What Levi’s Jeans Tell Us About Russian Sanctions

During the 1980s, a U.S. college student made some extra money by selling Levi’s 501 jeans.

However, his suppliers and customers were not what you would expect.

Communist Jeans

In East Germany during the 1980s, Levis were more than a pair of jeans. As capitalism, culture, freedom, and being cool, they represented everything that was Western. And of course, they were forbidden.

But there were some ways to get them. A visiting relative from West Germany could sneak a pair in. Or you might buy them from the one chain of stores allowed to sell them. But mostly, there were none to buy. And because wearing them was officially disapproved, sometimes illegal, and you could be sent home from school for wearing them, teenagers especially wanted a pair.

Somehow, a college student in Idaho realized that he could make substantial money by sending thousands of pairs of Levi’s to East Germany. He just needed to buy them in the U.S. and mail them to West Germany. Although the East German government limited who and what could enter and leave, the jeans made it to the black market.

When Levi Strauss discovered the plan, they limited the number of jeans an individual could buy. Responding, our Idaho entrepreneur asked random people entering stores to make purchases for him. It was worth the trouble. Even when he paid U.S. retail prices, the return was sufficient. Black market Levi’s sold for a month’s salary in East Germany.

Recognizing their popularity, in 1978, the East German government actually bought some Levis. Perhaps to placate the population for its 30th anniversary celebration, they asked Levi’s for 800,000 pairs of jeans.  Levi’s explained that because it was a rush order, they could only send leftover inventory. Saying yes, the government made a $9 million deal. Even with the 149 East German mark price tag (the same as $295 today) they quickly sold out.  Perhaps East Germans felt like the Soviet teacher who said that buying Levis 501 jeans was one of the happiest moments in her life.

Below, wearing their jeans, East German teenagers sit on the Berlin Wall:

Still now, like East Germany, Western goods are more attractive than any made in Russia. With sanctions, Levi’s is among the hundreds that left.

Our Bottom Line: Command Economic Systems

An East German joke:

“Why aren’t there more robberies in East Germany?”

“Well, you would have to wait for the getaway car for 13 years.’”

When the East German government tried to make jeans, they couldn’t get it right. The texture reputedly felt like a wood panel. With waists that were too wide and lengths too short, they fit no normal person. In addition, the social side was calamitous. No one wanted to be caught wearing them.

East German jeans reflect the constraints of a command economy. When incentive is tethered by someone telling you what you have to do (and no credit for anything better), so too are quality and creativity. For that reason, even today, we have no demand for Russian cars or fashion or appliances.

And, we surely have a population that will miss its Levi’s (and the goods and services from 300+ other companies that have withdrawn from Russia).

My sources and more: Thanks to an MSNBC newscast for alerting m to the history of Levi’s in East Germany and Russia. From there, I found the facts at a fascinating podcast from Business Insider and a PR article from Levi’s. However, the story could only become complete with the list of companies leaving Russia at this Yale website. Do take a look to see who and how.

Our featured image is from Business Insider.