An Inquiry into Russia Growing Richer by Fighting

Your observation is very sharp. The feeling of "getting richer the longer you fight" is both a real sensation for many ordinary Russians and a kind of economic "illusion."

In simple terms, Russia's current economic situation is absolutely not "completely fine." Instead, it is in a state of "high fever": borrowing from the future—the national treasury and human reserves—in exchange for short-term prosperity.

This "counterintuitive" phenomenon is mainly supported by the following core logics:

I. Why does it feel like "getting richer the longer you fight"? (Where does the money come from?)

For many lower- and middle-class Russian families, the war has indeed brought unprecedented wealth effects in the short term. This is mainly due to "Military Keynesianism":

• The state hands out money (massive military spending flows back):

• High salaries for frontline soldiers: The pay for enlistment, plus various allowances, is several times or even ten times the average salary in ordinary remote areas of Russia. Large amounts of cash flow directly into previously poor families.

• Death benefits and compensation: Although cruel, the high compensation for casualties does instantly give some families a huge sum they could never earn in a lifetime, directly stimulating local consumption (e.g., buying houses, cars).

• The crazy "talent war" leads to skyrocketing wages:

• Due to mobilization and population outflow, Russia is experiencing an extremely severe "labor shortage" (unemployment has fallen to a historic low of about 2%).

• Military factories offer high salaries to poach workers to meet deadlines; private enterprises are forced to raise wages significantly to retain staff. The result: wages across the entire society are rising.

• The boom of the military-industrial chain:

• Tanks, missiles, uniforms, canned food... all industries related to the war are running around the clock in three shifts. These enterprises have endless orders, profits soar, and workers earn plenty of overtime pay. This also drives prosperity in upstream and downstream sectors (e.g., steel, logistics).

So, what ordinary people see is: jobs are easy to find, wages are rising rapidly, and the neighbor's son who joined the army sends back piles of rubles. This feeling of "having more cash on hand" is very real.

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II. Is it really "no problem"? (What is the cost?)

Although people have more money in hand, the Russian economy is facing serious structural internal injuries, which are being masked by the wartime boom:

• Inflation is ferocious (money is losing value):

• Everyone's wages have risen, but fewer people are producing civilian goods (they've all gone to make shells). With more money and fewer goods, the inevitable result is soaring prices.

• Although the official inflation rate (around 8-9%) seems acceptable, the prices of daily necessities (like butter, potatoes, eggs) and imported goods have risen alarmingly. While people earn more, they also pay outrageously high prices for things.

• It's not just a labor shortage; it's "no people left":

• The labor shortage has reached a bottleneck. Current growth relies on "squeezing existing capacity": factory machines run 24 hours a day, and people work around the clock. To expand production in the future, there are neither machines nor people.

• Many civilian service industries (e.g., delivery, catering, repair) are seeing a sharp decline in service quality because they can't find workers or afford high wages.

• Extremely high interest rates (cutting off future investment):

• To suppress inflation, the Russian central bank has raised the benchmark interest rate to a terrifying 21% (as of late 2024).

• This means ordinary private enterprises simply dare not borrow money to expand. The current boom relies entirely on government spending. Once government finances tighten and spending decreases, the private sector cannot pick up the slack, and the economy could stall instantly.

• "Ineffective" GDP:

• Producing a tank counts toward GDP, but if that tank is sent to the front and destroyed, it does not translate into long-term national wealth (unlike building a road or a factory, which can generate benefits over time).

• This kind of growth is called "consumptive growth"; it is essentially consuming the nation's savings.

III. Summary: It's a "shot of adrenaline," not a "gym workout"

Russia's current economic situation is like a person on stimulants (war spending) running a marathon:

• Short term: He runs much faster than usual, with a rosy complexion and high spirits (GDP growth, rising wages).

• Long term: His body is overdrawing, his heart rate is too fast (overheated economy). If he doesn't maintain it with a stronger dose, once he stops, the side effects (stagflation, industrial hollowing-out) will be very painful.

Conclusion: Russia has not created an economic miracle. Instead, it is concentrating and spending resources that should have been used for development over the next decade (petrodollars, national funds, young labor) in an explosive manner over just one or two years.

As long as the war continues and oil prices don't collapse, this illusion of "wealth" can probably last for a while. But "getting richer the longer you fight" is not only unsustainable; in the future, the entire nation will likely have to "repay the debt" through a long-term decline in living standards.

This is not just your illusion; it is a very typical "war economics phenomenon." If you only look at the cash in people's hands, they are indeed "richer"; but if you look at quality of life and the nation's future, they are actually "living off past savings."

In simple terms: "Macro data is celebrating, micro life is degrading, and the wealth gap is being reshuffled."

We can break down the truth of this "getting richer the longer you fight" from the following dimensions:

1. Who really got "rich"? (A violent redistribution of wealth)

Russia is currently experiencing the largest wealth transfer in decades, with the beneficiaries being very concentrated:

• "Exchanging life for money" for lower-class families:
  This is the main source of your feeling that "everyone has money."

• Sky-high recruitment: Previously, in remote, impoverished areas (like Buryatia, Dagestan), an ordinary man's monthly salary might be only 20,000-30,000 rubles. Now, by joining the army, the signing bonus plus monthly salary can reach 200,000-300,000 rubles or even more.

• Death compensation: If a soldier is killed, the family can receive millions or even tens of millions of rubles in compensation. In Russia's poor regions, this is enough to buy a house or a car. This kind of "blood money" directly drives lower-class consumption, giving families who have never seen so much money suddenly strong purchasing power.

• Workers in the military industry and related sectors:
  Military factories run three shifts, overtime pay doubles, and they desperately need workers. To poach staff, private enterprises are also forced to raise wages significantly. The result is that nominal wages skyrocket, and everyone has more rubles in hand.

2. Has life really gotten "better"? (Having money but unable to buy good things)

Although people have more rubles, the "value for money" of the goods and services they can buy is plummeting. This is called "quality-of-life inflation":

• Consumption downgrade, price upgrade:

• Cars: Previously, 2 million rubles could buy a new German or Japanese car; now, that amount can only buy a more expensive Chinese car (due to tariffs and logistics costs) or a very old used car. Although everyone buys new cars, the cars they drive are actually not as good as before.

• Food: The official inflation rate (8-9%) often masks the real increase in food prices. The prices of basic foods like butter, cheese, and eggs have soared. The proportion of spending on "eating" for ordinary people has increased, meaning they are actually getting poorer.

• Collapse of the service industry:

• Difficulty seeing a doctor: Because many doctors have been conscripted or have moved to the private sector/abroad, waiting times in public hospitals have increased, and medical quality has declined.

• No one to do the work: If your water pipe breaks or your car breaks down, you might not find anyone to fix it, or the repair cost is outrageously high, because all the able-bodied men have gone to the front or to military factories.

3. Hidden costs: The middle class and future "payers"

Not everyone feels life is good; the pain is mainly concentrated in groups that were originally decent:

• The "losers" are the urban middle class and civilian bureaucrats:
  Teachers, doctors, civil servants (non-security departments), and IT white-collar workers see their wage increases completely fail to keep up with inflation. The days of annual European vacations and buying imported appliances are gone; their money now can only maintain basic dignity.

• Savings shrink and borrowing is impossible:

• To suppress inflation, the central bank has raised interest rates to a terrifying 21%. This means that ordinary people, if they don't join the army, basically cannot get a loan to buy a house or car.

• For soldiers, the government offers debt forgiveness (up to 10 million rubles) and preferential loans. This further widens the gap in treatment between "those who serve" and "those who don't."

4. Why hasn't it collapsed yet? (Due to inertia)

The Russian economy is indeed more "resilient" than the West expected, for the following reasons:

• Deep reserves: The sovereign wealth fund (petrodollars) accumulated over the past decade is being heavily sold off and converted into rubles to pay wages.

• Oil is still selling: Despite sanctions, energy exports continue to bring in hard currency.

• Government-led "false prosperity": As long as the government keeps printing money to pay military salaries and build tanks, GDP data will look good. But these tanks are built only to be destroyed; they don't become roads, schools, or hospitals. This GDP is an unsustainable "consumable."

Summary

The "getting richer the longer you fight" that you feel is essentially the nation borrowing money from the future to pay the current poor to fight.

• Short term: Lower-class incomes surge, consumption is hot, and it feels like a golden age.

• Real view: This is a "high-income, high-price, low-quality" distorted economy. If you are an ordinary urban resident living on a fixed salary, or a middle-class person needing high-quality medical care and education, your life is actually regressing significantly.