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The Fall of the USSR

2017 June 25
tags: ,
by Ian Welsh

The best book on both successes and failures of the Soviet Union is Mancur Olson’s “Power and Prosperity.”  If you haven’t read it, you should.  The second best is Randall Collins essay in Macrosociology.

The great problem with most critiques of the  USSR is that they do not explain its successes.  In the 20s and 30s it did far better in most respects than the West.  In the 40s and 50s and even into the early 60s it was still doing very well, and put the first satellite in orbit, produced tanks that were as good as the West’s and produced the most successful assault rifle in history.  As late as the early eighties, there were points where Russia’s best tanks were better than the West’s.

The USSR is one of the few nations larger than a city state which has industrialized other than through the use of mercantilist policies.  During the Great Depression the USSR vastly outperformed the West.

So, why did it fail?  There are two perspectives I believe have a lot of truth to them.  Let’s start with Olson’s: the failure of the USSR was a feedback problem.  At the beginning of the USSR local cliques and power groups had not formed.  The central planners knew exactly how much was being produced, and exactly how much could be produced and were able to coerce people into producing what they knew was possible to make.

As time went on, this became increasingly impossible. Put simply, the locals controlled the information flow to the center, and lied about what they could produce and what they did produce.  Workers worked less than they could have, local bosses appropriated production to themselves, and the secret police couldn’t keep up, or became corrupted themselves.   Absent accurate information, the central planners lost control.  Everyone slacked off, corruption soared, production dropped, and the products produced were crap, especially the consumer goods. (The USSR remained able to produce some of the best military equipment right to the end.)  Food production tumbled.

The second perspective is the geopolitical one.  The USSR had less population than the West or even America.  It was faced with enemies on every side, while America was isolated by sea from any possible assault and Europe only had to worry about attack from one direction.  It had a smaller economy than its enemies.  To keep up with its enemies militarily, it had to spend a larger percentage of its economic production than the West did.  With a central position and a smaller economy, why would you think it wouldn’t crumble under the strain?  I will note that Collins made this argument BEFORE it crumbled.  On every normal Great Power axis, the USSR was weaker than its enemies.  Fiscal strain is normal in such a situation, and it is to be expected that the economically weaker power will eventually lose.  From a pure power perspective, and ignoring nuclear weapons, the USSR should have launched an all out attack on Europe no later than the 70s.

This is basic guns and butter economics, understood by Adam Smith.  The more you spend on your military and your security apparatus, the more your civilian economy suffers, especially as the most brilliant scientists and engineers are hived off from civilian production.  The longer this goes on, the more you suffer.   If you’re facing economies that are much larger than yours, you’re screwed.  And the US economy was the largest in the world starting in the late 19th century, let alone a recovered European one.

As the USSR failed under these twin problems, exacerbated by the bleeding ulcer of the Afghan war, they also suffered ideological decay: they stopped believing in their form of government, and became less and less willing to kill for it.  When push came to shove, rather than use the Red Army to maintain control (which it was still capable of doing), they didn’t believe in the USSR and the Warsaw Pact enough to do so.

Now let us turn to capitalism.  The advantage of capitalism v. central planning, is that information is sent through prices, supply and demand.  This information feedback, however, is still gameable by power blocs.  The exact strategies are different than in a command economy, but the end result is the same.  The West and America are currently undergoing this exact problem.  The entire financial crisis was about inaccurate feedback, and broken feedback loops: it was about the financial and housing industries deliberately damaging the feedback system.  Then, when it finally went off a cliff, they destroyed the capitalistic feedback system, which when properly operating, makes companies go bankrupt, by obtaining bailouts due to owning western governments.

There are myriad other problems with feedback in the developed world right now, from massive subsidies of corn and oil, to oligopolistic practices rife through telecom and insurance, to the runaway printing of money by banks, to the concealment of losses by mark to fantasy on bank books, to the complete inability and unwillingness to price in the effects of pollution and climate change.

The great problem with humans is that we lack time perspective.  In a hundred years, when historians and whoever deals with economic issues look back (hopefully not economists as we understand them), they aren’t going to be that impressed that Western Capitalism outlasted Soviet Communism by forty or fifty years.  Instead they are going to look back and say that both were doomed, in large part, by inability to manage the exact same problem. In both cases the feedback systems which controlled economic production were so perverted by various internal power blocs that the societies were unable to reproduce the material circumstances necessary for their continuance.

(This piece was originally published February 2014. I think it still says some important things, and many new readers will not have seen it, so back to the top. Ian.)

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That tax cut talking point

2017 June 24
by Mandos


The Republicans are working hard to pass an amendment to the ACA called the AHCA.  Assuming it succeeds, which I wouldn’t take for granted, it would take Obamacare, with all the latter’s deficiencies and faults, and make it even worse, and probably kill a lot of people through health care denial due to pre-existing condition denials and the reinstatement of lifetime coverage limits.  If they fail to pass it, it would be because Obamacare is designed to make itself hard to retract; as Obamacare contains the bare minimum required to improve the status quo ante, anything significant they take away from it renders it unworkable.  If it passes, it would be because they had decided that it was the closest to the status quo ante that they could achieve.

The status quo ante was terrible, but contrary to the beliefs of many, it wasn’t “unsustainable” in some sort of fundamental way.  It could be contained by gradually excluding more and more people from insurance coverage, and therefore, down the line, care.  This is not a debate about health care, but about how to pay for health care.  It is about austerity, and the status quo ante was ultimately just a slow ratcheting-up of austerity.  (Yes, I know, Obamacare is a ratcheting-up of austerity, but it is a slower one.)

One of the talking points against the AHCA is that it appears to be designed to give the rich a tax cut.  However, the tax cut is, in proportion to many of its beneficiaries, quite small, even as it dwarfs the incomes of many.  It’s not a giveaway that in itself should raise the political passions of its beneficiaries.  Many of them won’t spend it or won’t notice the effect on their lives or wealth planning. Even the insurance industry is skeptical of key portions of the bill, and they’re not prone, as they say, to altruism.

The Republicans have invested a lot of political capital in the idea of undoing Obamacare.  Instead of that small a tax cut, if they were rational political actors, they could easily have come up with a bill that targeted large swathes of their constituencies for a substantial improvement in their (bad) standard of coverage, even if they wanted to target Democratic constituencies for tribal reasons.  They could have done this without even instituting single payer (aka public monopsony) and ruining their constituents among the insurance and corporate medical sector.  It doesn’t appear that this is on order.

The picture only makes full political sense if you see the cutting of health insurance coverage as a political goal in itself, if not some kind of fundamental ideological “end”. Or for the symbolic appearance of trading coverage for a token tax cut, in a way that is likely to create further damage to the US economy.  And that successful Republican politicians think that they can expel millions of people from the ability to pay for health care, including their own constituents, is a sign both of the significance of that symbolic appearance and the cultural limits of the US health insurance debate.

You Can’t Stay in the EU or Single Market And Be For Labour’s Manifesto

2017 June 21
by Ian Welsh

So, 30 Labour MPs have signed a letter calling for Corbyn to stay in the EU’s single market as a member.

This is not possible IF Labour’s manifesto is meant seriously. EU single market law is explicitly neoliberal, it does not allow for things that Labour wants to do, like nationization.

Access to the single market is one thing, being a member is another. Corbyn cannot do it and keep his promises, it is that simple.

The EU is a barrier against horrible things the Tories want to do, but it is a roadblock against basic social-democratic policies that Corbyn wants.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Do People Matter Most Or Does Property?

2017 June 19
by Ian Welsh

As you’ve probably read, there was a terrible fire in Britain, and hundreds of people were left homeless.

They were living in a council hi-rise building, Grenfell Tower. It had no sprinkler system, and the cladding which had been put on it, to make it look nicer, because rich people live nearby, was combustible.  The incombustible version of the cladding would have cost, total, about five thousand pounds more than the flammable version, and the council is the richest council in Britain, with a huge budget surplus.

So the fire went thru the building like a gasoline fire on cardboard, and at least 58 people died.

Clearly, very unimportant people.

What has happened since the fire is fascinating, however.

Corbyn suggested requisitioning unoccupied flats nearby and housing these homeless people in them.  This is the richest part of London, despite having a poor area in it, and as you’re probably aware, rich London has a lot of unoccupied homes. Almost 20,000 that authorities are aware of.

While a majority of British, to their credit support Corbyn’s idea, there’s been a great deal of resistance, and, of course, the Tory government is making no effort to follow his suggestion.

And Corbyn points out, further, that not helping these new homeless people is deliberate helplessness:

“It cannot be acceptable that in London you have luxury buildings and luxury flats kept as land banking for the future while the homeless and the poor look for somewhere to live.”

And in an interview on ITV on Sunday, Mr Corbyn said the flats could be requisitioned by the government or bought using compulsory purchase orders.

“Occupy it, compulsory purchase it, requisition it – there’s a lot of things you can do.

“But can’t we as a society just think, it’s all very well putting our arms around people during the crisis but homelessness is rising, the housing crisis is getting worse and my point was quite a simple one.

“In an emergency, you have to bring all assets to the table in order to deal with that crisis and that’s what I think we should be doing in this case.”


“Every day at Heathrow, planes get delayed. Hundreds of people get stranded at airports all over the world,” he said.

“Hotels are found for them immediately, they are sorted out. Four-hundred-or-so people, still most of them have not got somewhere decent, safe or secure to stay in.

“Somehow or other, it seems to be beyond the wit of the public services to deal with the crisis facing a relatively small number of people in a country of 65 million.”

What is irritating is just this, that so many problems we have are easily solved and we choose not to solve them. There are plenty of empty houses, requisition them.

Some years back I saw a statistic that Europe had twice as many empty homes as homeless people, and America had five times as many.

And yet there are homeless people?

As for the housing crisis in many cities, well, at the least rent wouldn’t be rising so fast if we had kept rent control in place; and prices wouldn’t be rising so fast if we didn’t allow homes to stay empty for long periods or to be owned by foreigners who don’t live in them.  As for increasing the housing supply, we could just build more housing, but don’t.

Oh yes, public housing is often terrible, but that, again, is because we don’t prioritize it: we underfund it, don’t repair it, etc… You can’t credibly say it’s all on the poors when you don’t even put in a sprinkler system; when you won’t spend 5k to put on inflammable vs. flammable cladding.

Every time public housing or co-ops open up in most major cities there are huge line ups and waiting lists for them.  There’s demand, but no supply.

Our society runs on a simple ethic: nothing can be allowed to happen if someone important doesn’t get rich doing it.  Having the government build housing isn’t nearly as profitable as building hi rises for Chinese ex-pats who pay millions per apartment and then, half the time, don’t even live there.

Is profit more important than people? Are property rights more important than whether people are sleeping outside?

The answer to both these questions, as we all know, is “yes, profits and property rights matter more than people’s welfare.”

But should they?

That’s the question that the British are in the middle of answering. And, to their credit, it seems like there’s a good chance that for the first time since Margaret Thatcher was elected, they’re considering changing their answer back to “human welfare comes first.”

(Also, check out the pictures of Corbyn in this article. His personal warmth, if combined with policy that works, means he will own Britain when he is Prime Minister. Because he actually does care.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.


The Sort of Behaviour That Gets You A Robespierre

2017 June 17
by Ian Welsh

And well deserved it will be.  (Mylan makes the Epi-pen, which went from $90 to $600, and which schools are required to buy by law to stop fatal allergic reactions.)

While I actually find this pretty funny, it’s also the sort of thing that makes me think “up against the wall”, since a lot of people are dying so that Coury can get rich.

Now, I, of course, would never condone political violence. I believe that poor people and lately, middle class people should just die, or just do non-violent things and never, ever, ever do violent things when their lords and masters are getting rich off of them and their children dying.

But it might be, just might be, that others might not be as committed to pacifism as I am, and that when things go sideways, they might remember people who engaged in this sort of profit gouging.


Might not.

But perhaps our lords and masters have become overly insulated from the results of their actions.

I am reminded of what Mark Twain wrote about the Terror.

THERE were two “Reigns of Terror,” if we would but remember it and consider it; the one wrought murder in hot passion, the other in heartless cold blood; the one lasted mere months, the other had lasted a thousand years; the one inflicted death upon ten thousand persons, the other upon a hundred millions; but our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break? What is swift death by lightning compared with death by slow fire at the stake? A city cemetery could contain the coffins filled by that brief Terror which we have all been so diligently taught to shiver at and mourn over; but all France could hardly contain the coffins filled by that older and real Terror—that unspeakably bitter and awful Terror which none of us has been taught to see in its vastness or pity as it deserves.

‘Nough said.

Oh, and Coury? He deserves a round of anatomically challenging self fulfillment.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

The Congressional Shooting and Political Violence

2017 June 15

Alright, so someone took a shot at Congressional Republicans and killed no one, though one Congressmember was injured badly.

I find that I am unable to care about this. No one died (because they had police protection).

However, there is a great deal of stupidity and hypocrisy floating around about this. Let us start with the hypocrisy.

So, it happens to people they know, without even one dying, and they’re all breaking up in tears.  As someone else said, did they cry for Sandy Hook or Pulse? To hell with them, especially as they belong to the class with the most responsibility for mass shootings.

Now, to the stupidity from my favorite highly educated idiot:

I usually don’t talk about anything Ezra says, because his entire career has been about sucking up to those in power.  But, well, this is a teaching moment.

Here’s a lovely chart:

Isn’t that a wonderful chart.

What do you think happened to suddenly raise the incarceration rate?

Right… war on (some) drugs.

So, something that wasn’t illegal became illegal. Making it illegal didn’t reduce the amount of drugs being used, but did make using drugs much more unsafe.

What happens in prisons? Well, a lot of violence, including a lot of rape.

Is that political violence? Well, it wouldn’t have happened if politicians hadn’t made a decision to make something legal, illegal, which increased harm to everyone and didn’t make the situation any better.

That is political violence.

Of course there is also non-domestic political violence—like Iraq, Iran, Yemen, Libya and so on. A lot of people died due to those entirely political decisions. Not one of those countries attacked the US. Not one.

But now “real people” have been attacked and they are in tears. They had no tears for dead children.

But they have tears for themselves.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

Is Impeaching Trump A Good Idea?

2017 June 13
by Ian Welsh

I’m really not sure it is.

Trump has been vastly incompetent at his job. He hasn’t appointed almost any administrative appointees, he’s embroiled in endless scandals, and he’s basically outsourcing policy to Rand Paul and various thinktanks.

It’s not that he isn’t doing bad things, it’s that he’s very ineffective and his own worst enemy.

(I am not in the least concerned that a man who hasn’t filled almost any DoD posts is going to launch a coup, so fear of that isn’t a reason to impeach him.)

Now there is an argument that he should be impeached simply because, well, he’s done things are impeachable offenses. Starting, in my opinion, with the emoluments clause: he very clearly receives money from foreigners every day.

But in political terms, he’s ineffective, and there’s good reason to believe that Pence would be much less ineffective. Pence is a theocrat’s theocrat and will push a set of horrible policies, but he doesn’t have foot in mouth disease, he will fill up all administrative slots post-haste with a combination of Christian college graduates and the normal Republican apparatchniks, and he will have enough sense to do basic things properly, like have lawyers check over administrative orders properly.

He’ll be much more effective at doing harm than Trump is.

I think, in terms of harm reduction, a badly wounded, unpopular Trump is far less dangerous than Pence.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

A Time of Hope

2017 June 12
by Ian Welsh

I have been writing a long time. For most of that time people said I was “pessimistic” and I replied that what they saw as pessimism was realism.

What I foretold, in broad strokes, has come to pass.  Climate change is past the point of no return, the housing bubble burst, austerity was a disaster and emboldened the far right.

When I first started writing I tried to push the Democrats to go left, and to get people who don’t vote to vote by offering them policies that worked for them, and outreach, since I, as many others, noted that people who don’t vote are a lot more left wing than people who do vote.  They didn’t vote because they were disenfranchised: none of the major parties represented them.

After the election of Donald Trump I had an interview with Jay Ackroyd, and he said that as long as he’d known me I’d been more pessimistic than others, but now I was optimistic, and what gives?

Simple, the trends had turned.

Sanders had happened and he had done better than any self-avowed socialist in America in my lifetime. He came very close to winning the nomination, despite the Democratic party fixing it against him.

Corbyn had already happened, in that he had won the leadership of the Labour party and then seen off a coup attept.

The trends had changed.

The time of neoliberalism was clearly ending, which I had noted repeatedly.  That meant that we were moving into a time of change. Now I had expected, following Stirling Newberry, that that period would first hit in 2020/24, but these are the pre-shocks.

That doesn’t mean we’re out of danger. It is not guaranteed that the left wins in every country, as it did not in the 30s.  The far right and the populist left both have an opportunity in this era: the old verities are dead, people are looking for a different way to run societies. They can go authoritarian, indeed totalitarian, or they can go populist left and no, there really aren’t any other options, though far right and populist left have variations: all types of populist left aren’t the same and shouldn’t be seen as the same.

But neoliberalism was a shit ideology, it had as its project impoverishing millions to make as many billionaires as possible. Ignore the bullshit about the 3rd world, during the post-war era the 3rd world was improving faster than during the neo-liberal era, but without cramming down first world middle and working classes.

Neoliberalism, with its market worship, was completely incapable of dealing with climate change. Proper government intervention to goose markets would have had us where we are today with renewables (cheaper than coal) 20 years ago, which is what we needed, and would have moved up the timeline for electric cars as well as the essentially wholly undone project of energy neutral and carbon neural building, while not allowing the oceans to be destroyed.

Markets work best when government intervenes in the correct ways. Neoliberalism intervened, in essence, only to reduce regulation and push money towards rich people: that did not make markets more competitive, it made them more prone to monopoly and oligopoly. (This is not close to in question, it shows up in all the data. Anyone arguing otherwise is a liar or a fool.)

So, neoliberalism failed to deal with climate change or ecological collapse and by vastly increasing inequality and failing to regulate markets caused both political and economic instability.  Asset prices should not rise faster than median wages over long periods, if they do so, something is wrong. That most economists and policy makers could not recognize this shows their corruption and foolishness, and the uselessness of mainstream economics to understand its own subject matter.

I am, therefore, not optimistic, but realistic: I say that we are moving out of an era where problems could only be solved if they made someone a billionaire, to an era where we will be able to start actually fixing problems that matter.

This is a high-risk period, and I, as many, tried to reform neo-liberalism, to fix problems without having to enter an era of war and revolution and to fix them before it was too late (as it now is for catastrophic climate change.)

That didn’t work. So be it. This is where we are.

But unlike in 2009, with the co-opted and corrupt Barack Obama taking the throne and throwing away the last chance to avoid the worst of what is now baked in, we now have some real reasons to hope along with all the baked in catastrophes handed to us.

Oh, yes, Trump.

Yeah, he’s bad and he’ll be bad for a lot of people, but I am not worried when it comes to the big picture because he’s incompetent. I never thought he’d be Hitler and the idea that he will launch a successful coup is now completely risible: he is far too incompetent. He’s supposed to launch a coup and he hasn’t even filled over 90% of all senior administrative posts at the Pentagon?

Get a grip.

In fact, as a I thought at the time, even when I thought he was more competent than he’s proved to be, Trump may well be an innoculation against someone worse. Someone competent, running on actual right wing populism, Bannon with charisma, could well have turned America into a fascist state for two generations.

Trump? No. And his failure provides a clear warning of the danger and may discredit those policies. (It is amusing that liberals are obsessed with getting rid of him. Pence will be far worse, because he will be competent and agrees with every bad part of Trump’s platform and none of the good parts (which, granted, aren’t happening anyway.))

Chin up.  We failed to reform the system and now we are in an era of great instability. Lots of countries are still being staggeringly stupid, as with France electing Macron to destroy their entire labor code and impoverish them, when Melenchon was available.

But the left, the populist left is rising. We saw it with Sanders, and we are seeing it with Corbyn, who may actually be the first world leader of the new era and the new era’s ideology: just as Thatcher is the first great neo-liberal leader, even if not called that at the time.

It will be ugly. There will be wars and revolutions. There will be periods where the old order does horrible things (Macron, Merkel’s destruction of Greece and impoverishment of the South) and where the new order of the right does terrible things.

But it is now, also, possible to do many of the right things, like re-nationalizing natural monopolies, ending the student loan bubble and the exploitation of the young, repairing universal healthcare in the UK and creating it in the US, and so on.

There are no guarantees. We got lucky in the 30s, though it may not seem like it.  Imagine if instead of FDR the US had wound up with some fascist? Many Americans at the time thought it possible.

Still, we now have the chance to be lucky, which was simply not possible as societies under neoliberalism. Under neoliberalism some individuals could get lucky, and obscenely rich; and but generally the whole population could not benefit.

Now we can. And that is reason for hope. So hope. Don’t be optimistic, just be realistic about the opportunities as well as dangers opening up.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.