The Taiga Home Companion: Letters Home from Moscow, 1993

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Part 6: Adam Smith

April 20, 1993

The Taiga Home Companion is a production of Major League Baseball and is intended for home viewing only. Any resemblance to real persons or events is entirely coincidental. Do not dispose of in fire.

All my correspondents, dissatisfied with the worm's-eye view of Russia I have been trying to provide, keep asking about the big events. Well, I can try. What follows is a pre-referendum view of Russia; who knows what next week will bring.

In the spring of 1989, Prof. Marshall Goldman, a prominent expert on the Russian economy, told me and 800 of my closest friends that the first step in moving Russia to a capitalist economy would be to generate demand for money. If there are no goods on the shelf, he said, there is no incentive for people to work hard or launch entrepreneurial endeavors, since the extra money they would earn will not improve their lives. Well, in Moscow at least, kiosks, hard-currency stores, and people standing on the street now offer a multitude of goods from the West: shaving cream, blue jeans, designer suits, fruit liqueurs, electronic calculators, and what is perhaps the most popular Western import of all, Snickers bars.

So far, so good. This array of tempting goodies certainly inspires me to run around town all day to shoot a picture for $15, and I can imagine that it has the same effect on the Russians. The pump has been primed.

But how are the Russians to earn the money to pay for all of this? They won't do it by taking in each other's washing. Russia needs to find something it can sell to the West, something a bit more exportable than apartment sublets and language lessons. But as far as I can tell from the press, every time Russia comes up with a viable export--metals, fish, satellites--it is told to limit its exports on the grounds that they are being sold below cost and are unfairly competing with Western goods. Which is absurd. I mean, it's one thing to outlaw dumping, a long-term strategy to ruin another country's industry. But Russia has much simpler, entirely innocent motives for its pricing strategies.

First, Russia desperately needs some hard-currency earnings, and its tactic of lowering its prices is no more sinister or illogical than the willingness of a college student to pay inflated prices for frosted blueberry Pop-Tarts (R) from a 24-hour convenience store at 3 a.m. when he desperately wants them.

Secondly, Russia needs to create networks to export its goods, establish contacts with customers abroad. If it does this through loss-leaders, offering new customers low prices in order to win their business, it is merely employing a classic tool of capitalist marketing.

Finally, in the chaos of the Russian economy, when subsidies and fixed prices are still very common, where the government invested for decades in industrial and military research and technology, and where the currency is constantly dropping, can anyone really say what precisely Russia's production costs for satellite launchers or steel are?

Meanwhile, every billion of Western aid seems to end up in Western pockets, going either to farmers, whose produce is purchased and donated to Russia, and to Western consultants, who are paid outrageous fees, allowing the billions to add up very quickly. (Ian Watson, my roommate here, has managed to surf this wave. He is working on the privatization project--auctioning off state industries--and pulling in an obscene amount of money that ultimately comes from U.S. taxpayers and gets counted as "aid to Russia.") The Japanese are the latest to catch on to this technique--nobly offering something like $1.8 billion despite the continued occupation of the Kurile Islands. But the small print, if anyone read it, said that almost all the money would go to Japanese firms.

My question to my readership, who may have both a better grasp of 20th-century history and better access to historical materials, is, was the U.S. this stingy when we created the Marshall plan? Did we tell the Germans not to export cars, even though Studebaker and Nash were threatened? Did our millions pay for consultants from Chicago to live well in Paris for a few years? Or did we actually give Europe money?

I actually believe that under the right conditions, Russia could become a thriving capitalist democracy. Many expats here would argue that the inefficiencies, shoddy work ethics, and astonishing rudeness that one encounters here daily are inherent features of the Russian character that can never be remedied. But even the worst-run Russian enterprise isn't that much worse to its customers than UPS, which sits on something like 93% of the non-express shipping business in the US, and takes advantage of that market share to refuse out-of-state checks, make you wait eleven hours for a pick-up, and spill your computer on your lawn as you watch because they were too lazy to make two trips from the truck and overloaded the hand-truck instead.

A lot of Moscow is like that. While there are private businesses here, there are few situations in which the competition is really fierce enough to promote the sorts of improvements that capitalism is supposed to bring. A sandwich shop has long lines, which could be avoided. But it has no real reason to improve the operation, because the customers have nowhere else to go and therefore the lines are not losing the shop any money.

In contrast, in the few situations where there is tight competition, one can see Russians running businesses well. The contrasts are incredible. Go to the Tretyakov Gallery, a state art museum, and you will find that the only art books on sale are placed behind the same cashier who is selling tickets, so just to get the chance to lean over the counter and squint at the titles of the books on distant shelves, you have to jostle past all the people who want to get into the museum. But step outside and there are a couple of guys on the street, with an inviting display of books spread out on a table for you to inspect.

Or carrots. The carrots at state stores are not only small and close to rotting; they are also covered with dirt. For a quick refresher, head down to the farmers' market, where one vendor has tried to outdo her rivals, a few yards away, by not only scrubbing her gorgeous carrots, but by periodically dunking them in water so that their moist skins are always a gleaming orange. These are Russians, I tell you, Russians. Guided by the invisible hand. If only they will be allowed to succeed.

Keep your fingers crossed on the 25th.

Here are some updates on items I have mentioned in the past. Lenin is disappearing from people's wallets, as new 1993 Russian 100, 200, 1000, 5000, and even 10,000 ruble notes drive out the old Soviet bills. The new currency doesn't have anyone's picture, just a view of one of the domes of the Kremlin with a big Russian tricolor flying over it. Meanwhile, I changed money on Friday, getting 803.6 rubles to the dollar. This means that the ruble lost about 23 percent of its value in the first 65 days of my stay. We received a clue as to why our building's staircase is so unpleasant. It was a bill for maintenance on the apartment, which is essentially a condo. Electricity, hot water, elevator charges, a radio fee (presumably for the one-channel radio stuck on the kitchen wall, right out of Orwell), and everything else added up to 652 rubles for the month. Of this sum, a whopping 83.59 rubles was allocated to "capital repairs." Yeah, that 10 cents will go a long way.

Spring in Russia is pretty weird. It snowed last Thursday, actually accumulating a bit. And while it has been a bit warmer, the nights are still very cold. Yet with the lengthening days' being reinforced by daylight savings time, it is now 8pm with a bright blue sky. Very unsettling.

Finally, I many not have mentioned that I am no longer kneeling at the bathtub to do my laundry. Ian spent $90 or so on a washing machine, manufactured in India and apparently intended for the domestic market--the instructions are in English, and in explaining how much one can cram into one load, it notes that a dhotee generally weighs about 215 grams, while a lungi is only 150 grams. It's not exactly a Maytag; one must lift the thing into the bathtub and fill it by attaching a hose to the bathtub tap, then drain and refill it to rinse. But it save a lot of elbow grease and sore knees, and after a trip through its spinner, clothes dry on the line in just a few hours, as opposed to several hours plus overnight. And the outlay won't be as extravagant as it may sound; when Ian leaves he should be able to sell the thing for most of what he paid for it.

Does anyone know of an International Brigade in Bosnia that I could join? Hurd and Kohl keep muttering about no one wanting to commit ground troops, but have they considered volunteers?


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