Wednesday, January 9, 2013

Russia's Austerity Measures

"After the conclusion of the election cycle and amid a deepening economic crisis, the Russian government is preparing major cuts in social spending. The Kremlin’s recently released report, Strategy 2020, outlines a program for economic growth based on the implementation of austerity measures. First commissioned by Vladimir Putin in 2008 shortly before the outbreak of the world economic crisis, Strategy 2020 has been revised several times. Its main features have remained unaltered, however."


Russian Article

After reading the article more thoroughly, describe how these measures affect everyday Russians micro-economically.  Does it affect the macro economics of Russia, if so, explain how using concrete examples.

9 comments:

  1. I believe that this strategy that Russian governemnt is going to use, would be a bad one due to the fact that in Russia the population is decreasing and the labor cost is getting higher, therfore there will be problems domestically with the cost of living and how each individual manages to survive. This would affect the market place and the pension cost on elderlts, and will results in less benefits for the rest of the population, therefore it would result in workers paying pensions of 15% instead of 13%.

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  2. Strategy 2020 proposes that Russia should have an increase in pension. Although the increase in pension is minimal, the affect on Russia micro economically would be substantially high. The pension age would most likely affect Russia as a whole since it would affect the economy as well. Not to mention the "radical privatization" that 2020 suggests would indeed increase market competition. This would also benefit the ruling circles as it has occured in the past. But this would also cause more layoffs for workers. 2020 also mentions "effective contracts" with employees. This would undoubtedly decrease wages and lower working conditions.

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  3. Based on what I have read, I think Russian people won't like this economic strategy. First of all, when it says the economy must becomes "competitive," I think it starts to go wrong. When companies compete with one another, they tend to lower their price, but not so low because they still have to make profit and pay their workers. The only solution is to pay the workers less, and only immigrants and really poor people would accept the low salary without suing or complaining. Next, Strategy 2020 is more like an "official" rip-off plan. If the men have a life expectancy of just 60 years, and women of 73 years, but they can only retire at 63, where will their money go? Say, both men and women start to work at the age of 20, then both of them should have worked for at least 40-53 years. The women might at leas get to enjoy their fruit of labor after all those years, but the men, they'd probable be six feet underground already. That would affect the micro-economy a lot! The macro-economy will be the only one who is benefited as they will get all the money from pension funds and business profit.

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  4. The measures that the Russian government are trying to implement with definitely change the micro economics of the country. Overall, the wages of the people in the country will decrease and families will have less money to live on. Also, the retirement age has increased meaning that people will not be able to get as much money from the government. At the same time, prices for good have dramatically increased, making it even harder for the working class to pay for them. This does also affect the entire economy of Russia. As a country, they are trying to come out of this recession and are trying to make more money for the country however possible.

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  5. Strategy 2020 is a plan created to help Russia's economy. This plan will fall under the macroeconomics of the country because the whole economy of the country relies on exports. Since the macroeconomics of the country is doing poorly then it ultimatly affects the countries small business and private owners microeconomicaly. Jobs are scarce and it is uncertain if the elderly will be able to get coverage.

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  6. The new measures presented in the "Strategy 2020" would definitely improve Russia's macro-economy, but it would also effect Russia's workers in a negative way. The macro-economy will in the end make a lot of money because of the new pension plan. The life expectancy for Russian men is 60 but the pension plan will be in affect when they retire at 63. Where will their money go? Surely, it is a way to lead them out of the economic problems, but it will rob many people of their money.

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  7. According to this online article the increased pension will have many affects towards the way the Russians see their government. Their government was weak and by adding this pension it would make every company very competitive therefor many people losing their jobs. Most of the people who are very dependent of a high salary will lose their job I say this because most companies when they are trying to be competitive about selling certain products they have to either lose employees or decrease the salary of all their employees. This is how many huge companies strive to giving competitive prices that make them very competitive to beat. Honestly to me this is taking too much of a risk, I believe that in either situation not many Russians will be happy with the out come.

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  8. Favi/Clayton/Gloria/5January 24, 2013 at 1:37 PM

    We agree with Pablo that "Strategy 2020" with help Russia's economy, but at the cost of the workers. This plan goes into the category of macroeconomy because Russia relies on exporting goods to survive. Russia's life expectancy for men is around 60, when men are allowed to retire at 63 many of the men will not get there. This is the new pension plan. This is where we agree with Pablo again. "Where will the money go?". It will go to creating jobs for the government. This is where we only disagree with Pablo because we believe this is a good thing for the economy and the people of the future. Life expectancy is going up, so if we move the retirement back it won't be such of a big deal for the new workers. It will obviously suck for the workers that are in their 50's because its father than it already was. We feel like this should be done in the U.S. as well. Social Security needs to be moved back, but there is one problem. Young people don't vote and people heading towards retirement do. No politician wants to face that barrier because they are scared to lose their job.

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