Soviet Union

Aug 15

The Soviet Star Wars Fallacy

A new concept I sort of came up, or at least categorized – I define it as not taking easily available substitutes into account.  For example it is a common belief that the Soviet Union collapsed because Reagan (and Congress) tricked them into an arms race, and they went bankrupt trying to keep up.  However, this does not take into account that the Soviets were going to spend the money on something, and spend it poorly.  Failure to use resources wisely is pretty much the definition of the Soviet system, and if they didn’t spend it on their military they would have blown it on a five year plans, canal to nowhere, sea draining or something like that.

For econ nerds, let it be said that they did not have a meaningful price structure, which basically meant that whatever they did was inherently wasteful.

Similarly people claim that if drugs are legalized that hard drug use would skyrocket, forgetting that the readily available hard drug, (and substitute) alcohol is already legal.  There would be some switching between the two, but no meaningful increase, or so I would predict.