Good job citing Rosbalt! See below. -----Original Message----- From: Jurriaan Bendien <[EMAIL PROTECTED]>
> > Of course, the shadow economy would consist both of activities defined as > production, and activities consist only of transactions unrelated to real > production (transfer incomes), one guesses about half of the total shadow > economy each. To some extent Russian statisticians do try to impute > estimated values for the "informal" economy. The World Bank estimates the informal economy as being 40% of GDP. It's everywhere. I'll give an example of how this works: Moscow has huge numbers of people living there illegally. Sometimes, this is because they are illegal immigrants, mostly from other countries in the CIS but also from China, Vietnam and elsewhere. Usually, though, they are people from the provinces who, in principle, should have a pretty easy time getting set up -- but they can't. Why not? Moscow has a system whereby every person in the city has to have his or her place of residence registered with the police within 72 hours. If you are renting an apartment, the person renting to you has to sign a document. Now, this is not a "landlord" in the Western sense. Muscovites own their own apartments, and it is very common for someone, especially a pensioner, to rent their apartment to someone and move somewhere cheaper themselves for the money (or just go out and live free of charge at the summer cottage over half of Muscovites own). 99% of the time, that person, like 99% of Muscovites, lives in perennial terror of that dread demon, the Tax Police. NO WAY are they going to go down to the police station and register someone as living in their apartment, because they would then have to pay tax on that income. So the renter winds up discriminated against in employment and, which is worth, they live in constant fear of the document checks the Moscow police carry out on a daily basis. This is part of the underground economy. Incidentally if you were lucky enough in 1992 to live in a part of the city that is now high-class real estate, you can sell or rent out that apartment and live like a king. A one-room apartment on the Arbat can go for tens of thousands of dollars. Russia has a tax system that imposes draconian taxes on businesses. The reason for this appears to be to create a system in which it is cheaper to bribe the tax man than to actually pay the tax. Anyway, as a result of this, employers in the private sector tend to hide their employees' incomes, or hire them off the books entirely (employers in Russia pay income taxes, not employees). Russian employees in the private scetor will very often have to parallel incomes: a ruble income, which gets sent in to the tax inspectorate, and a dollar income, which is handed to them in cash and can exceed the former by a factor of 100. Huge companies in Russia seem to all be run by a skeleton crew who are paid starvation wages, if you believe their official books. Officially, Moscow's middle class is tiny, but in reality, I would guesstimate it as about 30% of the working-age population. They just don't appear in the record books. BTW this is indirectedly responsible for a lot of the poverty in Russia. Russia's urban poor are people who work for the state (doctors at free clinics, teachers, professors and scientists at state institutes, workers at government enterprises, etc.) or are otherwise dependent on the state for their income (pensioners, mainly, which is 30% of the population). Because of the enormous level of tax evasion, the state has no money to pay these people (though I am happy to say that things are improving). A doctor working for a state clinic in Moscow earns about $125 a month (plus tips), as opposed to a McDonald's employee ($160) or a waitress at a nice restaurant (which can be more than $1,500). The average pension is something like $40. One thing you do not want to be in Russia is old with no family and unable to work, because you will have to panhandle and/or scavenge. People fiddle with the shadow economy figures all the time to score political points. Because no one knows how much people really earn (this is why, as an aside, regressive income taxation is just not viable in Russia), you can make the place appear as rich or as poor as you want. If you are Anders Aslund, everyybody is fine and dandy and no economic decline ever happened in the 1990s; if you are Worker's Vanguard, everybody in Russia is eating their own feces. I took an informal survey of Muscovites over the last few days and asked them what they thought the average monthly income in Moscow was; I got responses ranging from $200-$700. Nobody has a clue. What really, really drags down the income stats is the pensioners.
