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Reports in the press emphasize that various mafias run Russia. I have no personal anecdotes to support that contention, but I have no doubt it's true. Soviet society was based on force and fear; it rewarded people not for productivity, but for brutality. In the five days I spent in Moscow, the only Mafioso to be seen were at a classy stripper bar where we decided to take in some local color; it was easy to find, with about two or three dozen new Mercedes and BMW's parked in front. A crew cut thug encouraged patrons to check their heat before passing through a metal detector. A $10 entrance fee gained the right to buy $10 drinks for yourself and the scantily clad ladies, who would perform a table dance for $100. Interesting. But not as interesting as watching the thuggish Mercedes-owners throw their money around. Where and how do the Mafioso get their money? Basically by acting the part of small competing governments. When that's not the case, there's no difference between the Mafia and the government. As you probably know, I believe the institutions of the nation-state, and government itself, have already outlived what usefulness they may once have had. They're purely coercive entities that live through the initiation of force, and insofar as they produce any goods or services that people want (e.g., roads, schools, police, currency, health care, courts) it's only because they've muscled the free market out of the picture in those areas. Their essential products are wars, persecutions, confiscations, pogroms, taxation, inflation, regulation, and the like—all of which are purely destructive. I believe people support the idea of government mainly out of ignorance, stupidity, and simple inertia; government encourages support by pandering to people's basest fears, and encouraging the moronic notion that everyone can somehow live at the expense of everyone else. Of course, even though all governments are the same in essence, they differ greatly in practice, ranging from the relatively benign and ineffectual to truly malevolent totalitarian regimes. This isn't the place for an extended discussion of political theory. (If you're interested in a defense of the wild assertions above, I refer you to Chapter x of CI90's, or the classic book The Market for Liberty by Morris and Linda Tannehill; both are available from Laissez Faire Books, http://lfb.org/ 1-800-326-0996. But I bring it up because even the most cursory look at society in Russia, or absolutely any country in the Third World, makes one ask what possible useful purpose government in these places serve. And the answer to the question tells one a lot about the local mafias. Governments
in these places, most emphatically, do very little in the way of building
or repairing roads or airports, educating children, delivering mail, making
trains run on time, putting out fires, operating modern telephones, or
providing decent medical services. These state monopolies, in which government
has absolutely no business in the first place, are always pitiful; and
even though they hemorrhage money, the money involved in actual services
is trivial compared to what the government takes in. And I have never,
ever, seen a Third World government protect citizens from common crime
or offer worthwhile court services, which are arguably the only legitimate
functions for the State.
Like you, I read all the articles, and listen to the broadcasts, from pundits who claim to know what the government of Russia, or any other of these benighted places, "should" do. I find them an exasperating waste of time, because they don't understand that government action isn't the cure; it is the problem. Meanwhile, the Mafioso, like the State, are also running two types of operations. One type is purely coercive—e.g., extortion, theft, protection, shakedowns, and the protection of its territories from rival gangs—which are directly analogous to those of the State. The other type are black market related, which is to say non-coercive and desired by the public, but made illegal, for whatever reasons, by the State, commonly including smuggling, gambling, drugs, prostitution, and pornography. Many people find some of these things morally repugnant; but many don't, as evidenced by their perennial popularity. Unfortunately,
most people aren't moral philosophers, and figure that once they've broken
one law they might as well break another. Certainly, once you've broken
the arbitrary and pointless drug and money laundering laws you might as
well go in for murder and extortion—because the penalties for getting caught
are, perversely, far less severe.
Well, sorry to go off on a lengthy tangent. But these are the deep-rooted problems that will keep Russia from becoming an investor's paradise, while it will remain an excellent environment for speculators. For how long? There's enough pent-up envy, buttressed by several generations of economic, political, and social lies and misinformation, to make Russia an ideal incubator for sociopaths like Lebed or Zhirenovsky for the indefinite future. But if you're just a tourist taking in the sights of Moscow, these are not thoughts which will come to mind. Moscow is the final, and unintentional, evolution of Potemkin's Village. MOSCOW Moscow, to my surprise, was basically indistinguishable from any other European city. This was a far cry from my visit in April, 1976, when it resembled an armed camp, with a military presence everywhere. Dismal, grim, gray, shoddy, fearful, poor, ugly, nasty, and brutish are just a few of the adjectives that come to mind describing the place. Back then, instead of stores and restaurants, the dreary place featured paranoia, inconvenience and gloom. Even as recently as 1991, when my wife, who speaks Russian, made a trip here, you were well advised to bring your own food, and lots of one dollar bills. Dollar bills don't go very far in Moscow today; you'll do better to bring a role of hundreds, because it's one of the most expensive places on the planet for a tourist who wants to live as he would in the West But Moscow isn't Russia. The city lives off its roughly 500,000 foreign residents, each of whom has his own driver, housekeeper, translator, girlfriends, secretaries, hangers-on, and what-not. Moscow has always been the epicenter of any social, political, economic, or intellectual activity worth talking about in Russia, mainly because (with the exception of St. Petersburg) there was absolutely nothing of consequence outside the capital. Now, even though other cities actually have things like stores and restaurants, the amount of money flowing into Moscow sets it apart more than ever. Moscow is a giant parasite. The city produces absolutely nothing of material value; in fact, it produces only things of negative value-- taxes, laws, and regulations. But, perversely, it's those very things that attract the foreigners. That's not because they like them, but because they need to manipulate them in order to do business in Russia. And the presence of all these rich foreigners in this desperately poor country makes Moscow a pocket of wealth. That's reinforced by the fact that—again because of the taxes and laws—it's basically a one-way flow of funds from the provinces to Moscow. And the same is true of people. Anyone with any drive or brains tries to get to Moscow, because it's the only place where anything is happening. And when they get to Moscow, they want to get in on the dollar economy. Rubles are only for those peasants in the provinces. Go to the
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