How Business Works in Russia
I have been trying to schedule a phone call with a close friend who is currently living and working in Russia.
He sent me the following information this morning, and I found it fascinating, if only as a glimpse into modern Russia and the many ways in which we are still comparatively fortunate (beyond belief) in America.
I have a landline in the house I live in, but I will have to schedule a time that I can use it with the permission of the landlady, whom I avoid as much as I possibly can. I haven’t seen her for three days. I’ll try to talk to her about it tonight.
I’ll give you a landline phone number soon and hopefully will be able to send you an email… then there’s just the schedule issue.
You can see why I’m not in touch with anyone.
BTW, this has nothing to do with technical difficulties in Russia. These are top-down governmental obstacles created to prevent american corporations from saturating the marketplace here.
There are laws preventing companies from using the Roman alphabet in their company names, so companies have English names written in Cyrillic letters; thus they “look” Russian, which was enough to satisfy the mayor of Moscow.
Very, very few American companies are allowed or enabled to function as businesses here, so most of the retail businesses here are Russian-made and -owned, but they are very obviously knock-offs of American retail businesses… whether Starbucks, restaurants, clothing stores, sporting goods stores, etc.
The prices are significantly higher than anywhere in the world, too (Moscow is home to more billionaires than any other city).
Further, the government has got a scheme of “dollar inflation” — all high-priced items, and most salaries (especially large salaries), are bought or paid, off-the-books, in dollars. But the Ruble is the official currency and dollars are not ‘officially’ recognized.
Making this explanation to a Muscovite, she was shocked; but the evidence is obvious: Why are there ruble-dollar exchange kiosks EVERYWHERE — near every central metro station you can find more than a dozen. What other explanation for this could you find?
They are there because people are paid in dollars, then have to exchange their dollars for rubles to buy basic consumption items.
As you walk down the street here, you will see displays of numbers, looking almost like a list of gas prices; they are the dollar-ruble exchange rates. Currently about 27.5 rubles/dollar. When I came here it was 28.
Inflation, then, is driven largely by exchange rates and by demand through the wealthy people, who can be really price-insensitive (especially since the psychology here, and the lack of opportunities to actually use money for anything good besides travel — going somewhere else — prioritizes status-driven and conspicuous consumption.
So it works like gift-economics: if you spend more, and people know you spent more, it’s better; hence demand is very price-insensitive, and dollars are constantly inflating. This gives the illusion, to the man on the street, that the ruble is stronger and preferable to the dollar.
But at the same time, these people are completely locked out of any large purchase of real-estate, vehicles, or loans.
And almost every business here keeps “two sets of books”: everyone has an official salary, and then an off-the-books salary. (I guess one of the nice things for my situation is that I am paid entirely off-the-books).
To tie it back to the point I began with — telecommunications is operated entirely by Russian companies, which tend to fight (sometimes to the point of murdering each others’ directors: 34 such reported ‘deaths’ in 2005) for the rights to small, territorial monopolies.
I happen to live in the wealthiest neighborhood of Moscow, where Putin lives, where Andropov and Brezhnev lived. My internet access must go through a VPN. The company is completely complacent, the technology is bass-ackwards, but they don’t care; it’s just a sinecure for some mafia-type guy, and legally protected.
A 2-room flat in my neighborhood? They start at $500,000.
The best solution I can hope for is to buy a calling card (these began and continue as, basically, ultra-efficient end-runs around the barriers-to-entry erected by large telecom firms over decades and decades previously), and operate the calling card on a land line, but again, there is only the one landline for my house so I need to tread carefully in borrowing it from the landlady.
