Free Eat the Rich: A Treatise on Economics by P.J. O'Rourke Page A

longtime communist leader, Enver Hoxha (pronounced Howard Johnsonish: “Hoja”), ordered all this after the Soviet Union’s 1968 invasion of Czechoslovakia. He was sure Albania was going to be invaded next. Hoxha called for “…war against imperialism, against the bourgeoisie, social democrats, national chauvinists, and modern revisionists…. They hurl all sorts of foul invectives on us. This gladdens us and we say: Let them go to it! Our mountains soar up higher and higher!”
    But who’d want to invade Albania? Or so I was thinking as Elmaz and I drove past Albania’s Coca-Cola bottling plant. There, peeking out from behind a ten-foot fiberglass Coke bottle on the roof, was a sandbagged machine-gun nest. Maybe Hoxha wasn’t crazy.
    In the event, the pillboxes were no use against the force that actually invaded Albania, which was the force of ideas—though not exactly the same ideas that sparked the Declaration of Independence, to judge by what Elmaz showed me over the next week. Elmaz was studying to be a veterinarian. Everything had been stolen from his school: books, drugs, lab equipment, even parts of the buildings themselves. “We are without windows, without doors,” said Elmaz. “We study with only desks and walls.” The desks had been stolen, too, but the faculty had found them in local flea markets and bought them back. “All the horses we have were shot,” said Elmaz.
    Across the road from the veterinary school was a collective farm that once had 5,000 cattle. “They stole five thousand cows!” I said, amazed at the sheer get-along-little-doggy virtuosity needed to rustle a herd that size in Albanian traffic.
    “No, no, no,” said Elmaz. “They could never steal so many cows in 1997.”
    “How come?”
    “Because they were all stolen in 1992 when communism ended.”
     
     
     
    How could mere confidence games lead to total havoc? And why did pyramid schemes run completely out of control in Albania? It took about an hour to find out. Elmaz drove me to see Ilir Nishku, editor of the country’s only English language newspaper, The Albanian Daily News.
    “Why were the pyramids so popular in Albania?” I asked Nishku.
    “Were people just unsophisticated about money after all those years of communist isolation?”
    “No,” said Nishku, “there had been pyramid schemes already elsewhere in Eastern Europe, and they had collapsed before the Albanian ones were started. People in Albania knew about such things as the failure of the MMM scheme in Russia.”
    “Then how did so many Albanians get suckered in?” I asked.
    And the answer was simple. “People did not believe these were real pyramid schemes,” Nishku said. “They knew so much money could not be made honestly. They thought there was smuggling and money laundering involved to make these great profits.”
    The Albanians didn’t believe they were the victims of a scam. They believed they were the perpetrators—this being so different from the beliefs of certain Wall Street bull-market investors in the United States.
    “My family had two thousand dollars in the pyramid schemes,” said Elmaz. It was their entire savings.
    Nishku told me the first Albanian pyramid scheme was started in 1991 by Hadjim Sijdia. Sijdia Holdings offered 5 percent or 6 percent interest per month, 60 percent to 72 percent a year—way too much, especially considering that Albania was then in a period of low inflation. But Sijdia Holdings had some real investments, and although Hadjim Sijdia was jailed in Switzerland for fraud, he managed to get out and somehow repay his debts.
    Following Sijdia Holdings, however, came schemes with a primary business of scheming. There were about nine large pyramids in Albania. Three of them—Sude, Xhaferri, and Populli—had no real assets at all. By 1993 small-business owners had gotten the idea and began creating minipyramids all over the country. Free enterprise can be free of all sorts of things, including ethics, and