HOW (OR HOW NOT)
TO REFORM (MAYBE)
AN ECONOMY
(IF THERE IS ONE)
RUSSIA
At least with Russia, nobody even pretends to know what he’s talking about. No economic textbook prepares a visitor for the Russian experience. No school of economic thought foresaw the Russian situation. Can a society that has had the full faith and credit of its government contradicting economic sense for generations become a free market and not blow up? Can a Cuban-type mess be turned into Wall Street pandemonium without causing Albanian bedlam? And is there some middle way like the ball-up in Sweden? All the world’s Russia experts (and most of its Russians) are trying to figure these things out. But Russia is “a riddle wrapped in a mystery, inside an enigma, tied in a hankie, rolled in a blanket, and packed in a box full of little Styrofoam peanuts,” said Winston Churchill, or something like that.
The Russians may adopt our ideas, our way of living, and our point of view. They may join the great international society of rights, law, and progress. Or their response may be, as graffiti I saw on a Moscow factory wall put it, FUCK YUO.
I came to Russia for the first time in July 1982, arriving at the twilight of the Brezhnev era and also, literally, at twilight. Dusk is prolonged and shining in midsummer at latitude 55°, but nothing shone in Moscow. Storefronts weren’t lit, and there were very few storefronts. No headlights were visible. More to the point, no cars were. The city had street lamps, but as far apart as Patti Smith albums. The endless apartment blocks seemed blacked out. Could it be that no one lived in Russia? Or was there just not much living to be done? Red Square was shadowy. The Kremlin was dim. The Moskua River was an opaque trough beneath dismal bridges. The USSR was very dark, considering it was still daytime.
I came back to Russia in 1996 to find Moscow crowned in an arc of lights—Camel Lights. This being spelled out in tall letters atop a downtown high-rise. And the city below sparkled with ads for Sony, Coke, Levi’s, Visa, Pizza Hut, Sprint, and Nike. Freedom had come to Moscow.
Well, one freedom anyway. Many human rights had been taken from the citizens of the old Soviet Union, and the first human right they got back seemed to be the Right to Outdoor Advertising. Maybe this was a minor liberty, but I don’t know. Without advertising, human desires and intentions are invisible. What can people have? What do people want? Where are people going? They could be lining up to see Titanic. Or they could be lining up to tell on you. What succeeds with this public? What fails? A government could say the most popular flavor of ice cream is asparagus. How would you know? And what are all those buildings for? What’s going on in them? (The answer to that question in 1982—in a country without profit or loss, with little to sell and less to buy—was “nothing.”)
Now everything is going on in Moscow. Crowds load the sidewalks, moving briskly. The masses are actually massed. The masses are finally progressive. Except every member of the masses is progressing in a different direction. And he’d better be careful getting there. The pedestrian crosswalk is not yet an idea in Russia. Cars, trucks, and city buses approach intersections with the same speed and inclination to swerve as avalanches. Nor is this traffic the tinny, puttering, tacked-together output of the Soviet industrial pre-Cambrian age. You could have stood in front of that stuff and watched it fall apart as it hit you. But now there are Volvo semis and Mercedes sedans and solid little Opel coupes barreling down…crash…into one of a hundred gaping holes in the street, products of a flurry of construction that envelops Moscow in a glorious aureole of mud, dust, bulldozer exhaust, and jackhammer noises.
The place is hopping, happening, swinging, smoking. Factually smoking. You can fire a butt anywhere in Moscow, and nobody fakes a cough or pulls a C. Everett Koop mug on you. These people are busy. They have lives. And this vast liveliness does something unlikely to Moscow: It makes the city almost beautiful.
The Communists wanted to turn Moscow into a showplace and couldn’t get it right in seventy-four years of trying. From Stalin through Khrushchev, most building was done in the style of TragiComic Classical. The architectural forms of the ancients were reproduced in badly poured concrete and gross-out scale. Thus, poky offices are entered through arches more fit to be sitting at the end of the Champs-Elysees, and nasty warrens of slum housing are fronted with Ionic pillars as wide as tennis courts.
The city’s main streets are so broad that you can’t hit to the far curb with a three wood. Driving anywhere in Moscow is a half-day excursion because the streets were laid out, not with a view to getting anywhere, but according to what made the best parade routes. And traffic signals are timed to let three battalions of crack airborne troops and a hundred missile launchers through before the yellow caution light comes on.
At least now there’s something to do while you’re waiting to cross the street. You can have dinner. Moscow is engorged with good places to eat. I spent my first night in the Hotel Metropol’s restaurant, a Kubla Khan’s worth of stately pleasure dome with a fountain in the middle and enough space to fly a radio-controlled model airplane. A full orchestra was playing (among the selections: an instrumental version of Billy Joel’s “Honesty”). You have heard of Tiffany lamps. The restaurant at the Metropol has what looked to me like an entire Tiffany ceiling. The cooking was French to such an exquisite degree that the garlic breath from my escargots melted a hand towel when I got back to my room.
The next night I went to Uncle Gillie’s, which had California cuisine in perfection. My chicken had not only been allowed to range free, it had been given aroma therapy and stress counseling. The night after that, I went to Il Pomodoro for Italian food authentic enough to satisfy the Corleone family, Russian versions of which were eating at several other tables. Then there was the Starlite Diner, built in America and shipped in modular sections to Russia. Here even the water was imported from the States. Great burgers—and it is the world’s only diner filled with Republicans. International bankers in pinstriped suits crowded the booths, drinking milk shakes and bobbing up and down to the Four Tops.
“Tomorrow night I want caviar, blinis, and borscht,” I said to my dinner companion, Dmitry Volkov, correspondent for the Sevodnya daily. “Where’s a Russian restaurant?”
“There aren’t any,” said Dmitry.
And there aren’t any Russian products in the stores, either, other than vodka, fish eggs, and a few tourist tchotchkes. There is a simple reason for this. The Russian stuff is no good. Even the smallest, simplest items stink. The way you use a Russian match is: After you strike it, you put it back in the matchbox. It’s as likely to work as any of the other matches in there. In the old days the soda pop tasted like soap, the soap lathered like toilet paper, the toilet paper could be used to sand furniture, the furniture was as comfortable as a pile of canned goods, the canned goods had the flavor of a Solzhenitsyn novel, and a Solzhenitsyn novel got you arrested if you owned one. Now the Russians have discovered brand names. Easy to sneer at this. But there’s a reason why, when we go to Florida, we don’t drink Ocala-Cola.
Think what American shopping preferences would be if Sears were suddenly filled with wonderful products from the future—typewriters that could write things by themselves, safe cars that could go twice as fast as our own, shoes that made us sexually irresistible. The Russians are getting all these things.
Especially the shoes. Shoes are to Moscow what T-shirts are to Jimmy Buffet concerts. Shoes rule the store displays, particularly women’s shoes—pumps, mules, sandals, boots—all of them with the highest possible heels, even the clogs and espadrilles. High heels and nude hose define the Moscow look and are worn with thigh-flaunting skirts so that even policewomen and female army officers are tottering around, knees in the breeze. The ensemble is not always chosen on the best of fashion advice. Often the effect is sausage on a stick. But what the hell. This is a country where in 1988, when I was covering the Reagan-Gorbachev summit, I saw a near riot in the shoe section of the GUM department store. Scores of wome
n were pushing and shouting for the opportunity to buy Bulgarian sneakers.
Now, GUM is a mall, fully American, except for seventy-four years of Soviet maintenance on the greenhouse roof, which leaks, and containing more than a hundred private stores. They sell everything from high heels to nude hose.
Plus you can shop 24/7 in Moscow at thousands of Plexiglas and plywood kiosks that have been built Tirana-fashion in parks, under bridges, on railroad and subway platforms, and along every footpath wide enough to walk a dog. A full half of these market the instant mini-party with wares consisting of Marlboros, hooch, and pirated audio-cassettes.
Unlike Tirana, however, Moscow had McDonald’s. The McDonald’s was expensive. Everything in Moscow—except the thirty-cent subway—was expensive. The drinks, meals, and hotel rooms were as costly as Monaco’s. And retail prices were no better than in most places on the value-added-tax-plagued continent of Europe. Yet the average wage in Russia is $143 a month. Unless everybody is fibbing. Which they are.
Russia’s businesses pay a 35 percent federal tax, plus a 20 percent VAT, plus local taxes that can be as high as 45 percent. That adds up to 100 percent, so a tremendous amount of Russia’s business is conducted via the “informal” economy. And it can be very informal. The way you hail a cab in Moscow is that you don’t. You hail any car, and if the driver feels like it, he’ll stop, negotiate a fee, and take you where you want to go.
But some people in Russia don’t have cars—or anything else. Respectable grandmothers beg on the streets. The old folks are broke in Russia. Increases in pension payments have been modest, while inflation has been indecent. In 1988 one ruble was worth $1.59. By mid-’96, one dollar was worth 5,020 rubles. And though money had been printed with abandon, the government ran out of it anyway. At the end of the first quarter of ’96, pensions went unpaid. Then the panhandling golden-agers were all over the place.
Things have gotten somewhat better, but there’s still gross poverty in Russia. I talked to economist Sergei Pavlenko, the director of the Working Center for Economic Reform of the Russian Government. He estimated the Russian poverty rate to be 25 percent. You can compare this with the 10 percent poverty rate claimed by the Communists before 1991. But don’t. Pavlenko said that he had to wonder what the Communists considered poverty. The U.S. government sets the poverty threshold at $15,569 a year for a family of four. The Soviet government fixed the poverty line at seventy-five rubles per month. That was $119.05 at the official ruble exchange rate. But as in Cuba, the official exchange rate was a joke. The black-market rate back then varied from ten to fifteen rubles to the dollar, so seventy-five rubles was really something between $5 and $7.50. People were getting nothing under the Communists, too. It’s just that they knew how much nothing they were going to get and when they’d get it.
But there’s been more to the high price of freedom in Russia than high prices. You can be mugged these days or even shot if you put your mind to it. Moscow is no longer a town as safe as the tomb it used to resemble after 9 P.M. Random felonies, however, are still fairly rare. Russian crime is more likely to be the organized kind, and lots of it. The U.S. State Department estimates that there are 50,000 murders a year in Russia. More than half go unsolved. Sergei Pavlenko told me that four businessmen a day are killed in Moscow.
The key word is businessmen. Russia does not yet have an effective system of civil law. The only way to enforce a contract is, as it were, with a contract—and plenty of enforcers. What would be litigiousness in New York is a hail of bullets in Moscow. Instead of a society infested with lawyers, they have a society infested with hit men. Which is worse, of course, is a matter of opinion.
Moscow’s English language weekly, Living Here, publishes a club and bar guide which had this to say about a typical vorovskoi mir, or “thieves’ world” hangout:
Marika
Entrance: Entrance: $20 for men, free for women
Why: Come here to gawk at Moscow’s coked-up femme-fatale elite, none of whom will notice your existence; end your fun-filled evening by getting your date stolen and your life threatened by slobbering-drunk Mafiosi and their unshaven thugs.
Why Not: You still have dignity; you want to live.
The reliance on muscle means that criminals have a cut of everything mercantile or financial happening in Russia. This, combined with endless political wire-pulling and universal bureaucratic jobbery and graft, leads to an atmosphere that is…still a lot more fun than a KGB torture cell.
On my first evening in post-communist Moscow, after the lavish dinner, I ambled through the busy midnight streets to the Hungry Duck. An enormous circular bar occupied what looked like a trading pit from the Chicago Commodity Exchange. But there was no futures trading—or much future—in the old USSR. God knows the room’s Soviet-era purpose, but the current purpose was clear. A thousand twentysomethings—Americans, Russians, Germans, British, French, Australians, Japanese; the foot-soldier employees of the corporations that have invaded Moscow, the Anne Kleined and Brooks Brothered sentinels who man the mouse pads and keyboards of capitalism’s front lines—were having a Thursday night screen saver. Happy youth was pressed breast to pec in one raving mass while fifty people danced on the bar top and giggling waitresses passed out free vodka shots from some booze company promoting a new brand. Ties were yanked off. Blouses were unbuttoned. Beer spills were whipped to foam by flapping loafer tassels. Arms waved in the air. Legs waved in the air. Whole bodies fluttered in the smoky space above the crowd. And on the sound system, through speakers so big they would have done Stalin proud and played at volume enough to wake the old shit in his grave, Coolio sang “Gangsta’s Paradise.”
While I was visiting their country, the Russians were having an election. A momentous election. This was the first time in the 1,100–year history of the country that a national leader was being freely chosen by democratic means. And it might be a big election for everyone else in the world, too. Because running neck and neck were Boris Yeltsin, the man who almost single-handedly removed the Denver boot of bolshevism from the now freely spinning snow tire of Russian society (to coin a metaphor), and Gennady Zyuganov, a damned Communist.
Was the Soviet Union about to reunify? Was the Evil Empire coming back? Would the Russians vote themselves voteless? Would the tanks roll again? (The military commanders will have to pay some heavy bribes if they plan to park any armored vehicles near Moscow’s more-fashionable restaurants.) Or would Russia continue on the straight and narrow path of modern political economy, eventually turning into a gigantic frozen Singapore? (Picture Lee Kuan Yew trying to cane a full-grown Russian.)
The only people who seemed to be unconcerned about the Russian elections were the Russians. When questioned about the vote, Russians, even loyal partisans, campaign volunteers, and candidate advisors, prefaced their answers with a shrug—the kind of shrug that can be delivered only with Russian-sized shoulders. I asked a Russian friend who would be the next president. He shrugged and said, “Yeltsin.”
“How much will he win by?” I asked.
“I didn’t say he would win. I said he’d be the next president.”
Enormous state power exists in Russia whether the head of this state is elected or elects himself. And with such power goes tremendous governmental inertia. This either meant that no matter who got elected, nothing would change, or it meant that all the changes would keep happening, no matter who got elected. The Russians didn’t know, and, busy as they were trying to make a living, they weren’t that eager to find out. If Zyuganov and his ilk got in, the corrupt bureaucratic Soviet holdovers, the so-called dingycrats, would continue to run things. And if Yeltsin was returned to power, the dingycrats’ partners in corruption, the crime-and-business parvenus called New Russians, would continue getting rich.
The New Russians are an amazing bunch. The men wear three-piece suits with stripes the width and color used to indicate no passing on two-lane highways. Shoulder pads are as high and far apart as tractor fenders, and l
apel points stick out even farther, waving in the air like baseball pennants. The neckties are as wide as the wives. These wives have, I think, covered their bodies in Elmer’s and run through the boutiques of Palm Springs, buying whatever stuck. Their dresses certainly appear to be glued on—flesh-tight, no matter how vast the expanse of flesh involved. Hair is in the cumulonimbus style. Personal ornaments are astonishing in both frequency and amplitude. There was a David Bowie concert in Moscow in June 1996, and according to the Moscow Times, the loudest sound from the expensive seats was the rattle of jewelry.
Most of the New Russians, like the dingycrats, had government connections in the old Soviet Union. They were at the heart of the socialist beast, and when it collapsed, they found themselves in perfect position to feast on the carcass.
Drinking with Dmitry Volkov one night, I said, “Maybe you should have cleaned house in Russia. Maybe after the attempted coup in 1991, you should have hanged the Communists.”
“No,” said Dmitry. “What would it have mattered if Goebbels had hanged Himmler?”
Like many other places in the world, Russia is a land of contrasts between old and new. But these are not the cute contrasts between old and new that telecommunications companies love to use in TV commercials—Zen masters faxing each other blank pages. In Russia, the contrasts are all scary. I visited a radio station on election night, a radio station still using vacuum tubes in its broadcast equipment. There was a Toshiba laptop in the studio. And this ordinary piece of journalistic equipment was alarming. The laptop, with its crisp design and neat finish, made the whole building look like it had been built by apes. Apes on the take. The place was no more than fifteen years old, and the plaster was flaking, the floor tiles were buckling, the walls were crooked, the windows didn’t fit. The carpet was unraveling into long, smelly coils. You could break down the doors with a blunt remark. And there, on a wobbly table with a veneer top wrinkled like a relief map of the Urals, sat the little Toshiba, doing the one thing that nothing made in the Soviet Union ever seemed to do: It worked.
Eat the Rich: A Treatise on Economics Page 16
