It’s shocking to see such childish and idiotic financial “analysis” being produced by as lofty a source of financial information as the Financial Times of London.
Writing on the FT’s “Beyond BRICS” blog, Rob Minto claims “Russia is not as unequal as you think” based on a report he read (but does not even take the time to link to, really shabby stuff) from Russian stock brokerage house Renaissance Capital.
RC used Gini coefficient analysis to produce a chart that, apparently, Minto did not even take the time to read. The chart plots the positions of 22 different countries based on per capita income and Gini rating for economic inequality.
Apparently they haven’t learned to count yet over at the FT, because only five countries out of the total group show more economic inequality than Russia (South Africa, Brazil, Chile, Mexico and Argentina). That’s right, sixteen of the 22 countries showed less economic in equality. Russia stood in the bottom quartile of the group, yet Minto, a braying jackass if ever there was one, thinks this proves Russia isn’t that unequal after all.
And that’s only the first gaping flaw in Minto’s analysis.
He also ignores Russia’s epic corruption, which means that the true wealth of Russia’s oligarchy is unknown.
He ignores the fact that RC is basing its data on information supplied by the Kremlin, apparently assuming the Kremlin wouldn’t lie.
He ignores the fact that RC itself is biased, because it makes money by convincing foreigners to invest money in Russia, and therefore profits by any information that makes Russia seem less threatening and incompetent.
And most importantly, in truly breathtaking fashion he totally ignores Russia’s recent stock market collapse, which saw Russian equities shed three-quarters of their value and wiped out the fortunes of many oligarchs. Is such an even really a basis for crediting Russia with equalizing incomes and having more faith in the Russian economy? Only someone flying high on drugs could think so.
Minto acknowledges that even RC admits “entrepreneurial activity in Russia has declined – a situation that is related to the overall unfriendly business environment in the country and suggests to us that one way of reducing income inequality could be to improve the business climate.” But he seems incapable of thinking about what this means. How could there be any meaningful decrease in inequality based on rising fortunes among the have-nots if entrepreneurial activity is falling? There couldn’t be! All that has happened is that the pathetically weak Russian economy has imploded, so that now the rich are also poor.
In other words, it’s bad news for Russia, not good news. And even worse news for the journalistic standards of the Financial Times.