Twenty years ago, I made my first trip to the USSR. I worked for a company that had a contract with the Soviet Ministry of Education to teach free market principles to business leaders and aspiring entrepreneurs. Over the following six years, I traveled to Eastern Europe about two dozen times and spent many months living and working in the former Soviet Union.
I had a front row view as the USSR fell apart and socialism was reconstituted as a capitalist democracy. I met hundreds of Russians, including high-ranking political leaders and rural peasants.
I’m concerned today because I see the United States making many of the same mistakes that led the USSR to political and economic ruin.
In the Soviet Union, the change to capitalism and democracy was not motivated by revolutionary fervor or a desire for political freedom. Most Russians would have been perfectly content for the Communist government to remain in power. But in the end, they simply had no choice in the matter.
Communism ended abruptly without bloodshed or riots because the system ceased to function.
This is virtually impossible for people to fathom without experiencing it. The government ran out of money. Everything was government controlled so in a fairly short period, the political machinery and the economy came to a standstill.
People everywhere in all types of businesses stopped getting paid because the government had no money to pay them. Many people continued to go to their jobs because they had nothing else to do. But there was very little production. In factories and offices people played chess or cards, or they read books. They felt no compulsion to work because they received nothing in return. In many cases they could do no actual work even if they wanted. Factories were not supplied with the materials they needed to create products.
Store shelves were virtually empty. Goods were only obtainable through the black market or from personal networking. Bartering with goods or services became the accepted form of transactions. Virtually every park became a flea market where people would go to sell their household possessions because they had no other way to make money.
The key point to understand is that the situation had virtually nothing to do with political ideology. Government control over all aspects of society created a huge bureaucracy and in the end it did not matter what person or party held the top elected positions.
As an outsider, many of the situations I witnessed seemed absurd and obscenely stupid. The Russian people accepted them as a matter of course, because they had no alternative. Let me give a couple of specific examples.
Like everything else in Russia in 1990, light bulbs were in short supply. In an attempt at fairness, the government rationed bulbs when they were available. Someone who wanted to buy a new light bulb could only do so if he turned in a burned out bulb. This led to a thriving black market. Any accessible bulbs in public or private buildings would be stolen. Black market vendors sold burned out bulbs that people could turn in for new bulbs.
Under these circumstances, imagine someone in charge of maintenance of a building. He hasn’t been paid for several weeks and every day is a struggle to acquire the basic needs of life. A shipment of 40 light bulbs arrives. Instead of distributing the bulbs throughout the building, the man will take them and barter for the things that he needs. He doesn’t consider it stealing because he has not been paid.
In another example, in 1990 Russian pay phones all used 15 kopek coins. The Russian monetary unit was rubles and 100 kopeks equaled one ruble. Rising inflation made kopeks virtually worthless and they were no longer in circulation. That meant in order to obtain coins to use in pay phones one had to buy them from someone who had them. The going rate was 10 rubles. To make the situation more understandable, it would be the equivalent of paying $12 to buy a quarter.
Obviously the phone company should have had 15 kopek coins available because it collected them from the pay phones. But asking about obtaining the coins at a phone office would result only in a curt “nyet” and an icy stare. After all, the people working at the phone offices had not been paid. So when 15 kopek coins were collected from the pay phones they ended up in the pockets of employees who sold them for rubles to people who needed to make calls.
I could give dozens more examples. If one needed to renew a driver’s license, the going rate was a case of liquor. A baggage handler at an airport once told me that for $40 he could make certain my luggage would make it on to the plane. If I chose not to pay, he made it clear that my bags would almost certainly become “lost.”
Obviously the United States will not find itself in this type of situation immediately. It took the Russians 70 years before the socialistic bureaucracy messed things up to the point where nothing functioned. But the expansion of government control and social spending will eventually net the same result here, no matter who is president or what party is in power.
There is a relatively simple solution that I think could help slow the cancerous growth of bureaucracy: term limits.
I’m not referring to term limits just on political leaders. I propose term limits on all federal employees. I think 12 to 15 years should be sufficient. Once someone spent that much time as a government employee, then they would have to join the private sector.
Such a rule would prevent bureaucratic entrenchment of federal employees who continue through multiple administrations and eventually end up accountable to no one. It would also ensure a continuous flow of new ideas back and forth between the public and private sectors.