New Rich. Old Rich

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"New Poor Russians"
Poverty in Russia has changed its face

A new social group has appeared in Russia - the new poor Russians. These are actively working people who, nevertheless, cannot provide for themselves. This is the conclusion reached by the participants of the "round table" held on Friday in the Federation Council. According to experts, even the “poverty threshold” set by the government of 2,137 rubles is in fact the threshold of poverty. Therefore, contrary to official statistics, in Russia 30% of the population are poor and 35% are poor, that is, "two-thirds of the population of Russia live either in poverty or on the verge of it."

"These are not poor - these are poor people!"
On Friday, the Federation Council Committee on Social Policy tried to calculate how many poor people there are in Russia. Official statistics in this matter are guided by the living wage set by the government at 2,137 rubles. According to the State Statistics Committee, today 23.3% of Russians live below the poverty line. Independent studies show more depressing results. According to a poll by the Public Opinion Foundation, 27% of Russians earn less than 1,000 rubles per person per month, and 38% earn between 1,000 and 2,000 rubles. That is, 65% of the population is below the poverty line.

Senators and experts disagree, however, neither with the size of the subsistence minimum, nor with who should be considered poor in Russia.

“2137 rubles is an unacceptably low level! - said Igor Kamenskoy, deputy chairman of the committee. “People whose incomes exceed the subsistence minimum, for example, by one and a half times, should be considered poor, since they are able to satisfy only the most basic needs.” David Shavishvili, director of the Institute for Social Policy of the Academy of Labor and Social Relations, was more categorical: “We usually call poor people who have incomes below the subsistence level. By all Western definitions, these are not poor - these are beggars! And the poor are those whose income exceeds the subsistence level twice.

According to experts, 35% of the Russian population can be safely classified as poor, and 30% as poor. But 5% - to the rich and super-rich.

Moreover, “the face of poverty is changing”: if traditionally the poor in Russia were the disabled, pensioners, large families and single-parent families, now a special class has appeared - the new poor. “These are people who are actively working and yet cannot provide for themselves,” said Rimma Kalinichenko, program coordinator for the International Labor Organization (ILO) in Moscow.

"What to distribute?"
“We have set a deadline for overcoming poverty - 3-5 years. But can poverty be overcome at all? Andrey Shmelev, deputy chairman of the committee, asked a question. - There is an opinion that the state should fight poverty with the help of a distributive function. But the question is what to distribute?

Here opinions are divided. David Shavishvili advised to pay attention to the oligarchs: "Half of the income of the oligarchs was due to underpaid salaries." In his opinion, it is possible to stop "free conditions for employers" and overcome the mass poverty of the population by setting a basic salary standard of 8,500 rubles.

Representatives of the ILO also complained. “It is difficult for us to fight poverty, because when we go to Geneva and ask for help, we are told: “You decide: either your country is a member of the G8 or is poor,” said Rimma Kalinichenko. However, sometimes international organizations are generous to the new poor Russians. “We recently launched one of the programs in the Northwestern District,” Kalinichenko boasted.

There were chuckles in the hall: “Of course, St. Petersburg is the poorest region in our country!” “I specifically went to Geneva to ask for help in the Far North! That's where the real poverty is! But the ILO did nothing! She helps St. Petersburg,” Mikhail Nikolaev, who represents Yakutia in the Federation Council, caustically remarked.

"We need to find a formula for survival for the people"
Professor of the Institute of Economics of the Russian Academy of Sciences Lyudmila Rzhanitsyna put an end to the dispute: “We must show will: stop the decline in the UST, bring the minimum wage to the subsistence level. Abolish income tax on the minimum wage! You talk about poverty and cut off 13% of those 600 rubles yourself!” The senators were embarrassed and turned away.

Rzhanitsyna continued: “Do you know that our child allowance is 70 rubles?! What can you buy with them?

However, the government is well aware of the meagerness of the benefits. “It is impossible to live on 70 rubles, but even if we double the benefits, what is 140 rubles? They won't give anything. And for the budget, such an increase will cost an additional 22 billion rubles,” Deputy Prime Minister Galina Karelova told GAZETA. Therefore, she believes, “it is necessary to find a survival formula for people that would allow them not to rely only on benefits.”

The "survival formula" that the senators came up with is unlikely to suit the government: to raise the minimum wage to the subsistence level, which will require not 22 billion rubles from the budget, but a couple of trillions.

In such a situation, only the psychological resilience of our people can serve as consolation. According to VTsIOM-A polls, 80% of Russians stubbornly classify themselves as middle class, although most of them are below the "poverty threshold."

The "new rich" concentrated in their hands the largest fortune. There are 267 million NWB families in the world, and by 2020 their number will reach 403 million. Since 2010, this class has been accumulating wealth faster than the super-rich and the middle class. This trend will continue for at least the next decade.

There are 1.32 million new wealthy families in Russia, and in six years their number will exceed 2.4 million. The volume of financial assets of “new rich” Russians in 2014 amounted to about $267 billion, and by 2020 the figure will grow to $503 billion. Developing countries lag behind developed countries in terms of the number of NWBs, but by 2020 everything will be different (see Chart 5). Many mature economies are already facing a slowdown in growth, while developing countries, despite certain problems, continue to grow. Accordingly, the population of the latter is getting richer much faster.

In terms of total welfare, mature economies will retain their leadership in the forecast period. However, China will take the first place in the country ranking. By 2020, the ratio of the fortunes of the "new rich" in the Middle Kingdom and the United States will be 2 to 1. The Chinese will have assets in the amount of $53 trillion, while the Americans will accumulate $27 trillion.

India will be the first in terms of growth rates among developing countries and in the Asia-Pacific region. The total assets of the local "new rich" will grow 10 times by 2020 and reach $880 billion. There are very favorable conditions for this: economic reforms, modernization of infrastructure, a stable political outlook and a positive mood of investors.

In terms of the average annual growth rate of the well-being of the "new rich" families in 2014-2020, Latin America will lead with 11.1%. The Asia-Pacific region follows with 10.1%. Russia and the countries of Central and Eastern Europe will take third place with 9%.

Humble and hardworking

The New Rich achieved success on their own. "The vast majority of them - nine out of ten - have created their capital in the last 10 years, only 3% associate it with receiving any inheritance," says EIU US editorial director Erika Klein.

They themselves are modest and do not consider themselves rich. This label, according to many of them, can be placed on those who have investment assets of more than $2 million.

NWB achieve their goals through hard work, so they place great importance on education and knowledge. These are doctors, lawyers, accountants, investment consultants and top managers of companies. They are well versed in modern technologies, use digital banking and most of all value convenience and the opportunity to save their time.

As citizens of the world, the "new rich" are not limited to a few countries. More than half of them go abroad for business purposes more than three times a year; a third send their children to study abroad; a quarter hold bank accounts in more than two countries.
They know firsthand about philanthropy: 97% of NWB regularly donate a certain percentage of income.

Moral and independent

The New Rich are confident and independent investors. The vast majority (84%) personally manage their investment portfolios, although a good half still seek professional support on narrow technical and tax issues.

Focused on sustainable growth of prosperity, they are far from being conservative. Most often, NWBs choose domestic stocks, mutual or pooled investment funds, and in rare cases, sovereign bonds.
They invest in projects that are truly exciting and see them as an opportunity to secure the future of their loved ones. They do not enter into deals with conscience: the factor of moral considerations influences the investment decisions of 95% of NWB.

Their appetite for growth leads them to consider exotic avenues for investment. In the near future, the "new rich" plan to invest in countries such as Andorra, Bhutan, Ecuador, Ghana, Greenland, Iceland and Malawi. In the meantime, their portfolio is distributed mainly among stable regions, with the most favorable economic prospects: the US, UK, India, Australia and Singapore.

Investing in passion is no stranger to 82% of NWB. At the same time, a third of the “new rich” consider this category of investments as a way to leave “non-monetary wealth” to their heirs.

They consider economic and political instability to be the greatest threat to the growth of personal wealth. And the “new rich” react to any turn of the market earlier and sharper than the rest.

According to a recent forecast by the Ministry of Economic Development, poverty in Russia will increase by 1.4 percent in 2015 due to rising prices and falling incomes. Experts, however, believe that this forecast is too optimistic, and the real level of poverty already today does not correspond to the official 11 percent. Who and how gets into the poor of modern Russia? Do these people have a chance to escape from poverty by raising their social status? Or, having once found themselves at the bottom, are they themselves and their children doomed to stay there? Candidate of sociological sciences, senior researcher at the Institute of Sociology of the Russian Academy of Sciences Svetlana Mareeva answered these and other questions for Lente.ru.

"Lenta.ru": In Russia there were "new poor"?

Mareeva: This process is really underway. And according to my estimates, and according to the estimates of my colleagues, it has been going on for the last 10 years. But I would not strongly link it to the current crisis, as well as to the 2008 crisis.

And what's the matter?

According to official statistics, we are doing well. Moreover, Rosstat says that poverty has declined in recent years. But the trick is that Rosstat measures poverty by an absolute criterion. That is, the poor are those whose incomes are below the subsistence level, those who do not have the opportunity for simple physical survival. But the living wage does not save from poverty. Having it, people, for example, cannot eat normally, buy meat and fruits in the required quantity, cannot buy durable goods, invest money in their education and the education of their children. That is, the poor are those who are not able to maintain the standard of living accepted in a given society.

And there are more of them?

Yes. But this is not the main thing. More sad, in my opinion, is that there is an intergenerational reproduction of poverty. That is, children born in poor families cannot escape poverty.

Was it different before?

That's the point. If you remember the 1990s, then almost the entire population was poor. Being poor was not shameful and not ashamed. It was "like everyone else". Now the poor are increasingly separated from the rest of society. Their social capital, their connections, as a rule, are tied to the same poor families. They intersect less and less with the middle strata and even with the low-income. As a result, this group closes and begins to reproduce itself. This is really a qualitatively new phenomenon. This poverty is not comparable to the poverty that was 15 years ago.

What has changed in these 15 years?

The country was recovering, new opportunities opened up, and the most active part of the population got a chance for social and economic adaptation. In general, the term "new poor" was specially introduced by sociologists by analogy with the "new rich" to designate the category of people who did not grow up in poverty, but got there by chance, having a normal education and professional skills. This happened precisely in the 1990s, when competent professionals lost their jobs and livelihoods. And it was this category of the population, using its resources in the form of education, property and social connections, that was able to get out of poverty.

Today, the poor do not have such resources?

Our data show that this is the case. Economic resources are almost exhausted, because liquid property like apartments and land plots is gradually being sold in order to somehow maintain the standard of living. And there is still not enough money to invest in their education and the education of their children. The same applies to health. In addition, it is unnecessary to say that social elevators have been working worse and worse in recent years.

Who is more numerous today - the hereditary poor or the new poor?

Those who have long and finally stuck in poverty are not yet the majority. But they create the core of this group, nothing can be done with them, and the formation of such a core is a very alarming signal. However, the main problem, in my opinion, is that this category of the poor will continue to grow. Because even with the most correct social policy and state support, the standard of living of the new poor can be raised to the maximum of the low-income. Their own resources are not enough to move into the middle strata, even with such support.

Sooner or later they will join a group doomed to live in poverty.

In other words, poverty today is a one-way road.

Essentially, yes. During the period of economic recovery, everyone who could, moved into the middle strata. Those left in poverty are those whose resources are insufficient for such a transition. It is possible that something will change with the next economic recovery, but such things are difficult to predict, and, I am afraid, by this time the new poor will have completely lost their economic resources, and they will never find others.

Where are there more poor - in large cities or in the provinces?

Ironically, while there are more opportunities in big cities, poverty rates are higher there. This is due to the fact that the level and cost of living there is also higher. To get out of poverty in a big city, a person needs to make much more effort.

What do the poor think of themselves and their lives?

This is another wake-up call that the new poor are turning into the new periphery of society. They increasingly report that they experience discrimination because of their low social status. They believe that representatives of more successful social groups avoid communication with them precisely because they cannot afford to purchase the same goods and services. The poor are less tolerant of inequalities and believe that the state should do something to reduce these inequalities.

Photo: Yury Martyanov / Kommersant

I guess the majority of our population is not tolerant of inequalities.

This is true. Three-quarters of Russians believe that the inequalities are too pronounced, and the grounds for these inequalities are illegitimate. The rich, in their opinion, got rich not due to their education, professionalism and hard work, but due to their connections and not entirely legal methods of competition.

Are the poor resigned to their situation or are they ready to look for new opportunities?

If we talk about value orientations, then there is such a problem in the world as a “culture of poverty”. The poor become more passive, which further reinforces their poverty. Among the poor, competition, initiative, enterprise and the desire to stand out are less common. However, our research shows that in Russia it is too early to talk about the emergence of a split in values between the poor and the rest of the population. Of course, it is already being formed, but for our society this problem is not so urgent yet.

Some experts, including your fellow sociologists, say that a lower class has begun to form in Russia. What is it, and is it possible to speak of a new class society?

There are indeed signs of the emergence of a lower class. But the class structure of society is somewhat different from the income division now accepted in Russia - the poor, the low-income, the middle strata, and the rich. Classes are determined by the presence of the resource from which the representatives of this class receive the main income. The upper class, or the bourgeoisie according to Marx, receives income from the means of production - enterprises, land, etc. The middle class has human resources - education, professional skills and abilities. The working class receives income for their physical strength. Education and skills in this case play far from the main role. The lower class are those who do not have any resources at all, or these resources are not in demand on the labor market. These are people without education and without unique skills, workers of the lowest qualification, workers employed in the shadow segments of the economy. That is, the poor and the lower class are not the same thing. Even a member of the middle class can be poor if he has a low salary and many dependents in the family.

Photo: Dmitry Korotaev / Kommersant

Can we expect an expansion of the lower class in the near future?

Common sense suggests that those who in recent years nevertheless got out of the poor into the low-income, most likely, will slide back. And some people with average incomes will fall into the category of low-income people. In addition, the labor market will shrink and competition will intensify. As a result, those workers whose resources turn out to be unclaimed will be squeezed into the lower class. I think this will also be reflected in official statistics - there will be more people with incomes below the subsistence level. And of course, this will be seen in sociological studies. More people will face restrictions on eating, buying clothes, renting a house, spending free time - those who will no longer be able to maintain a lifestyle familiar to their social class.

The New Rich have true FREEDOM!

New Rich. Old Rich. Who are they?

Work with pleasure! Have free time! Travel all year round! To be rich! Isn't that what most people in the world dream of? :)

As usual! :) Most people are just dreaming. And only UNITS DO everything to make their dreams come true.

But NOT everyone who becomes rich gains true freedom! These include the Old Rich.

Old Rich.

The Old Rich measure their wealth only by the amount of money they own. Whoever has more millions is richer.

The Old Rich dedicate 24/7 to their business. Some even live at work in the truest sense of the word. They specifically create a mini-apartment inside an office building to always be close to their offspring.

The Old Rich are tied to a certain place. They cannot be absent from the workplace for a long time. They cannot travel long distances for long periods of time. And if they return from business trips, they will face a rush of problems that have accumulated during their absence.

The Old Rich are completely tying up business on their personality. And all processes within the company directly depend on the actions of the owner himself.

In the end, it would seem that there is money. And perhaps even IN EXCESS! But there is NO TIME to spend them! The Old Rich are bound hand and foot by TIME and MOBILITY. Old Rich don't know what FREEDOM is!

New Rich.

But the New Rich have the opportunity to make any of their dreams come true FULLY!

New Rich work with pleasure! If, of course, it can be called work. :) For them, work is their FAVORITE pastime.

The New Rich have FREE TIME! The New Rich are constantly coming up with every possible way to reduce their working hours to a few hours a week. And more surprisingly, the New Rich know HOW to make the day rubbery. Ordinary people knock for 24 hours. And the New Rich have as many hours as they want! :) The whole secret is that the New Rich skillfully use the possibilities of outsourcing.

Do you want to know WHAT is outsourcing? HOW to apply it? And HOW do you explain all this to your children? So click on the button "I want to be aware of all the events!" in a special form on the right! And then you definitely won't miss anything!

The New Rich have MOBILITY. They can manage their affairs from anywhere in the world. They are not tied to a specific place. Such an opportunity was given to the New Rich by mobile communications and the Internet.

The New Rich call KNOWLEDGE the "new money." Because they easily extract any amount of money from their own head. That is why the New Rich consider investing a large amount of money in their head as one of their main investments!

If you ask the New Rich: “I have $10,000. Where to invest them? Most likely they will answer you: “In YOUR HEAD! Invest in your education! And then, if used correctly, it will bring you millions of dollars in profit.”

The New Rich LIVE and ENJOY their lives. Because they have FREEDOM! And it is achieved with the help of three main elements: KNOWLEDGE, TIME, MOBILITY. We have already discussed each of them above.

Project "The New Rich From Childhood" It was created just to give your RICH child the most important, most valuable element. This is KNOWLEDGE!

Don't miss this great opportunity! Put this knowledge into practice! And then your child will definitely grow up to be the New Rich! ;)

New Rich on Radio.

New Rich Artem Melnik will tell about who the New Rich are and how they live.

Artem, as usual, THANK YOU for USEFUL and PRACTICAL knowledge! ;)

To the entry "New Rich. Old Rich. Who are they?" left 5 comments.

Thank you, Rima for the project! Super! Especially the fact that it is for children, my children watched cartoons about income, the goal (especially my son was dying of mumps, and my 11-year-old daughter decided to print and use a lot for herself). Thank you for the opportunity to raise our children financially literate now. Indeed, in order to become rich, successful, it is important to be such a person - to do, to act - and then to have, to have fame, and income, and all the resulting benefits ... I wish you and your project further prosperity! We are with you.

Rose! Thank you for your comment!))
I love thank you very much. They inspire action. It is especially pleasant that my materials turned out to be useful for your children.
Glad to see you in our ranks! Learn, apply, get results! Then share with us. ;)
Wishes for success, as always, are mutual!
P.S. Rose! Join our VKONTAKTE group http://vk.com/newrichkids and get even more materials for raising successful children.

Thanks Rima for this post! Artyom is a good example of the “New Rich”, a successful, young, positive, developing, free and open person who, not in words but in deeds, shows many people how he lives - with a new lifestyle!
Good luck everyone!

Work with pleasure! Have free time! Travel all year round! To be rich! Isn't that what most people in the world dream of?

As usual! Most are just dreaming. And only UNITS DO everything to make their dreams come true.

But NOT everyone who becomes rich gains true freedom! These include the Old Rich.

Old Rich.

The Old Rich measure their wealth only by the amount of money they own. Whoever has more millions is richer.

The Old Rich are completely tying up business on their personality. And all processes within the company directly depend on the actions of the owner himself.

New Rich.

But the New Rich have the opportunity to make any of their dreams come true FULLY!

New Rich work with pleasure! If, of course, it can be called work. For them, work is a FAVORITE occupation.

The New Rich have FREE TIME! The New Rich are constantly coming up with every possible way to reduce their working hours to a few hours a week. And more surprisingly, the New Rich know HOW to make the day rubbery. Ordinary people knock for 24 hours. And the New Rich have as many hours as they want! The secret is that the New Rich are good at outsourcing.

The New Rich have MOBILITY. They can manage their affairs from anywhere in the world. They are not tied to a specific place. Such an opportunity was given to the New Rich by mobile communications and the Internet.

The New Rich call KNOWLEDGE the "new money." Because they easily extract any amount of money from their own head. That is why the New Rich consider investing a large amount of money in their head as one of their main investments!