Russia Income Inequality = Greatest in the World? – Part III

Dear Readers:

Continuing this piece from Komsomolskaya Pravda, by Evgeny Chernykh.  Chernykh springboarded from a new monograph by French economist Thomas Piketty, into an interview with Russian analyst Elena Larina.  Larina is not described as a professional economist; however, she did author a book entitled:  “Multiplying the Pain:  How to Survive In the Epoch of War of Elites”.

In fact, Elena has written a whole series of books on this topic of financial elites, cyberwar; living in, and surviving this pickle of a Matrix that we ordinary people find ourselves in.  Where we were placed by our Insect Overlords.

In the ad for her book, Elena warns us thusly:

Враг у ворот! Война уже идет и в ней участвует каждый из нас, потому что сражения развернулись не на улицах и площадях наших городов, а в наших умах. Такова современная война – ее не видно, но она есть.
Выбери красную таблетку – прочитай книгу. Ты получишь знания, умножающие скорбь, но узришь мир таким, каким он является на самом деле.
Выйди из Матрицы, стань Избранным!


The enemy is at the gates!  The war is already underway.  Each one of us is a participant in it, because the battles are taking place, not in the streets and squares of our cities, but in our own brains.  Such is contemporary warfare — it is invisible, but it exists.
Take the red pill — read the book!  You will receive knowledge which multiplies your pain; but at the same time you will see the world as it actually is.
Escape from the Matrix, become one of the Chosen!

Transfer Fees

Where we last left off, Elena was explaining to Evgeny the mechanism of something called “Transfer Pricing”.   Russian wiki defines Трансфертное ценообразование  as delivery of goods or services between mutually-dependent parties at an internally-discounted price that is other than the market price.  With the main goal being to avoid paying taxes for the transfer to the state/government.  And also serving to “launder” any capital/loot that may have some shady origins.  Once the capital is salted away, like whale blubber, into the offshore bank,  then nobody can touch the seamless flow of coins into the billionaire’s pocket.

Analyst and author Elena Larina

Under this scheme, capital is exported from the home nation, ostensibly legally.  But in reality the transfer goes to an offshore, under a discounted price, with no, or little,  taxes paid to the government.  Taxes which could pay for, say, roads and schools. Peter sells to Paul, in other words.  The offshore then sells the product to the final customer, some other company or entity.  The offshore takes the lion’s share of the profit; and the home nation — the place where the actual wealth was created —  is that much poorer for the transaction.  This was precisely the type of illegal scheme for which Khodorkovsky served jail time.  And which all the other Russian oligarchs do every single day of the year, but never serve time for.  [Because, unlike Khodorkovsky, they fly under the radar and perform their evil deeds quietly and without fanfare.]

Here are some more facts and numbers:

According to the consulting company Knight Frank, the number of Russian multi-millionaires and billionaires grew 3.5 times between 2004 and 2014.  If the current trend continues, then the number will increase still another 1.5 times by 2024.  Along with Saudi aristocrats, Russian (millionaires) are known to the world for their luxury yachts and private planes.  [As well as their brazen attitudes.]

Khodorkovsky: A master of “transfer fee” pricing schemes

And the other side of the coin:  Poverty and disease for ordinary people.  Larina cites numbers from various ranking agencies.  Some of these “rankings” from Western ranking agencies I would take with a grain of salt; but the problems listed are actual curses of humanity:  alcoholism, suicide, HIV, hepatitis, tuberculosis, tobacco smoking, violent crime, chemical poisoning.  All of which problems could actually be solved, if any society had enough money and enough will to try.

Russia also does not show well, according to Larina, in such rankings of “comfortable life” that include pensions, health, convenience of transportation, physical safety, social connections, and such factors.

A whale is stripped for its blubber

As to measures of poverty in Russia, according to Larina different studies contradict each other.  There are the official statistics of the government agency Rossat, which paint a rosier picture than that of other agencies.  Again, grains of salt are needed here, because the rankings and statistics are highly ideological.  Larina, who is a warrior to prove her own points, cites official EU statistics, according to which a whopping 25% of the Russian population lives below the poverty line!  But one needs to keep in mind, that American and European plutocrats want their own captive nations to feel superior to Russians; therefore, they exagerrate Russia’s woes.  Still, the truth is probably somewhere in the middle, between Rosstat’s “everybody is doing well” and the EU’s “Russians are starving” line.

How and when did all this misery start?  According to Elena, the dark deed was done back in 1991, when the Russian people passively accepted a sort of mass suicide plan.  A plan that was crafted for them by a small elite group behind closed doors…

[to be continued]

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