What's ridiculous is claiming that the Soviet bloc had to outproduce the rest of the world in order to survive. There was no need for the Soviet bloc to maintain military parity with the US and its allies to maintain effective deterrence. Nuclear weapons, and their massive destructive potential, were the great equalizer and made it so the Soviet bloc could spend a small fraction of what the US and allies did, and maintain MAD.
>>The destruction wrought by "any kind of communist policy" still led to outcomes that were above the global average. Yes, they eventually lost, but they were very much in the same order of magnitude as the rest of the world, and were slowly catching up until political factors caused destruction, which was arguably the greatest weakness from a competitive point of view.
No, the Soviet bloc's economic statistics were over-stating their performance. They were seeing continuous depletion of intangible capital like work ethic, social trust, etc. The corruption in their societies grew to enormous proportions, with party insiders amassing huge amounts of power through their positions, and the privileges it gave them in the undergdound econonomy, including the blat system of favor-trading where high up officials who could bypass government controls on currency and goods had the most favors to sell.
The lack of diversification and economic complexity was also obscured by the lack of a market economy to assign goods/services with prices. If such a market existed officially, then the extreme scarcity in basic consumer goods like toilet paper would have been reflected in high prices, and in lower inflation-adjusted income.
>>As far as attributing deindustrialization to social democratic, all I can say is that this is laughable. Exporting your capital to countries where the wage share will be lower is the cause of deindustrialization, and it's simple economics. You need government policy in the form of direct or indirect capital controls to prevent that from happening.
You finding it laughable while regurgitating a layman's understanding of deindustrialization is pretty egregious. Advanced economies can and ofter-do see more rapid growth of their manufacturing sectors than developing economies, and this is because other factors besides labor costs, like logistic costs, which are affected by infrastructure and proximity to the supply chain, access to abundant energy resources (e.g. natural gas, which the US has in abundance), an efficient and reliable legal system, a stable political system and the skillset of the workforce, can make a country the least costly place to site manufacturing, despite it having high labor costs.
The cause of the West's deindustrialization is broadly speaking, the capture of its economies by rent-seeking unions and regulatory agencies.
The first seeds of the economic destruction were planted in the 1930s, when laws like the NLRA granted totalitarian powers to unions, like the power to prevent companies from replacing them with workers outside the union.
The union movement completely captured US industry and extracted exorbitant benefits that crippled the golden geese of the US economy.
The labor laws passed in the 1930s and 50s guarantee that any industry that does start to become a significant contributor to national output, whether it's the Big Three Auto Makers and the big steel manufacturers in the 1950s, or Tesla, Amazon and Google today, becomes the target of rent-seeking unions who are impossible to effectively resist thanks to the free-market undermining labor laws in place.
The decline in productivity growth, particularly in globally competitive markets like manufacturing, is a predictable consequence of that.
Beyond labor regulations, is the growth of government social welfare spending, at the behest of public sector unions who increasingly control the political system:
In California, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.
California now has $1 trillion in pension obligations for its unionized public sector workers.
Every dollar taxed for social welfare programs that end up as pension payments to public sector workers, is one less dollar spent on infrastructure, or private sector investments that expand the country's capital (e.g. factories, R&D, etc).
>>The destruction wrought by "any kind of communist policy" still led to outcomes that were above the global average. Yes, they eventually lost, but they were very much in the same order of magnitude as the rest of the world, and were slowly catching up until political factors caused destruction, which was arguably the greatest weakness from a competitive point of view.
No, the Soviet bloc's economic statistics were over-stating their performance. They were seeing continuous depletion of intangible capital like work ethic, social trust, etc. The corruption in their societies grew to enormous proportions, with party insiders amassing huge amounts of power through their positions, and the privileges it gave them in the undergdound econonomy, including the blat system of favor-trading where high up officials who could bypass government controls on currency and goods had the most favors to sell.
Many of the current crop of billionaire oligarchs in Russia are former Soviet officials or relatives of these officials: https://worldview.stratfor.com/article/organized-crime-russi...
The lack of diversification and economic complexity was also obscured by the lack of a market economy to assign goods/services with prices. If such a market existed officially, then the extreme scarcity in basic consumer goods like toilet paper would have been reflected in high prices, and in lower inflation-adjusted income.
>>As far as attributing deindustrialization to social democratic, all I can say is that this is laughable. Exporting your capital to countries where the wage share will be lower is the cause of deindustrialization, and it's simple economics. You need government policy in the form of direct or indirect capital controls to prevent that from happening.
You finding it laughable while regurgitating a layman's understanding of deindustrialization is pretty egregious. Advanced economies can and ofter-do see more rapid growth of their manufacturing sectors than developing economies, and this is because other factors besides labor costs, like logistic costs, which are affected by infrastructure and proximity to the supply chain, access to abundant energy resources (e.g. natural gas, which the US has in abundance), an efficient and reliable legal system, a stable political system and the skillset of the workforce, can make a country the least costly place to site manufacturing, despite it having high labor costs.
The cause of the West's deindustrialization is broadly speaking, the capture of its economies by rent-seeking unions and regulatory agencies.
The first seeds of the economic destruction were planted in the 1930s, when laws like the NLRA granted totalitarian powers to unions, like the power to prevent companies from replacing them with workers outside the union.
The union movement completely captured US industry and extracted exorbitant benefits that crippled the golden geese of the US economy.
The labor laws passed in the 1930s and 50s guarantee that any industry that does start to become a significant contributor to national output, whether it's the Big Three Auto Makers and the big steel manufacturers in the 1950s, or Tesla, Amazon and Google today, becomes the target of rent-seeking unions who are impossible to effectively resist thanks to the free-market undermining labor laws in place.
The decline in productivity growth, particularly in globally competitive markets like manufacturing, is a predictable consequence of that.
Beyond labor regulations, is the growth of government social welfare spending, at the behest of public sector unions who increasingly control the political system:
https://ourworldindata.org/grapher/social-spending-oecd-long...
A couple anecdotes illuminates the kind of power these unions wield:
New York has nearly 300,000 unionized public sector employees receiving over $100,000 a year:
https://www.forbes.com/sites/adamandrzejewski/2020/05/26/why...
In California, emergency workers can retire at 55 with 90% of their pension, that averages $108,000 per year.
California now has $1 trillion in pension obligations for its unionized public sector workers.
Every dollar taxed for social welfare programs that end up as pension payments to public sector workers, is one less dollar spent on infrastructure, or private sector investments that expand the country's capital (e.g. factories, R&D, etc).