Tuesday, February 5, 2019

At Least Twice as Many Russians Now Living in Poverty than Moscow Suggests, Gontmakher Says

Paul Goble

            Staunton, February 5 – In May 2018, Vladimir Putin said his goal was to reduce the number of people living in poverty by 2024, a worthy goal to be sure but one almost impossible to achieve because of the difficulties of providing everyone with a decent income and because the state and the society understand poverty differently, Yevgeny Gontmakher says.

            Even if everyone agrees on the goal, the Moscow economist and commentator says, there are difficulties in establishing the necessary metrics and in collecting the data needed to see where Russians are at any particular point (mk.ru/economics/2019/02/05/arifmetika-rossiyskoy-bednosti-oficialnoe-chislo-nishhikh-zanizheno-v-dva-raza.html).

            But even if these metrics and this effective measurement are in place, Gontmakher points out, “the state and the population understand what poverty is in completely different ways.” Moscow came up with a state definition in 1991 when Gorbachev introduced the concept of a minimum consumer budget. Under its terms, about 15 percent of all Russians were poor.

            A year later, after the disintegration of the USSR, that share jumped to more than 50 percent; and so Yeltsin changed the poverty line, introducing complexities that had the effect of allowing the government to say that far fewer people were poor than in fact were, the economist continues. That tradition has continued under Putin.

            With the new definition of poverty in place, Moscow overnight was able to reduce the number of poor people it said Russia had by 50 percent. Unfortunately, this kind of playing with definitions by state officials has remained the dominant Russian approach. If one used the 1991 definition now, about 25 percent of Russians would be classed as poor.

            But that figure, twice as high as the one Kremlin officials announce, is still too low because Russians’ understanding of what they need not to be poor has changed over time. What would have been viewed as a worthy life 40 years ago would now be seen by most as the direst form of poverty.

            The European Statistical Agency is one of the institutions that has tried to come up with a modern definition of well-being. It says that nine material “goods” are to be considered the normal basis for a life above poverty. These include eating meat every day, having a car, television, telephone, the chance to take a week-long vacation and savings to pay for the unexpected.

            The Russian state statistical agency refuses to use such a measure of well-being and hence of poverty because if it did the share of Russians who would be classified as poor would skyrocket.  It would be “much higher than 25 percent” and thus an embarrassment to the powers that be, Gontmakher says.

            Polls confirm that: 50 percent of parents say they have financial problems, only 36 percent have savings, 40 percent of the population doesn’t have enough to pay for food and clothing, and 70 percent of Russian families now live on the edge of financial disaster. And what is especially worrisome, only a third of Russians have funds to invest in their future, gain access to medical care, and take part in cultural life.

            Russians with such problems see themselves not as living but as surviving.  And their ideas about poverty are fundamentally different than those dreamed up by better-off bureaucrats, the economist says.  Poverty in modern countries must be defined not by officials but by a consensus of the population.

            Consequently, Gontmakher says, “attempts of the current Russian government in its running after ‘optimization’ and ‘improvement’ in the methods of defining poverty are condemned in the best case to a lack of understanding by society” which has its own ideas about what poverty means at any particular time. 

            It is time for everyone in the government and outside it to understand, the economist and frequent critic of the powers that be says,  that “Russian social policy can become genuinely effective only when it becomes part of a democratic process.” Anything else is playing at arithmetic games which fool no one. 

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