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 street in
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