My Socio-economic Perspective Comparing Russia to the USA
By no means am I a political scholar. Take that under advisement when you read the below! What I write here is my perspective on American life compared to our Russian Federation friends.
This is long so grab a cup of coffee, a notepad to jot down comments, and start reading.
Why in the world would I ponder this topic? A friend recently pointed me to an essay, well book, about how the US is overtaxed, funded by a monopoly of power, ruled inconsistently, is politically weak, etc. My goal is not to dispute or agree to those statements but rather to compare our way of life to Russian life.
Let’s begin with the most important physical traits: life and health. The metro stations have been coined “gentlemen’s clubs.” You find, at any given hour, numerous people, mostly men, standing around drinking. Young teens walk the streets with beer in tow. When not drinking, smoking is in order. Practically every restaurant has a smoking section. Previous travels to the UK let me see that their cigarette packets largely, and boldly, display a warning that says “these will kill you.” Ok, so I paraphrased slightly. Russia has no such warning on cigarette packages or cartons. Average life expectancy numbers prove the disparaging life/health point. United States males can expect to live 67.5 years; Russian males just 56.1 years. That difference is greater than one decade! (Females in the US 72.6 years and Russian females 66.4 years.) “The most common explanation is the high incidence of [Russian] male alcohol abuse, which led to high rates of accidents, violence and cardiovascular disease,” writes the World Health Organization (WHO). (Japan has the best life expectancy at 74.5 years.) Also know this, Russian health care is universal and free of charge for every citizen. Americans pay billions each year for care. I ask a rhetorical question then, why then is life expectancy so dissimilar?
There is an expression that “death and taxes” are the only two things that can be counted on. Most people esteem money with high priority. The polar opposite is taxes. Rest assured you will hear the word “tax” if you ask any kid about their first paycheck! The United States federal government runs almost exclusively by means of income taxes. Tariffs on imported goods are a minor revenue source. Personal and corporate taxes make up the vast majority. America works on a progressive tax system. Simply put, the more you make, the more you pay in taxes. An average American making $40 000 has an effective tax rate of just 14%. Granted, if you make $200 000 you can expect up to a 35% tax rate. Russia has an effective tax rate of 13% – very similar. But products incur a VAT of about 18%. Russia is 9th worldwide in GDP, and has about 7.8% of its population living below a poverty level. By contrast, the US has about 4.5% of population in poverty. According to the Federal State Statistics Service of Russia, the monthly nominal average salary in January 2007 was 11,410 rubles (about $437 nominally). Multiply that by ~9 and you have the US’s average monthly salary of $3 860.
What do the numbers represent? I believe three things. First, Russian’s have two classes of living. You either have or you have not. City centre Russia, downtown, is very expensive. Mediocre, by US standards, one bedroom apartments run $2 000 and up. You can not make $500 a month and live anywhere near city centre. The increasing gap between poor and rich people also intensifies social tension. Second, the (low) wages lead to morale and then to service issues (eg. wait service at restaurants or how the mobile phone guy treats you when you have a broken SIM card). We have a running joke about Russian service – what Russian service? I’ve heard that people in service positions are paid measly salaries. They are looked down upon by bosses and subjected to verbal abuse. No wonder they do not care about their customer! Why should they? There is no incentive for them and, further, they have no morale to share! Third, it is not the how much that we need to care about, but where the money/tax is allocated. Read about my visit to Moscow State University. Or walk around city centre. You quickly see that since centralization Russia has neglected its infrastructure. That neglect especially is evident in buildings and sports. A byproduct of low wages is an increase in bribery incidents and scandals. I have seen reports that police (outside of Moscow) make about 4000 rub ($160 USD) per month. Even inside Moscow, the police are paid sub-par, pity, wages. Of course, they want (need?) to make an extra buck. When stopped on the road they enforce their own system of law and judgment. Which, usually means you pay a few hundred rub to them.
I believe that how a nation taxes non-profit organizations is a litmus test for its autonomy and moral state. Russia does not allow corporate tax deductions to non-profits and individual tax deductions to non-profits are very low. Charitable organizations pay about a 24% corporate profit tax on much of their revenue. Gifts become fully tax exempt only when used within the same fiscal year. It is clear that Russia does not trust the non-profit sector. President Vladimir Putin cautioned that “not all organizations are orientated toward standing up for the real interests of the people. The priority for some is to receive financing from influential foreign organizations. Others serve dubious group and commercial interests.” [Information from The International Journal of Not-for-Profit Law.]
Wrapping up finances, I assert this: We pay a fair amount of taxes in the United States. More importantly, our politicians (usually) make sure that the taxes are allocated to appropriate infrastructure needs. And fair money dissemination reduces bribes and scandals. US tax laws recognize the importance of tax-exempt organizations and treat them favorably.
Third, let’s speak of freedoms, political corruption and worldwide dealings. Most articles I read say that Russia’s largest challenge is “defeating corruption.” Russia occupies 122th place among 157 countries in the Index of Economic Freedom. The US places 9th. That is a wide gap! The Economist rates Russia as a “hybrid regime”, which they consider “some form of democratic government”. Freedom House is an independent non-governmental organization who rates Russia as “not free.” They write, “new laws on combating terrorism and extremism further opened the door for abuses of civil liberties.” Just last week a protestor, with license to protest, was arrested for wearing a Putin mask. His charge was mocking the Russian President in a “theatrical performance.” This trend has lead to animosity between free-world powers like the United States or Britain. In the news recently, Russia has refused to extradite murder suspect Andrei Lugovoi to Britain. Britain was considering expelling Russian diplomats over the case. Russian Senior lawmakers “vowed tit-for-tat retaliation.” Putin was just in the US to meet with President Bush. According to MSNBC, “Bush and Putin have contrasting views on democracy and missile defense, NATO expansion into Russia’s backyard and independence for Kosovo.”
Summarizing, our US freedoms should not be taken for granted. Are some of our politicians corrupt? Sure. But the overall picture is rosy. We have true freedom of press, freedom of religion, and freedom of speech.
And with that I step off my soap box. I duly recognize that there are dozens of other comparisons which can be made. I’ll update this article as research time permits. Your comments are welcomed!