What Moscow’s Sheremetyevo Airport Taught Me About Transition Economics

Some of the old way still continues in Russia, but in the meantime, the little kiosks will continue to outperform the results of bloated and dying central planning.

They say life is about the journey, not the destination. I don’t know if that’s true, but the journey is a real trip when traveling through Moscow’s Sheremetyevo airport. I recently had the pleasure of visiting the famed airport myself. I flew out of Dulles in July to rendezvous with my family, who were flying out of JFK later that day. Our final destination was Yerevan, Armenia, where a distant cousin was getting married.

Soviet Branding

The first thing that caught my attention was the bright red outfits worn by Aeroflot stewardesses. Every passenger is reminded that they are on the same airline that took the Reds to the skies, as every chair is still embroidered with the distinctive winged hammer and sickle.

 

Good branding sticks, apparently. Aeroflot was the airline of the Soviet Union until the former’s collapse when the Russian government wholly absorbed the company. It was split into hundreds of smaller companies and was characterized by “discomfort, chaos, unpredictable schedules, poor security and overriding uncertainty about safety.” In 1994, the government sold 49 percent of its shares to employees, making the company partially privatized while the government remained the largest stakeholder. By 2007, Aeroflot was profitable and internationally competitive. At the end of my flight, everyone clapped.

When we arrived at the airport, I stepped right out on the tarmac and got on a bus. I only realized after the bus began moving that I didn’t know where it was going, nor if I wanted to go there, but here I was, anyway, along for the ride (similar to the situation most of Russia was subjected to in 1917). The main Sheremetyevo airport building soon came into view.

The design philosophy struck me as having a double use: to intimidate NATO diplomats and do the same to Soviet citizens. Turning the corner, the magic was lost as the Radisson Blu Airport hotel came into view with its IHOP-blue neon lights. The hotel stands taller than the aforementioned intimidating building, which is now Aeroflot headquarters and a history museum for the airport.

Exploring in the Russian Airport

My bus arrived at the terminal for international connecting flights (*whew*). After a long wait in the passport line/mob, we went through security—a surprisingly brief experience—and were dumped out into the international terminal. Immediately, I was bombarded with the glare from bottles of perfume, alcohol, and pickles (covering all major food groups). As the location of my flight was yet to be decided and I had 10 hours to spare, I did some exploring.

He took my laptop and wrote down some fake numbers for my passport along with the name “Ignat Vasiliev.” It worked.

The first goal was to establish a Wi-Fi connection in order to reach home base. The sign-in page required, by the legislation of the Russian Federation, that I register to access the internet. To do so, I provided my passport number and made my way to the nearest information desk. I soon found that the nearest information desk was in the next terminal.

Even after the trek, the desk was absent of any signs of life until one employee came back from his break with his blueberries. He tried to approve my access three times to no avail. Shocking. At that moment I saw a little red bulb light up at the back of his head. He took my laptop and wrote down some fake numbers for my passport along with the name “Ignat Vasiliev.” It worked.

Central Planning and Economic Calculations

In my further explorations, I noticed the restaurant and fast food business was booming. I found three Burger Kings and two TGI Fridays. American products are in high demand. But what I saw next will blow you away. I saw a woman running a kiosk performing the mundane task of inputting sales into a spreadsheet. What’s amazing about this? Profit and loss accounting, the guiding star of free enterprise, was now available to the Russians.

In the seminal article “Economic Calculation in the Socialist Commonwealth,'' Ludwig von Mises asserts that economic calculation from the position of a socialist central planner absent prices is not only difficult but also impossible. No matter what economic system you live under, scarcity still exists, and choices have to be made along some margin.A central planner cannot sort out a subset of economically feasible set of plans from a larger set of technologically possible plans. Contrast the busy and crowded coffee shops and kiosks with the way the government dismantled Aeroflot or how the airport bureaucracy was run.

No matter what economic system you live under, scarcity still exists, and choices have to be made along some margin. Socialism trades prices and the knowledge bundled within for politics, bureaucracy, and oversight. Some of the old way still continues in Russia, but in the meantime, the little kiosks will continue to outperform the results of bloated and dying central planning.