Tuesday, October 7, 2014

Nathalie Heidema, Chapter 4, Question 6

A passage that highly interested me was the old joke of a woman in Soviet Union that wanted to buy a Lada. There were so many people waiting for it that she should come back in 2 years. She then asked if she should come in the morning or afternoon because the plumber is coming that day. This story shows how inefficient the former government of USSR was in allocating resources. They had the money to build a rocket and compete with the Americans, but they were feckless in providing its citizens with other, more necessary, goods. It all depended on who was the politician and what was their incentive. And as we know, bad incentives can ruin the economy. The politicians were all corrupt, you could get well off if you had friends in the government. Politicians also made sure that other high positions in government, army etc. were occupied by their family members or friends. They used the state's money for building their villas or  they accosted public land. This still can be seen in Slovakia.
I remember my mum saying that there was a store called Tuzex, which sold goods from the West. They were highly desired, expensive and limited- as called in the economy - scarce resources. When my mum and uncle got extra money, they spent it on the canned Coca-Cola drink. 
The services were not much better in USSR. As there were usually public businesses and services instead of private ones, employees had no incentive or motivation to be productive and more friendly because they wouldn't get more customers or get more paid. Until this day, old ladies at the desks of social services etc. are seldom friendly or productive. The communistic system is still present in the old generations. 

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