Re: back to PPP comparisons\Chris' question

[Chris Doss]

Thanks for the input! See below.


 State supplied utility benefits such as electricity
 are in Russia's
 national accounts in Ruble terms, so yes they are
 included in these
 comparisons.

Even with the recent price hikes, my monthly
electricity bill in Moscow (pretty large Stalin-era
apartment, with two big rooms, kitchen, bathroom,
water closet) is a whopping $8. Domestic consumers
also get gas and oil at far below market rates (you
probably already know this).

BTW even if an apartment dweller simply refuses to pay
the bill, there is no effective way to disconnect him
or her, since Soviet apartment blocks are constructed
in such a way that you either shut power off to the
whole block or not at all. Ditto for water. Such
deadbeats were frequent subjects of mockery in Soviet
comedies.


 Self-grown food is normally not in *conventional*
 national accounts - one
 example of why people get perplexed when they see
 very low GNP p/c figures
 that don't match up to their intuitive feel for
 living standards.

That's a very good point. I remember how stunned I was
at how much richer Moscow was than I has expected,
going by official figures (unaware that up to half of
the economy does not exist on the books). (The
home-grown food issue, BTW, also points to what a wild
exaggeration Gaidar's warning of impending famine was
in 1991. It is impossible to starve in Russia. I know
people who got through the dark days of the early 90s
by gathering mushrooms in the forest. Russia is mostly
wilderness. Hunting is as much a way of life in
Siberia, as, say tax evasion in Moscow. :) )

Moreover, Russia still has a strange, quasi-Soviet
economy that is to some extent nonmonetarized. E.g.
the factory where someone works might pay him or her
practically nothing, but it provides daycare for your
kids, gives you meals, free bus passes etc. etc. etc.
(This is why people where able to survive during the
days of year-long wage delays -- they didn't live off
their wages. Their wages were supplemental.)


 Existing apartments are assets so they are not, per
 se, in Russia's Ruble
 national accounts.

Incidentally the high apartment ownership rate and the
way it was acquired (privatization of the apartment
you happened to live in in 1991) has interesting
sociological effects. For instance, Russia does not
have ghettoes organized around ethnic or income (or
for that matter sexual) lines. You can have a
middle-class family and an impoverished beggar living
next to one another (the exception is the rich). The
concept of a slum is completely alien (I recollect an
Indian acquaintance trying to get the idea across to a
Russian coworker to no avail -- you mean like a
Khrushchev building? You don't understand, you've
never seen a slum.). For the same reason Russian
cities are not divided into low- and high-crime areas
-- there is a low level of danger everywhere, but
nowhere that is completely secure and nowhere that it
is suicide to go into. There's also the everpresent
alcoholic who seems to live in every apartment block,
who would be on the streets in the United States but
still has his apartment to stagger home to in Russia
(everything in the apartment, however, has probably
been pawned to buy booze).



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Re: back to PPP comparisons\Chris' question

[Paul]

Chris wrote
As a general question, do these income comparisons
somehow factor in nonmonetary income, state-supplied
benefits or similar perks? E.g., in the country in
which my butt is parked, monetary incomes are
generally relatively low, but most families own their
own apartments and grow their own food in part, plus
electricity and utilities are dirt cheap, even giving
the recent price increase. Thanks.
I hope I am not presenting myself as expert on this (anyone out there who
is?) but here is my understanding.
State supplied utility benefits such as electricity are in Russia's
national accounts in Ruble terms, so yes they are included in these
comparisons.  BUT there is no objective way to compare electricity in
Russia vs. the U.S. (i.e. how do you convert the Rubles to
dollars).  Straight exchange rates are flawed (prices may be lower in
Russia); so they have tried to create a different PPP conversion BUT, as I
have tried to point out, inevitably this has new flaws and biases that are
as serious.
Self-grown food is normally not in *conventional* national accounts - one
example of why people get perplexed when they see very low GNP p/c figures
that don't match up to their intuitive feel for living standards.  As the
obsession with GNP has grown, analysts have tried to extend it to measure
life as a whole by imputing their own estimates of all sorts of things,
including such non-market production, along with household production (esp.
women's work and child labour), depreciation of the environment, etc.  Some
of this may have bled into including a bit of self-grown food in some
countries' national accounts.  ((And of course in Russia all bets are off
when it comes to the official accounts which periodically include estimates
of unrecorded income in ways that are negotiated within the govt and with
foreign authorities.))
Existing apartments are assets so they are not, per se, in Russia's Ruble
national accounts.  But the depreciation (or creation of new assets) would
be - in theory - put in the Ruble national accounts (no doubt big errors
and guesses here). But depreciation would appear only under the heading of
a Net National Product not the Gross National Product (aka Gross National
Income).  I don't even want to think about how they would include
depreciation of an asset in a PPP version of a Net National Account (I
haven't checked but I bet they don't bother to try to produce this).
Of course Russia is maintaining much of its living standard by living off
its assets (and human skills) and this is another way that Gross National
Accounts don't capture living standards.
Paul