“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”
― Milton Friedman
NOTE: May, 2013. The Merriam-Webster dictionary defines moribund as “being in the state of dying: approaching death”. Indeed, that was what I found when I took a tour from Helsinki to Leningrad (now St. Petersburg) then on to Moscow. It was the summer of 1981 and it was at depth of the Breznev era. In fact, Leonid Breznev did die a year later and thus began the fall of the Soviet Union and the transformation of the Russian economy to a freer market. Mikhail Gorbachev assumed power in March of 1985 and by December 1991 all of the other countries that comprised the Soviet Union had gained their independence. (see chart below). The next report on Leningrad and this report on Moscow came from notes taken during my visit there. What these two stories show is a snapshot of a system just before it died.
The lessons to be learned are obvious. Oppressive central governments that attempt to control all aspects of the economy are doomed to a similar fate. Although the transformation for Russia was painful, per capita income has tripled since then. Many of the satellite countries of the Soviet Union are doing even better. I visited Estonia later and they are thriving much like their Finnish cousins. In Thailand where I am now living, we are overrun with Russian tourists flush with loads of money crowding the restaurants and taxis and buying up real estate. In some areas of my beach town, half of the signs are in Russian. Although some parts of the Russian economy are still under tight government control, whether or not they are willing to admit it, ordinary Russians have been well served by the move to a market economy. Those advocating more government control of the economy in western countries take note.
June, 1981. Moscow, like so many other capitals, has experienced a problem with people from the countryside migrating there. As a result, it has attempted to limit its growth. In order to move there, a special permit is needed. Some people say this is a form of veiled racism, a way of keeping Moscow to the white Russians. But, nevertheless, after seeing Moscow, I couldn’t see why anybody would want to live there anyway. Aside from a few older buildings around Red Square, the Kremlin, for example, and a few grotesque Stalin birthday-cake style buildings like the State Department Building, most of Moscow consists of broad, gray expanses and mile after mile of ugly utilitarian-looking buildings.
We were put up at the Belgrade Hotel which was a bit south of town. They gave us free time to look around Moscow before the planned tours began. Never were we followed and our participation in the organized tours, for instance the trips to the ballet and the circus, were only voluntary. We had a young Jewish-American fellow on our tour and whenever we would go on one of the planned activities, he would tell the tour guide he was not feeling well and that he’d rather stay in the hotel. Instead, he would go out and visit Jewish dissidents. He was given a list of phone numbers by the Congressman he was working for and he would phone the Jewish dissidents and check on their welfare and take any reports they wanted relayed back to the Congressman. As it turned out, the tour guide never asked us where he was and she wasn’t particularly concerned.
A couple of unusual things happened on this trip, however. On one of the days when we had free time, I decided to visit the commercial attache, the business officer of the American Embassy. When you check into a hotel, you are given a hotel card and they lock up your passport in their safe. My only means of identification then, was the hotel card from the Hotel Belgrade. I walked the several blocks to the US Embassy where I found three rather tall Soviet guards standing in front. I started to enter the main door of the Embassy and one of the guards shouted “Ah!…ah!…Nyet. Where is your passport? Pasaporte?”
And I said, “it’s at my hotel. All I have is a hotel card.” “Nyet! Passport.” Indicating that I must have a passport. So it’s a catch twenty two…you can’t go in if you have no passport and you have no passport because it was locked at your hotel; a clever way of restricting access to the US Embassy. As I was hassling with them, I happened tolook back in the doorway and there stood a Seventh Fleet US Marine guard. I looked up and said “Hey, would you tell them to let me in?”
In a big voice that resembled God speaking from heaven, he made the whole tunnel rattle when he shouted, “Let him in!” They parted quietly and I walked into the Embassy. I thanked the guard. He asked where I was from. I told him San Diego, and of course being a marine, he had been to Camp Pendleton. He said, “Oh, by the way, if you and any members of your tour are interested, this is Friday night and tonight, we have a disco going on at the Marine Snack bar and Canteen here in the Embassy compound.” I thanked him for the invitation and I thought to myself, sure, sure, if I want to drink with Marines, I can do that in Oceanside near Camp Pendleton. I then went in to chat with the staff in the commercial attachés office about the problems of doing business in Russia and then went back to the hotel.
Later, at the hotel, I was with several other people on the tour and we were drinking at what was known as the Foreign Currency Bar where only foreigners can drink and the drinks can only be bought with hard non-Soviet currency. It’s another way they have of acquiring foreign exchange money. I was with a Dutchman and some Nicaraguans and we lost track of the time. It was getting dinner time, so we decided to have dinner on our own than rather in the hotel.
So, we set out to find a place to eat and the first place we came to had a long line at the door. We tried six different restaurants but could not get in because it was rather late in the evening. Basically, the system is that the restaurants are given a quota of meals to serve and once they serve that number of meals, then it’s finished; like say, a restaurant has a quota of two hundred meals and you are number two hundred one, you don’t get to eat. There is no profit motive to serve that additional customer. That’s what we ran into; we could not get into any restaurant. There was no incentive for them to serve extra meal, they don’t make another penny. It was a little bit late in the evening so guess where we ended up eating? At the Marine Snack Bar at the US Embassy. They welcomed in my Dutch friends and my Nicaraguan friends and we ended up spending the evening there with roast beef and sandwiches and dancing with the nannies of the French and English families who were working for the different diplomatic posts in Moscow.
Note: Four years later, Sgt. Clayton Lonetree and two other Marines assigned to the US Embassy in Moscow were arrested and tried for espionage. It seems Sgt. Lonetree was seduced by a beautiful Russian girl and he allowed her “Uncle Sasha” to come into the embassy and plant “bugs”. The story can be read here http://www.spymuseum.com/pages/agent-lonetree-clayton.html
After we’ve been there for a few days, Steve, the fellow who was working for the Congressman, began gathering stories from dissidents and was relaying them on to us. Basically, the consensus was that dissidents felt the Soviet government was becoming more and more entrenched and more and removed from the people. They felt greater isolation. The Soviet elite were living in their special apartments and, in addition, had special dachas or summer homes. Their children were sent to special schools and shopped at special stores and were having less and less contact with people and had less and less knowledge of what was going on.
A good example of the elite was our tour guide. Her name was Irina. She was medium height with short, dark hair and she wore expensive imported clothes. She wore a purple, sort of valor pant suit and good quality Italian shoes and Italian purse. She was a real contrast with that plain lady that was our tour guide in Leningrad, Natasha. I got to know her rather well after the week that we were there. She began to confide in me. So one day I asked her, “How was it that you dress so stylishly?”
“Well, my husband travels to Europe a great deal.”
“Really? What’s his job?”
“He’s a delegate to the world peace movement and his job is to go to Europe and organize anti-nuclear rallies.” she answered straightforwardly. It was down to the fact that the nuclear rallies in Europe, by and large, were financed and staged by Soviet agents including Irina’s husband. Because he was a member of the elite, her husband was able to travel and Irina was able to have all these imported clothes, shoes, and so on. But for those people who did not have any connections, the other ninety eight percent (98%) of the population who weren’t high government officials or important sports figures or important scientists, they had to subsist on the meager, shoddy production that the system turned out. And if they could not get it through the normal means, then they had to resort to the black market.
What you have in the Soviet Union is approximately thirty per cent (30%) of the economy is black market So would call it the free market. Two good books were written on this. In his book “The Russians”, Hedrick Smith talked extensively about this thriving black market. He was a correspondent for the New York Times in Moscow. But even in the limited time I was there, the shortages and mismanagement of the economy are evident everywhere. You can’t walk down the street more than a couple of blocks without seeing a waiting line or queue of people trying to buy something-coffee, shoes, whatever. It has been estimated that the average Soviet housewife spent three and a half (3-1/2) hours a day in waiting lines to buy things. You can not travel anywhere without being accosted by someone. If they see you’re a foreigner, either they want to buy something or to exchange money with you. I recall walking down the center aisle of the GUM Department Store, the major department store in the Red Square, and being asked three or four times to exchange money. I really tried not to get involved into the blackmarket. I didn’t need the troubles that could arise. But in this one particular time I was walking down throug GUM, a young man pointed to the ballpoint pen that was sticking out of my pocket and offered me two rubles for it, which was something over three dollars. Well, I got this free from my bank and it had my bank’s name on it and, what the hell, I gave him the pen and took the two rubles.
This happened repeatedly. People in our party sold their jeans and other apparel. Glenn sold the pair of white jeans to someone. Many people financed their trips in the Soviet Union through this thriving black market. In fact, I had two friends living in Imatra, Finland, Remo and Sally, and both of them told me that they frequently empty their dressers 0f their old clothes and book a tour down to Yalta or some other parts of the Soviet Union and those used clothes will finance their entire trip. What the whole problem boils down to is that the free market is a much better planner than some bureaucrat in Moscow. The whole process is left opened to mismanagement and that’s exactly what you have in the Soviet Union.
The entire time we were there, we had no fresh vegetables in our hotel meals. It was always boiled potatoes and boiled meat and sausages and so on; no green leafy salads like we’re used to in the States. They grow excellent vegetables in the Soviet Union, but the distribution is the problem. They don’t have that wonderful pricing mechanism that allows goods to be shipped from where they’re not receiving a high price to wherever they are receiving a higher price. The distribution system in the US is the most efficient in the world.
As part of our tour, we were taken to the Red Square and to Lenin’s tomb. Just outside Lenin’s tomb, we saw the grave of John Reed, the young American communist who was a part of the Russian revolution and they divided his body in half and sent part of it to the the United States. The other half is in Red Square and you can see his name “JOHN REED” inscribed there. I think he was the subject of the movie “Reds” starring Warren Beatty.
To actually see Lenin’s body, it usually it takes about an hour. You wait in a long line that winds around the Kremlin . You’re searched very thoroughly on the way in and then as you go down into the tomb you walk 30 or 40 feet and look through the glass. And there the famous man is lying, with his sloping forehead. You can’t help noticing his fingertips. I don’t know how they embalmed him, but his fingertips appear to be turning blue. This man had supplanted God in the Russian society. For example, while we were standing in line, we heard some applause and someone rushing by us. It was a bride in a white gown with her groom in tow. People were applauding them. Our guide told us that as a present from the State, they are allowed to go and view Lenin’s body without waiting in line on their wedding day. Where many Americans go to church on that special day, Moscovites get to see Lenin’s dead body including his blue fingertips. What a thrill! They then will usually go up above the city to the University of Moscow area overlooking Gorki Park and have their pictures taken. They are married in a wedding palace instead of the church. All of this, of course, is done very cheaply.
Around Moscow, you notice half of people are in uniform. The reason is that every male between the ages of eighteen and twenty must serve in the military. If you look on a typical street, you see a lot of military. After two weeks of traveling in Leningrad and Moscow, if one were to ask me in which of the two I would like to return to, I would say Leningrad, and, no, I would not return to Moscow. Too many of the stereotypes you hear are true. Living in Moscow would be like spending every day of your life at the Department of Motor Vehicles.
So after our two weeks was up, we took the overnight train back to Finland. We made the border crossing at Vainikola where money was counted out again and where our travel companion, Joaquin, was put under arrest and interrogated about his eight one-hundred dollar bills. (see earlier report on “Train to Leningrad”). Finland never looked so clean and well-organized and the Finnish people never seemed friendlier.