Easy Money

In Albania half of the population of the country lost all their savings in Ponzi schemes, and that triggered a civil war.

Pyramid schemes were massively popular in all post-socialist countries. Albania was by far the worst case but the phenomenon existed everywhere else. N lost some money in the Russian most famous Ponzi scheme called MMM. He’s smart, so he realized immediately that the money was gone. But thousands of people hoped that the author of the MMM Ponzi scheme was going to give them their imaginary high earnings if only the conditions were right. They protested, demonstrated, and elected him member of Parliament to protect him from going to jail on criminal charges. The guy went on starting fresh Ponzi schemes in Russia and Africa for the next twenty years until he finally died.

My mother participated in an unofficial Ponzi scheme started by a neighbor who was emigrating to Israel and wanted to raise cash for his new life there. He promised the neighbors gigantic returns on any cash they gave him, and the poor fools gave them all their savings.

I remember my mother making endless calculations of the fabulous riches that her $200 were going to turn into. I tried to explain to her that the idea was nuts but it was useless. The neighbor left for Israel with his neighbors’ money, and nobody heard from him again.

The frustrated love of easy money is the main reason why Eastern Europeans are in a pout. Everything was done in socialism to make sure that people hated working. The concept of work was profanated and perverted. People no longer saw the possibility of working hard, enjoying what you do, and deriving emotional and financial satisfaction from the process. Work was to be avoided, and money had to appear from other sources.

This is what many people don’t get about socialism. It’s not simply an economic system that doesn’t work. It messes with your head. If half a country’s population simultaneously gets involved in a pyramid scheme and then starts murdering each other when it collapses, there’s a deep dysfunction here, way beyond the economic.

Yes, there are Ponzi schemes everywhere. Believe me, I’ve watched documentaries about every single one of them in the US because N loves them, so I know. But it’s the scale, the persistence, and the consequences of these schemes in places like Albania that is different. Most importantly, it’s the reaction that is scary. N’s “ha ha, I was young, I was so dumb but now at least I’ve got a funny story to tell about it” is rare. Mostly, the reaction is what you see in Lea Ypi’s memoir. It’s deep hatred towards the West for not immediately providing enormous wealth to everybody. That hatred has already erupted in the largest European war since 1945. It’s not going to go away no matter how much we pretend it isn’t there.

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10 thoughts on “Easy Money

  1. “Everything was done in socialism to make sure that people hated working”

    That’s true but not necessarily even the worst of the distortions. It fundamentally messed with people’s perceptions of cause and effect because the two were so… disjoined.
    It’s not just a desire for easy money that’s behind the ponzi schemes, it’s otherwise intelligent people (like math teachers in your mother’s case?) can’t abstract out from the now in a realistic way to see the numbers can’t work.
    Decades of things happening seemingly with no cause or things not happening despite massive causes in place for them to happen… messes with the perception of reality itself.
    It turns everyone into Underpants Gnomes (from South Park – they were dwarf like creatures who stole people’s underpants as part of a brilliant scheme:
    1. Collect underpants.
    2. ?
    3. Profit
    It’s weird to encounter people whose understandings of the workings of the world basically function at that level…..

    Liked by 1 person

    1. This is true. It’s also why every form of totalitarianism messes with people’s perception of reality.

      For example, Russian TV is airing the footage of the apartment building in Uman that was bombed by Russia earlier this week. The chyron says it’s a building in Donetsk bombed by Ukrainians. According to Russian propaganda, Ukraine has been bombing Donetsk non-stop for 9 years. Yet somehow Donetsk remains intact. There’s no rubble, no destruction. Both things exist simultaneously in the minds of the Russian people. They believe in daily bombings of Donetsk just as they see the city with no signs of destruction. They sincerely don’t notice the contradiction.

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  2. I’m so curious about what happened with Communism in VN. They’re still officially communist, but it’s the most aggressively, radically, business-entrepreneurial culture I’ve ever encountered. It’s like the entire culture, every man woman and child, spends every waking moment scheming about what business they will start next in addition to the ones they’re already running. It seems like every house has three or four small enterprises running out of it, minimum.

    Was it a different style of communism? Were they simply unable to stamp out the underlying ferociously commerce-oriented culture? They had their collectivization phase, followed by the famine-and-starving phase. Did all the usual commie things. What was different?

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    1. “most aggressively, radically, business-entrepreneurial culture I’ve ever encountered”

      The first time I went to Poland was in the communist period and just beneath the dull state run surface everybody was involved in side-hustles, off the books businesses and trade in kind (lots of barter) and there was a small private sector which had difficulties and was blamed for problems but which…. helped a lot.

      The second time was after the change and the state run surface no longer existed (very weird and limbo like — no one knew which laws mattered and which didn’t…) and thriving street markets and new stores opening (and closing…) and half the people who weren’t involved in that wanted to be (there were some lounging around and feeling sorry for themselves but they weren’t the majority).

      But even among the active there was a tangible feeling of…. disappointment.
      Before the collapse of communism many thought it would be a matter of months (at most a year) before living standards would rival the west. It seems silly but… yeah lots thought that and when it didn’t happen there was a lot of bitterness.

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      1. Perhaps the difference is that communism hasn’t collapsed in VN. It still exists, officially… it’s just that the actual practice of it has eroded quite a lot. From what I hear, even when they were trying very very hard to live up to China and Russia standards of communist… it was the “traders” who kept life going. Officially and socially reviled, they kept the wheels of commerce turning. Now there’s still an official veneer of communism, but the actual form of government is… something else. Hard to say what. Not democratic. Lot of bureaucracy, tempered by bribery and a bit of gangsterism but it doesn’t turn into chaos like in latin america, because east asian culture is just very different.

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        1. The East Asian country with the worst gang problem is the Philippines. They were a Spanish colony, which probably has something to do with it.

          Liked by 1 person

          1. I should add that while traveling there, I did not encounter any such thing– it was one of the safest-seeming places I have ever traveled, including the US. What I hear is that the local bo doi offices may shake people down for bribes once their businesses reach a certain level of profitability… which may or may not account for why everybody is running five small businesses instead of one large one. There is also definitely some kind of drug/smuggling trade, but it’s pretty low-key compared to the US.

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    2. I think it’s the culture. I’ve been to Vietnam and other SE Asian countries. The people are all entrepreneurial.

      I think the communists just weren’t able to completely stamp out the local culture and now they are just reverting to their traditional way of life.

      Liked by 1 person

      1. It would not surprise me if that’s just the local culture. It is almost as though no housewife in her kitchen cooks a meal without calculating in her head if she could quadruple the batch and sell the excess at a profit.

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