gender equality, the 1960s becoming a triumph for equal rights activists of all stripes. At the same time, Socialism was quagmired in internal antagonism, the total control of the state eroding all freedom and neutering the enjoyment and variety of everyday life.


Source: Capital in the 21st Century by Thomas Piketty. Not part of Kholmogorov’s article.

However, the economic developments of the treinte glorieuses were the gravedigger for both Soviet Socialism and Western Welfare Capitalism. They signed their own death warrants themselves. A natural accumulation of capital was underway, via saving a part of income in the West or direct capital giveaways by the state in the USSR. But a feature of capital is that it “magnetizes” and draws income. The owner of capital tends to rent-oriented, not work-orientated, behavior. This “capitalist” wants to gain interest and rent, to make his capital inheritable, to pay the lowest taxes he can, and thoroughly despises the have-nots whose claims to a share of his income seem to him most outrageous.

The late 1970s saw the rise of a new Capitalism with many faces, from British Thatcherism to US Reaganomics to the waves of privatization that swept away the Soviet system and its socialist economy. It was a massive uprising of capital that wanted back its right to extract revenue and spend it on itself without sharing with society. Just like the pendulum swinging towards Socialism in the early 20th century, its return towards pure Capitalism at the end of the century was most pronounced and most socially destructive in Russia. A savage, dog-eat-dog oligarchic Capitalism that took sway in the country freed itself from practically all burden of social responsibility. It was a tyranny of wealth limited only by the garrotte in the hands of thugs, be they mafia racketeers or bureaucrat raiders.

However, it would be unreasonable to claim that the nature of the processes that transpired in those decades was drastically different in Russia, Europe, and the US. It was a time of large predatory fortunes, scams and profiteering, social polarization, and growing inequality everywhere. Americans and Western Europeans, accustomed to slogans of “equal opportunity,” suddenly once again found themselves in the era of Rastignac, when the only way to get rich – was to be rich. Also, the very notion of wealth had changed: It was no longer a reasonable, comfortable prosperity, but a blatant, tacky luxury.

In The Price of Inequality, Stiglitz describes the behavior of modern American business as “rent-oriented.” Nobody wants to improve real economic indices, nobody wants to make money, everybody wants to live as a rentier off unfounded bonuses, “golden parachutes,” and other forms of self-financing so common in American corporations. Is it that different from Gazprom cleaning women?[1]

At the other end is the growth of inflamed poverty: according to Stiglitz, the life expectancy of US White men with no college education is plummeting at the rate of 1990s Russia. Over the last 15 years, everyone and their mother have talked about the “death of the middle class.” Piketty projects that at the current rate of increasing inequality, Europe will return to 19th century levels by 2050: 10% of the population will own 80% of capital, and 60% of all income.

The society built by the global anti-Capitalist uprising of the early 1900s is becoming a thing of the past, as is faith in market-based self-regulation of Capitalism, allegedly evolved enough to solve social issues. It turns out that self-regulation played no part whatsoever, and the growth of economic equality occurred due to a catastrophe that had wiped out the “old money,” paving way for a unique Social-Capitalist system. Conversely, growing capital concentration, seemingly normal for a self-regulating capitalism, simply reproduces inequality.

A Neo-Socialism is the natural response of a society that enshrines equality to the emergence of a new inequality. Will it be different from classic Socialism? It will be, and rather strongly so.

Destruction of private property and socialization of the means of production proved to be a rather dubious road to Socialism. In practice, they only led to the creation of a new class – the nomenklatura, a decline in individual initiative, logistic and planning errors leading to shortages and even famines. And, in the long run, they failed to prevent the restoration of Capitalism in its most savage incarnation. In addition, small-scale private property continued to develop even if when it all private property was nominally abolished.

The utopia of complete socialization is opposed by the following fact: As material progress unfolds, a human being demands more, not less space for individual existence and self-expression. The ideal of a normal human, as it turns out, is his own house, not an army barracks. Collectivism invariably leads to a tyranny of mediocrity and dooms the societies that adopt it to backwardness in scientific-technical development.

Under these conditions, Neo-Socialism presupposes, above all, the socialization of income and prohibitive measures on capital concentration. The world of future Socialism is a world where all offshores are annihilated and each and every fatcat is subjected to high income and property taxes, with inheritance laws hampering the transfer of super-wealth. This nullifies the magnetic effect of large capital, and most of income is redistributed as wages in the context of free labor and a free market. From an instrument of optimizing income, the market turns into an instrument of optimizing expenditure.

Here, however, the New Socialism faces several classic pitfalls, already singled out by Joseph Schumpeter in the mid-20th century. The impossibility of super-wealth, limiting unfair and imperfect competition, monopolism, and profiteering lead to the waning of that very entrepreneurial spirit that nurtures the Capitalist economy. There will a dearth of those interested in starting a new business to beat all competitors and make a nice buck. And, needless to say, an “inventor and innovator” certificate[2] is a feeble substitute for super-incomes.

The only remedy to entrepreneurial crisis within Neo-Socialism could be a change in business philosophy: Stop chasing big money and instead take pride in the individuality of your business, its attractiveness and social relevance. This, however, only works for small and middle-sized businesses, while bigger enterprises require investments (including non-returnable ones) and risks so enormous that a small-time businessman can only afford it if he is aiming for a super-income. An alternative is a planned, state-run innovation policy, a “Communism of ideas” that will be of dubious long-term efficacy.

A society that guarantees a relative equality of income would be doomed to low economic growth. However, it is precisely the form of economic growth stabilization – especially within the core of the Capitalist system – envisioned by Neo-Socialist economists, Piketty above all.

Another question inevitably brought forward by Neo-Socialism is its relations with globalization. In a Neo-Liberal world, globalization is a world market system that forces the expenses of wealthy and developed countries on the poor and undeveloped by creating “common markets” that stifle economic development. They confine poor countries to the lower stages of technological chains while keeping the rights to ideas and the final product in the hands of developed countries. This is exactly the principle of the Transatlantic and Trans-Pacific Partnerships, modern attempts to cement the eternal commercial dominance of the US.[3]

An alternative to this economic globalism is economic Nationalism; the greater the drop in economic growth and surge in inequality, the more that will it be visible. Countries with independent industrial potential and inner market resources will isolate themselves from the rest of the world as much as they are able to, from imports to economic immigrants, in order to maintain their development level despite in spite and at the expense of others.

This Nationalist alternative is seen as the greater threat to the Neo-Socialist project. Its defenders keep putting a lot of effort into criticising Nationalist and Protectionist ideas and rallying to the defence of Smithian dogmas of “relative advantage” that lead to international division of labor and creation of common markets.

Nevertheless, preserving global markets under a Neo-Socialist policy would require a serious “leveling of fortunes” everywhere on the planet. Wealthy countries, much like wealthy people, would be compelled to spend most of their wealth to improve the living standards of the poor up to a certain “golden mean.” According to modern GDP per capita statistics, it would be represented by the living standards of a Turkey or a Mexico – probably even lower in reality, because rich countries create much of their GDP and national income by virtue of being rich. Were they to be more modest in their lifestyle, much of their national product simply wouldn’t be produced.

Is it possible to downgrade the living standards of rich countries and prop up the poor ones to even slightly reduce global inequality? One may well doubt this, especially considering that for most of humanity, it is the quality of life in the developed countries that really matters, not the tyranny of averages. Everyone in the world dreams of a Lexus, not a Zaporozhets.[4]

And now we re-encounter a fundamental contradiction within the Socialist dream. It is inspired by a global historical trend towards equality and social justice, but the justice in question turns out to be a tyranny of mediocrity, the erasure of extremes of arrogant wealth and abject poverty. But how is the value of this justice comparable with the imperative of development that presupposes certain extremes? To move forward, one must desire to be the best, which is impossible without a certain, sufficiently wide score chart – even if it comes at the expense of others.

Combining the values of justice and equality with the values of development is a task yet unsolved by the New Socialism.



[1] Allusion to a news item at around the time of this article’s writing featuring a woman employed as a cleaner in the Gazprom office who had reported the theft of her Christian Dior handbag worth $26K.

[2] Allusion to the Soviet practice of rewarding technical and industrial innovators with honorary diplomas and certificates, as opposed to patent rights or other, more substantial awards.

[3] A cheap rear-wheel-drive supermini mass-produced in the USSR (and then, briefly, in independent Ukraine) in 1958-1994 that became a byword for shoddy, uncomfortable, and breakage-prone cars in (post-)Soviet culture.

[4] On January 23, 2017, the US announced its withdrawal from the Trans-Pacific trade agreement.


Translator’s Note

The article was written in April 2016 and reflects the political and economic situation of the era.

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There are three main reasons why the correlation between national IQ and GDP per capita is only around r=0.7, instead of r=0.9.

Oil/resource windfalls: Saudi Arabia would otherwise be about as prosperous as Yemen.

The legacy of Communism: Central planning and especially the lunacy that is Maoism are far less effective than free markets.

The legacy of Malthusianism: This is the most subtle factor, but it used to be very important. Countries like China, Japan, and to a lesser extent India used to be stuck in a high-level equilibrium trap; quite intelligent and productive, but unable to accumulate capital surpluses due to almost everyone being at the limits of subsistence.

This was not the case with relatively land-rich Latin America, where escaping from the Malthusian trap was easier. As a result, the degree of human capital there has long correlated much better with the region’s wealth. (Argentina even had a resource windfall effect around a century ago).

But all these factors will diminish in the coming decades!

Practically everyone outside Sub-Saharan Africa has more or less escaped the Malthusian trap.

Communist regimes have nearly all collapsed, leaving just a few relics like Cuba and Best Korea as monuments to failure. Moreover, over the long term, we can expect institutions everywhere to get better, as different countries adopt established best practices – occasional backsliding as with Venezuela regardless.

The impact of resource windfalls – apart from a few exceptions (e.g. Botswana – diamonds), we’re speaking about oil – will likewise decline. Technology has conquered Hubbert’s peak from the supply side, and soon enough, electric batteries are going to cut in from the demand side.


Even today, it is presumably not an accident that the countries with the most developed automation in manufacturing – Germany, Switzerland, (Northern) Italy, Japan, South Korea, parts of the United States, and increasingly, China – are those where the core populations have 100-105 range average IQs.

The coming automation of more and more sectors of the economy, including services, will impact disproportionately on low IQ jobs, so the impact on economic performance of average IQs – and especially smart fractions – should if anything increase even further.

The one thing that could throw a wrench into this – sort of – is if countries were to begin randomly adopting large-scale intelligence augmentation at highly differential rates (e.g. via CRISPR + genomics of IQ). But it isn’t likely to be random. It will almost certainly be the richest and least superstitious/obscurantist countries that will adopt these technologies first, and both of those factors are already highly correlated with IQ.

• Category: Economics • Tags: Automation, Futurism, Human Biodiversity 
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In 2014, conducted a study into the ethnic composition of Russia’s billionaires. (Steve Sailer picked it up as well). The observation that Jews constituted 21% of the Russian Forbes 200 predictably drove handshakeworthy journalists, Jews, and especially Jewish journalists into a tizzy (as I recall, when I asked him when he was also going to condemn Forbes Israel, which also loves to count Jewish billionaires, that was when anti-Russian hack Ben Judah blocked me).

The hysteria concealed real failings in the article. There was no clear methodology. Furthermore, the numbers of Ukrainians in the ratings seemed vastly inflated. They supposedly constituted 12% of Russian billionaires, even though most of them were nothing of the sort; the analytical team seems to have just consigned everyone with a surname ending in “ko” to the Ukrainian race. This makes about as much sense as counting Donald Drumpf as a German oligarch in America.

Still, some general trends could be clearly discerned. Russians – that is, Russians and Russians misattributed as Ukrainians and Belorussians – consituted about 66% of the list’s members and almost exactly half of the combined capital of $481 billion. Jews and Mountain Jews constituted 24% of the list, and had 28% of the capital. All of the rest belonged to Caucasian and Muslim minorities. Notably, there were no traditionally Buddhist/animist Siberian minorities on the list.


In recent days, the blogger Ivan Vladimirov, who produces excellent data-heavy material on Russian demographics, published a similar census based on the spring 2017 edition of the Forbes 200 for Russia for the nationalist journal Sputnik and Pogrom: Who Owns Russia?

Here are some of the more pertinent take-away points:

1. First, he notes that state ownership is now at 70% of the Russian economy, twice its share 10 years ago, so in actual fact, the real “owners” of Russia are now the curators and appointed directors of its state behemoths, such as Igor Sechin (Rosneft) and Alexey Miller (Gazprom).

2. Unlike, he goes into some detail into his methodology:

  • No “svidomy zmagars” – all the billionaires with distant Ukrainian or Belorussian ancestors are assumed to be Russians by default.
  • Nationality is passed on down the paternal line, including with the Jews.
  • Unless they have openly declared they identify more with another aspect of their ancestry. For instance, Petr Aven (head of Alpha Bank), despite being a Latvian-Russian métis through his father, identifies more with his Jewish maternal grandmother and belongs to Jewish organizations, so he’s considered to be a Jew.
  • No presumption of Jewishness or non-Jewishness based on just the name since there are too many false positives.


3. Now we come to the actual numbers – out of the Forbes 200 and their cumulative $459 billion in assets:

Russians constitute 127 (63.5%) of the people in the list, including 57.4% of the capital.

Jews have 41 (20.5%) people in the list, with 24.8% of the capital.

After those came Armenians (7), Tatars (6), Azeris, Chechens, and Ingush (3 each), and two Uzbeks, though one of the latter, Alisher Usmanov, is the fifth richest billionaire in Russia and has a relatively “interesting” public profile (a spat with Navalny; funding Western race realists).

4. Vladimirov also notes that the Russian billionaires tend to have a very low degree of national consciousness.

For instance, Evgeny Kaspersky’s comments when asked if he had any Jewish ancestry on a visit to Israel:

I searched and searched, alas, I did not find… I got the name from Polish peasants, who during the uprising in the 1860s emigrated somewhere under Nelidovo about 300km from Moscow. There they married into Russians (that is, Slavic, Tatar, Polovtsian and whatever else constitutes “Russian” blood from in me). By mother is from the Tambov peasants. But this is the most interesting thing. Tambov was inhabited by soldiers who served their lives in various places. And soldiers sometimes came with brides from the most different places. And according to indirect data – I have roots from Scandinavia and Persia. But from Israel – alas, no… Although who knows?

This is, of course, nonsense from a population genetics standpoint. But one of the tropes of Soviet/Russian multiculturalism is that Russians are mulattoes up and there is no such thing as a Russian anyway. And the Russian elites respect this legacy, after as they’ve long done away with the economic aspects of Soviet dogma.

In fairness, this multicultural spirit likewise applies to Russia’s Muslim elite. He cites the example of Mikhail Gutsuryev, who sits on the Board of Trustees of the Jewish Museum and Center of Tolerance, while at the same time funding the construction of synagogues, Orthodox churches, and mosques. Or Lukoil head Vagit Alekperov, an Azeri-Russian, who renovated the main Russian Orthodox church of Imperial-era Baku, and prefers to keep his silence on matters of religion: According to a NYT profile of him from 2004, he “prudently keeps leather-bound copies of both the Koran and the Bible at his office, to allay any concerns that he prefers one almighty to another.”

5. I also noticed that Russia’s statistics are rather similar to America’s.

In the US, North-West Europeans make up 51% of the members and own 56% of the cumulative assets in the Forbes 2010 list – this is almost identical to the figures for Russians in Russia, though on the other hand, this demographic group only makes up about 50% of the US population (non-Hispanic Whites minus Greeks, Italians, etc.), whereas Russians constitute 80% of Russia.

Jews own about a quarter of Russia but more than a third of the US – that said, they only make up 0.1% of the Russian population, versus 2% of the US population. That said, as Vladimirov points out, the more relevant indicator would be their 0.5% share of the Soviet population c.1989.

It is also interesting to note that “southern” diasporas, which in Russia’s case are Caucasians (Armenians, Azeris, Ingush, and for that matter, the Jews), are relatively more successful in commerce/becoming billionaires in Russia. This is also true for the US, where Italians, Middle Easterners, and Greeks are overrepresented as a share of the population. This is even though with the exception of the Jews, who are massively overrepresented, their IQs are no higher than those of WASPs or Russians, and possibly noticeably lower. I have speculated at times whether this “commercial trait” of people with Near Eastern/East Med ancestry could have developed as a consequence of their unrivalled length of experience with urban life and the associated haggling, bartering, etc. skills it selected for over the millennia.

• Category: Economics • Tags: Billionaires, Russia 
Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.