August 28, 2002
From the desk of Jane Galt:So I was at dinner
So I was at dinner the other night with a friend who was arguing that Russia's per-capita GDP was higher in 1916 than in 1989. He knows more about the subject than I, but I just can't believe it. No one is more aware of the economic problems with Communism than I, but the Russians had the benefit of 70 years of Western advances, and no copyright. Even with a horribly screwed up economy, they should have been able to improve things over 1916.
But friend argued that Russia's GDP was crippled by the people Stalin killed collectivizing architecture and industrializing, devastated by World War II, stifled by the secret police in the 1950's, hamstrung by the culture of non-work that had evolved by the 1960's, and that it went all downhill from there. That the political culture stifled not just economic advances, but also technical ones, because the best man for the job was less likely to get it than someone's idiot relative -- and everyone worked for the same company which never went out of business. That the destruction of both the local and national work ethic will take decades to rebuild.
He also said he didn't think that Russia was done in by trying to keep up with our military expenditure in the 80's; he said rather that the inevitable doom had been staved off by fortuitous events: foreign aid during World War II, seizing German and Eastern European assets, including their productive work force with better work ethics than those who had been living under communism for 20 years, looting the economies of later Eastern European possessions, and wild spikes in the prices of the commodities from which it got nearly all its hard currency in the 1970's. He traced the fall not to our military expenditure, but to the collapse of the price of oil, and no further cash infusion coming along to bail them out.
It seems hard to believe. After all, much of the "software" for a modern industrial economy was as absent in Tsarist Russia as under communism -- the rule of law, ironclad property rights, political freedom. Yet he argued, convincingly, that had Russia simply continued under the Tsars, they would today be a modern European republic. I don't know if I buy it, but it's certainly an interesting question.
Thoughts?
Posted by Jane Galt at August 28, 2002 12:38 PM | TrackBack | Technorati inbound links"); ?>