Economist Sonin: Poor will suffer the most from sanctions and crisis

The sanctions and the entire economic crisis that began after the start of the Russian military special operation in Ukraine will hit the poorest half of the population hardest, and among the poor, the poorest. Konstantin Sonin, an economist and professor from the University of Chicago, writes about this on social networks.

He noted that the director of VTsIOM, sociologist Valery Fedorov, wrote a post from which it appeared that the sanctions hit the richest and upper middle class the hardest. Sonin expressed doubts about the competence of VTsIOM, and also noted that the same idea about how bad things will become rich for the upper middle class and the middle/creative class is heard from many lips. Sonin acknowledged that the super-rich lost the most in absolute terms. “Now they will have to spend hundreds of millions of dollars to get billions out of sanctions. Of course, they will deduce something – and their children will remain very rich people. But they will live in a world in which the 1990s and early 2000s will not be repeated – it will not be possible to simply come, bring a billion, buy a big football club, etc., ”writes Konstantin Sonin.

According to him, one can also feel sorry for ministers, a number of deputies involved in business, heads of state corporations, especially those who fell under personal sanctions or under the need to explain how he earned these funds. “Here, in my opinion, there is a very small chance that the arrested or frozen will return. Well, the descendants will get real estate in Russia – even if it has fallen in price a lot now – someday it will start to rise in price again, ”the economist notes.

He noticed that in the upper middle class, the losses are really big – “it’s lost businesses, ruined businesses – and not-for-profit firms, and schools, and faculties, ruined professional careers.” However, such people are more likely to find a good job abroad – the level of human capital is very high.

For many, the losses will be great, the decline in living standards will not occur in the field of food, health and basic needs, but in what can be abandoned. “Worst of all, of course, will be the poor half (in Russia, the “middle class” is much higher than the half, so the “poor half” is 60% or even more). Here it is almost impossible to reduce, essentially, “what you can refuse”, because there is practically none of it. The poor (half of the “poor half”) have no savings, and most of their income is spent on food. During such a comprehensive crisis, food becomes more expensive than anything (it becomes more expensive relative to other goods) and, accordingly, the displacement of “everything else except food” from the poor is faster and stronger than from the rest,” stated Konstantin Sonin.

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