Russian history is filled with examples of credulous Westerners shilling for the Motherland. In the 1930s, New York Times columnist Walter Duranty praised Stalin’s regime, downplaying the political repression and murders, and staunchly denying the intentional starvation and pillaging of millions of Ukrainian farmers. Although savvier reporters were aware of the blatant horrors of the Soviet system, Duranty was awarded a Pulitzer for his Russia dispatches. In the 1960s Paul Samuelson, dean of American economics, predicted in his widely-read college textbook that the Soviet economy would outgrow the USA within a generation. In the late 1980s, on the eve of Soviet collapse, Bernie Sanders played the commie stooge role, visiting Moscow and gushing about low housing costs and universal healthcare in the workers’ paradise.
People with any idea about the actual history of Soviet Russia know better—it was both history’s most murderous regime and Exhibit A in the evidence file of socialist failure. Economists, especially those who were born during the Cold War years, point to Soviet Russia as a cautionary tale in the realities of socialism, central planning, and political repression. While today’s Russia is no longer full-on socialist and standards of living have improved markedly from the Soviet days, Russia is still very much a dictatorial regime with a largely dysfunctional economy. There’s really nothing to admire nor emulate in Russia’s economy today.
Yet despite the facts on the ground and the sordid history, there’s always another dupe from the West with another round of pro-Russia/ pro-Putin apologetics. Enter Tucker Carlson, who recently voyaged to the motherland to interview the thug dictator himself. Let me state up front that I have no problem with the interview itself—that’s what journalists do, after all. Sure, he could have asked tougher questions or grilled Putin harder on some big issues, but I’ll at least credit Carlson for just talking to a guy who’s infamous for finding creative ways to off his critics.
I will scold Tucker, though, for beclowning himself after the sit-down with Putin. Carlson posted a video in which he strolled through a clean, brightly lit, attractive grocery store somewhere in central Moscow. Tucker nonchalantly filled his grocery cart with what he suggested was one week’s worth of food for a typical family of four. Upon checking out, Tucker acted shocked at the total price of 9,481 rubles, which at current exchange rates works out to just under $104.
What, if anything, are the economic and political implications of Tucker’s Russian grocery bill? Let’s let Tucker speak for himself—here’s his takeaway, transcribed from his grocery store monologue:
I went from amused to legitimately angry. So we were guessing what this would cost, everybody here’s from the United States, buys groceries, and we didn’t pay any attention to cost, just putting in the cart what we would actually eat over a week. And we all came in around 400 bucks, about 400 bucks. It was 104 dollars US here, and that’s when you start to realize that ideology maybe doesn’t matter as much as you thought, corruption. If you take people’s standard of living and you tank it through filth, and crime, and inflation, and they literally can’t buy the groceries they want, at that point maybe it matters less what you say or whether you’re a ‘good person’ or a ‘bad person’—you’re wrecking people’s lives and their country, and that’s what our leaders have done to us. And coming to a Russian grocery store, the ‘heart of evil,’ and seeing what things cost and how people live, it will radicalize you against our leaders—that’s how I feel, anyway—radicalized. We’re not making any of this up, by the way.
Tucker is so off base here, it’s hard to know where to start. Since I’m an economist, I want to focus on his woeful ignorance of some really basic economic concepts—specifically in this case the economics of exchange rates and relative prices.
I’ll start with the most glaring error, in which Tucker mistakes himself—a rich American—for a much poorer average Russian. Yes, Tucker, the US dollar buys a lot of rubles, and rich Americans feel even richer when they take dollars to poor countries. But Russians, you see, earn rubles, not dollars. And though the nominal amount of rubles they earn might be a large number, nominal Russian food prices are also large numbers. To compare the cost of a grocery basket in the US and Russia today, Tucker should have asked something like, “how much money does the average Russian make, and how much of his income is taken up by the cost of groceries, as compared to the average American?”
Fortunately, this data is easily available. According to Russian state data, the average wage in Russia is currently about 74,000 rubles per month. Tucker’s grocery bill—let’s round it to 9,500 rubles—was ostensibly for 1 week’s supply of food, so that comes to about 41,000 rubles per month (1 week times 4.3 weeks per month). This works out to well over half (55%) of that average Russian wage. According to the USDA, Americans’ spending on food in 2023 was about 11% of their disposable personal income. But wait—that number is for ALL food, not just groceries, but restaurants too. Subtracting restaurant visits, Americans are spending less than 6% of their disposable income on groceries (“food at home” in the USDA classification). This is a full eight times less than Tucker’s Russian produkty basket. Even the bottom 20% of US earners spent only 31% of their income on food—both groceries and restaurants. And if you want to compare earnings, median personal income in the US was about $40,000 in 2022. The average Russian wage cited above annualizes to just under 900,000 rubles, though the highest estimate of median Russian wages I found came to about 1.1 million rubles per year. Let’s split the difference between these data points and suggest that the average Russian is bringing home about 1 million rubles a year. At today’s exchange rate of 92.5 rubles to the dollar, that’s a puny $10,810 US dollars.
But as students of international economics realize, the exchange rate itself does not come close to representing differences in the cost of living. Poor countries like Russia usually feature much lower costs of production, which makes for lower prices. The lower productivity of land, labor and capital in such places means the opportunity costs of these resources is lower—they don’t have as many valuable alternative uses. This, in turn, makes their relative prices (their current prices in local currency) lower as well. Therefore we need to translate rubles into dollars taking the lower relative prices of all Russian resources into account. We can do so using the Purchasing Power Parity (PPP) exchange rate. PPP rates reflect differences in local costs to provide a more realistic exchange ratio which reflects the buying power of the local currency in terms of the US dollar. The PPP exchange rate for the US dollar in terms of rubles is currently 32.4, making the ruble significantly more valuable in purchasing power terms than the currency exchange rate of 92.5 to the dollar would suggest. This means our 1,000,000 ruble salary equates more realistically to around $30,864. With all that being said, average Russians are earning a full $10,000 less than Americans. Tucker Carlson, call your office: even using the most realistic, apples-to-apples comparison, Russians are still at least 25% poorer than Americans.
So Tucker is way off base regarding incomes and living standards in America vs. Russia, and many commentators have rightfully pointed out this glaring omission in his single-number “analysis” of comparative standards of living. But I have another bucket of cold water to toss on Tucker’s dumpster fire economics. Tucker, after all, hangs his argument about how our own people “literally can’t buy the groceries they want” on the assertion that corrupt elites have “wrecked people’s lives” through inflation.
Yes, true—American consumers have suffered from a nasty bout of inflation recently, with headline year-on-year consumer price growth peaking at 9% in June, 2022. Even though inflation cooled since then, the cumulative increase in the Consumer Price Index for the US has been 20% since pre-pandemic (January 2020 to January 2024). But Tucker, if you think inflation is bad in America, you should see Russia’s inflation—it’s way worse. The evidence is all around us, I’m not making it up. Over the same period in which US prices went up 20%, Russia’s prices, from January 2020 through November 2023 (the most recent available data) increased a whopping 47%. Forty-seven percent—that’s more than two times bigger than America’s twenty percent inflation.
Even if you want to claim that the CPI understates US inflation—and I’m potentially sympathetic to those arguments—it’s clear that Russian inflation has been way, way worse than that in America or the west in general. And this is not surprising, given Russia’s history of very weak economic performance and the devastating economic consequences of Putin’s invasion of Ukraine. Russia’s inflation rate shot to almost 18% in the months after the invasion and stayed well in the double digits for all of 2022. America’s inflation was bad (and the Federal Reserve is mostly to blame), but Russia’s has been far worse. No wonder a Reuters headline from October 2023 states “Almost half of Russians say salary does not cover basic spending.”
Anyone with Tucker Carlson’s exposure to people, places and events should have a strong basic intuition that America is the most prosperous place on earth today—period. Immigration patterns alone (which Tucker surely knows about) tell the whole story: foreigners are flocking to America, not Russia. They know that nowhere in the world offers them opportunity to earn more money or have more goods than the good old US of A. Economists have reams of data to certify this claim. Sure, the US economy is in something of a funk, largely due to the recent bout of inflation and a host of bad policies. But to even bemuse that things are better in Russia?! It just ain’t so. The fact that Tucker’s sensational, emotion-laden report came out days before the news of the death-by-government of Alexei Navalny, Putin’s erstwhile nemesis and major opposition leader, really puts an exclamation point on the absurdity and sheer ignorance of Tucker Carlson’s lunatic ravings. To Tucker Carlson, may I offer a polite piece of advice: when you don’t know what you’re talking about, kindly shut up. To Tucker’s fans: even if you agree with this guy’s stances or conclusions on certain issues, when it comes to economics he’s as incompetent as a pacifist drill sergeant. He can’t be taken seriously on economic issues, and his economic ignorance should cast doubt upon his credibility in general.
In the meantime, I’ll go on the record saying that, despite our problems, America is still the best place to live, and a heckuva lot better than Vlad Putin’s Russia.
Tyler Watts is a professor of economics and management at Ferris State University.