SUBSIM Radio Room Forums - Russian Federation vs Soviet Union.

Before more pictures, a quick rant that I promised.

Just to explain to the people what, in my view, is the real story of the "abortion of Russia's middle class".

Perestroika. Gorbachev's wonderful reforms suddenly turn up massive economic problems and there is a huge deficit of goods. Naturally, with nothing on the shelves to buy, most people save their money. Thanks to the reforms, though, some enterprising individuals set up cooperatives, but these are rather few.

Then the devaluation of currency starts. Naturally, people try to get their money out and buy something - except for the most part, there's nothing to buy. Some are lucky; my father managed to buy a wad of grey cloth worth a few hundred dollars and later converted it to colored metals (money was worthless) - not much but I think it really made a difference for a rainy day. And the rainy day came.

Sberbank (the central and only bank in the USSR) closes all withdrawals. Soon, the currency crashes. People's entire savings are wiped out. It should be noted that with the way the Soviet system worked, people had little in the way of assets as most of everything was state-owned.

Not all the people however. Naturally, the ones that didn't lose were those who did not rely on Sberbank - and who they are might be easy to guess. For one, it's the wise entrepreneurs who, in the brief couple of years between being allowed to organize cooperatives and the crash, managed to build up small businesses and gain some assets. Then, of course, it's the black market run by the mafia who, understandably, would not have relied on the state bank. Thirdly, it's of course the party elite, for obvious reasons.

Privatization - for which some consider its mastermind, Anatoly Chubais, an economic genius, and for which I'd love to see him drawn and quartered. Up until now, this was a typical economic crash story, but Privatization is where it got uniquely ugly.

With the USSR gone and the Soviet system collapsed, naturally there was now a need to switch to a new system which encouraged private enterprise - and thus hand off the economy to the people. There was a problem of course: the people just lost all their money.

But in any case, in a stroke of genius, the government sells Russia's massive industrial power for remarkably low prices. International investors are not in the scene, of course, seeing the massive instability within the country. Of course, however low the prices, most people can't afford anything. They are broke.

Now, the government decides to play fair. They issue vouchers for a proportional share of state property to every soul in the country. There are two things that one can do with their voucher: invest it into one of the many investment companies that suddenly spring up out of nowhere; or, more cynically - sell it to one of the myriads of guys standing at subway entrances offering the equivalent of $10 for your voucher.

Most who went with the latter option were the better for it. My family, who were persuaded to invest, were luckier than most - we got a few dollars' worth of dividents before the company mysteriously disappeared. Most other people who invested never saw a rouble.

Meanwhile the sale of state assets is proceeding full-force. And those buying it are the ones with money. The former party officials are of course there by default. The mafia, coming out of the black market to the 'white market', are best adapted to negotiation. They benefit massively. The entrepreneurs are in a disadvantaged position for the most part - assuming they hadn't already been forced out by the envigorated mafia's racketeering. When trying to buy these major state assets, many are simply told "this is not for you". Only the most persistent and the most willing to bribe secure their spot.

Out of these three groups comes a great new Russian elite, called "Novye Russkie" meaning "New Russians". The most advanced of them are the famed Oligarchs - but the rest aren't too badly off. Consider the fact that at the present moment, just 12 people own 50% of Russia's GNP. It's fair to assume that the next 1% of the population owns another 40-something percent. The New Russians are that very group - former party officials and their families (the Chernomyrdin [ex-premier] and Yeltsin [ex-president] families are among the top names); children of the black market and shady trade (Berezovsky, Abramovich come to mind) and the mafia;
lucky entrepreneurs (Khodorkovsky) who were willing to go the way. With the mafia and the former party (a mafia of sorts in themselves) being the most numerous of the New Russians, it's easy to imagine their cultural values and ethics.

I've no sympathy for the New Russians whatsoever.

Meanwhile, what's all the more absurd is that following all that upheaval, what one would associate with 'cultural elite' or 'core middle class' are suddenly at the bottom of the well. Teachers, doctors, scientists, and other public workers were, at least during the 90's, some of the least paid professions (at one point the teachers at my school were earning around $15 a MONTH - not an exaggaration).

The stabilization of the economy in the past few years has smoothed things over somewhat and most people can survive - just barely. Not all is great, of course. For all the supposed positives, the current government seems to be bent on starving out the numerous pensioners. This may be unsurprising: pensioners overwhelmingly favour the remaining Communist Party that consists of the party members that didn't, in their view, "sell out" and go over to the new government. The parliament, without much debate, has passed a few bills in the past couple of years which would strike any reasonable person as death warrants for pensioners. Little noise has been raised over it. Likewise, Putin prides himself in incentives for families with children that he recently introduced. These are also a total joke, unless one believes that a lump sum of about $400 is enough to convince a family to have a child.

Remember that the cost of living in most Russian cities today is about the same as in most US cities for example.

The Russian middle class is dead, having never been born. Russia is not a democracy. Russia today is essentially a feudal state run by the few New Russians that have, with the have-nots being just that - have-nots.