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Not really arguing anything in this post, just sharing some interesting stats I found about the affluent class in Russia (as compared with BRIC’s and others).

First, as we know Russia is (in)famous for the opulence of it oligarchy. But according to the research firm Wealth-X, despite a relatively high number of billionaires, its overall share of Ultra High Net Worth Individuals (UHNW) is far more modest as you can see in the table below. As a percentage of GDP (caveat: this is comparing apples and oranges, but still instructive since national wealth is correlated to yearly output), the wealth of the Russian UHNW’s is equal to 43% of a 1.5tn GDP in 2010 (as compared with 28% in China, 43% in Brazil, 44% in the US, and 55% in India).

So, same picture as with income inequality – as I’ve noted before on this blog, Russia’s levels of inequality are in fact quite modest by world standards – with a Gini index of about 40, it is higher than most European countries (25-35) but lower than the US and China (45) and most Latin American countries (50+).

Now what’s really distinctive about Russia’s ultra-rich is that billionaires comprise a high percentage of all UHNW individuals – some 7% of them, as opposed to about 1% in the other countries; and those same billionaires control 84% of that group’s total wealth, as opposed to 33% in Brazil and China, 25% in the US, and 20% in India.

Is Russia’s concentration of wealth at the very top of the top good or bad? It’s hard to say. It ultimately depends on your view of the merits of the upper middle class and their values. If you believe it reinforces social stability and creates economic dynamism, then this is a weakness. If on the other hand restricting the emergence of a class system and enhancing state power are held to be important, then Russia’s structure is better (after all, it’s easier to influence 100 odd billionaires than keep track of thousands of multimillionaires).

One interesting (and puzzling?) thing I’ve noticed is that Sweden seems to have a similar structure of wealth ownership. This country of 9 million has 10 billionaires – that is almost as many as France (12) or Italy (13), whose populations are six or seven times bigger, and almost as many per capita as the United States. Considering that it’s one of the most equal countries in the world, this leaves very little room for the millionaire class (which I guess makes sense on account of its high income tax rates).

Second, I was trolling Forbes’ list of Russia billionaires for 2011 and counted up the wealth of those known to be friends of Putin (Gennady Timchenko of Gunvor, oil transport and Yury Kovalchuk, banking – through the Ozero dacha coop; and Arkady Rotenberg, of construction, inc. of the controversial Khimki route – through judo). It came up to around $8.1 billion of the total $432.7 billion.

That is a very comfortable sum, of course, but doesn’t really support the oft peddled line that friends of Putin are corruptly buying up most of the Russian economy. Little doubt that Timchenko et al. got by some or most of their wealth “unfairly” (and I assume they’ll be expected to return some of the favors to Putin & Co. once they retire) but that’s just really existing capitalism most places in the world for you.

* Kudos to those who got the Pelevin reference.

(Republished from Sublime Oblivion by permission of author or representative)
 
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My views on Khodorkovsky – and by extension his being found guilty of $25bn embezzlement – aren’t exactly a secret (1, 2, 3) so I’ll keep this brief.

1. As usual, the only people who care about this are Western politicians eager to score cheap shots against Russia’s “assault” on transparency and rule of law (note that the same people have no problem with repressing Wikileaks and killing Assange – everyone should be subject to equal scrutiny, but some more equally than others!); MBK’s lawyers and PR-men whose job this is; and the legions of naifs, fools and ideologues manipulated by them. BTW, my favorite photo is above, showing elderly ladies parading with that chic glossy poster of their hero, with Medvedev and Putin darkly conspiring behind his back. I’m sure they funded it all out of their pensions.

2. The standard argument of MBK’s PR-men goes something like this: how could Khodorkovsky be guilty of embezzling $25bn, from his own company? And especially considering that he’s already been found guilty of tax evasion? But that’s just begging the question; insinuations, not facts. While MBK *might* not be directly guilty of this, I’m sure the prosecutors have found some legal loophole or another sufficient to convict him. I can imagine a scenario where the proceeds from the tax evasion he was originally convicted for – if retained by MBK’s various LLC’s and holding companies, which they presumably were – could also legally constitute embezzlement.

The issue then becomes a question of whether Russia’s laws against double jeopardy apply to this case; it’s theoretically possible to both evade taxes, and consequently to deprive your shareholders of dividends, i.e. embezzlement. I don’t know the legalistic details but neither do more than 99% of the pundits; what I do want to stress is that even from the legalistic viewpoint, stressed by MBK’s defenders, things are far from a straightforward case of “Putin’s vendetta” against the “independent businessman”.

3. I’m not going to reiterate the other arguments as to why Medvedev should pardon MBK (e.g. that in itself it a subversion of the legal process; that the US imprisons people without trial at Guantanamo doesn’t give me free reign to abduct passersby into my basement Juggler-style; that he never cared about rule of law until it boomeranged back against him). The bottom line is he failed at his power grab. Too bad for him, he should have used his ill-gotten gains on buying foreign football clubs and luxury yachts with AA systems. Smallest violin in the world playing for his lost opportunities!

4. The liberal intelligentsia and libertarian oligarch-apologists love yapping on about how Khodorkovsky’s political “persecution” will lead to investors withdrawing their money from that non-BRICworthy economic hellhole, that is Russia. I checked specifically for this and observed absolutely zero discernible effect on the RTS stockmarket around when MBK was found guilty on December 27th. (Of course, pardoning criminals just to appease the hurt feelings of international capital is perhaps the most reprehensible pro-MBK argument of them all).

(Republished from Sublime Oblivion by permission of author or representative)
 
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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.