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Alexander Zemlianichenko/AP

Russia is widely thought of as an oligarchy run by President Vladimir Putin and a handful of billionaire cronies whose main accomplishment is looking out for their own financial interests. In a new paper, three economists say forensic evidence bears that out.

Economists Thomas Piketty, Filip Novokmet, and Gabriel Zucman found that income inequality is as great in Russia as the United States, with the top 1% of earners garnering upwards of 25% of national income, well above China and other former communist countries like the Czech Republic.

An offshore treasure trove: Piketty and Zucman have studied rising income and wealth inequality all over the world, and what makes Russia unique is how much cash is held offshore. They estimate that nearly $1 trillion in Russian assets is held outside the country, likely by a handful of oligarchs, most of which doesn't show up in official statistics.

The exploited masses: The Russian experience is in stark contrast to economic development in China, where income inequality has also exploded, but where the typical citizen's wealth and income has risen significantly as well. This research shows that the average private citizen's share of the national wealth has not increased whatsoever since the fall of the Soviet Union, despite the huge transfer of assets from the public sector to the private. The authors write:

What is particularly striking is the very low level of recorded financial assets owned by Russian households. ... In effect, it is as if the privatization of Russian companies did not lead to any significant long-run rise in the value of household financial assets, in spite of the fact that it is now possible to own financial shares in Russian firms, which seems especially paradoxical. In our view, the main explanation for this paradox is the fact that a small subset of Russian households own very substantial [sum of] unrecorded financial assets in offshore centers.

In other words, the uber wealthy in Russia have as much or more assets stashed overseas than the rest of the population combined holds in the country itself.

Why it matters: The Russian system rests on the extraction of natural resources, primarily oil and natural gas, which is sold abroad by oligarchs. They use the proceeds to invest in foreign real estate and other assets, rather than in productive ventures at home that would create jobs and allow the median Russian to share in that prosperity.

Go deeper

Off the Rails

Episode 7: Trump turns on Pence

Photo illustration: Eniola Odetunde/Axios. Photos: Elijah Nouvelage, Alex Wong/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. Axios takes you inside the collapse of a president with a special series.

Episode 7: Trump turns on Pence. Trump believes the vice president can solve all his problems by simply refusing to certify the Electoral College results. It's a simple test of loyalty: Trump or the U.S. Constitution.

"The end is coming, Donald."

The male voice in the TV ad boomed through the White House residence during "Fox & Friends" commercial breaks. Over and over and over. "The end is coming, Donald. ... On Jan. 6, Mike Pence will put the nail in your political coffin."

Big Tech's post-riot reckoning

Photo illustration: Sarah Grillo/Axios. Photo: Tasos Katopodis/Getty Images

The Capitol insurrection means the anti-tech talk in Washington is more likely to lead to action, since it's ever clearer that the attack was planned, at least in part, on social media.

Why it matters: The big platforms may have hoped they'd move to D.C.'s back burner, with the Hill focused on the Biden agenda and the pandemic out of control. But now, there'll be no escaping harsh scrutiny.

34 mins ago - Technology

Why domestic terrorists are so hard to police online

Illustration: Eniola Odetunde/Axios

Domestic terrorism has proven to be more difficult for Big Tech companies to police online than foreign terrorism.

The big picture: That's largely because the politics are harder. There's more unity around the need to go after foreign extremists than domestic ones — and less danger of overreaching and provoking a backlash.