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Monday, July 31, 2006

The Facts on Russian and U.S. Economic Growth

In the second quarter of 2006, each American contributed on average $250* to economic growth. This growth rate caused the New York Times lead story on Saturday (July 29th) to proclaim American economic growth to be “modest” and related to a “big toll” on the economy.

During the second quarter of 2006, each Russian contributed on average $175 to Russian economic growth. In other words, each American produced 43% more economic growth for his country than each Russian did for his. Despite this fact, this growth rate caused an op-ed writer in the LA Times to call Russia’s economic growth “surging” so that “urban Russians in particular are enjoying higher living standards — and not just because of oil wealth.”

This isn't just your typical media ineptness and inaccuracy where Russia is concerned. Clearly, we’re through the looking glass here. And it gets worse.

Because this figure of $175 per person is wildly liberal and inflated. It assumes that the Russian GDP is $1.5 trillion (so that 7.1% growth amounts to $105 billion per year or about $25 billion for the quarter, which works out to about $175 per person). But in fact, Russian GDP is only $1.5 trillion under the “purchasing power parity” formulation, which assumes among other things that the quality of medical care received from a doctor earning $4,000 per year is the same as that received from one earning $400,000 per year – in other words, it’s a totally bogus notion. What’s more, it asumes that the economic production data produced by the Kremlin, controlled by a clan of KGB spies who spent their lives learning how to lie, is trustworthy. To say the least, Russia’s actual per capita growth figure is far less than $175 per person. To say the most, when you ASSUME you make an ASS out of U and ME.

And that is to say nothing of the fact that economic growth is distributed among the population far more evenly in the U.S. than in Russia, where the Kremlin is hoarding a vast amount of Russia's "economic growth" (which is really just increased income from rising oil prices, not increased productivity among Russian workers) as reserves rather than investing it in the country. In other words,the $175 is pure smoke and mirrors.

*This number is calculated based on 2.5% of America’s $12 trillion economy or $300 billion annual growth, which translates into $75 billion in second quarter growth divided by America’s population of 300 million, which works out to about $250 per person.


copydude said...

Another meaningless statistic which has no connection with reality.

I always find it amusing that Russophobe's blog is usually fronted with America's begging bowl ad to the rest of for Katrina relief.

Think you should post this article to the homeless guys in the food stamp queues and tent cities down in Texis.

La Russophobe said...

COPYDUDE: Another meaningless comment with no explanation, analysis or substantive contributrion of information. In other words, classic Russophile gibberish.

If you don't think there is anything significant about the tiny amount of economic growth Russia is producing, the miniscule salaries its people are earning or the fact that its population is rapidly declinging, you are more dangerous to Russia than any foreign enemy.

La Russophobe said...

GUZHEVNIKOV: LOL ;) I think he was trying to write "Moscow."

Robert Dupuy said...

You suggest purchasing power equity is, and I quote "a totally bogus notion."

Given your pre-disposition to say things that aren't accurate, maybe no critique is necessary.

But, lets run it down, the average wage in Rwanda is $350 per year. According the USDA department of agriculture, the average american must spend $130 per month, on food to survive. The figures allowed in bankruptcy courts are closer to $ 180 (male) $155(female).

Either way you look at it, if things cost the same in Rwanda, all of Rwanda must die of starvation by the 3rd month of the year, when they completely run out of money.

Point being, food costs less in Rwanda.

You talked about medicine, and the assumption that Doctor's are equal, despite pay disparities. That isn't the assumption. If you have a tooth removed for $300 and one removed for $20, its the same procedure, one costs 15 times more. Is one better than the other? Maybe, but the point is, if you need a tooth out, you have to look at how much it costs to do that in each country, and take account of it.

Purchasing power, isn't a completely bogus notion, if you don't like some of the finer details, assuming you can do math at all, you could tweak it some, but at some level you do have to account for purchasing power equity, at least in some form or another.