Doing Business in Russia. Котова К.П - 23 стр.

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      The problem of consumer goods may even become more acute because
prices, even the high ones, will hardly be able to reduce the demand for basic es-
sentials. Most of the country has a low and very erratic diet pattern. The shift in
the consumption pattern of even the high-income bracket towards cheaper food
may give rise to an increased disbalance.
      A stabilization of the financial situation is also unlikely. It is quite possi-
ble that the difference between the amount of price rise will go to finance addi-
tional expenses connected with this measure. The printing of new money will
keep growing. The current expectation of inflation will continue the tendency of
“shunning money”.
      The introduced system of compensations will finalize the disintegration of
the functioning distribution system. Wage leveling will intensify and defects in
wages of people engaged in various branches may become aggravated. Compen-
sation payments to workers from funds of enterprises will increase the tendency
towards freeing more manpower. With the existing sharp recession of produc-
tion, this is a step to a higher unemployment level. The living standards of prac-
tically all social groups will drop.
      All the above consequences, supplementing and aggravating one another,
are creating a situation, which is going practically uncontrolled. The road of am-
biguous reforms and compromises in the economy is too dangerous for the gov-
ernment and burdensome for the people. There isn’t and can’t be any effective
forms of social protection under the disintegrating command-and-administer
system. In any critical situation the most precious things always get saved first,
and so the System will try to save itself.
      People must know about this if only to correctly oriented themselves and
work out the needed model of conduct, relying on its own strength and having
no illusions regarding the state’s social protection.
      One can speak seriously about social protection only in the context of
radical economic reforms. Lying ahead is a transition to a system built not on