It is a truism that the best evidence of stability in the society and the state is the existence of a broad stratum of the middle class.
It is the middle class that provides the most reliable support to the existing order and, respectively, to the current government which maintains that order. This is how the things are the world over. And how about this country? What kind of government and order suit our middle class? And, in fact, do we in Ukraine have a middle class at all? And if we do, who can be called its typical representatives?
“Teachers, engineers, and doctors,” my mother-in-law, a retired meritorious teacher, stated categorically.
“Those who earn $500 a month,” said my wife with a deep sigh.
“Those in the middle,” said my five year-old son.
Recognizing the right for all those versions to exist, I still would like to share my own opinion.
The middle class is not an arithmetical mean of the very rich and the very poor. And not those who can earn their own living. In the USSR, seventy years of Communist rule produced its own idea of the middle class: those who are well-fed, shod, and clothed — what else could a person want? However, for the broad masses even this standard remained out of reach, for they were just about fed, just about shod, and just about clothed. Except perhaps the regional Communist Party bosses, whose living standards approached that of a French peasant.
Since we now call ourselves a democratic European nation, let's compare ourselves with the developed European countries, rather than the poorest states in Africa. Otherwise it made no sense to start all that Belovezhskaya Pushcha business breaking up the USSR.
The middle class is those who solved for themselves the problem of survival and made the transition to accumulation. They have learned how to make money under the current regime, and endeavor to maintain the existing order, because everything in it satisfies them. The middle class is those who have something to lose should there occur any great changes like revolution, collectivization, nationalization, pogroms, etc. This is exactly why they are not interested in revolutions and tremors in the social order.
The hungry, the unemployed, and the poor can be found everywhere in this country: they beg, strike, bang their helmets, and borrow a 5-hryvnya bill from you “until payday.” The rich are also highly visible: they either sit in Parliament or are made the subject of criminal reports (very often these two activities take place simultaneously). Yet, representatives of the Ukrainian middle class have to be hunted like mushrooms in dry summer. First, there are just as few of them. Second, they have found their niche in the economy and sit there quietly, minding their own business. And should they agree to a frank conversation with a journalist, then absolute anonymity is required. OK, then let it be anonymous.
Ihor M. is director of a small business trading in office equipment and software. In addition to this, he is co-owner. Ihor is 34-year-old, married, has one child, and is a university graduate. His monthly income averages about Hr 1600-2000. After I heard these figures my well-thought interview plan was good for nothing.
“Ihor, I said jealously, “I'd like also to be an owner of a small or even big business.”
“If you want to, do it!”
“Seriously?”
“But I am serious. Well, here's the secret: first you must learn three very simple truths. I know them from my own experience, and thus give them to you in a chronological order...”
“...In the eighties, the scientific and engineering departments of the university at which I studied were especially popular. We, technicians, considered ourselves the student elite, in great demand for the then omnipotent scientific research institutes and companies of the military- industrial complex. The government did not spare money to finance the defense sector. Engineers were well paid, given a room in a dormitory, and usually it took three years to get an apartment. At certain point all this was over. Although we were not dismissed, our salaries were not paid either. We already were married, and had kids to take care of — whether you like it or not. Pay arrears seem to have become a normal thing now, but then we had a real shock. Most smart and get-ahead types went abroad and, I should say, virtually all of them got good jobs. And those like me stayed on and learned our first, and probably the main lesson: it is we — not the trade union, the party organization or the state — who is responsible for us and our families.
“Well, no tragedy, we thought: we're no sissies. When students, we used to make quite a lot of money during summer vacations working on construction sites, woodcutting, and doing similar hard but well-paid work. So we thought we would handle the problem anyway. But it did not take us long to learn lesson No. 2: big money for low-skilled, hard physical labor was offered no more.”
“And you decided to become a businessman?”
“Well, not right away. Don't forget that we grew up and had been formed under conditions of the state's monopoly on every aspect of our life: from the economy to sex. Many of us had already been granted the title of candidate of science and appointed section supervisors. Not that we were afraid, but it was beyond our comprehension: how one could work for a non-state company? With this regard, the cooperatives [which then started to appear] were very useful. While remaining with the state-owned institution, we worked in cooperatives under labor contracts. Soon it turned out that in the cooperative one can make good money, without having to share it with a lot of managers, officials, and other loafers who made up more than half the work force in any research institute.
“And we learned Lesson #3: We can earn money using our brains! Thank God, we got an excellent education. This is when we grew up and opened our own company, four of us.”
“You call this secret? Sorry, Ihor, but your lessons can be now read in dozens of books and hundreds of newspaper articles.”
“Why then are grown-up, healthy guys sitting in state institutions and complaining all the time of being unpaid? I don't mean miners, doctors, and teachers who have limited opportunities. But what about the rest? Reading is not enough. Such things, simple as they may seem at first sight, must be lived through so that one can become mentally prepared to make money — yes, to actually make it and not just dream about it.”
“Do you think that all conditions for small business in Ukraine are in place?”
“Well, that's an interesting question. You can't answer it in two words.”
“...We started in 1991, and it was much easier to operate then than now. To begin with, the registration procedure was simpler, and it was not required to put up such a great statutory fund as now. Competition was not that tough, and probably most important, the bureaucrats were preoccupied with retaining their positions as the Soviet Union collapsed and did not have time to interfere with us. In addition, they were sure that sooner or later we would be closed down. Then the bureaucrats suddenly awoke and began to stifle us with taxes, numerous inspections, resolutions, backdated changes to the law, etc. I can understand their attitude. Just imagine an old guy sitting in a ministry or some department. He has given half his life to get this office, his hair grayed from squabbles with rivals, but his position is just average. The guys above him take bribes in big bills, and what is he supposed to do? To make things worse for him, some suckers dare not only live and work their own way, but earn ten times more than he does. Shouldn't he be hurt? But if you have a relationship with an average bureaucrat, you can always come to terms with him and solve — for money, of course — on any problem.”
“Like what?”
“Anything: from installing a telephone to issuing a receipt. Who is difficult to come to terms with is the state. An inexperienced person is afraid of racketeers. But you could always negotiate with those guys, besides they are now a little clamped down on. Presently, the biggest and the only racketeer for legal business is the state. The declarations by government officials about equal rights for the state and private business are for just for dopes. How did we get started? We pooled our resources to buy a typewriter, rent a tiny room in some dilapidated building, and started to work. Or, to be more correct, started to learn how to work for ourselves. Our workday lasted 10 to 12 hours, and we worked virtually seven days a week. I haven't been on vacation for 5 years. Well, this is just a lyrical digression. The point is that my employees are able to support their families. Although not to the degree I do, but still. And we don't live off the state. Moreover, the state did not invest a penny in my company, but it does not forget to accurately collect taxes from me.”
“Do you mean that just like the state accurately collects taxes from you, you accurately pay them — the full amount?”
“Accurately, but within reasonable limits. There are legal and, so to say, semi-legal ways to avoid taxes. If the full amount of taxes were paid, I would have to close the company by tomorrow, get a job with a state enterprise or go to the Verkhovna Rada to bang a helmet demanding my wages. So, who would benefit from that?”
“But the pensioners, doctors, and teachers are no better off for your company's prosperity.”
“But they are none the worse, either. Who are we? Germans? Americans? We're Ukrainians! We are part of the nation, the part which is not begging the state for money but, quite the opposite, bringing in revenues. Plus, why does my private firm pay salaries and taxes, and most state enterprises don't? I manage a private company and the funds it generates, but I also bear full responsibility for the results of its work. If you work poorly and make mistakes, but you get nothing. Quite a few small firms have gone bankrupt since we started. Why is privatization stuck in the mud? You don't know? Well, I do: because of the bureaucrats who manage the work of state companies and can control budgetary means without bearing any responsibility. Privatization just doesn't pay for them.
“As far as taxes are concerned, let them establish reasonable tax rates and a sane tax collection mechanism. Then you can sleep well after you've paid your taxes.”
“After reading about the size of your income, many of our readers are sure to say: what kind of tax reduction does he want? He's already a fat cat.”
“Well then, let's talk about fat.”
“...My income was not always like this. There was a period when the whole company did not see their pay for half a year. In five years I saved enough money to buy a two-room apartment, and it took another year to furnish it. I bought a computer, which is indispensable for me. I don't have a car. I have a TV and a VCR. We don't stuff ourselves with red caviar, but we eat all right. On weekends, we go out to a cafe. What else? Every year my wife and child go for two weeks to the seaside. My parents are retired. They, just like the others, are delayed their meager pensions which they deserved for having worked all their lives. I help them, of course.”
It is a truism that the regime whose actions make the poor get poorer, and the rich get richer, will be doomed. This truth was borne out by the parliamentary elections. It seems that at least for some of the authorities, if not all of them, the election was a good lesson. This is testified by the latest decrees to create free economic zones in Donetsk oblast and Mariupol, simplification of the tax system for private businessmen and small enterprises. The only issue is whether that middle bureaucrat, whom Ihor has come to terms with, will be willing to get off his gravy train. Will the sensible Ukrainian politicians have enough strength and political will to radically change the situation? We'll have to wait and see. So far all attempts to reasonably reform the tax system have failed. This is an indication that those in control of the shadow economy, also control, to some degree, law-making in Ukraine.
The middle class, which constitutes the basis for the ruling regime in any civilized country, is being formed in Ukraine despite what the state does, not because of it. And who can be assigned to this class? Those who were lucky to get a job in a foreign company, bank employees, and successful middle-sized businessmen. Just a few, who against the background of overall pauperization of the country, are viewed almost like Rockefellers. And the paupers, as is generally known, have nothing to lose but their chains. In the presidential elections slated for the next year they will follow those who will advocate Sharikov's [a character of Mikhail Bulgakov's Dog's Heart] principles: “There's nothing to think about. Just take away everything and divide it up.” Keep away from me! We have already passed through that one.






