Sunday, April 2, 2006

Economics and poverty, again

Observations on Economics and Poverty

I've been here going on a year now, and I have learned a lot about Russia and Russians. So far, My first impressions have been validated. I still see more middle class existence than wide-spread poverty.

However, we do have to set some standards here. What do we call poverty? In a nation where it is cheaper to live than in the US, and cultural norms are different, can we keep the standard the same? Just something like income of $25K per family? I don't think so.

I take a look at how people live in the village nearby. Are they poor? By financial and material standards compared to the U.S., yes. Are they desperately poor? No. They have the basics of life and some left over. They are happy, well-fed, well-clothed, and entertained. Very few lack for these basics. On the other hand, almost none of them have running water, and the outhouse is the norm. But they have decent shoes, and they can afford some clothes they like and a few luxuries from our modern electronic world. In the villages and the countryside I see plenty of babushki and dedushki who, if they were wearing the same clothes in the US, you would think them homeless, but they are not. Their clothing, although mismatched and hodgepodge a collection as they are, are usually relatively clean. These are farm people, more or less. So one would have to compare them to a rural middle class of a time, I would say no more recent than my childhood, to get some idea of whether these people are poor or not. I would have to say many people in the country are in poverty, but not terrible poverty. There are fewer visible people in the city who appear to be in poverty.

Let's go into town, to Chelyabinsk. Do I see any homeless people? Very few. Do I see any really poor people? A few, but not so very many. How do I judge poverty? Look at their coats, are they clean, and in good repair? Or are the mends and patches showing? Are their shoes decent? How about their cleanliness? Have they had adequate dental and medical care? I think yes.

Most of the inhabitants do not own an automobile, but almost all have running water and bathrooms. Their clothes are as neat and tidy as I would expect to see in a middle class town in the US. The coats and shoes are mostly new enough not to have noticeable repairs or age. When I came over here I read many accounts that said Russia was a land of great poverty compared with an elite rich few. The elite rich few still exist, but I continue to see a land with a huge middle class, and very little poverty.

They reuse things far more than we do, but this does not indicate poverty. Their infrastructure is much tattier than ours - sometimes. For instance, the buses and automobiles look like they have a million miles on them, and they are still being patched until they simply can't be patched any more. Also, the patches will take the form of make-do fixups. They look like somebody figured out a way to make it work again. Example, new brackets bolted on to a bus door to hold a handle but they don't even attempt to use the wornout metal where the old brackets were, and the patch is entirely utilitarian, with no concession to any attempt to make it look tidy, much less original. But, I do see some new buses, some new train cars, some new autos, some new road paving. There is plenty of building going on, which is good. The quality of the last couple of waves of apartment buildings is sometimes questionable. These building are now 25 or more years old, and are showing a heavy toll of poor maintenance.

Still, I must remember that this country has only changed from out of the Soviet system for 15 years now. A mere eyeblink in time. I constantly meet reminders that while things may seem stable now, there were some very rough moments in history very recently. In Perestroika, people died. In Glasnost, people died, and it seemed like anarchy reigned. I can't say robbery, theft, and violence were common, because I have no figures, and I wasn't here. But I frequently talk to people who have stories about these times, and their attitude is frequently that it is better now. Much better.

I think most Americans would feel that living as most Russians do would be poverty, but I do not agree. I don't think the lack of material possessions makes their life poorer. The availability of medical care is not as good, and may actually be getting worse for the lowest earners. The same may be true for education. But when I think of places in the world that are truly poor, this just doesn't compare. Life may be difficult here, but there is opportunity. Not as much as I, or most of the Russians I meet would like, but it does exist.

I still get the impression that as recently as five years ago the situation was different, and the poverty was greater. Russia's economy is growing. It seems to me to be so vigorous that it would be hard to suppress, but lately I've seen enough government policy issues, and business ethical issues, that I think the current ruling class in Russia could actually kill, or at least maim, the current economic growth patterns. The government are stifling business and reducing competition, and the CEO frame of mind over here seems to consist largely "get mine, screw you". The business owners need to remember that the cogs are what make the wheel turn.

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