Is Government Policy Reducing the Population?

The profits of large private companies and natural monopolies are the unpaid labor of Russians
A report issued by the Russian Health Ministry and circulated at the final meeting of the ministry in March says the death rate in Russia is on a continuous rise. While 15.6 out of 1 thousand people in 2001 died in Russia, the figure came to 16.3 in 2002. The death rate has increased because of infectious and parasitic diseases, such as tuberculosis, disorders in the blood circulation system, respiration and digestive organs. The death-rate rise started in 1999 and still continues. In 2002, the death rate increased in 78 regions of Russia and in 55 regions in January 2003. Last year, the death rate exceeded the birth rate by 1.7 times in Russia, the same result as in 2001; but the excess was by 2-3 times in 24 regions of Russia.

In 2002, in 34 regions of Russia the total death-rate coefficient was higher than in Russia on average and it made up 2% and more in 11 regions of the country. 49 regions of Russia registered a death rate lower than the average showing in the country. The 10 regions of Russia where the death rate was the highest in 2002 (given in descending order) were the Pskov, Tver, Novgorod, Tula, Ivanovo, Komi-Permyatsky autonomous district, Smolensk, Leningrad, Vladimir and Kostroma regions.

Experts say that, for Russia, with its territory of 17.1 million square kilometers and traditionally low density of population, the abrupt reduction of the population means destruction of the country's territorial infrastructure. This certainly poses a threat to Russia's economic security as waves of immigration from neighboring countries, China for example, may be rather strong. This process will be inevitably accompanied by cultural and global political expansion, which in its turn will entail unfavorable economic and social consequences. As a result, the demographic burden of the able-bodied population will increase (also because of the birth-rate crisis), the health-care system will worsen and problems with payment of pensions and hardship allowances will arise.

An acute shortage of manpower will add complications to maintaining Russia's defense potential, as the number of army conscripts and specialists in the defense establishment will be seriously reduced. The problem will also hamper development of the fundamental and applied sciences. The number of young people capable of studying at institutions of higher education will abruptly drop starting in 2005. The native population of Russia, the bearer of its authentic culture, religion and values, will be diminishing, which will further change the ideology of the state’s development and Russia's geopolitical role in particular. 

Independent experts sharing left-wing views say that the economic policy carried out by the Russian government makes for the development of the above-mentioned unfavorable tendencies. The experts say that forecasts saying that Russia's population will catastrophically drop to 60-70 million people within the next 15-20 years are economically grounded. The main economic aspect is that the country is aiming at increasing its positive balance of payments in foreign trade. Recently, the excess of Russia's exports over its imports has reached $40-50 billion, which makes the governmental and business community extremely proud. It is treated as a prominent achievement in the virtual economy of monetarism in which everyone is taking such great interest now. 

However, experts say that in the actual economy a positive foreign-trade balance of payments and increase of currency reserves means the following: the money equivalent of the physical energy Russians spend on production of exported materials makes up $100 billion, while what they received back for replenishment of the spent energy  makes up only $40-50 billion. In a word, the deficit of products for replenishment of their spent energy is $40-50 billion.

GDP at $0.5-0.6 trillion means that support for the life of one Russian citizen requires goods and services at the sum of $4-5 thousand. Roughly speaking, withdrawal of goods to this sum means death. But taking the earlier accumulated funds into consideration, the unbalance to the sum of $40-50 billion deprives the population of subsistence (including the earlier accumulated one) and guarantees death to 1.5-2 million people. So, while the death rate in the country is currently 700-800 thousand people per year, millions of people deteriorated and their life expectancy gets smaller, as they don't get enough to replenish the energy they spend. In a word, for millions of people, reproduction on a simple scale is not provided.

As experts estimate, now there are up to 60-70 million Russians who live under the physiologically adequate consumption level limit. It may sound cruel, but in fact these people are in the guaranteed liquidation zone. Referring to the Russian and foreign liberal economists, experts say that a lethal economic model of continuous maintenance and accumulation of currency reserves was thrust on Russian society. And this tendency is still increasing, taking into account the recent statements of the Russian president addressed to the U.S. capital city to increase consumption of Russian resources.

Meanwhile, judging by the behavior of Western investors, the situation in Russia is quite obvious for them. Large-scale investors have lost their interest in Russia; they no longer prefer to invest in Russia as a sector of the world community that is dying out. In this situation, Russian governmental officials and business community seem to be mistaken when they make statements about Russia’s investment attractiveness.

Experts say it is impossible to increase Russia's investment attractiveness under conditions of a continuous positive foreign-trade balance. Only a positive balance of net profit may be formed in money, which makes up 5-10% of the proceeds in a regular economy. Unfortunately, the Russian economy, especially its export sectors, fixes imaginary proceeds, as the sum of spending is fixed in documents at a rate which is even much less than the sum required for reproduction of spent resources; the basic assets, natural and human resources. So, even 10% of the proceeds cannot be saved in money. 

Independent experts suggest that the situation can be improved in the following way: Special regulations for export operations must be developed, and producers must follow the key obligation to guarantee at least simple reproduction of the population and spent  resources. In other words, exporters cannot have debts to the state budget, to the governmental funds, to suppliers; all loans they borrow must be paid on time and they must owe no wage arrears to their workers. Owners of companies (holders of 51% of shares) and management must be responsible for observance of these regulations with their private property and family savings. 

Wages must guarantee workers, their families and the whole of their infrastructure with minimal reproduction on a simple scale. This means that monthly payment to a worker has to make up not less than 20,000 rubles per month (over $600). Russia must stop being a preserve of super-cheap manpower that is continuously degrading.

Spending of basic assets and resources on eating must be stopped. Exporting companies should have a separate accumulative depreciation account where amortization is calculated not on the basis of some strange balance value, but on the basis of an assignment that is adequate to actual replenishment of the funds. A rise in prices on construction and equipment and spending on geological surveys must be included there as well.

Experts say that if the regulations are not introduced and the situation keeps on developing as it does now, the death rate in the country will increase even more quickly. Thus, in fact, Russia loses $50 billion of net profit in goods, which is equivalent to output of goods to the sum of $500 billion. It is characteristic of all Western countries that they follow the civilized way: goods-money-goods. At that, goods must be mutually balanced and money must serve as a regular instrument.  And all the gold and FOREX reserves of the Central Bank are to be substituted with goods used for development of the country. Only in these conditions will it be possible to consider the problem of preventing value-carrying outflow.

MiK news agency

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Author`s name Michael Simpson