Sunday, September 2, 2018

How Can They Lie to us so Blatantly? The Strange Case of Wealth Inequality in Russia



The figure is taken from the "Independent" dated 23 November 2016. It is an example of propaganda techniques based on spin and omission. We live today in a true Empire of Lies

(note: this article was modified after having received a comment from "Alien Observer")


By mere chance, I happened to stumble into the graph you see above. It bothered me: can it really be that Russia is, by far, is the most unequal country in the world? It just didn't fit with what I know of Russia. Yet, the power of well-presented graphic information is such that for a while I tried to rationalize these data in my mind. Maybe the fall of Communism really caused some kind of terrible unbalancing of the Russian society. Scratching my head, I thought that I had to check the data.

Perusing the Internet on this matter, I found several other 2016 reports in the mainstream media about the alleged high inequality of the Russian society. In a 2016 article on CNN, you can read that "Russia is the most unequal major economy in the world," while on "Radio Free Europe" they say that "wealth disparity in Russia is unparalleled."

But there is something wrong with these reports. I checked with the World Bank, I checked with the "World Inequality Database," I checked with the Statista site. I even checked the  CIA Factbook, not exactly people known for their sympathies for those evil Russians. The result was always the same: Russia is NOT the most unequal country in the world. "Inequality" is a wide-ranging concept that can be measured in various ways but, in general, Russia is ranked at about the same level as the United States and at much lower levels of inequality than countries like India or Brazil.

So, what are these reports based on? CNN doesn't provide links to their sources, but they refer to a company called "New World Wealth." Radio Free Europe cites one Mr. Tony Shorroks of a company called "Global Economic Perspectives." Neither source seems to be very reliable. A company called "New World Wealth" has a Web Site but, frankly, it looks like a fake company: their "reports" are simply links to the site of a bank in Mauritius and, in any case, none of them says anything about social inequality in Russia. As for Mr. Shorroks' company, it seems to exist in London, but it doesn't even have a Web address - it is hard to think that it can perform an independent economic analysis of the Russian Federation.

How about the data on the Independent? The number provided for Russia just doesn't seem to be right. According to the World Inequality Database, the share of wealth of the top 1% of the Russian population is around 42%, not 74.5%. Again, they don't provide a link but, after some work, the 74.5% value can be found buried in a table at page 145 of a report published by Credit Suisse (h/t Alien Observer). How is it that this number is so different than others is probably because of the data the Credit Suisse use are incomplete, as they themselves say. In any case, the wealth of the top 1% is a very partial tool to measure how unequal a society is. It only tells you something about the existence of an upper crust of super-rich people, whose wealth is very difficult to estimate anyway. It tells you nothing on how wealth is distributed among the rest of society, the poor and the middle class.

So, among the data available in several reports, the Independent chose the only number they could find that gave them the possibility of denigrating Russia -- conveniently forgetting to cite all the others. But that's the way propaganda works. Good propaganda - better defined as "perception management" - is not about telling lies, it is about distorting the truth, typically, by means of the three basic propaganda techniques: omission, spin, and saturation. Here, we have a classic case: the data which agree with a certain interpretation are cited (spin), the others are ignored (omission).

The interesting point, here, is that I could find nothing on the Web that challenged these stories about inequality in Russia. It seems that most people are too busy and distracted to have the time and the inclination to check the data they read in the media. So, the concept of "high inequality in Russia" just flashes up in people's perception and then it becomes part of a diffuse worldview.

So, here we are: the whole issue is not so much about Russia, it is about how blatantly they can lie to us and get away with that. How about much darker things for which we have no reliable sources? How can we believe in anything we read in the media? And note that this is not the kind of fake news diffused by amateurs on the social media. These are news appearing on major media outlets which, by the way, often claim to be fighting fake news.

Maybe lies are not a bug but a feature of our society. It seems to be true that we can "create our own reality," as an aide to Donald Rumsfeld is reported to have said at the time of the invasion of Iraq. So we are creating a true "Empire of Lies" and that's not a good thing.


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Some more info on inequality in Russia. Here is a graph from the "World Inequality Database"


As you can see, inequality in Russia increased after the fall of the Soviet Union but, later on, it started to go down with the economic recovery. Recently, however, it went up again, most likely because of the strain on the economy imposed by the international sanctions. Still, the current value of about 42% for the 1% share doesn't compare with the 74.5% value given by the Independent. 

Here are, instead, the data for the US.
The graph is a little outdated. Today, the 1% share in the US is higher than it was in 2014 and about the same as it is in Russia. Note also that these data are only about personal wealth but say nothing about other factors, such having a health insurance, which is provided for free by the state to Russian citizens, but not to American ones. About the growing inequality trend, maybe it is correlated to the oil production peak in the US - in any case, today the level of inequality in the US is close to that of England in the 18th century.





28 comments:

  1. It comes as no surprise to me that we are surrounded and drowning in manufactured data, false narratives, and fake news. Perhaps it has been this way since the first complex societies emerged on this planet and the-powers-that-be needed the support of the masses to remain in power and carry out their 'policies'.
    I am reminded of what Noam Chomsky argued in Hegemony or Survival: America's Quest for Global Dominance: "Those who want to face their responsibilities with a genuine commitment to democracy and freedom—even to decent survival—should recognise the barriers that stand in the way. In violent states these are not concealed. In more democratic societies barriers are more subtle. While methods differ sharply from more brutal to more free societies, the goals are in many ways similar: to ensure the ‘great beast,’ as Alexander Hamilton called the people, does not stray from its proper confines. Controlling the general population has always been a dominant concern of power and privilege…Problems of domestic control become particularly severe when the governing authorities carry out policies that are opposed by the general population. In those cases, the political leadership may…manufacture consent for its murderous policies."
    The notion that Russia is home to the greatest inequality on the planet simply adds to the narrative that it is need of intervention to save the Russian people, a common refrain by those in the US/Europe that seek to overthrow a non-compliant nation state. Russia is currently, and has been for some time, a favourite target for American/European intervention.
    When exposed to any and all information, one of my current mindsets has been simple: question everything!

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    1. Regarding Russia, I don't think that there is a "narrative that it is need of intervention to save the Russian people". During the 1990s, when Russia was attempting to reorganize their economy and much of the industrial wealth was gathered up by oligarchs, there was vast indifference in America and Europe; there was certainly no push for any kind of overthrow.

      That indifference lasted right up until recently, when Crimea, Ukraine and Syria got our attention (not to mention the Trump/Russia nexus). The prevailing narrative now is that Russian intervention needs to be guarded against.

      I have never seen or heard anyone suggest that we should overthrow the current Russian regime for any reason. America and Europe may not like Putin and his cronies, but as ever, containment is all anyone worries about, certainly not the fate of the Russian people.

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    2. I have to disagree. While the ultimate goal may be containment as you suggest (and I don't disagree), the narrative of 'expanding democracy', or some other similar 'story' to save a state's people is often used to 'justify' military/economic 'intervention'. Here are a few examples of such a narrative:
      https://www.newsweek.com/raising-russian-rebel-army-overthrow-putin-334223
      http://theduran.com/leaked-memo-shows-how-george-soros-planned-to-overthrow-vladimir-putin-and-destabilise-russia/
      https://www.quora.com/What-can-I-as-a-Russian-do-to-help-overthrow-Putins-dictatorship

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  2. Nice piece, I thank you for your perseverance over the years. Here in Canada too we have blatant political disinformation: Justin Trudeau won a majority government on a campaign of climate change action, just and transparent negotiation with First Nations, electoral reform. None of it was true. Now he's shown himself to be a shill for the oil industry, buying a leaking and superfluous pipeline to get dirty tar sands dilbit to the west coast for world markets. Argggh.

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    1. Pointing this out before the election was pointless, people wanted so much to believe. Can we blame Trudeau for using the people's deep wish for delusion to further his personal goals?

      He continues to pretend he is doing something about climate change, and the masses continue to adore him...

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  3. A few thoughts about media falsehoods, Seneca Cliffs, and the Micro reflected in the Macro

    Dan Siegel is a Los Angeles Psychiatrist who has been studying the formation of and management of minds…which are not the same thing as brains. His latest book is Aware: The Science and Practice of Presence. He traces a theory from Quantum theory to the Mind. You can read about in the chapter titled The Nature of Energy, The Energy of the Mind. I won’t try to defend it or critique it in any detail.

    I will simply note certain parallels between the way the micro world demonstrably works and the way we empirically see the macro world of the Mind working. From page 191:
    Quantum physics invites us to examine:
    *the probability nature of reality
    *the potential influence of measurement and observation on probability
    *the relational nature of reality and the entanglement of quanta and its nonlocal influences
    *the arrow of time or directionality of change that may manifest only at the macro state level of reality.

    Now four parallel empirical observations at the macro state:
    *Haste Makes Waste and A Stitch in Time Saves Nine are BOTH true. But we won’t know which one was true in a particular instance until we make a measurement, which in the macro world may be considerably later.
    *If the Powers That Be can influence us to express an opinion NOW, then that sets in motion a chain of events at both the micro and macro levels. If the British Press can get us to agree about the awfulness of the Russian government, then our own ability to be in the undecided state, or in the state of flexible response, is diminished. Used car salesmen know this. The interminable political polling in the US where we are asked ‘do you agree that Donal Trump has low moral values?’, or the converse, is an attempt to move us off of neutral and flexible and into a stance with deep ruts which will require a lot of energy to get out of.
    *While the average English person has no real contact with Russian citizens, they do have contact with their own thoughts. And they are wedded to the notion that their own thoughts are pure. So the political manipulation is to get those who shouldn’t be making any decisions because they have no skin in the game, to prematurely make decisions which favor the elite who control the media.
    *While quantum events alone have no time component, once the quantum events interact with the macro world, the arrow of time insures that the action will not be easily overturned. Once a person agrees that fossil fuels can sure make life easier, it becomes ever harder to get the person to foreswear fossil fuels. The process is similar to entanglement…once two electrons are entangled, it takes twice the energy to flip them.

    The Seneca Cliff may follow from the inertia which is generated when people prematurely decide something, frequently in response to prompting from the Elite controlled Media. If people kept Haste and Waste and Stitch in Time both pending for longer periods, there would be less build-up of entanglement. But, alas, that is not the world we live in. And so we experience Seneca Cliffs.

    Don Stewart

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    1. An intriguing assembly of ideas Don. I have gone to sleep, woken in the night and variously pondered the resonances elicited, which are many and far reaching.Hope to say more.

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  4. The "Aide" was Karl Rove, the top ideologist at that time. (You mentioned him also in a previous article. It was what he said to a journalist. Like that journalists did not need to search for truth or reallity because they were creating truth and reallity.

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  5. I dont know if I can follow this blog any longer, since you clearly are a puppet of putin, brainwashed by watching too much RT.

    (Yes, that was irony)

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  6. While I am totally capable of believing we are being lied to all the time, this case seems to be open for debate.

    The german language wikipedia-entry about wealth distribution in the world shows exactly the data from the independent's graph, it gives the same sources and links them. https://de.wikipedia.org/wiki/Liste_der_L%C3%A4nder_nach_Verm%C3%B6gensverteilung#cite_note-CreditSuisse2015-6

    There is the credite suisse paper(s) here (2016) and here (2015).

    As it is only a single source from a private banking institute, the data is not very trustworthy and I think that responsible journalists would point that out or require a second source.

    That being said, I do think that such a wealth distribution in russia is unbelievable, russia IS an oligarchy after all and since the iron curtain came down, those oligarchs, with help fron the West, robbed russia blind.

    The data also hides the fact that concerning wage-distribution, Russia seems to be fairer than many other countries.

    I totaly concur that the aim of such an article is to shed a bad light on Russia. It also relies on the continuation of an narrative that we need to overcom if we want things to change.

    In reality, there is no Russian, or US-American, or Italian, or German .. elite. There is only the global rich and the global poor. The rich, as Warren Buffet himself said, wage a class war on the poor and are winning it, and they do it globally.

    Nothing keeps people from thinking about class and wealth distribution than dividing them into nations and have the people blaming the "others" while global capital has long since stopped to really care about nation states and their borders.

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    1. Typo (I seem to have aprobelm with double negative in english)
      I do NOT think that such a wealth distribution in russia is unbelievable

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    2. Only the poor are much tied to nations, wealth renders you mobile.

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  7. Another note on the Suisse Credit data:
    The data is explained in the paper, especiall the problems of determining the lower wealth group. Data from russia is incomplete, as it only counts monetary wealth and no data of real estate was available for the study.

    The explanations about the data do hint to a bias against russia, as the determination of the lower wealth tail includes large numbers of the russiabn housholds, while in conveniently places most household in western and north american households outside the "poor" range.

    In this way the calculation of the GINI Index might be a false representation of the reality of wealth distritibution.

    The topic is clearly pretty complicated, but as general wealth in Russia is pretty low and only a small number of people in russia profit from the countries rich ressources, the wealth distribution can be seen as shown in the graph.

    A russian friend once told me: "If you are poor in an oil rich country, you are basically fucked, because the government and the elites dont need your tax money, your approval or your work and thus are able to rule over your head."

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    1. Alien, thanks a lot. I modified the article to take into account your find. In the end, they do use the classic propaganda techniques: spin and omission in this case

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  8. Prof Bardi, thanks for the post, the Credits Suisse Paper is a fascinating read.

    Numbers about fairness of Distribution I find quite interesting:

    Section four of the study shows where the worlds poorest billion lives. Interestingly 21 Million of the worlds poorest inhabitants are living in the USA, 27 million in Russia.

    The Wealth/Adult in the USA is 244.002 $ in Russia it is 991 $. Americans are in statistically 250 times richer than russians.

    This is what I mean with the numbers being biased against russia. Russia is a very poor country with a few very rich individuals. The USA is a very rich country with many rich individuals and many that are just above being really poor.

    But those 21 Million americans that are members of the worlds poorest billion and living in the USA, they are the poorest bastards anywhere in the world. They are the ones that are hungry and homeless in paradise.

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  9. Ugo, I think this is a good example of a general trend. Let me first make some comments. You say that it was easy to discover this lie, but if we retrace back the path you followed, we will discover that it is not for everyone. It is necessary: ​​to have a minimum understanding of the economic variables we are talking about and how they are calculated, to know how to find reliable official sources, to read the reports, to understand them, to know English, to argue that a company like Global Economic Perspectives "hardly can perform an independent economic analysis of the Russian Federation", etc.

    The problem of "fake news" is fascinating, because after all it is the central problem of philosophy: "What is truth?". A satisfactory answer, as we know, has not yet been provided, but an acceptable (and working!) compromise is the one proposed by modern science: it is true what is experimentally demonstrable. The ultimate judge is physical reality, appropriately interrogated.

    Unfortunately, this guide is no longer available for the vast majority of the statements we stumble upon every day. At the time of Galileo it was in principle within everyone's reach to verify his statements about the motion of bodies: it was enough a little artisan skill (which at that time was not lacking) and the knowledge of elementary mathematics to reproduce his experiments at home. Today, the experimental verification of a proposition may require extremely complex experiments, within the reach of very few people all over the world. Most of the others, including scientists, must "trust" someone else.

    And here comes the problem: without direct experimental verification, how do I know if what I read (even on a scientific article) is true? I have to put in place a mechanism of cross-checks in such a way that I can be reasonably sure that those who collected the data, who processed them, who interpreted them did it correctly. Which is not easy, given the ease with which today you can "pack" false news, and how fast they spread around.

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  10. indeed, it doesn't tally well with, e.g. https://en.wikipedia.org/wiki/List_of_countries_by_income_equality (not put here as authoritative, just another view.)

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    1. this is income inequality, not wealth.

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    2. But it is another indication of the wealth distribution in a society.

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  11. You are supposed to go after Russian fake news, not those against Russia.

    Even if Russia is not as unequal as in the Independent article, everybody knows that Putin is a blood-thirsty, baby-eating pedophile intent on poisoning innocent Brits in the morning and destroying US democracy over lunch. He is responsible for the gas attacks in Syria and for spreading the climate change hoax together with the Chinese, so that Western companies have to suffer from government regulation and the UN can impose a world government that will cull population to <1 billion via chemtrails.

    That a newspaper misreports one data point is utterly meaningless compared to Russian crimes against humanity.

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    1. Ok, I suppose you figured out that my comment was meant to be sarcastic. Or at least I hope so.

      I watched a report on the Dutch news about the entirely laughable European initiative against fake news (this one https://eeas.europa.eu/headquarters/headquarters-homepage_en/2116/%20Questions%20and%20Answers%20about%20the%20East%20StratCom%20Task%20Force).

      That an unelected clique of fat bureaucrats has the arrogance of deciding what is truth for the hapless many is completely odious. But this being the EU, the mixture of inefficiency, lack of funds, grand-standing and vacuousness makes the whole thing almost comical.

      Apparently, according to the EU the Russians are the only ones spreading fake news in Europe. The person interviewed, an employee of the fake news watchdog, spent his days watching Russian TV to identify potential propaganda - imagine a worse way to waste your life away!

      It is like it never crossed anyone's mind that European MSM are as unreliable and treacherous as shady Russian outlets, and have been this way for decades.

      The article in the Independent being a point in case, but I remember the fake news of Saddam buying uranium in Niger published in Berlusconi's newspapers, the hysterical coverage of Berlusconi himself in the Dutch press around 10 years ago, the likewise hysterical reaction to Trump's election, ...

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  12. "Note also that these data are only about personal wealth but say nothing about other factors, such having a health insurance, which is provided for free by the state to Russian citizens, but not to American ones." You might also note free higher education in Russia versus massive student loan debt in the United States.

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  13. Funny bias on graph.....we don't know how data is obtained but we know some funny fact of the top five: Thailand and Indonesia don't allow land seal to foreign and the land is always state "owned",all the five have some good share of native tribes living inside and a strong tire to socialist approach. We can consider the law form of the Sweden comune housing: the building is a company financed by the ones living inside wich pay expenses, living inside give a vote and to come to live inside you have to be voted, how the value of the building-company is accounted? About Russia i have only indirect report from expat but seems that a lot of comunity owned resources are aviable in countryside, almost anyone have acces to self produced goods (fornitures,riverboats, little dacias and similar)and full access to a lot of unused natural resources (wood, wild land products and similar). Russia give free electricity and next 3 on the list have quite a lot of state subsides for keep il very low prced.Accounted for it in the graph?
    I suppose the autors used western approach, your wealth is based on registered accounts aviable. As a credible account we can consider that theyr graphs are a good view of their data, as lacking and biased as they are, but pose some interesting question about their dataset: Nigeria and Congo are more equal than United States and Mexico, this country are not accounted or the value is based on some elabiration that make them more egualitaian?

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  14. Yes, it is BIG LIE about "inequality in Russia". Journalists who started this fake just ASSUME what whole wealth of average Russian twice as much as money he holds on bank account. They ASSUME what total wealth of all Russian is only $1.2 trillon (though only real estate only in Moscow costs several times more than that)

    anyway, journalist lie.

    use Google translation: http://ruxpert.ru/Рейтинги:Global_Wealth_Report_от_банка_Credit_Suisse

    https://fritzmorgen.livejournal.com/802324.html

    https://fritzmorgen.livejournal.com/729589.html

    https://fritzmorgen.livejournal.com/575815.html

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  15. so if you want to understand why credit Suisse report id plain lie, read this link

    ruxpert.ru/Рейтинги:Global_Wealth_Report_от_банка_Credit_Suisse

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  16. Most Russians own their own apartments/housing.
    Most Westerners are owned by their banks and can be thrown out of the BANK'S housing any time they miss a payment.
    Nuff said about "Russian inequality". They have simply ignored too many OTHER factors.

    Having a lot of fiat on your bank account accounts for nothing whatsoever. Especially if your administrative costs are through the roof, which they are in most Western countries.

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Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014). His most recent book is "The Seneca Effect" (Springer 2017)