Eat the Rich: A Treatise on Economics

by P. J. O'Rourke

  Not that this mattered, since all of the USSR’s statistics were Cuban in their unreality. The figures used to calculate the gross material product were drawn from bureaucratic reports about fulfillment of the notorious gross-output targets and, hence, were all lies.

  Besides, the USSR’s output was stated in rubles, a currency with no value at all. Or, rather, the ruble had up to a dozen different values by the end of the Soviet era. There was the international ruble, the official currency with an exchange rate of about $1.75; the commercial ruble, used for trade with hard-currency countries and usually pegged at fifty-seven cents; the tourist ruble, introduced to undercut the black-market ruble; the auction ruble, with value determined by sales among foreign banks; the enterprise ruble, which could only be spent on products from a specific Soviet industry; and so on. Russians are still suspicious of the ruble. A store clerk in St. Petersburg rejected my tattered 1,000-ruble bill on the grounds, I guess, that it was a torn ruble with yet another special exchange rate.

  We don’t know how much of the Soviet economy shrank after the collapse of communism, because the Soviet economy was unknowable. But we do know that electrical consumption fell by only 18 percent. This argues against the amount of GDP contraction claimed by the Russian government. We also know that black-market activity grew, although by how much is also unknowable. (Amazing how little you can find out from the people running things when they’re flanked by enormous thugs.) I talked to one of Communist presidential-candidate Gennady Zyuganov’s economic advisors. She claimed to be an expert on the “black economy” and said she believed that 45 percent of Russia’s industry and trade was now conducted off the books.

  Some of the shrunken parts of the USSR’s economy will not be missed. In a leftover Soviet-era guidebook, I found a passage about how “a giant wood-pulp and paper mill polluted the pristine waters of Lake Baikal.” I saw no sign of that thing. And some of the downturns in economic indicators are actually signs of progress. From 1986 to 1990, the part of the USSR that’s now Russia produced an average of 105 million tons of grain per year. Now it produces only 69 million tons. But at the end of the communist period, 27 million tons of grain per year were being imported, while today, Russia is a net grain exporter. This is no paradox, considering the USSR’s transportation and storage facilities. As much as 60 percent of the Soviet Union’s food used to be lost moving it from field to face.

  Still, the Russian economy did have conniptions in the 1990s. There was the wallet-popping inflation. In 1992 the inflation rate reached 1,353 percent. When the Soviet Union went to pieces, all of its former republics were left with central banks that had the equipment to print rubles, and no one was there to stop them. In effect, Russia had fourteen estranged wives, each with a duplicate of the Kremlin Visa card.

  And many of the country’s largest industries collapsed. The cars, refrigerators, and TVs they made were junk. The only way they’d been able to sell them before was through a Soviet retail system so screwed up that no one could buy any cars, refrigerators, or TVs, and so there were no complaints. Tens of thousands of jobs disappeared, or, worse, the jobs stayed but the paychecks vanished.

  By all rights, Russia should have been in the kind of great depression mess that led to Hitler in Germany and whiny, nasal Woody Guthrie songs in the United States. But Russia, mysteriously, was not singing “This Land Is Your Land.” And Russia was pretty stable, considering all the asses-and-elbows political events of the past decade.

  With the reelection of Yeltsin, the Russians had voted for a sort-of democratic, kind-of free-market government. And that government’s finances weren’t even a total mess. Inflation was down to between 1.5 or 3 percent a month, nothing to amaze an American old enough to remember Richard Nixon’s wage-price controls. National debt as a percentage of GDP was lower in Russia than in any country in Europe except Luxembourg. Probably this was because only a crazy person or the International Monetary Fund would loan Russia money. But, even so, the 34 percent of GDP Russian debt was a big improvement on America’s 70 percent and Sweden’s 100 percent. And Russia’s budget deficit was only 4 percent of gross domestic product, about the same as the average for European Union countries. Russia’s economic situation defied standard analysis.

  Russia’s economic situation defied standard analysis because its numbers didn’t add up in any standard way. Russian industrial output had declined by half since 1990, but its export trade flourished. The nation had a $19.9 billion trade surplus.

  Russia reportedly exported $88.3 billion in goods in 1996—mostly timber, cellulose, ferrous metals, coal, oil, and gas. Russian extraction industries weren’t the flop that the Russian manufacturing sector was, but there was more to it than that. When the Soviet Union collapsed, Russian industries were found to be hoarding enormous amounts of raw materials, perhaps as much as $700 billion worth—in a country with chronic shortages of everything. This senseless inventory glut resulted from a combination of realpolitik cynicism and cynicism of the regular kind. The leaders of the old Soviet Union thought a nuclear war could be won. They meant to survive and rebuild the (now socialist, of course) world. It was to be, I gather, a world made of timber, cellulose, ferrous metals, coal, oil, and gas. The managers of Russia’s industries were happy to go along with the daft stockpiling because they could use these heaps and piles of superfluous stuff for black-market bartering through the tolkachi system. Now many Russian industries were keeping themselves in business by fencing the assets of paranoid Kremlin megalomania.

  Then there was the matter of Russia’s continuing inflation. The inflation was dinky compared with what it had been, but nonetheless it verged on 30 percent a year. Why did a country with low national debt, a moderate budget deficit, a supposedly shrinking GDP, and a trade surplus have any inflation at all?

  And if there was a trade surplus, why was the ruble losing value? Russia had issued new currency and solved the problem of rogue central banks in places like Trashcanistan. But the ruble exchange rate fell anyway.

  The answer was that none of Russia’s official economic figures properly took into account the “black economy,” the informal market. The trade surplus was an example. According to the government import-export accounts, Russia spent only $59.8 billion of its annual export earnings on foreign goods. That left an amount equal to more than a month’s salary for every person in the country. Where was this money going? It wasn’t being spent on deficit financing. The IMF was loaning Russia $10 billion over three years for that purpose. And the money wasn’t being used for the capitalistic purposes that Russia’s Soviet forefathers so loathed. Investment in fixed capital had fallen by 36 percent since 1993. The Russians were spending it on the sly.

  The Russians were spending money on uncounted and unrecorded foreign goods brought into the country by small traders. In 1996 you were allowed $2,000 in duty-free imports when you entered Russia, and no real Russian came back to the country with a penny’s worth less. Clothing, toys, and small appliances were packed into enormous burlap sacks so that the baggage-claim area of any Russian airport with international flights seemed to be populated by hundreds of Santa Clauses in their off-duty clothes. Myriad Russians were doing this for a living. They were known as chelnoki, or shuttle boats. They went back and forth to Turkey, Poland, Italy, South Korea, Egypt, Thailand, Dubai—anywhere with cheap products for sale—flying bargain charters to obscure provincial airports. Ankon Airport, in eastern Italy, was visited by 38,677 Russians in 1995. The chelnoki bought with cash, and they sold unencumbered by taxes, licenses, permits, or any of society’s other parasitical attachments on trade.

  There were two ways to shop in Russia. You could walk down the main streets, and here were the same stores that America had, full of the best-known brands of everything. Or you could go around the corner, down the alley, and into one of the broad paved courtyards in the middle of Russia’s gargantuan city blocks.

  I didn’t know these places existed until I was walking down a side s
treet in St. Petersburg and caught sight of a huge bustle at the end of a dank, narrow passage. I walked through and emerged upon a Gotham of cardboard boxes. In other poor countries, people would be living in them; here they were minding shop. All the world’s handiwork was for sale, at least all the world’s handiwork that’s cheap—from Chinese canned hams to Malaysian underpants. It was illegal, of course. But the only signs of that were two enormous thugs demanding a buck to let me in.

  This was where ordinary Russians cruised the mall. They shopped for old-fashioned necessities. They shopped for newfound pleasures. And I hope they shopped a little bit just to make the people at the Russian State Committee for Statistics look like saps.

  The day after I got back from Lake Baikal, I boarded the Trans-Siberian Railroad for Vladivostok. I’d gone to Intourist to look into traveling across Russia. “What about a train ride?” I’d asked the clerk. “Is the Trans-Siberian Railroad any fun?”

  She stared at me. “It will be long remembered,” she said.

  It will—four days and three nights with no scheduled stops longer than eighteen minutes in accommodations that were Spartan. Trojan is more what I mean—like the inside of the horse of that name after a whole platoon of sweaty Greek hoplites had been squished in there for, oh, four days and three nights.

  Public transport in Russia is not for the faint of nose. I don’t mean to hurt any feelings, but I’m a professional journalist with certain duties, and conscience compels me to provide the information that Russians smell. They smell with a big, mildewy, musky, left-the-gym-clothes-in-the-car-trunk-all-summer stink. And they didn’t start smelling any better between Irkutsk and the Pacific, because Russian trains don’t have baths in the bathrooms, or showers or hot water or soap or towels or toilet paper. The toilet itself empties directly onto the roadbed, with its waste pipe aimed out to the side in a way that must provide surprises to the occasional bystander.

  There’s one bathroom to a car. It’s the size of a high-school locker, and everything in there, including the toilet seat, is made out of sheet metal. There’s no drain in the floor, and what with spills and leaks of one kind and another, the cubicle quickly fills with a variety of liquids to a height above your shoe tops. Bring Handi Wipes.

  The passenger compartments are slightly larger than the bathroom, almost large enough to contain the four bunks with which each is equipped, plus maybe one and a half of the four adults who are supposed to be accommodated therein. You can stretch out on these bunks in comfort if you answered the casting call for Tattoo on Fantasy Island. The compartment window does not open, and there’s no fan or other form of ventilation, and no window shade. In the summer in southern Siberia, the sun shines eighteen hours a day. If your compartment is on the south side of the train, as mine was, you can use it to bake pies. A few of the windows in the corridor do open, and some relief can be had by sticking your head out and letting your jaw hang open in the breeze. I saw most of Siberia the way your dog sees I-95.

  Each train car carries two middle-aged ladies whose job, as far as I could tell, is to walk up and down the corridor making sure no one smokes. You can drink on the train, you can puke on the train, you can yell and quarrel and party all night, you can cook tripe on alcohol stoves and make fetid picnics of smoked fish and goat cheese, but you can’t smoke. In order to smoke, you have to stand between the cars and risk getting shoved under the wheels by all the people from the adjoining compartments who are standing between the cars, too, because everyone smokes in Russia.

  And this is the first-class section of the train. In second class, the corridor runs through the middle of doorless compartments with four bunks on one side and a fifth above the window across the aisle. Below this bunk are two seats with a hinged flap between them. Raise the flap and you get yet another bunk. There haven’t been so many people on top of each other at bedtime since the U.S.A. in the 1960s.

  Russian trains are reeking, grubby, airless, and clamorously loud. The cars sway in sudden and violent motions. Rail sections are laid haphazardly, with large gaps between rail ends. Instead of clickety-clack, Russian trains go KA-WANK! KA-WANK! KA-WANK!

  I ended up angry, but not about the discomfort or lack of services. What was maddening was more abstract—how the train had been designed with no consideration for anyone on it. In fact, there seemed to have been active malice. Mere negligence wouldn’t explain that bathroom. In the old Soviet Union, nobody had to like this train—or anything else. Nobody had a choice. People couldn’t go on a competing railroad. People couldn’t go on a Greyhound bus. People couldn’t even—considering what a trip to Siberia usually meant—not go. So the trains weren’t built to satisfy the needs of the passengers. They were built to satisfy the whims of people in the Kremlin, and to satisfy the personal agendas of the managers and technocrats putting that whimsy into practice.

  This is central planning. And anybody who advocates central planning—from Gennady Zyuganov to Sidney Blumenthal—should be made to get down on his hands and knees and lick the Irkutsk-to-Vladivostok train.

  The trip had its compensations, however, even without a pair of prominent political figures lapping the couplings. I’d bought a whole compartment so I could loll around in my boxer shorts while keeping myself hydrated with Stolichnaya. Though this didn’t taste exactly like the Stolichnaya we get stateside. Stolichnaya may have a paint-thinner subsidiary.

  There was a shabby dining car about half a mile up the train, and, though the galley was dirty enough to start a worm farm, the food was good. I don’t know what the food was, but it was good. It was a bird, I think, and had a great flavor, and I only got a little sick afterward.

  I’d brought my own food along, too, purchased in Irkutsk’s Martha Stewart grocery. And when the train made its brief stops, I could go to the market stalls that lined the station platforms and buy fresh bread, homemade pickles, smoked fish, and—even in Ust’-Urluk, on the frontier of Outer Mongolia—Pepsi. I also bought carbonated Russian mineral water. This tastes like Spic-and-Span, but I could shake the bottles and use my thumb to direct squirts of household-cleaner-type liquid at the cockroaches eating Hong Kong tea biscuits under my bunk.

  Whether everyone’s better off in Russia these days, I still don’t know. But the people in the market stalls certainly were. In 1990, Cato Institute, the libertarian think tank, reported on this same rail trip, saying: “At isolated rural stops, peasants burst onto trains to buy oranges, apples, and milk from a train staff eager to pocket additional rubles.” Now the bursting was in the opposite direction.

  The stops came every few hours at little cities which appeared without preamble in the wilderness: Ulan-Ude, Mogocha, Birobidzhan. They are ugly little cities, with immense factories where suburbs usually are, and everybody lives where you’d expect the stores and offices to be. So devoted to standardization were the Soviets that high-rise concrete worker housing was built even in Siberia, with nothing but land in every direction. The cities of the Russian east are the only places on earth that need urban sprawl.

  And what a place to sprawl in. There is confounding beauty here in bewildering amounts. Half a day was required just to skirt the southern shore of Lake Baikal. The scale of Siberia is baffling. And so is everything else about it. Lake Baikal has seals—1,500 miles from an ocean. Using a pair of flippers to drag tail all the way from the Bering Strait must make a Trans-Siberian train ride seem comfortable.

  We went east from the lake, through sandy plains and pine barrens, then into meadows and birch groves, riding through them all night. If the Iroquois had had these—and a capitalist free market—they might have founded a General Motors of canoes.

  In the morning we were out on the rolling grasslands. You could imagine the Mongol hordes riding their horses across the horizon if you wanted. I preferred to imagine the Mongol hordes playing golf. Business—even the professional-sports business—is an improvement on war. The Mongols would have been better received if they’d invaded on a PGA Tour. (And th
ey would have won, too, what with practicing on 100,000-yard fairways. Par 900.)

  We traveled into the Yablonovyy Mountains and the wilds north of Manchuria, following the Amazar River and threading between heights on a roadbed chipped from the riverbank cliffs. The Amazar looked to have white-water-rafting potential. But Russia has not yet reached the stage of development where its yuppies feel the need to risk their lives on weekends. In an economy as Mafia-infested as Russia’s, they get enough danger 9 to 5.

  Beyond the mountains was the taiga, the boreal forest that covers an area of Russia larger than Western Europe. Anton Chekhov said, “You don’t pay attention to it on the first day of travel; in the second and third you are surprised; the fourth and fifth day give you a feeling you’ll never get out of that monster of the Earth.”

  Of course, Chekhov was a fussy little Western European type at heart. To an American the taiga just looks like God got carried away with the recipe for northern Maine. The only thing monstrous about the Russian woods is that they bring back memories of summer camp.

  There were, however, no signs of sing-along or capture the flag or any other social activity outside the train windows. Siberia is mostly a giant resource being unused. And it’s not being unused in a sweet, preservationist way. All along the Trans-Siberian Railroad’s tracks were huge pieces of discarded industrial equipment; big, twisted nests of twelve-foot I beams and enormous shattered chunks of rebar and cement. It was as if the gargantuan Soviet industrial complex had been trying to use Siberia and kept getting it wrong and would then—Godzilla-like—crumple up its mistakes and throw them away.

  There were also lone graves along the tracks, neatly fenced and marked with handsome headstones. Maybe these are hero workers who died while getting it wrong. Or maybe these are Trans-Siberian bathroom tragedies—people who stood too close to the track when someone in a passing train was on the can.