In 1991, the Soviet Union blew apart at the seams when Soviet president Mikhail Gorbachev resigned and handed over the nuclear missile launching codes to Boris Yeltsin, president of Russia, the largest republic. No one knew what would happen next. It was an exciting and scary time to for an American to visit, but that is just what Phaedra Fisher decided to do a few years later, in 1994.
Jason Hartman welcomes Ms. Fisher, author of Vodka Diplomacy, to the microphone of The Creating Wealth Show to discuss her time spent in the aftermath of the fall of the Soviet Union. With degrees in Russian and economics, recent graduates like Fisher were in great demand as this former superpower tried to figure out how economic reform would play out after nearly a century of communism.
Could these economies that had never experienced even a whiff of capitalism survive privatization and inflation?
From the back cover of the paperback edition:
“Every generation of university graduates believes they are going to change the world. My classmates and I took things one step further and really tried. The Soviet Union had collapsed in late 1991. The future was not yet written. There were no correct answers. Anything could happen. On this raw new frontier, anyone in academia or politics or business who tried to posture as an “expert” was really just guessing as best as they could. My classmates and I who studied Russian language and economics found ourselves graduating at the precise moment in history when these skills were highly valued. I leaped into the thick of the post-Soviet era, delirious with naïve optimism, a thirst for adventure, and a mission to make a difference.”
In the pages of “Vodka Diplomacy,” Fisher talks about the two years she spent working on aid projects in the former Soviet Union.
Here is a sampling of the topics touched upon in Jason’s discussion with Phaedra:
* Why she was so eager to dive into what was perhaps the most chaotic point on the globe directly out of graduate school
* How the World Bank, the United States, and other countries hoped to build a democracy and, more importantly, why their efforts were doomed to fail
* Proving property ownership in the complete absence of a title registration system
* The reality of the Soviet Workers’ Paradise – not a paradise at all
* Conditions on the ground: no credit cards, only cash, and a national currency (ruble) that tanked at an exponential rate
* Laws were more like suggestions, depending upon whom you could influence
* And much more…
This firsthand account of how a global superpower turned into a banana republic on the world stage is a fascinating listen.
ANNOUNCER: Welcome to Creating Wealth with Jason Hartman! During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before, and a new slant on investing: fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self-made multi-millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it! And now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
JASON HARTMAN: Welcome to the Creating Wealth Show. This is your host, Jason Hartman, and thank you so much for joining me today. We’ll be back with today’s guest or segment, in just a moment.
JASON HARTMAN: It’s my pleasure to welcome Phaedra Fisher to the show! She has a very interesting background; she was on the ground in Russia during a very, very historic time in the 90s. Of course, she witnessed first hand, because she spoke Russian and didn’t deal with interpreters, she witnessed first hand the privatization, the inflation, and a whole bunch of other issues. Her book is entitled Vodka Diplomacy; awesome title. And we’re going to hear about her experiences today, and I think it’ll be very interesting. Phaedra, welcome. How are you?
PHAEDRA FISHER: Thank you very much. Good to be here.
JASON HARTMAN: Well, it’s good to have you. Just to give our listeners a sense of geography, where are you located today?
PHAEDRA FISHER: I’m in San Francisco today.
JASON HARTMAN: Fantastic. And how long were you in Russia?
PHAEDRA FISHER: I was in Russia a total of about two something years. I was actually also in Kazakhstan for six months.
JASON HARTMAN: And, what in the world would have inspired you to go there? Especially during this chaotic time that we’re about to talk about?
PHAEDRA FISHER: Well, if you’re in search of adventure, you go where the adventure is. I was just straight out of graduate school, I spoke Russian, and it was a time in history, in the mid 1990s, where anyone who spoke Russian and was up for a bit of adventure was fully employable on these aid projects going on in Russia and the former Soviet Union.
JASON HARTMAN: And so what type of aid project were you working on?
PHAEDRA FISHER: The projects that I was working on were really the World Bank and USAID projects. And the whole theme about these aid projects—the fundamental goal of them, the stated goal, is to really help to build democracy, help to build the private sector. And these are things that are near and dear to my heart, so I thought wow, rather than just talk about it, it’d be great to actually be part of it. So I signed on to be part of these two—part of these projects. Each project was for one year. The first one—they were both extremely exciting. The first one was really setting up a national database, similar to like, Dun & Bradstreet for recently privatized companies. So if you think about it, if you’re a foreign investor, or any investor, trying to decide which companies to invest in, in the former Soviet Union, even though they’re privatized companies, there was no organized way of finding them. So that was my first project, was trying to collect the information, consolidate it in such a way that people can find it. And the second project was really about the property market in St. Petersburg. And the goal of that particular project was a title registration system. Because again, what had happened was, in the early days, or in the early days of privatization, even though people theoretically now owned their own apartments, there was no way to validate title registration. The complete lack of a process meant that it could take upwards of two years to confirm that someone actually had title.
JASON HARTMAN: Yeah. So I assume that all of this work that you were doing was really with the goal of increasing FDI, or foreign direct investment. Because if foreigners can’t find anything out about these newly privatized companies, they’re not gonna invest. I mean, there was just no system at all. I mean, the Soviet Union was about an 80 year run, I guess? Or 60 year run? I can’t remember exactly. But wow! I mean, what a, just an amazing shift. That’s incredible.
PHAEDRA FISHER: And, well the key word here is goals of the project; there’s very much a difference between goals and results, as you know. And so, the basic truth about these aid projects was that the fundamental purpose of them was to keep the country from collapsing. I mean, that’s really why USAID and the World Bank were there, was they didn’t want to return to the battle days. And if you think about the logic of all that’s happening, what was happening was that you essentially had the US government providing money to the government, asking the Russian government to structure their own demise, as far as getting less involved in the economy. And if you just start thinking through that logically, you wonder, okay, which government official is actually going to sit around trying to plan ways to walk themselves out of work? So, it was a very, very interesting concept, which essentially, if you had the government there to—the government’s really not going to plan its own demise.
JASON HARTMAN: Right, right. And that’s the same problem we have in the US. We have all of these people in government that will never do anything to work themselves out of a job! Which is what they should be. And you know, I could say the same thing about many charities as well. Whether the motivation is really to find the cure, or solve the problem, or just increase power and influence. That’s just part of human nature, you know. I always like to say that any human organization, just has the goal or perpetuating itself. That’s how it always works out, right?
PHAEDRA FISHER: Oh, exactly. And I mean, I think essentially the conflict that happened with that aid project is, first of all, of course you’ve got the consulting firms in there, and their goal is just to collect revenue. It’s to just build a client. And whatever it takes to sign off the milestones, is what they’re gonna be doing. Meanwhile, on the Russian government side, what they’re interested in, is still preserving the power base. And so, especially what was going on in St. Petersburg with me, is we had this team that was working on the title registration, which in the good old days inquired about different government agencies, each one of which had their own fiefdom for how to either sway influence to get their bit of the process done, and we’re here coming in, saying, oh, we’re here going to eliminate all of these middle men. Yet of course the various government agencies aren’t interested in that. But, they are very interested in the money that we have. So, as a result, we started seeing, and this gets to your question about mafia, this gets to the question of okay, how will the people who want our money but don’t want the results, get their hands on money? And you do that by organizing certain subcontractors, and putting pressure on the American side to, if you’re going to use these particular subcontractors, and we will sign off the deliverables, only after certain money is transferred. And that’s the way it starts going downhill.
JASON HARTMAN: Fascinating. I mean, this is just completely fascinating. So, take us through kind of what happened. I mean, we all saw it on the news and so forth. Assuming we were even alive at that point. You know, depends what age the person is. But take us through what happened. I mean, the Soviet Union was dismantled, things were being reorganized—it’s really hard for me to fathom how privatization even works! I mean, if you’re just a regular average citizen, you’re living in an apartment! And you know, it was owned by the government, and then it’s deeded over to you, I guess? And then, what about all the companies, you know, all the government-owned factories, and so forth? Who gets those? How are they picked? What happens?
PHAEDRA FISHER: You know, [unintelligible] privatization, the mechanics of it—the academics can get into the details of how all of that worked. I can share with you some of the things that I witnessed on the ground that I don’t think most people realized the scale of what was going on. For example, in the former Soviet Union, you really had—or, I should say, in the Soviet Union itself, before privatization happened, you really did have the workers’ paradise, where everything was provided to the workers by the government. So, if you were working as, let’s say, a tractor factory, you worked at the tractor factory; the tractor factory provided your housing, they provided your schools, they provided the hospital, they provided also your children’s education, and generally, the income was so low that you didn’t have transportation, you didn’t have your own car; and so this tractor factory’s off in the middle of nowhere—you’re then dependent on the company to drive you to civilization.
Which means that it’s not quite serfdom, but it’s pretty darn close. In that if you are no longer [unintelligible] at a company, and essentially when [unintelligible] showed up there, the state of financial crisis was so extreme that most people had not been paid in six months, across the whole country. Just the financial system had reached a state of collapse. People were not paid for six months, and I visit this tractor factory and find all of the employees are still hanging out there. They’re sitting around in the yard drinking vodka, because there’s nothing else—the factory’s not operating, they’re not being paid, but they have nowhere else to go. And it—it just makes your head explode, going wow, this is absolutely fascinating. And so, the question that you’re asking is, how do you unwind all this? And that was the issue that was grappled with with the voucher privatization.
The first thing that had to be established was—and mind you, I’m not an academic expert on this; I’m just kind of breezing through it extremely quickly. But, the—essentially, all these various industries had to be given title, and fractured up, and determined which of this actually is an entity that can be sold, and what comprises of it. And then that was—what was structured then was a bunch of voucher auctions, and every citizen in the country was given a number of vouchers that they could then trade in to buy shares of their preferred companies. And this is where [unintelligible] scam after scam started happening in Russia in the early 1980s, and this is how the oligarchs really acquired a lot of their wealth, was scams of convincing lots of individuals to give up their vouchers in return for x, and as a result, a lot of people accumulated a lot of shares very very quickly.
JASON HARTMAN: So, people were given vouchers, and—I mean, how were those vouchers allocated? Who gets what? I mean, how many vouchers do you have to buy your Russian oil company?
PHAEDRA FISHER: Yeah. I really—this is an area that I just couldn’t even represent that I’m an expert in.
JASON HARTMAN: Right. Well I appreciate the disclaimer. And as I said to you before we started recording, I would rather talk to an on the ground person with first hand experience than an ivory tower person any day.
PHAEDRA FISHER: Exactly. To some of your other questions about things that we’re witnessing on the ground that were just shocking that other people just may not have actually realized—I mean, the main thing that we were really witnessing on the ground was, there really were no laws. There’s only suggestions. And that’s the opening phrase I start with in my book, was, we have no laws, only suggestions. Whenever you’re operating in a country without laws, or I should say that it started to be more like, there are laws, but the laws are flexible, depending upon who you influence, it just changes everything. It changes how you operate in society, and how society as a whole starts operating. And some examples of that were things like, well, the most basic example—I was actually attacked on the street in Russia. People start gasping about that. But everyone—everyone is in a state of violence at some point, so it just happened. The amazing thing about my particular situation was that the police were actually nearby, and caught the guys. And we were all taken off to the police station, and this is a sort of thing where in the States, what you’d be expecting was, okay, the three guys were caught, they should be read their rights, they should have a lawyer present, etcetera. And what happened in my situation was simply, the police held the guy, pointed to me, and said, is this the guy that attacked you? And I said, well, I’m pretty sure. And that was enough to slam him to the ground, start kicking him—the most violent physical abuse I’ve ever seen in my life, and ever hope to see again.
JASON HARTMAN: This is vigilante justice. But it’s interesting that it’s the police! I mean, I thought you were gonna say something different. I thought you were going to say, the guys that attacked you got off! I’m in a way glad to hear that there was some justice.
PHAEDRA FISHER: Yeah. Well, it’s one of those things where you’re very conflicted at this point. They ended up finding my business card on these guys, so there was absolutely no agenda that they had, in the ones, to rob me. So, it was zero question in my mind, but I was very conflicted from a perspective of, yes, they should punish, versus, it really should go through a proper process. It shouldn’t just be the police being judge and executioner.
JASON HARTMAN: Oh, of course, of course. I agree. Very interesting. Okay, so, yeah, I mean, communism is such an incredibly inefficient disaster, because it has this sort of sense of, everybody can buy justice, in a way, and it also has this other issue of inefficiency, where people are lining up to get their pair of shoes. And during the privatization stage, I mean, things were dismantled, inflation was incredible, I mean, people were just massively impoverished, initially, right?
PHAEDRA FISHER: That’s correct. I mean, it’s very difficult for people to understand the scale of inflation, of what was going on in the country, and what it’s like to live in a country that is undergoing such extreme inflation. And, at the time I was—at the time I arrived there, I guess the ruble to the dollar started at about 200 rubles to the dollar. By the time I left, it was 5,000 rubles to the dollar. To give you a sense of just how extreme the inflation was during that period of time. And so what that meant for people on the street, was first of all, the financial system had completely collapsed. And even if the financial system did exist, you’re not gonna leave your money in a bank when it’s deteriorating a couple percent an hour or a day.
JASON HARTMAN: Right, right. With inflation you’re losing your money so quickly.
PHAEDRA FISHER: Exactly. So the question is, what do people do? How do you actually make it during this period of time? And the answer first of all was dollars. People were just desperate to get their hands on dollars. Meaning, the actual, physical pieces of paper. This is not bank accounts; everyone had physical pieces of paper that were stashed literally underneath their mattresses, because that was really the only was that they could preserve anything resembling wealth. And then the second part of it also is the big rushes to the store, for anything that you can buy that can retain value, you’ll buy, just so that you can—anything except for hauling those stupid pieces of paper rubles that are going to deteriorate tomorrow. And it was pretty extreme. And also, at the same time, we had no credit card system; really, it was a cash-only society at this time in Russia, which meant that when I’m traveling, I was traveling continuously, I had to travel literally with shoeboxes full of paper rubles, which is pretty alarming. It’s pretty amazing, thinking that if you actually take these rubles and wrap them up in newspaper, wrap them up in string, so that they look not just like a big box of money. But then you sit, and because inflation was so high, the numbers of notes that you had—you had—the big value notes were insufficient, and so you could sit for like five minutes counting out the paper notes when you’re checking out from a hotel, just standing there counting them out. It’s like paying for a hotel with quarters. It’s gonna take forever to do it, and it’s completely ridiculous.
JASON HARTMAN: It is completely ridiculous. So, people were looking for some stable store of wealth. I mean, this is a great economic lesson. And you saw it first hand. And so, they were looking to the dollar to provide that; gold and silver are too heavy, and they’re not divisible enough, and they have all sorts of problems. But you know, at the time, they thought, well, the dollar. And a lot of people in the US now today are fleeing the dollar, because they’re thinking the same thing. Of course to a much lesser degree. But that’s really interesting. And the shoeboxes—I mean, you had to completely increase the amount of money in rubles you would carry all the time, I’m sure, because it kept devaluing! Right?
PHAEDRA FISHER: Well, and also, I would keep money in dollars until the very last moment when I had to convert it into rubles, of course. And everyone would just keep money in dollars. And this also sort of fed the whole reason why foreigners are a target in these foreign countries; because first of all, the Russians did not believe in keeping money in banks, and they knew that Americans had dollars, and they just couldn’t fathom Americans keeping money in banks. Therefore, the calculations are, therefore the Americans must have all kinds of dollar stashed in their apartments. And so, there is all kinds of violence against foreigners, at their apartments, you know, where people would follow them back to their homes and beat them up, looking for money in their apartments, with the expectation that these wealthy Americans must have cash stashed here somewhere. And it’s sort of a symptom of two interrelated problems. One is the inflation, and the complete lack of a financial system leads people to believe that everyone’s keeping money somewhere stashed away in their house.
JASON HARTMAN: Wow, amazing. Do you have any lessons? I mean, I’m sure you do. But, does this say anything about how we should be thinking today with what’s going on in the economy? Just any thoughts on that, you know? I know it’s tangential, but…
PHAEDRA FISHER: Yeah. It is tangential. Again, I don’t claim to be an expert on these things—
JASON HARTMAN: We heard your disclaimer.
PHAEDRA FISHER: Inflation is a terrifying thing, and it actually—it can just rip out the heart of a country. And it’s things like, going to a restaurant, and all of the items on the menu are printed daily, because the restaurant menu has to update daily, because of the inflation. You come back the next day, it’s gonna be different prices. And you can’t plan anything with that. You can’t plan your family budget, you can’t plan payroll, you can’t pay your phone bill—you just, because you have absolutely no idea what’s going to happen in the next month. And so, it just—it really starts to affect everything that you’re doing in society. And then, where it really started to affect us in Russia, was that your planning horizon changes from years to days. And when no one is thinking in the long term, it means that there’s no investment that’s forward-looking. And so, what was going on in the post-privatization factories, you initially think, oh, these newly privatized companies, people are going to be trying to build up, you know, rebuild these factories, they’re going to be hiring more people, they’re going to be trying to come up with a better product line. That all requires years of investment. People are thinking on a horizon of weeks, not years, and as a result, what was happening in these newly privatized companies is that they’re just being stripped of assets, and just being sold. And so, that was resulting in positive cash flow in the short run, but the long run investment was just dire, and this is part of what sent Russia into a big spiral, economically, during those years.
JASON HARTMAN: Unbelievable. Wow. So, what did you see? I mean, you went to about 30 different Russian cities, and stayed at about 30 different cities while you were there, right?
PHAEDRA FISHER: That’s correct. Yeah, somewhere around there.
JASON HARTMAN: And so, how were people surviving? I mean, what were they doing? You said they weren’t being paid for six months at a time. Inflation was rampant when the price controls went away. You know, what would they do to survive?
PHAEDRA FISHER: Essentially, everyone had some scam going on on the side. And yeah, you can use the word scam, or you can use the word business. But it was all just sort of happening as, everyone had some other way of making money. One of my favorite stories is, whenever I first got my apartment, I was like 20 something years old, and all my Russian friends were really lobbying me to take in a housekeeper. And it was like, I’m in my mid-20s, I don’t need a housekeeper, this is ridiculous. And they really saw it as being my moral obligation to the future of Russia, to hire somebody. And it was like okay, I can do that.
JASON HARTMAN: You gotta increase employment.
PHAEDRA FISHER: So, I can do this. I was able to—I hired a woman who—you’re not gonna believe this one. She was actually a nuclear physicist. She had not been paid by her nuclear weapons factory for the previous like six months plus, so she decided it would be more lucrative to work as a housekeeper for Americans, and this woman—Dalia was absolutely one of the most amazing people who I met in Russia. She was—she took on this role that you and I might think oh gosh, that’s a real setback, going from being a nuclear physicist to being a housekeeper. But she had an amazingly positive attitude about it, like, hey, I’m now in control of my own destiny here. I can get my own clients, I can earn a cash income. Meanwhile, at the weapons factory, I wasn’t being paid, and you know, when I was there, I was under such bureaucratic control that I had no control of what I was doing anyway. So, she actually felt a lot more economic freedom as well as personal freedom, taking this new life of being a housekeeper, which, in the world of modern America, it’s a bit mind-numbing, but this was the reality of what was going on at the time, where people just were very much seeking, you know, let’s just look at practicalities. What will it take to survive? And let’s move forward.
JASON HARTMAN: Yeah. Right. So, she was excited about the change. What age was she? Because I find that the—when I’ve visited formerly communist countries in eastern Europe and Russia, and then, the only actual operating communist country I’ve ever visited at the time was Cuba, which was fascinating. But I find that there’s a real disparity age-wise. It seems like the younger people—they were pretty optimistic about the changes. But the older people, they just kind of liked their old idea of, what do they say, it’s the joke about the workers’ paradises—we make it look like we’re working, and they make it look like they’re paying us.
PHAEDRA FISHER: We pretend to work, they pretend to pay us.
JASON HARTMAN: Right, exactly, exactly.
PHAEDRA FISHER: Yes. And you’re exactly right. And Dalia was about the same age I was, maybe a couple of years older. Late 20s or so. And you’re absolutely right, that younger people really saw opportunities, where the older generation—I mean, to their credit, or just sort of acknowledging their position, they’ve worked this way their entire lives, and they just saw their entire life savings disappear. And if you just see your entire life savings disappear, you will be a bit pessimistic. It’s really—I mean, the other thing to keep in mind is the whole history of Russia is very fascinating, in that one thing that we just sort of take for granted in the west is the whole concept of, the civil society has the ability to influence government direction. And of course, you can be cynical about it in this day, yeah, the people in Washington, we really have no influence over them. But the reality is that we still do to a much greater degree than ever happened in Russia. In Russia it just is like, who’s in power, and the people in power really treat the whole country as their own personal back yard. Whatever it is that they want to do is what happens, and civil society really had no influence over what was going on at the higher government levels, until the next revolution and the next group of people takes control, and then they decide what’s going to happen. So, definitely with the older generations, you really saw that the mindset of, you know, what goes on in government really doesn’t even matter, because we can’t influence it anyway. And so, there just isn’t very much a view of—you know, as long as you’re not making things worse, or disrupting things, just let them continue.
Whereas the younger generations, especially the ones we started to work with on our projects, they were very, very optimistic about just seeing the potential that could happen. And for me personally, what was really exciting was working with all the young women throughout the county, because until I came along, their whole view of what women would do in the workforce was maybe teach, maybe be a bureaucrat…my dear Dalia, who was a former nuclear physicist, was very much an exception. But talking to the women that I interviewed for roles with my project, to speak with them—they really didn’t look beyond just basic administrative tasks. And then they started to see, wow, the whole world is opening up here, and look at all the things I can do. They were—a couple of the women on my team ended up going to the States, to MBA school, which I was extremely excited about. But you have the younger generation definitely started to get very excited about the opportunities, and I think that’s hopefully continuing.
JASON HARTMAN: And just to be a sarcastic pessimist—so they went to the States, and they went to business school, so instead of being a slave to the government, or to the chauvinistic culture, they can be a slave to student loan debt. [LAUGHTER]. But, I’m actually just kind of kidding. It’s not as bad as the other alternative. So, wow. Just incredible. Well, why do you call the book Vodka Diplomacy? I love the name.
PHAEDRA FISHER: Oh, thank you for that. Well, Vodka Diplomacy—as I’m sure that everyone knows, the stereotypes of Russians and vodka, you pretty much always think of them together. One of the things which is sort of like a stereotype about Russia, but I just learned to be unfortunately quite true, is that when in Russia real business happens over vodka; it really does. And it’s even more extreme than most people believe, in that if you are meeting with people, working with your Russian partner, everything is really decided about the relationship by how well you drink together. But meanwhile, it’s all about determining who’s in power here; is it the host, or is it the guest? And it’s all the posturing, all the drinking games really have a very sinister edge to it, of, in the old Soviet era and before that the Czarist era, all this drinking was really all about to get people to loosen up their tongues a bit, to really speak your minds about what you really believe. Because in this country, in this societies where neighbors have been turned against neighbor for so long, people are very guarded about what they say, and so, you need to have the vodka flowing to get people to actually say what it is that’s on their mind. And this is just a scene that I saw again and again, working for Russia, was that that’s what really sets the tone for your working relationship, is how well you’re able to drink with your Russian partners. My liver definitely was sacrificed in the process, but we actually—it did make progress there.
JASON HARTMAN: Well, what’s interesting about the Vodka Diplomacy though, is using alcohol as a truth serum, which I think is a pretty valid reason to use it, actually, and that’s quite interesting. It applies to both sides though! I mean, one has to be a better drinker than the other to not give away the secrets, and not have the loose tongue, and get the other person to do it, or fake that they’re doing it, and not really drink, right?
PHAEDRA FISHER: Oh, exactly. It’s one of those things that’s very ingrained in Russian culture, but the other part of it that you’re sort of implying there is that this—the whole relationship is very, very different than the western business relationship. The western business relationship, you can actually go into the relationship and say, hey, I want to buy carrots from you. I want carrots, you want my money, we can actually come up with a deal where we both walk away from the table happy. That concept is very much ingrained in western society, but in Russian society, there’s always this concept about, who is winning, and who is losing, in a particular relationship. Both people cannot go away from the table happy. And if both people can’t go away from the table happy, you’ve gotta figure out some way of one-upping your business partner. And I guess partner is not even the right word. It’s the person who you’re sitting at the table with. How can I make sure I come out on top? And so, this is where the Vodka Diplomacy came in; how do you—you’re sorting out, how can I actually take advantage of this particular situation? And how can I come out ahead? So, the real agenda is very, very different than the superficial agency from what’s going on at the table there.
JASON HARTMAN: So, the win-win idea just doesn’t work in Russia. It’s a win-lose deal, it’s conquering your opponent, rather than building something great together.
PHAEDRA FISHER: Yeah. Well, one of my favorite anecdotes from Russia during this period—this is of course during the era that McDonalds was really making major headway into Russia. And the whole concept of customer service just fundamentally did not exist under the Soviet era. So, you would try—I would try to check in for a hotel, and you’re treated more as, under suspicion, rather than as a guest. It’s like, who are you? There’s times where I was thrown out of a hotel because they thought I was a prostitute, just because women do not travel by themselves. And so, if you’re checking in here, you must be one of them. Like, no, no, that’s ridiculous. So, the whole idea of customer service is fundamentally lacking. So, with that context, then, one of my favorite stories about the era comes from the McDonalds days, and I have no way of knowing if this is actually true or not, it’s just one of those urban legends that was spreading at the time. So, the whole group of young kids in for their first day of McDonalds training, and they’re learning all these controversial subjects, like, smile at your customer, would you like fries with that, have a nice day—these things that are completely foreign concepts. And then, a hand shoots up, and a kid asks, I don’t understand. Why do we have to be so nice to them? We’ve got all the hamburgers!
JASON HARTMAN: [LAUGHTER]
PHAEDRA FISHER: And that just summarizes the whole mentality of what was going on at the time. Just the whole concept of customer service, of no, we’ve got the hamburgers, but we want their money, and you’ll get that by being nice to them. And it’s something that—it’s a very, very interesting concept to think about how other cultures operate.
JASON HARTMAN: It sure is. And this is why it is so important to travel. Because it’s just hard to fathom that! Your mind just—you can’t get your head around it until you’ve been there and sort of witnessed it. There are still even 20 some odd years later, you can still sense these things. They still live in the culture a little bit, even to a much lesser degree than they did at that time, obviously. Very interesting. Well, Phaedra, please give out your website, tell people where they can find out more about Vodka Diplomacy, and I highly recommend the book; on Amazon it’s got great reviews.
PHAEDRA FISHER: Thank you very much! Yes. My book, you can primarily find it on Amazon, Vodka Diplomacy. My name is Phaedra Fisher. It will show up there when you search in. My website’s very much under construction, but you can look at it if you like, which is VodkaDiplomacy.com, and also on Facebook, which is updated regularly—Facebook, and you’ll look up Vodka Diplomacy there.
JASON HARTMAN: Fantastic. Phaedra Fisher, thank you so much for joining us.
PHAEDRA FISHER: Thank you so much!
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Transcribed by David
The Creating Wealth Team
Episode: CW 384: Russia in the 1990’s From Global Superpower to Banana Republic with Phaedra Fisher Author of ‘Vodka Diplomacy’
Guest: Phaedra Fisher
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