We’ll start with the big-picture comparison based on data from the IMF, Maddison, the UN, and World Bank. As you can see, Americans are far richer than their Russian counterparts.
The IMF and Maddison data are based on purchasing power parity, so they adjust for the fact that some things are less expensive in Russia (and the Maddison data is based on 2011 dollars, so those numbers would look more like the IMF numbers if based on today’s dollars).
The bottom line is that Americans should not envy the Russian economy, regardless of which data source one prefers.
This does not mean, by the way, that the U.S. economy is perfect. Or that America should be immune from criticism. Most of my professional life has been devoted to trying fix bad U.S. policies. Or trying to prevent new mistakes from happening!
But I’m very grateful that I live in a nation where policy is inadequate rather than a country where policy is terrible.
And even though I’m an economist, I’m also very aware that the United States is also much better when comparing basic political and social freedoms.
Is the U.S. perfect in those areas? My Victims-of-Government page confirms that we have some problems. That being said, we are far better than Russia (where 47-year old political dissidents mysteriously die in Siberian prisons).
Before concluding, let’s return to economic comparisons. Here’s a tweet that captures the difference between a rich country and a struggling country.
And I’ll also cite a few sentences from a 2022 column in the Washington Post by AEI’s Nicholas Eberstadt.
Putin is flailing against the history of modern economic development. The wealth of modern nations is overwhelmingly generated by human beings and their capabilities. Natural resources (land, energy and all the rest) have accounted for a shrinking share of global output for the past two centuries, with no end in sight. …for all its vaunted oil and gas riches, Russia’s export earnings last year were actually lower than Belgium’s. Like other Western democracies, Belgium manages to augment and unlock the economic value residing in human beings. Putin’s petro-kleptocracy is woefully inept on both counts. …Since the invasion of Ukraine, some of Russia’s best talent has been voting with its feet, heading abroad any way it can. …the Russian system produces remarkably little private wealth. According to Credit Suisse, total private wealth in Russia in 2020 amounted to $3 trillion: one-ninth of Japan’s, one-sixth of Germany’s, and scarcely more than Sweden’s (a country with a population 14 times smaller).
The bottom line is that Russia is way behind the United States.
Anyone who says otherwise is ignorant or dishonest. Even those who assert equivalence are wildly wrong.
Dan Mitchell is co-founder of the Center for Freedom and Prosperity and Chairman of the Board. He is an expert in international tax competition and supply-side tax policy.
