Economies of scale

I asked Yura what the main industry in Baykit is. He says there is not one. How does a town survive? In Soviet times the industry was collective farming. Today all I can think is that the government must prop up the town some how. There are obviously jobs here, in services such as schools, hospital, shops, buses, airport etc. Yura produces something in that he makes clothing and boots. 

A little example of how economies can differ. 

In Pasechnoe (the Chulym village I visited recently) there virtually no jobs at all. There is a village office, but the school has closed down and moved to the next village. There are just a couple tiny shops. By and large everyone is subsistent in their life style, producing their food in their gardens and owning some animals, as well as going fishing.

Occasionally people in Pasechnoe may take some berries to the district centre to sell, or sell a horse for meat. But on the whole, people don't have many ways of producing money. And because their lives are subsistent, they have less things to spend money on. (Unless of course they are alcoholic.

The family we stayed with have a cow. It produces 22 liters of milk a day. Fresh milk is absolutely delicious I can tell you. Apparently it is a lot healthier than store bought milk. When you can't drink 22 litres of milk a day, some of it gets used to make other dairy products, some of is given away and some is thrown out. There is no milk for sale in the shop in Pasechnoe. Why would there be, as nearly everyone has their own cow anyway? So the going price of milk in Pasechnoe is 0 rubles a litre. And because there is excess, it is then free.

In Baykit (a fly in town of 4000), things are very different. There are shops here. People have jobs. Food products get flown in from down south. So naturally things are a lot more expensive here. In Krasnoyarsk a litre of milk costs 35 rubles ($1.16) a litre. In Baykit it costs 60 rubles ($2) a litre. People have their own gardens here and produce a lot of their own vegetables, but far fewer have their own animals. Yura and Alona do not have a cow.

Some local people have their own cows. They will sell you milk. They sell it 3 liters at a time for 210 rubles ($7). That's more expensive than the milk in the shop here, although arguably better quality.

So, nobody is giving away milk in Baykit. That which is free in Pasechnoe, costs 70 rubles a litre in Baykit. I think this is a good example of how something can cost a completely different price in a different economy. The value of something is completely relative. This explains why the Australian economy is so much more expensive than say the North American economy. But the average salaries are also a lot higher. Often an economy has a lot of artificial factors, sometimes external factors. I found this micro example fascinating.