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.





Who

Ugo Bardi is a member of the Club of Rome, faculty member of the University of Florence, and the author of "Extracted" (Chelsea Green 2014), "The Seneca Effect" (Springer 2017), and Before the Collapse (Springer 2019)