26 February 2011

Surprising $$$ Statistics about the USA and Russia!

Graphical representation of the Gini coefficie...

Image via Wikipedia


A cautionary note...

Statisticians are a careful crew.  But interpreters may not indicate which average they are talking about... mean, median, or mode... or the study time span. The results may not be labeled clearly, or mention a crucial consideration, such as upward mobility.

It makes me think of one of my father’s favorite books, How to Lie With Statistics by Darrell Huff, 1954.  I have tried to unravel the conflicting numbers.  Please let me know what you think of this effort, and correct me where I may have gone astray!

The Petersburg Curmudgeon says...

The rich are making fools of the poor in many parts of the world, including the US and Russia.  The galling thing is everyday people let themselves be manipulated and pushed down.  And hard pressed people sometimes think themselves virtuous or upper class by supporting the very people that are taking them to the cleaners!

GINI... Income distribution throughout the world.

The GINI coefficient measures the inequality of income distribution of a nation’s wealth.The United States is a wealth-concentrated country, with an income distribution that shows a GINI inequality of 46.8 in 2009, rising from 45 in just two years!  The Russia GINI of 42.30 in 2008 is slightly better (more unequal!). 

The rich have a high proportion of wealth in America. Since 1979 the richest 1% having doubled their share of total income.

Taxes are low for the wealthy...

Taxes in America *, for the rich, were lowered by presidents Ronald Reagan and George W. Bush.  Barack Obama felt forced to continue Bush’s tax cuts.  But still, tax rates are much higher in  Western Europe.

Footnote 1.  America and Americans are quick ways to refer to the USA and its citizens.  Canada and Mexico have easy names.

Russia has a flat tax of 13%, partly responsible for the rich getting richer. 

Unions are weak...

Since the failed 1981 air controller Patco strike, unions have become weaker, which contributed to a redistribution of wealth from union members to the rich. The United States in 2010 had 14.7 million union members, a small number, and a smaller percentage compared to Russia’s much smaller population.

Russia had unions set up by the Communist party which continue now.  Recently the Federation of Independent Trade Unions of Russia, with 25,000,000 members, celebrated it's 20th birthday. But still, government and owners sometimes undermine union efforts to achieve better working conditions and higher pay. 

American real* disposable income

Footnote 2.  real = adjusted for inflation

American real disposable income Jan 2011 was $36,000, a monthly $3,000.  Household income at $46,326 is affected by women in the workforce.

Douglas A. Hibbs, Jr. said, “Real disposable income is the broadest measure of economic well-being,  It has a very, very powerful effect.” 

Real weekly wages (private business nonsupervisory) have decreased from $372 in 1972, to $298 in 2010.  Much of this decrease I ascribe to trickle-down economics that trickled up to the wealthy!

Robert Reich said, "The underlying reality that people live with is their sense of anxiety about paying the bills."  It is a predictor of election results.

(Inflation 1.4% in 2010)

Russia’s astounding increase in real disposable income

Russia is moving in the right direction, at least in statistics... with somewhere between 7 to 20% viewed as the new middle class. Since 1998, real disposable income in Russia  has doubled, rising an average 7% a year.    The average monthly salary as of June 2010 is p 21,597... $720. 

(Inflation 8.8% in 2010).

MacDonald’s Rule of Five

I flippantly devised this rule in 2000 to explain American/Russia prices... for every dollar (in rubles) spent by the average Russian, an American spends five. Now in 2011, the Rule of Five for prices is more like a Rule of Three, but for income the Rule of Five still holds.

Being poor in America with big houses and cars...

It’s left to the politicians in each country to identify a poverty line.

In the USA poverty is defined as a family of 4 earning below $22,350 in 2010. In 2009, 14.3% of Americans were at or below the poverty line.  Rich or poor have many of the same things, but rent, keeping a car on the road *, and medical bills can be crushing for those without much income.

Footnote 3.  America has a weak bus system outside of the cities, so at least one car for a household is a necessity.

The standard of living of much of the poor in the United States is higher than how the majority of people live in much of the world. 

Most of the poor can get some food from local food pantries, and reduce food costs with government food stamps used at the supermarket checkout.  Meals on Wheels, partly staffed by volunteers, delivers a midday hot meal to the aged and infirm in parts of the USA... at a token cost.

The 2008 share of disposable personal income spent on food in the USA was 9.6%... 1/5  of the 45% of income needed by the average Russian family for food!

Poor and malnourished on the Russian Food Basket...

Russian households below the poverty line went from 38% in 1998 to 13% in 2010.  Household income spent on food reduced from 73% in 1993 to 45% now.

Russian food quality with no GSM, hormones and few pesticides is better than what is generally available in America if you can afford to buy it.

In accordance with the Federal Law “On the Minimum Cost of Living in the Russian Federation” (of 01/01/1998), the minimum cost of living is the estimated value of a basket of consumer goods that includes the minimum amount of food and other goods and services necessary for ensuring a person’s health and survival as well all obligatory payments and fees. Throughout the RF, the basket of consumer goods is established by the Federal Law “On the Basket of Consumer Goods Throughout the “

The region spends more money feeding dogs than it does feeding pensioners said Andrei Alshevskikh, a regional assembly member on Vesti TV channel.

Liza Surnacheva and Vitaly Nikishin, have personally tested the Russian statistical food basket, and found it did not allow for adequate nutrition. *

* See Interesting Reading at the end of this post.

What’s it all adds up to...

Whether in the USA or Russia, purchasing power determines how content you are with the economy and your government.  Can you pay your bills without stress?  Well, if so, it’s likely you have  economic well-being!


Agree, disagree, have something else to say?

Just click comment on the next to last line of this post.

Post previews...

1. We wonder, what features of the American and Russian economies make them successful, and what are their profound weaknesses? 

2. The clash of materialism and other values.

3. How is the insipient middle class in Russia nothing like that in the United States?

Interesting Reading

Liza Surnacheva, a Russian reporter, tries to get by on the Russian government food expense minimum. http://www.opendemocracy.net/article/russia-lessons-from-the-poverty-line

Vitaly Nikishin, a 17 year old blogger from Yekaterinaburg, attempts to stay fed and healthy on the Russian food basket allotment. Author Natasha Doff, RIA Novesti. http://en.rian.ru/russia/20110120/162224760.html 

Revolution Handbook for Americans by Joel S. Hirschhorn


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  1. I think the definition of middle class in the US is "one paycheck from disaster". If I were to become too ill to work, or have an accident, or otherwise be unable to to bring in my monthly income, it would take only a month to begin to lose our comfortable life. If I cannot pay insurance premiums, I lose health, auto, home and life insurances. Without those I cannot legally drive, cannot afford to see a doctor, and my home is at risk. Like most of the 'middle class', once I am a couple of months behind in my bills, there is almost no way to catch up again as the monthly income barely covers the monthly expenses, with little left over to save. Even with two household incomes, it can be difficult to make ends meet. To dream about retirement or travel, or having a 'life' outside of working... being middle class in America is slogging along the rainbow, with only a faint hope of a pot of gold at the end. However, that faint hope that one will somehow bridge the chasm and become one of the 'rich' keeps many of the middle class going, eternally striving to find the bridge, working a little harder, a little smarter, looking for shortcuts, never giving up.

    What I have observed about my Russian friends is little of hope for something better. One young friend, when I proposed different ideas for making money (in Russia) was reluctant to even try anything new. He said "Why should I work so hard to start something? Someone will just come along and steal it from me." His mother's sole purpose in life seems to be to make sure her son gets a good education, and a ticket out of Russia. Is there hope within the middle class in Russia?

  2. The issue is not about how things are at this present snapshot in time, but rather the direction and speed at which they are moving. There is no doubt that America is rapidly deteriorating in any measure one chooses to measure (cost of living, employment opportunities, affordability of health care, educational standards, etc.) While there is no question that Russia has problems in these areas, things are gradually improving, which is very different from the American situation that now stands on the brink of a total meltdown.

  3. Hi Margo,

    Americans have mortgages, taxes from many sides, save for their children's college, suffer expensive car insurance, outrageous pharmacy costs, large hospital and medical bills with expensive and inadequate insurance, child support, the list goes on.

    In Russia many middle aged have no mortgage (inherited or given their apartment), 13% flat tax, may or may not have car insurance, relatively cheap pharmacy bills, free hospitalization, moderate medical and dental cost, and probably don't pay child support, and doesn't pay much of his tax liability. But Russians have a stressful life in exchange for many shortcomings and the corruption of society.

    This economic crisis which the world is struggling with affected Russia. Many small businesses were crushed, and the government doesn't care or know how to help little enterprises. So, many people are not willing to take a risk now. Corruption takes morale and energy from a nation.

  4. Thanks Anonymous,

    You see the way things are going in both the USA and Russia. America has ruined it's balance sheet with foreign wars and interventions since Vietnam. Russia was able to start fresh after '97 with a disciplined, and generally peaceful, foreign and domestic policy.

    Whether the USA will fall through the thaw of a meltdown is uncertain. I advocate closing all foreign bases, and shuttering the Federal Reserve.

  5. Hi everyone!
    I can say that, if you loose your job in Russia, you can die of hunger. You'll don't get any help from government. Yes, maybe you can use for free our badly medicine, but you don't get a food for free, or free electric and water for your home, or clothes, or something else.
    And what I can say about food. At our food-store we can found frozen fish and meat with the smell of rotting when we unfreeze it. And also we have a total cheating with expiration date. In a simple word the foods in Russia are bad. Sorry for my horrible and broken English. :) I was starting to learn it for escape from Russia with my wife and daughter. Because. When I'll go to retire, then I’ll starting to get about 300$/month from my government, and I also to kept my bills to housing (condo) about 200$/month.

  6. Hi Anonymous!

    Thanks for commenting.

    There's no worthwhile unemployment benefits and little compassion for the poor.

    You have to be alert for bad food handling as many regulators hold a position but do not employ their power with zeal, some just looking for kickbacks.

    The individual has to be his own food cop and be extra resourceful when hard times hit.

    But a lot depends where you shop and how alert you are.

  7. Many russians move to Germany to get into their social benefits and then remain total leeches on society for the rest of their life. they don't want much, just to get by worry-free. I despise this way of life. If one has nothing to contribute to their new-found countrythey should not move.
    With all that said, the main reason why i moved out was corruption. It is not a shortcoming of Russian reality. It's cancer that will rot the country from inside out.


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