
Report: 110 people own 35% of Russia's wealth - ddeck
http://bigstory.ap.org/article/report-110-people-own-35-pct-russias-wealth
======
omonra
I would urge readers to refrain from the kneejerk reaction 'it's happening all
over now'. What is happening in the Western world (rise of inequality due to
skills being prized higher owing to technological change) is very different to
what happened in Russia.

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

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

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

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

~~~
auctiontheory
_I 'd suggest that these guys are personalities that learn how to survive in
the current climate regardless what that climate happens to be._

Well said. And that's a great skill to have. (I often wish I had more of it.)

------
tokenadult
China has a similar problem.

[http://www.forbes.com/sites/kenrapoza/2013/01/20/the-
china-m...](http://www.forbes.com/sites/kenrapoza/2013/01/20/the-china-
miracle-a-rising-wealth-gap/)

[http://www.bloomberg.com/news/2013-02-05/china-approves-
inco...](http://www.bloomberg.com/news/2013-02-05/china-approves-income-plan-
as-wealth-divide-poses-risks.html)

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

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

[http://articles.latimes.com/2012/jul/18/business/la-fi-mo-
wa...](http://articles.latimes.com/2012/jul/18/business/la-fi-mo-walmart-
heirs-20120718)

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

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

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

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

~~~
jcampbell1
Wealth statistics are tricky. As a thought experiment, I have always wondered
what the numbers would be if everyone in the country had identical incomes of
$50k/year. I have a feeling that 25% would accumulate debts and have zero
total wealth. Even with perfectly identical incomes, the "wealthiest" person
would have more wealth than the bottom 25% combined.

~~~
ctdonath
A recurring observation about wealth distribution is that if everyone's income
& wealth were equalized, we'd soon return to the economic disparity &
distribution we see now. Poverty/wealth is, on the whole, a consequence of
_chosen behavior_.

I find it odd that those of us who make this observation, and follow it thru
to its natural outcomes, are lambasted for the consequential opinions we hold
thereon.

~~~
lutusp
> Poverty/wealth is, on the whole, a consequence of chosen behavior.

That's very true, but an equally important factor is compound interest, which
tends to amplify what might initially be very small differences in wealth. I
once wrote an article
([http://arachnoid.com/example/#Compound_Interest_Example](http://arachnoid.com/example/#Compound_Interest_Example))
in which, as an example, at age 20 a prudent person invests an inheritance of
$20,000 for his retirement at age 60, expecting to withdraw $45.00 each week
for walking-around money. In the experiment, if the investor withdrew 38 cents
more each week, he ended up flat broke at age 60. If he withdrew 38 cents
less, he doubled his money.

Another factor is that being poor is expensive, there's no other way to put
it. When a rich person uses a credit card, he gets a free 30-day loan. That
service is being paid for by those at the bottom, who have a constant balance
on their cards.

A poor person has to buy insurance for his house and car, because they're both
on bank loans, and the banks require insurance (and the bank loans sometimes
double the cost of the purchases). A rich person can buy things in cash, and
then self-insure using his assets to cover accidental losses.

Let's face it -- overall, being poor is a very bad business policy. But the
point is that an old adage about the rich getting richer and the poor getting
poorer is backed up by simple economics.

~~~
smsm42
>>> A poor person has to buy insurance for his house and car,

We're doing pretty good here if a poor person is implied to have a house worth
insuring (implying either ownership or rental of sufficient value, containing
sufficient assets) and a car, and is eligible for bank loans for both. In some
countries, a person rich enough to have a house, a car and to qualify for bank
loans for both is considered pretty well-to-do.

>>> A rich person can buy things in cash, and then self-insure using his
assets to cover accidental losses.

I'm pretty sure most people, not only poor people, use car insurance. It's
more convenient and usually (unless you drive exotic or super-expensive cars)
cheaper than surety bonds that are usually required, and same with cash
deposits (since cash deposited at DMV can't be used for anything else). For
businesses having massive fleets, OTOH, it may make sense to self-insure since
they get the same risk distribution as insurers, but without the middleman.

>>> overall, being poor is a very bad business policy

It's bad business, but you may have a lot of incentives for it, given that
welfare subsidies and services you may get in many US localities pay more than
minimum wage job and in some localities more than average wage job.

[http://www.cato.org/publications/commentary/why-get-
welfare](http://www.cato.org/publications/commentary/why-get-welfare)
[http://www.cato.org/publications/white-paper/work-versus-
wel...](http://www.cato.org/publications/white-paper/work-versus-welfare-
trade)

>>> rich getting richer and the poor getting poorer is backed up by simple
economics.

It may be but it definitely is not backed up but what you said. The thing is
that statistics that talk about "rich getting richer" makes you assume that
same people that were rich 20 years ago got even richer now, and same people
that were poor 20 years ago are even poorer now. In fact, nothing in this
statistics point to it - what statistics can tell you is that some people were
rich 20 years ago, and some different people are rich now, but it usually says
nothing about how many of people rich today were rich or poor 20 years ago. It
is completely normal for a person to be piss-poor while being a young student
and become quite well established when retiring. Usually it comes from working
hard and making a number of right choices on the way. Including, yes, saving
diligently and having long-term view, which leverages the power of compound
interest - but for this you need the right _behavior_.

~~~
e12e
> overall, being poor is a very bad business policy

>> It's bad business, but you may have a lot of incentives for it, given that
welfare subsidies and services you may get in many US localities pay more than
minimum wage job and in some localities more than average wage job.

Wait, what? If you have the choice of making more from welfare, than from a
job, picking the (hypothetical) better financial option is an incentive for
you to stay poor? How's that? If the alternative is to make less doing more
work -- surely minimum wage is more of an "incentive" to stay poor?

(Lets not get into the discussion of "rich" welfare receivers and such, I'm
just curious how you could see choosing the option to make more money as an
incentive to stay poor, vs making less doing something else -- now if the
person had the option to get a decent job, then that'd be diffrent?)

~~~
smsm42
Simple: local maximum. If getting off welfare and into work implies immediate
income loss, you are incentivized to stay on welfare, even if working would
eventually make you better off, with time. If you are more inclined to respond
to short term than long term incentives, you are stuck in a local maximum.

~~~
e12e
But there's no guarantee working would eventually make you better off? You're
just taking that as a given. If there aren't any real prospect for higher pay
-- then the issue isn't just "getting off welfare".

Better welfare (say free college or other education/training) might make a
difference, however.

Now I agree that it would be good if people worked (if they are able) -- but
in and off itself that doesn't make them better off.

~~~
e12e
For an example that (sort of) confirms my bias ;-), see:

[http://www.bls.gov/opub/mlr/2006/07/art4full.pdf](http://www.bls.gov/opub/mlr/2006/07/art4full.pdf)

"The likelihood of leaving low pay decreases dramatically as tenure in a low-
paying job increases. Low- wage employment could itself decrease future wage
growth if it causes workers to receive less training or skill development,
conveys a negative signal to future employers, or provides access only or
chiefly to weaker labor market networks. Significant numbers of stagnant low-
wage earners could also be visible because of “sorting,” as those individuals
with lower employment opportunities remain low- wage workers. The latter
finding indicates that, not only is earnings mobility a reality for a
substantial number of initially low earners, but also there is continued
poverty within a large subpopulation of workers."

In other words, it's not quite as simple as "work will always win".

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

[http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_n...](http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=33765#.UlbL3mTXiGo)

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

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

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

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

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

~~~
jschulenklopper
This is an interesting presentation (and told in a powerful way) on the wealth
distribution in USA: [http://www.upworthy.com/9-out-of-10-americans-are-
completely...](http://www.upworthy.com/9-out-of-10-americans-are-completely-
wrong-about-this-mind-blowing-fact-2)

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

[https://www.youtube.com/watch?v=QPKKQnijnsM](https://www.youtube.com/watch?v=QPKKQnijnsM)

~~~
jschulenklopper
Sorry. I guess my social media button filter is tighter than yours, as I
didn't see Like-buttons at all. On top, the introduction on UpWorthy,
mentioning the authors reaction when watching the story unfold, added
anticipation for watching it.

------
AJ007
Bloomberg has a good rebuttal about the measurements used in this "study":
[http://www.bloomberg.com/news/2013-10-10/just-how-rich-
are-r...](http://www.bloomberg.com/news/2013-10-10/just-how-rich-are-russia-s-
billionaires-.html)

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

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

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

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

~~~
e12e
> If I work twice as hard as you at the same task, you should not make as much
> as I do.

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

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

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

~~~
buckwheatloaf
you just haaaaad to bring up programming skills, didn't you. FINE. but it's
not always programming that gets things done. sometimes its the determination
in your veins not the dexterity of your mind that counts for the most.
remember that.. remember that.

~~~
e12e
I'm sure even Ford would agree that working smart trumps working "hard" most
of the time...

------
Mikeb85
This is what happens when you privatize massive industries without proper
processes in place... Most of these people inherited billion dollar businesses
when the Soviet Union crumbled.

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

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

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

[http://en.wikipedia.org/wiki/National_wealth#Statistics](http://en.wikipedia.org/wiki/National_wealth#Statistics)

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

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

~~~
VladRussian2
Tzar transferring wealth from (and publicly humiliating and stripping them of
all the privileges, etc...) non-110%-loyal to him rich people (who built their
wealth by "stealing from people" \- in Russian mentality there is no other way
to build a wealth) to the loyal ones is the national reality show in Russia.
People there just love a "strict, yet just tzar".

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

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

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

~~~
hartator
It proves the opposite at contrary.

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

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

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

~~~
softbuilder
How much of America's wealth is that?

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

~~~
dwiel
Also, if your net worth is -$0.05, you're worth more than all of those with
less than you combined! Not only that but as someone with a net worth of
-$10k, you too are worth more than the bottom 5% [1] of Americans combined as
well. I guess a more interesting metric would be to count people with debt in
these combined statistics as having nothing rather than having negative net
worth, even if they do.

[1]
[https://news.ycombinator.com/item?id=6527192](https://news.ycombinator.com/item?id=6527192)

~~~
tobr
So you could craft a headline targeting the individual with the highest debt
and still say "this greedy scumbag has more money than n% of the population
combined", where n is the percent of people who have negative wealth.

~~~
delinka
Either you have logicked incorrectly, or I cannot read you. (I'll take the
blame for the latter...) Care to clarify with some numbers?

~~~
nilkn
He's saying that if you add up a bunch of negative net worths, eventually the
sum is going to be very negative, even if each individual number was small. In
particular, he's talking about the case where each of those numbers that you
add up is individually smaller than your personal debt, but their sum exceeds
your personal debt. Therefore, it looks like you are wealthier than all of
those people combined (since your worth exceeds the sum of all theirs!).

~~~
tedunangst
Not to mention, that by having a negative net worth, you are a part of the
bottom X%. But your debt is less than the sum of all debt, by definition. So
100% of Americans have more net worth (individually) than the bottom 5%
combined.

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

------
PeterisP
Now _that_ is "1% of 1% of 1%", literally.

~~~
taybin
We are the 99.99%.

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

~~~
camus
Would you want to live in Russia or China?

~~~
tiatia
Well, I have a US passport (naturalized).

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

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

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

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

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

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

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

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

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

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

------
tipiirai
Disgusting tendency allover the world.

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

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

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

------
return0
So it's a lot like the west.

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

~~~
dkuntz2
Not really. Leninist ideals went out the window when Stalin took over. The
results you're citing aren't due to Leninism, but Stalinism.

