Not Everyone Is Celebrating Forbes List
- By Unknown
- Mar. 12 2008 00:00
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Such an impressive showing reflects the continuing expansion of the national economy, and that is good news. The bad news is that the economy has yet to be diversified from exports of oil and other commodities. In fact, it is rising commodity prices that have swelled the number of Russians on the rich list, as Staff Writer Max Delany reported Friday. The increase in oil prices has accounted for 25 percent to 40 percent of the country's economic growth in recent years.
Equally worrisome is that many Russians have not benefited from the continuing windfall. Russia ranks 41 on the Gini coefficient, a measure of the inequality of wealth distribution, just 4 points below the United States. But the United States does not position itself as a paternalistic state, while Russia does. The Russian government has actually been trying to create a paternalistic Soviet-like state but without the social benefits of the Soviet Union, the U.S.-based Center for Strategic and International Studies noted in a recent report on Russia's future. The government of a country that saw two revolutions in the last century should be especially attentive to the gap between the rich and poor, as well as to fighting poverty.
Another concern is the disparity in living standards among Russian regions, with some villages in the North Caucasus scraping by under a basic rural economy while Moscow experiences an economic boom that has propelled it to be on par with West European capitals, said the report, titled "Alternative Futures for Russia to 2017."
It is clear that the current system is ineffective. The billions of dollars that are allocated for health care and social and economic subsidies do not always reach their intended targets, and the amount that does is woefully insufficient.
The authorities need to address disparities by targeting the neediest people and regions with employment incentives, higher salaries and the offer of an investor-friendly environment for opening and operating small and medium-size businesses.
As for the superrich, the government should consider eventually abandoning the flat income tax to make sure they pay adequate taxes to help finance these projects. The middle class and poor could continue to pay 13 percent, if not less.