Category Archives: Spain

National Foresight, Or: Why Russia Needs A Strong Hand

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In a 2010 paper on time preferences*, the authors Mei Wang et al. conducted an experiment in which participants could choose either $3400 now or $3800 a month later. Now I would choose the latter option but maybe it’s just because I’m intelligent and have been living in the West for quite a while. In other countries this is not the obvious choice however.

We see the usual correlates. Countries that are richer; more Germanic; less corrupt; more intelligent – they all have more future time orientation. In countries that have a Communist legacy future time orientations are perhaps lower than we might expect them to be otherwise.

This all of not insubstantial relevance because time preference can have an impact on economic structure and social life. For instance, as the paper notes, societies with higher future time  orientation are likely to devote more attention to the environment. They are also likely to devote a greater share of their GDP to R&D.

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The Soviet Economy – Charting Failure

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Many Communists, leftists, and even patriots (I’m sorry to say) have a pronounced tendency to make out the Soviet economy as not quite the resounding failure it really was – or even to paint it as a success story that was only brought down by perestroika and liberal reforms.

The above chart – based on historical GDP per capita (Geary-Khamis 1990 Int$) by Angus Maddison, compiled by liberal economist Illarionov, popularized online by Lopatnikov, and Starikov – purports to destroy two “myths”: That of (1) Prosperous Tsarism, and (2) The ineffectiveness of the Soviet economy. After all, the average Russian went from being 40% as rich as the average American in 1885, to only 23% by 1917; whereas during the Soviet period, despite the turmoil of two major wars, Russian incomes reaches a relative peak at 40% of American levels during Brezhnev’s “stagnation” period.

These is however a glaring hole in this logic, namely that (1) relatively slow growth under late Tsarism reflected a permanent state of affairs, as opposed to the heavy but temporary burden of a large rural, illiterate population; and (2) that a level of per capita GDP that is a mere 40% of what Americans enjoy was in any way a fulfillment of Russia’s potential during the 20th century. In fact, graphical comparison with other countries shows this to be almost certainly false.

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