Quarterly Reports: Russki Business

Twenty-five years ago, when I was arrested by the Soviet secret police, I got a firsthand look at whatever you'd call the opposite of glasnost. Maybe that's why, to me, the Gorbachev regime is an enormously exciting, hopeful thing. (Sure, I was guilty—but of what, really?)

This is not your standard column on personal finance. But personal finance is about nothing more (or less) than trying to ensure personal economic security, and few things have more bearing on yours than our relations with the Soviet Union. At one extreme, we all turn to radioactive cinders (try to get your broker on the phone then). At the other, it's possible to envision a far more prosperous world. If half our military outlays could be diverted to productive investments, there would be an incredible stimulus to world economic growth. Both sides could still easily destroy the world. But when the pie is growing, there's less fighting over how to split it up, so they might not have to.

We are so used to dismissing such thoughts as naïve that when the opportunity comes along to make progress—as it seems to have come along with Gorbachev—there's the chance we'll miss it. ("Washington, August 21—A United Nations conference on disarmament and economic development will open in New York on Monday without the participation of the United States, which is boycotting the meeting. The conference is to examine how money saved under future disarmament agreements could be used to stimulate economic development, particularly in the Third World." All our NATO allies and all the Warsaw Pact countries were among the 128 nations that had signed up as of this New York Times report, but you wouldn't catch us participating in the dialog. We're too smart.)

But more of this later. Right now, I am 16, soon to be a senior in high school, on a three-month American Friends Service Committee tour behind the Iron Curtain. I am learning how it's possible for good people with high ideals to become bitter enemies. There are the Americans and the Soviets, of course (this was just months after the Cuban Missile Crisis); but also, locked in equally tense psychological combat, the adult leaders of our group.

It had started peacefully enough—though even the early stages of the trip were not without drama. Three hours into it, on a KLM DC-7 from Idlewild Airport (soon to be renamed Kennedy), the engine directly outside my window caught fire. I had been watching as a drip... drip... drip of black fuel had gradually become a drip-drip-drip and then a steady stream—should a 16-year-old ring for the stewardess to instruct the pilot to abort the flight?—when it finally caught fire and was shut off. My first photograph is of the clouds below, the far propeller a blurry circle and my own propeller so still you can read its serial number. We turned back to New York, boarded a later flight—one of those newfangled jets this time—and arrived in Amsterdam 30 minutes early.

It was hard to decide whether our having arrived early in this manner should be taken as an auspicious or an inauspicious sign. But there was no rush anyway, as it turned out, because the two VW buses that had been arranged for our three-month camping trip were nowhere to be found. We spent the extra week in Amsterdam getting to know one another—easy to do when you're living in pup tents.

Our leaders were a middle-aged Quaker couple who spoke no Russian and "Chrysanthemum" (not her real genus), a woman of about 30, with curly dark hair and a slight eastern European accent. They were responsible for 20 of us 16- and 17-year-olds (who also spoke no Russian, except me, who spoke a little), the two VW buses and enough peanut butter to last us, when smeared on local black bread, all the way from Amsterdam through Bavaria to Prague to Kiev to Moscow to Leningrad to Warsaw to—I think we ran out of peanut butter somewhere in Poland.

The Quakers, being Quakers, were morally conservative. Momma Bear, as we called her, was an earth mother it was hard not to love; Poppa Bear was a pill; neither of them thought 16- and 17-year-olds should be drinking or smoking or many of the other-ings some of the more precocious ten males and ten females in our group were guilty of—though by today's standards, it was all quite tame.

Chrysanthemum was not wild about some of our -ings, either, but neither was she wild about the Quakers. The three had been thrown together in this endeavor by sponsors who apparently had not taken the trouble to define who, exactly, was in charge. After all, this was supposed to be a trip about people learning to live together in harmony. It may not be practical to run an entire society on idealistic egalitarian principles—we'd soon see—but surely three sensitive adults, two of whom had named their children Patience and Charity, would get along fine piloting a summer tour.

Perhaps tellingly, it's hard to recall what all the fighting was about. Says one tripmate, then 17, now a genetic epidemiologist: "Nothing much, really. Decisions. It was not too much different from a group of hippies' trying to pick a restaurant." Yet it led to a polarizing of the troops—with only two buses, you pretty much had to choose to be in one or the other—and, eventually, to Chrysanthemum's defection, from the trip. It is not the easiest thing in the world for humans to share power amicably, or even to be neighbors.

The Russians are good people, most of us believe; it's their government that's our enemy. That's certainly how Russians feel about Americans. Now comes a young, modern Soviet leader—the first ever to have been born after the revolution—who appears eager for a better country (his) and a safer world (ours). Yet there is the tendency to doubt his motives. ("In a closed, hidebound dictatorship," writes Time's Strobe Talbott, "Gorbachev's slogans of openness, restructuring and democratization are either particularly cynical or particularly significant. It is not yet clear which.")

The occasional misjudgment notwithstanding, American leaders are fundamentally decent people out to make a better world. Soviet leaders are fundamentally evil. Yet could it all really be so simple? Black hats and white hats? Cowboys and Indians? A hundred fifty years later, it appears the Indians may not have been entirely in the wrong, after all.

It was just such seditious thoughts I was thinking as we traveled through Russia. For in truth, the Soviet system sounds pretty good on paper. Especially to a 16-year-old. There were these czars and aristocrats on the one hand, these serfs and a few factory workers on the other. Nothing remotely smacking of democracy; all very "Let them eat cake." Then along came Lenin with ideas about liberté, égalité, fraternité, only in Russian, and soon you had scenes like the one in Doctor Zhivago where Rod Steiger is dining and dancing with Julie Christie at a spectacularly lavish restaurant—violins, chandeliers and formal-wear—while down below, out in the cold, the hungry workers sing We Shall Overcome (or words to that effect). And then you had revolution. Although not very broad-based—the masses knew next to nothing about it—the revolution certainly was not without justification. But soon things got messy, and then things went awry (power corrupts), and then you got Stalin ("and absolute power..."), who made some of the dictators we've supported look like angels with snowflake wings. But the goals and principles of the revolution, however impractical and however subsequently distorted, are hard to fault per se.

So there I was, little Red menace, standing by one of our VW buses outside an Intourist hotel, protected from the light afternoon drizzle by a 99-cent five-and-dime plastic raincoat. We had been told the day before on our way in from Czechoslovakia not to sell anything on the black market. Free enterprise was illegal; Western influences—clothes, records, books—could subvert the revolution. (One needed special permission at Moscow's Lenin Library to see The New York Times—and one's request would be noted in the file whether permission were granted or not.) I had not paid much attention to any of this, because I hadn't the slightest intention of setting up shop in Red Square—nor had I anything to sell.

Or so I thought until a man approached saying something unintelligible in either German or English. "Zdrastvweeche!" I brightened immediately, thrilled to have a real, live, uncontrived reason to use—not study or practice—my high school Russian.

"Kak vwee pozhivayetye?"

He allowed as how he pozhivayetyed just fine, thank you, but what he was really interested in was my raincoat. He wanted to buy it.

Now I was really excited—a boy so unused to taking an active, adult role in life he was too shy to call attention to his soon-to-explode airplane engine, suddenly carrying on spontaneous East-West negotiations in Russian, in Russia.

My counterpart was less demonstrative. He was talking under his breath, offering ten rubles for the raincoat.

Ten rubles was a lot of money for a 99-cent raincoat—officially, $11.11 back then, but enough to buy a dozen hardcover books (we subsidize tobacco farmers, the Soviets subsidize books)—so I started to take it off. "Nye zdyace!" ("Not here!") he whispered urgently, no doubt amazed I could be so oblivious to the seriousness of the crime. We walked half a block to a less traveled thoroughfare, I chatting up a storm, amazed to see that the Russian I had been learning for two years from a textbook could actually be understood (more or less) for real.

In a minute, (continued on page 186)Russki Business(continued from page 151) I was back at the bus, damp from the drizzle but rich, and flushed from the adventure.

OK, I guess I thought (if I thought at all), we are not supposed to be doing this. But where's the harm? He wants the raincoat; I want rubles to buy more books about the Soviet Union; the Soviets probably want me to have more such books—"Meer ee druzhba!" This was the greeting we got everywhere ("Peace and friendship!"), and I didn't see how a little East-West trade violated its spirit. I guess, at heart, even then, I was a capitalist. The dirty little secret of communism, if you ask me, is that everybody, at heart, is a capitalist. But I'll get to that.

Right now we had traveled a couple of cities deeper into Russia and were camped on the outskirts of Kharkov. Tanya and Tonya, our two Intourist guides—supplied by the government whether you wanted them or not—accompanied us into town each morning. It was their hope that all 20 of us, plus our fractious leaders, would stand dutifully in front of each statue and museum exhibit while they explained, in slightly peculiar English, its significance. We were not technically required to do so, however—it was just "best" that we do—so my friend Mark (the genetic epidemiologist) and I began striking out on our own. Mark supplied an uncanny sense of direction and considerable courage; I supplied the subtitles. I would go up to people on the Moscow subway (for example) and, nervous and embarrassed but also a little giddy, say, "Guess where we're from!"

The moon, they were probably thinking, but "Germany?" they would guess politely. "New York!" I would say, grinning, certain this would please them very much.

I can't imagine now ever having done such a thing, let alone what I'd do next. But I was completely caught up in the flush of discovering that Russians were nice people, too, and that the Soviet constitution, like ours, was filled with unassailably high-minded principles. Kennedy and Khrushchev were finally beginning to come to terms—the nuclear-test-ban treaty was signed that summer in Moscow—and I was more than a little taken with the fact that we were not quite as perfect as I'd been taught (well, what about unemployment and racial oppression and slums in the shadows of skyscrapers?) nor communism quite as malevolent (what's so awful about "From each according to his abilities, to each according to his needs"?).

So my next question, once I'd captured their attention, was usually something like "Excuse me, but may I ask what kind of work you do?" And then: "How much are you paid per week?"

Amazingly—perhaps because they could see I was brimming with good will, if ever so slightly short on tact—most of them told me. (They earned about $150 a month, as I recall, which was more than enough, because there wasn't much available to buy.) One even invited us back to his flat—an 8' x 15' high-ceilinged room with a hot plate and a pile of newspapers and vodka bottles in the corner.

The point is, Mark and I were not your model tour members, and I think this had been noticed.

There had already been a couple of other approaches since my first score with the raincoat ("Blue djzheenz?" passers-by would ask us quietly. "Djazz recordz?"), and now, waiting for the group to assemble outside the Intourist hotel in Kharkov, I was approached by a man intent on doing business. I was more interested in finding out what he did for a living and what he earned—I had to keep something to wear—but he was insistent. He pulled out a huge wad of multicolor ruble notes and offered to buy whatever I had—shoes, shirts, anything. I said I didn't have much and that I didn't think it would fit him, but I could get my suitcase from out of the bus if he wanted to look. This was a particularly dumb idea, he told me (with his eyebrows)—we should meet later, someplace private. Where was I staying? Now, with hindsight, I think he knew all along where I was staying. At the time, though, it never crossed my mind that I was being set up, so I told him we were staying at the campsite. Did he know where it was? Yes, he'd meet me outside the gate at six that evening. Bring clothes.

Mark and I hid in the grass by the gate with what little we could spare. I had already purchased and mailed home a ten-volume colorfully illustrated Soviet children's encyclopedia ($44). I was running short of funds and eager to buy more books. I was excited by my growing expertise in Soviet economics (I knew what just about everybody earned) and enthusiastic about the sides of communism American textbooks conveniently overlooked (a distortion matched by the section on the U.S. in my Soviet children's encyclopedia).

A little after six, Ivan showed up with an empty suitcase and his wad of bills. He would make the exchange across the road, in the woods, he said—and just with me, not Mark.

Lucky me.

We went a few yards into the forest and, just as Ivan was making a big show of holding up a pair of pants to appraise their value and fit, who should happen to come walking through the woods but two Soviet "citizen policemen."

In a bad novel, the dialog would have gone something like this (which is how it did go, only in Russian):

"What goes on here?" they barked.

"Nothing. Mind your own business," Ivan snapped back.

"Grab him, comrade!" one of the tall, beefy Russians shouted, grabbing me at the same time.

A scuffle ensued (doesn't it always?), Ivan struggling vainly (invariably how people struggle in bad novels, though to me it suggests a fellow struggling with an eye toward how he looks while struggling) to break his captor's grip; I, my heart in my shoes, standing there limp, realizing that—out of nowhere—my life had come to an end at the age of 16 in the woods outside a campsite outside Kharkov.

I didn't think they'd literally shoot me, of course. But even six months in Siberia would seriously disrupt my plans.

Coincidentally, the citizen police—who had just happened by at that precise moment—had a key to a nearby shack. Coincidentally, too, one of them spoke enough English to interrogate me and had pen and paper ready for my confession.

I was not read my rights, because I had no rights. I was not allowed a phone call to let Mark and the Quakers know I'd never see them again, because it doesn't work that way (and the phones themselves didn't work real well, either, and there were no phone directories). Instead, for four hours, we went back and forth in English, they asking me what I had been doing, I—normally far too well behaved to lie—telling a preposterous story that my interrogators, having almost surely set this whole thing up in the first place, knew was entirely untrue. (I had gathered my clothes to do a wash, I said—shoes, too?—and had been lured to the campsite gate by this man asking me what time it was.)

What difference did it make what I said? They could do anything to me they wanted. And since we'd been warned on our way in not to sell anything, I couldn't say they were entirely out of bounds. I had not been a good guest in their country.

They told me that Ivan, supposedly in another room (but probably home for dinner by now), would be shot. But I got off easy. Because I was so young, I would be given a second chance. "Don't do it again," they told me. And then, simple as that, I was allowed to run back to the campsite. That should keep the little bastard in line for the rest of the trip, they must have been thinking. And (until we got to Poland) it did.

Now, here's the problem with communism: It's human nature to be selfish. It's human nature to be competitive. It's human nature to respond to incentives. Even the Iranians dying "selflessly" for the cause are doing it because they believe they'll get a terrific heavenly reward. (Well, aren't they?)

There was a bomb scare at the Pan Am Building in New York a couple of years ago. Quick! Everybody out of the building!

At one brokerage office there, all the salaried personnel—secretaries and clerks—went downstairs to enjoy the afternoon. All the commissioned reps—the brokers—stayed glued to the phones.

Whether it's in New York or Paris or Peking or Moscow, people respond to incentives. This is the first rule of economics. As I say, those incentives need not be purely monetary. There's the incentive of getting your picture on the wall as employee of the month; there's the incentive of doing a job because you believe it should get done. But monetary incentives—which are a surrogate for comfort and leisure and security and a competitive measure of self-worth (however false)—loom large. Tell a Soviet factory manager to produce 100,000 pairs of shoes within a certain budget and he will—only they'll all be the same size (it's cheaper than retooling in the middle of each run) and they will be small (it takes less material) and they will be entirely without style (how do you specify panache?). His incentive is simply to fill the quota.

The beautiful thing about the free market is that it harnesses man's natural selfishness for the benefit of all. If you provide what people want, you'll get what you want. You don't need an elaborate central plan or an arcane set of interwoven incentives (à la the U.S. tax code). Adam Smith's "invisible hand" takes care of everything. Or a lot, anyway.

There are, naturally, places where individual free enterprise must be balanced against broader community interests (which is presumably why I was taken into an interrogation room and strip-searched by U.S. Customs agents when I returned to Idlewild Airport that summer—something about a crackdown on kids bringing switchblades into the country, they told me when they discovered I was clean)—but by and large, we make those adjustments, too, for our own selfish good. Some of the motivation of our social programs is selfless—once we're well off, we really do like to see others nearly as well off (just as long as they are not better off). But some of it is "I could need that benefit myself one day" or "If we don't do this, the poor will rise up and take what we have" or "In the long run, our economy will be stronger if these people can read"—all fundamentally practical, selfish motives.

Gorbachev seems to recognize a lot of this, just as the Chinese have. He has taken dramatic steps to open the Soviet Union to modern Western influences and to Western-style critical debate. He has taken dramatic steps toward legalizing individual free enterprise and toward letting the profit motive, rather than central-government planning, drive the workings of the economy.

If he's not derailed by the entrenched bureaucracy, the Soviet system will look a lot more like our own than it ever has. That is not to say it will be the same. Ownership of most assets (factories, large farms, mineral resources) is likely to remain mostly in collective hands. But that's a different social system, not an evil one.

Our society has itself moved toward socialism in the years since the Russian Revolution. Back then, there was no income tax or estate tax or Social Security tax to speak of, all three of which massively redistribute income from the prosperous to the less so (and all of which most of us, at least grudgingly, acknowledge are worth while). And anyone who thinks we have an economy free of Government controls has never tried to start or run a business. There are tens of thousands of pages of regulations trying to safeguard the broader social interest from the individual interests of unrestrained capitalism.

If the Gorbachev restructuring proceeds, our two systems, while still decidedly different (and ours still, for me, decidedly better), will be approaching more or less the same center from different ends. We assume capitalism and modify it for the greater good. They assume socialism but hope to make it work by harnessing the power of free-market economics. Both—in theory—aim toward healthy, happy, productive, equitable societies.

Humans being humans, lots goes wrong. Here is Castro, the quintessential revolutionary, reported in Time this past summer as having 14 villas and a fleet of yachts. Here are American capitalists exchanging suitcases of cash in mindless pursuit of more, American politicians doing back-room deals because it's in their selfish interest to do so. The Soviets have Afghanistan and Czechoslovakia and Hungary; we have Vietnam.

This is not to say that because we both fall short of our respective ideals, we are morally equal. The Soviets doubtless believe that the selflessness of their revolution and their social vision is superior to ours. We believe (and we're right!) that our system, particularly as it has worked out and is likely to continue to work out in reality—not in theory—is superior.

But under the kind of Soviet Union Gorbachev seems to envision, there is no fundamental reason the two systems must be at war, Cold or otherwise.

Unless, that is, it is also human nature to require an enemy—which one might easily conclude. Teams work best when they're competing to beat (not just play) other teams.

Failing a team of malevolent Martians, the challenge of the next century will be substituting enemies such as hunger and poverty and disease for the traditional enemies it is easier to grab by the throat, throttle and shoot in the head.

With that thought in mind, holiday revelers, peace on earth, good will toward men. And women. And Mr. Gorbachev.

"I guess, at heart, even then, I was a capitalist. The dirty little secret of communism, if you ask me, is that everybody, at heart, is a capitalist."

"The dirty little secret of communism is that everybody, at heart, is a capitalist."