Dr. Sarah Paine on Dwarkesh Patel: Why Glasnost Ended USSR

1. 0:00 – 15:53

   Did Reagan single-handedly win the Cold War?

   1. NANarrator0:00

      (applause)

   2. SPSarah Paine0:02

      Thank you for coming. It is, it's a treat to be with you and sharing all this stuff. Um, since we seem to be in a second Cold War, maybe it's a good time to revisit the last one, to see why it turned out the way it did and why the participants in it thought it turned out the way it did. So, I'm gonna pose the question: Why Russia lost the Cold War. And people have loads of different answers to that question, so this is gonna be a tour of the counterarguments. I'm gonna start with an answer that many Americans have, very simple one that's like, "Ronald Reagan single-handedly defeated the Soviet Union." So that's one possible answer. But then I'm gonna give you all kinds of counterarguments to that, and some of them are gonna be other external explanations of what others did to the Soviet Union, others are internal th- uh, ones of what the Soviet Union, the cards it didn't play particularly well, and then I've got some umbrella explanations. So that's my plan for this evening. The story that Ronald Reagan did it, well, here's a picture at the Reagan Ranch after the Cold War's over. You see the Gorbachevs and you see the Reagans, and they seem to be having a grand old time, which suggests there's something maybe off with that explanation. But anyway, the way, uh, that Ronald Reagan did at school is, Ronald Wreagan, uh, did a massive military buildup and that s- some would argue it bankrupted the Soviet Union. He was a man of words and deeds. He made really good speeches that were memorable. Here's one before Parliament where he says, "The regimes planted by totalitarianism have had more than 30 years to establish their legitimacy, but none, not one regime, has yet been able to risk free elections. Regimes planted by bayonets do not take root." And then here he is before the Brandenburg Gate. This is in Berlin, long a symbol of German greatness, but then it was a locked gate on the Berlin Wall. And here's Ronald Reagan: "General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization, come to this gate. Mr. Gorbachev, open this gate. Tear down this wall." And who can forget the Evil Empire speech which he gave to the National Association of Evangelicals in Orlando, Florida, and they skipped Disneyland to hear it? All right, Reagan did a very significant military bu- uh, buildup that actually had started under Carter when the Soviets invaded Afghanistan. Big mistake, as we discovered. And, um, he also, uh, invested, deployed, uh, missiles in Europe. He was busy funding anti-communist insurgencies and also others who didn't like the Soviet Union all over the world, starts doing more aggressive military patrolling, patrolling, and b- by the time he's out of office, he's like half a dozen ships short of this 600-ship navy or whatever it is he was planning to make. And, uh, he also was trying to build a, a missile shield, this Strategic Defense Initiative. And the problem is the Soviets tried to match him on this. And if you add up the GNPs of the United States, NATO allies, and Japan, well, that would be seven times larger than the Soviet GNP, and you gotta be aware of symmetric strategy. So, the CIA thought during the Cold War that perhaps Russia was spending up to a 20% part of its GNP on defense. After the Cold War ended, when you're tr- get- getting more accurate statistics, it turns out it was at least 40 or 50%, and some people say it was up to a truly economy-busting 70% if you take in- to account all the infrastructure investments that were associated with military things. If you look during the Cold War, the United States was spending less than 8%, Germany less than 6%, Japan less than 2%, and Nazi Germany, which was no piker, 55%. So, uh, you look at all this and, uh, it was difficult. So I am gonna be quoting lots of Russians today because they have thought deeply about the fate of their country, how life as they, uh, knew it disappeared, the Soviet Union gone, the empire gone. They thought a lot about it. And here is a former ambass- Soviet ambassador to West Germany, Valentin Falin, and here's his take: "Following the American strategy of our exhaustion in the arms race, our crisis in public health and all the things that have to do with standard of living reached a new, uh, dimension of crisis." And then if you add to the arms race with the United States, the arms race that was going on with China on that border, the, uh, the arms race plunged the Soviet economy into a permanent crisis. And here you have Georgi Arbatov, who was the Soviet Union's, late Soviet Union's, uh, finest expert on the United States, or at least he's the most famous one. He's looking at, uh, the Soviet war in Afghanistan. He said, "It is quite clear that the Afghan war was most advantageous for the United States." And we got our Vietnam because the United States is busy funding the other side, and it's costly. And, uh, Gorbachev is looking at this as he's telling the Politburo a year after he came into power, he said, "Look, the Americans are b- uh, uh, betting precisely on the fact that the Soviet Union is scared about, of this, this SDI missile, the Strategic Defense ini- uh, initiatives, uh, missile defense. That's why they're putting pressure on us, to exhaust us." Correct. So some would argue that the US victory in the c- arms race guaranteed victory in the Cold War. It'd be, "Go Ronnie." That's one explanation. But I'm gonna give you a tour of the counterarguments and some other explanations, starting with Presidents Ford, Carter, and the Helsinki Declaration. So-After World War II, the Soviets had wanted to convene a conference of European states to confirm its expanded World War II borders. And for a long time, nobody was interested. And then the Western Europeans are sick of all the drama. The United States still doesn't wanna show, but we go along with our allies. And our allies insist on including human rights provisions, and we think this is crazy land because we know the Soviets are never gonna, um, enforce those things. But you get the, uh, the Helsinki, uh, uh, agreement, accords that have all sorts of human rights pres- provisions. Well, lo and behold, unbeknownst to anybody, dissidents across the Eastern bloc and human rights activists across the West start holding the communists to account for the agreements that they have signed, and start contrasting the liberation that communism promises versus the dictatorship actua- actually delivered. And this human rights, uh, movement took on, within the Soviet Bloc and abroad, it took on a life of its own. So here you have the former director of the CIA and former head of the Department of Defense Robert Gates saying, "The Soviets desperately wanted this big conference, and it laid the foundations for the end of their empire. We resisted it for years, only to discover years later that this conference had yielded benefits beyond our wildest imagination." Go figure. Uh, and here, uh, is Jimmy Carter with his human rights, uh, initiative, and it was Gorbachev's English language translator who said that actually Carter's, uh, emphasis on precisely the human rights that were denied to Soviets, uh, really resonated, and it made people think that they wanted a more democratic, open, liberal society. So here's, uh, Carter giving an address, graduation address at Notre Dame. He said, "We have refirmed, reaffirmed America's commitment to human rights as a fundamental tenet of our foreign policy. What draws us Americans together is a belief in human freedom. We want the world to know that our nation stands for more than just financial prosperity." We're bigger than that. Uh, and here is Eduard Shevardnadze, um, Gorbachev's foreign minister, echoing some of these sentiments. He said, "Look, the belief that we are a great country is deeply ingrained in me. But great in what? Uh, territory? Uh, uh, population? Quantity of arms? People's troubles? Uh, the individual's lack of rights? Uh, and what do we, who have ver- virtually the highest infant mortality, uh, rate in the world take pride?" It's not easy answering the questions, who are you? Who do you wish to be? A country which is feared or a country which is respected? A country of power or a country of kindness? And others, uh, agreed that communism was essential to the survival of the Soviet Union, and, but it's an unde- democratic ideology that fundamentally it's a, it's a foundation that can't, can't endure forever. And that's the take of Vitaly Ignatenko, who was a Russian journalist. And Oleg Granievsky, who was a Soviet career diplomat is saying, "Look, communist idol- di- ideology is associated above all with the Soviet Union. Its rejection created a vacuum, and it determined its ultimate fate." And then Boris Yeltsin, who was Gorbachev's successor said, "Look, no one wants a new Soviet Union." So some would argue this counterargument, that human rights clauses of the Helsinki Accords and Carter's subsequent human rights campaign destroyed communist belief in communism. Okay, another president, another counterargument. Uh, those who are, uh, fans of Richard Nixon would say, "No, no, no, no, no. It was Richard Nixon who played the China card so the United States and China could gang up on the Soviet Union and overextend it financially to wreck it militarily." I think the Chinese would beg to differ and say, "No, no, no, no, it was Mao who played the America card." (laughs) Because what's going on in 1969, there's a border war between China and, uh, the Soviet Union. China's gotten its nuclear bomb in '64, it no longer has to defer to the Soviet Union and starts, uh, uh, playing more tough on their border disagreements. And so the Soviets are really upset, and they come to, uh, the United States and ask us whether it would be okay to nuke these people, 'cause they think Americans don't like the Chinese. Well, we didn't, but we said, "No, it's not okay to nuke those people." (laughs) And so the Chinese figure it out, the one that wants to nuke you is your primary a- adversary, right? Up until then, think about it, China and Russia, for them, the United States was the primary adversary. Now they're primary adversaries with each other, freeing up the United States to decide which one it's gonna cozy up to. And the United States decides it's gonna cozy up to China. Why? Well, Chinese belligerency forces the Soviets not only... They've already got a big militarized border with Europe. Now they're gonna do the same thing on a very long border with China, and this is nuclear-armed, mechanized forces, very expensive. Imagine if this country had to have such borders with Canada and Mexico. It would be, it would be bankrupting, and we are far richer than the Soviet, uh, Union, uh, was then whenever. Uh, it was bankrupting. So, some would argue that US cooperation with China fatally overextended the Soviet Union. One could take all of these arguments...... starting with President, uh, Nixon all the way through Reagan to say, make an overarching argument that says, "Look, each president opened up opportunities for the others, who then leveraged them." So Nixon plays the China card, which others play with increasing dexterity. Ford comes in and begins dabbling in human rights. Carter then comes in and really goes for human rights and starts, uh, doing a military buildup, which then Ronald Reagan really does. So that by the time you get to Reagan, he is dealing f- in a position of both ideological and military strength vis-a-vis the Soviet Union. And for those who think that US foreign policy was not consistent during the Cold War, you're not looking at it at the strategic level. Uh, there were certain, uh, different, uh, strategies going on in how best to achieve it, but both parties agreed the- the goals were free trade, democracy, containment of comm- communism. Those were staples of US foreign policy, both parties for its duration. So, some would argue that Presidents Nixon through Reagan produced a cumulative presidential effects to defeat the Soviet Union. Okay. Others would say, "Forget this great man theory of history business. That's really passe." Uh, what really, uh, accounted for the outcome of the Cold War was this military platform. That's Pentagonese for large military systems. But anyway, it's a nuclear powered, nuclear armed submarine. They say that this is the- the- the item. The way deterrence, a theory worked during the Cold War and I believe now as well, is you, in order to deter the other side, you have to have a reliable second strike capability. So if they, um, thought of lobbing a nuke at you, they would be guaranteed that you would have the second strike to lob a nuke back. Therefore, they're never gonna lob the first nuke. Um, when Jimmy Carter became president, he was a graduate of Annapolis and also a submariner, the United States began a much more aggressive deployment of its fleet, and that's continued even more so under Reagan, where we're taking, um, our th- our submarines and we're targeting Soviet submarines in their home water bastions. So the Soviets are thinking that we're gonna be able to destroy their stricken strike capability on our first strike, and they're having a heart attack. So here you have Valery Boldon, a longtime aide to Gorbachev saying, "Look, the most powerful strength of the United States is the naval fleet, and we aren't gonna get one," or, "Our geography actually isn't set up to use one the way the United States can." And then you have Marshal, uh, Yazov saying, uh, "For the Americans, the main means of atomic attack is a fleet." So when you get Marshal Akhromeyev who's visiting the United States in 1987, at the end of the Cold War he will kill himself, but he's still around in '87. And he's telling his American hosts, "You know where our submarines are, but we don't know where yours are. Uh, it's destabilizing. You, you, the United States Navy are the problem." Go Navy. Uh, and here's his host, Admiral Troost who's going, "Yeah, the inability of the Soviet Union to maintain a strong defensive capability, uh, led to the demise of the Soviet Union and to the removal of the Soviets as a major threat to us." So, some... you could make a perfectly good c- uh, argument to say the Soviet Union could not counter technologically or financially the US submarine threat to its retaliatory nuclear forces, so war termination was the only thing it could do. All right. So, all of these preceding explanations are naval explanations, spelt with an E, as in staring at one's own. They're all about what the United States did or didn't do. So let's get beyond the half-tour- court tennis of Team America, and you need to look at the other side of the net. And this is where the g- the, uh, Western guru for things military, uh, Carl von Clausewitz emphasizes reciprocity in war a- and the interaction of both sides, that you're not gonna do well unless you consider what the other side

2. 15:53 – 30:37

   Eastern Bloc uprisings & oil crisis

   1. SPSarah Paine15:53

      is doing. So, um, I have given you, uh, some int- uh, external explanations, and I'm gonna do the internal ones. And here is Arnold Toynbee. He's one of the finest historians of the 20th century, wrote a big multi, multi-volume History of the West, uh, and which he se- uh, argues that civilizations die from suicide, not by murder. So I've discussed the murder, what the United States tried to do to the Soviet Union. Now I'm gonna talk about the suicide, what the Soviets did to themselves. And here is, yeah, counterargument number one, which the argument is, the Soviet Union was an empire, and when that collapsed, that meant they lost the Cold War. During the Cold War, the Korean War and the Vietnam War, there was much fear in the West of this domino theory. And the idea is one country fell to communism, and then the next, the next, the next, the next would fall to communism. Turns out, the domino theory did not apply to capitalism. It applied to communism, because once the democratic contagion hit one Warsaw Bloc country in Eastern Europe, it spread to the others until it was a seething mess and they fell like dominoes. So in 1988, '89, there were all kinds of demonstrations in the Eastern Bloc, the Soviet Union. In the Soviet Union, there for political freedoms. In the Eastern Bloc, they're for freedom from the Soviet Union. And Gorbachev may have not gotten that detail. But they're all about not only wanting political freedoms, but also they're about crumbling economies, of how to fix their miserable standards of living. And very uncharacteristically, uh, the Russians didn't send tanks. In fact, Gorbachev, uh, welcomed and encouraged reforms in the Eastern Bloc, both political and economic, just as he was doing in the Soviet Union. So his idea of glasnost, openness, and perestroika, rebuilding, they resonated at home and abroad. Uh-And these reforms began in Poland. Poland had been, um, a scene of much worker unrest many times in 1956, 1970, 1976 and '80 and '81. In '80 and '81, this is when Solidarity, the workers' movement, gets going and it gets a national and international reputation. The next set of strikes are happening in 1988 because in the preceding several years, the Polish standard of living had shrunk by over 3% and the government was out of cash and wanted to raise basic food prices and Poles hit the streets. And the government was in a panic because it was worried the economy would go into free fall. So the government cut a deal with Solidarity and said, "You call off the strikes and then we'll let you into political talks." And Solidary agreed. And there was a complicating factor on that, all of this. It's called the Roman Catholic Church, which is an institution of enormous credibility and legitimacy in Poland, which had a partiality for Solidarity and it had a Polish pope. Um, and, uh, so the Round Table discussions were these political talks. They occurred a year later in February 1989 and the Soviets encouraged them. In fact, here's one Soviet person there advising the Poles, "Look, you gotta find some quick solutions out of your economic and political mess. You're an itty-bitty country, so when you make mistakes, they'll be itty-bitty mistakes. But if we make them, they'll be big." They got that one right. The Polish Communist Party thought they had this one covered by the way they jiggered the election rules. Not quite. The day they held elections is exactly the same day that, uh, Deng Xiaoping turned the tanks on demonstrators in Beijing and you have the Tiananmen Massacre. Two solutions for, uh, the problem. So, uh, the way the elections worked out in Poland is Solidarity won every single seat for which it could compete but one and then only three people in the Communist-designated, uh, seats actually won. So who won all the rest of them? Uh, the box on the ballot called None of the Above. Yes, the Roman Catholic, uh, Church had ins- helped instruct people that that's the box you want. (laughs) And with that, uh, the legitimacy of the Communist Party to rule had just been wrecked and we're on to democracy in Poland. And this democratic contagion spread into East Germany four months later. This is about the 40th anniversary of the founding of East Germany. And 70,000 people demonstrate at Leipzig and within the week around, oh, like 1.4 million Germans are demonstrating and over 200 demonstrators. Typically, the East Germans, uh, would have sent tanks. That was what they would have done in the past. But Would-We-Tank Man, Erich Honecker, was already out of a job. Uh, his ruinous policies of living off debt since he came to power in 1971 had just about wrecked, uh, East Germany, so he was out. And then, uh, less than two weeks later, the Council of Ministers resigns and then on November 8th, the Politburo resigns. And then on the 9th, whatever's left of that government is issuing new travel regulations and you might wonder what's travel got to do with it. I'll get there. So, uh, in response to a question at a news conference, this guy, Guenter Schabowski who was one of the remaining Communists hel- helping run the show, uh, he gets asked a question, doesn't know the answer and so he wings it. And the question is, "When do these travel regulations go into effect?" And he goes, "Immediately." Well, crowds immediately started gathering at the six gates to the Berlin Wall and at one of them, the border guards decided that discretion was the better part of valor and they opened the gate. And East Germans poured into West, uh, Berlin and within the first week alone, over half of East German's, Germany's population visited the West. And within the month, 1% of the population emigrated to the West. And, um, like the Polish el- elections, this opening the gate was a pivotal decision. A pivotal decision, whatever it is, there's no going back to the way it was. And here's good old Guenter going, "Gosh, we hadn't a clue that opening the wall was the beginning of the end of East Germany." Okay. Uh, better luck next time. (laughs) And the Russians, uh, were shocked by, uh, how unpopular they were. They were thinking they were gonna get credit, Gorbachev for East German, uh, East Europe's liberation rather than blame for Eastern Europe's enserfment. And here you have Yuri Gromyko, a scientist and parliamentarian going, "All of our former satellites by compulsion cast off from us as fast and as far as possible." And Ana- Anatoly Kovleyov, who was a deputy foreign minister said, "Look, and we had no confidence whatsoever concerning whom the East Army, uh, East German Army's gonna shoot, the demonstrators or us." And the same thing for the Polish and Hungarian armies. Great. With allies like this, who needs enemies? The allies gotta cover it. So this argume- under this argument, unrest in the empire forced the U- Soviet Union to forfeit the Cold War. Okay, I got another counterargument. Says, "Nonsense. The real problem was the satellites were unhealthy. That's why the whole thing fell apart." So this map is 1960 and you see all those tempting green places? They're about to become independent and they are really sick of their Western European colonizers. Enter the Soviet Union with a program to put the West out of business. There were many takers.Okay, fast-forward to the late 1980s. Soviet Union is on a roll. Small hitch. In the late 1970s there was a big recession, and it continued into the '80s and it tanked commodity prices. So for some of the newfound, uh, newfound pals like Angola, South Yemen, Ethiopia, Nicaragua, uh, it wrecked their export earnings 'cause they're exporting commodities and these commodity prices are down. It, uh, in, in many cases, it, it halved them. The Soviet Union was really dependent on oil exports, still is. Oil an-, uh, oil prices tanked, and oil accounted for up to 55% of the Soviet budget. So here, Brezhnev has got a, a deep bench of non-performing pals at a time when he doesn't have the money to support all of them. And worse yet from the Soviet point of view, so it's dumped all this money in these third world friends. Meanwhile, it's got its own nationalities who are deeply unhappy and they want out of the empire. And most problematically, they all revolt at exactly the same time. And one of the rules for continental empire is no two-front wars. Uh, well Russia has so many fronts at this point, it can't even keep ca- keep count. And the, the unrest in the internal empire of nationalities started as soon as Gorbachev got in. There were student movements in Kazakhstan and Yakutia, opposite ends of things. By the time you get to 1990, I don't know, there are like 60, 76 seething ethnic re- rebellions in different parts of this. Uh, there was too much to go o- uh, for, for the Soviet Government to handle. So you could argue that the Soviet Union bankrupted itself on the third, on the third world while ignor- ignoring its own internal third world of nationalities whose simultaneous revolts brought down the Soviet Union.

   2. DPDwarkesh Patel25:52

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   3. SPSarah Paine27:05

      I got a completely different argument for you. If you don't like all of those, I got another one for you. It's, uh, the economy, stupid, right? That one, that line. Um, uh, one could argue that communism failed as an economic system. If you look at growth statistics for the Soviet Union, they're pretty good post-World War II when they're rebuilding. But they go, they really stagnate from the mid '70s onward. So for the decade preceding Gorbachev's coming to power, Soviet growth s- uh, stats were one to two percent lower than those of the, of the, uh, the United States. And the compounding effects of that were enormous. What's going on? Everyone's lying to each other. So that's the ta- the data that Soviets are using is garbage. What's, so if you're working for a, like a subunit of, of an enterprise, you have to lie about the inventories you have, saying there, you have less than you do. And then you have to lie about what you need saying, "You need more than you do," because you're worried about getting enough things. It's not a market system where you just, the price dictates it. Um, this is all about the plan. You gotta enter the right numbers and then you get whatever inputs you get from the centralized plan. So everyone's lying. They're aggregating all the lies. The higher up the food chain you aggregate these things, the worse the data is, so that the Soviet Government has no idea what the actual value of capital or labor are, no idea what actual productivity is, and no one has any idea what consumer preferences are. You're not using markets and prices, so that the misallocation of capital and labor goes unnoticed until it metastasizes, already metastasized into a catastrophe. And to give you a sense of these misallocations, the Soviet Union was rotting from 20 to 40% of its crops. Well, it's using scarce hard currency for agricultural imports to make up for those crops. Total mess. And so you can look at what happens to the economy with oil prices down, uh, th- we're into a spiraling mess, so that from when Gorbachev comes in at '85 to when it hits a trough in Russia in 1998, you see this crashing share of world GDP of the Eastern bloc as a result of all this. And even, if you look at Soviet statistics on deficits, trade balances, debt, they're just soaring, and then GDP growth goes double digit negative. That's called shrinkage. It's not the normal thing. So, Marshal Yazov, here's his take. "We simply lack the power of all these whale, wealthy NA- NATO nations. We had to find an alternative to the arms race." So, uh, and here's a foreign service r- officer, Anatoly Artemyshin. He said, "Look-"Our problems began with the departure from isolation. There are main reasons for a collapse, were internal, not external reasons. The Soviet economy was literally exhausted from this monstrous arms race, militarism, enemies with half the world. That's his take. And Gorbachev, um, told the, uh, Central Committee, he said, "Look, we're encircled not by invincible armies, but by superior economies." And he often told people, "Living this way any longer is impossible." So, you could make a powerful argument, it's the Soviet con- economy that lost the Cold War.

3. 30:37 – 37:33

   Gorbachev's mistakes

   1. SPSarah Paine30:37

      Uh, this gentleman, Alexis de Tocqueville, is very famous for writing a, a book about the last days of the French monarchy before the French Revolution overturned it. And he also wrote, uh, something about democracy in America, both excellent books. But this one's come from the one about France, and which de- uh, Tocqueville observes, "The most dangerous moment for a bad government is when it begins to reform." Russians of all political persuasions, they agree on at least one thing, uh, i- and that is that Gorbachev's role in how the Cold War turned out was pivotal, that he pay- played in a very essential part. And Gorbachev made his decisions based on certain false assumptions. One of them was the irreversible direction of history. Gorbachev thought of history going always forward towards communism, never backwards to capitalism. And of course, Eastern Europe took a U-turn, went straight back to capitalism. And here is Leonid Shevardnadze, who was a, uh, um, a, a senior person in the KGB, their intelligence office, he said, "The thought never occurred to the government that it's possible to withdraw from socialism." And if you think about both communist theory and how imperialism works in practice, usually the mother country is more developed than whatever all the colonies are. Right? Well, the Soviet Union was an inverted empire. People in Eastern Europe, as a group, were more well-educated and they were richer than Russians. It was like a donut empire, so that when, uh, the empire went, Eastern Europe, uh, the Russians could no longer siphon off the wealth of these enserf populations in Eastern Europe, which explains why they lea- wanted to leave. It also suggests why Putin wants them back. All right, another false assumption has to do with the sentiments of the neighbors. Gorbachev was convinced he was gonna get credit for liberating Eastern Europe, rather than blamed as a Russian for having enserfed them in the, uh, uh, in the first place. For Gorbachev, the c- the clock beg- began on his watch. For other people, no, no, Stalin's when it began, when he started shooting a lot of people. Uh, so here you have Anatoly Chernov, foreign policy advisor to Gorbachev, saying, um, that, "Gorbachev thought that bringing freedom to our Eastern European satellites would, uh, have them adopt socialism with a human face. He made an enormous mistake, because these countries brutally turned their back on us." Really? If that's brutal, then what, pray tell, was Stalin? And then it gets better. "The politics and connection with our former friends were totally unexpected to us." Really? Uh, you occupy people, you never leave, you shoot a lot of people in their government, you put in a new government, you siphon off a lot of their wealth, and you impose a non-performing economic system, and you wonder why they don't like you. Think about the United States, interview- intervenes all around the world in other people's troubles, dumps billions in economic aid, and even leaves, and people don't like us. I don't know why the Russians think they're so special. Another false assumption, Gorbachev believed that if the Warsaw Pact disappeared, the military alliance of the Eastern Bloc, if that disappeared, then NATO would disappear. And that if, um, the Comecon, which is their trading organization, if that goes away, then it's the European Community in those days, it becomes the European Union later, anyway, that would disappear. Not quite, because it turns out that organizations that are, uh, coercive versus those that are voluntary, they, uh, dissolve for different reasons. And then Gorbachev also assumed that the United States would share a continental outlook of not wanting strong powers, and that the United States therefore would not want a unified Germany, let alone a strong unified Germany. So when all the unrest is happening in Germany, Gorbachev is off taking a vacation. Poor life choice, because at that moment, President George Bush Senior and, uh, Chancellor Kohl of Germany are working on fast-tracking German unification of a fully sovereign unified Germany, both halves in NATO. All right. So, many of, uh, Gorbachev's closest supporters, at the end of it all, uh, blamed him. They said, "Look, his foreign policy mistakes were a function of his domestic policy mistakes, and it, uh, destroyed the Soviet Union." And, uh, back to this, uh, America expert Vladimir Lukin, "Gorbachev was no Deng Xiaoping." Okay. And Arbatov, who's their premier, uh, America expert, "The stupidity of lea- of our leaders caused the disintegration of the Soviet Union." So, the big bozo was playing with plastic bags, stuck one on his head, committed suicide. It was by mistake. All right, Lukin continued, "In the West, they love Gorbachev because everything took place so easily and cheaply," basically like that. But only for you. For us, it was expensive. Uh, but you could argue the time to reassess all the Stalinist stuff, uh, was long overdue. All right, here's a completely different way of looking at it. I've been giving you sins of commission.And now I'm gonna do sins of omission. It's a good framework. It's useful for other things. So, the sins of commission are all the things Gorbachev did. Now what I'm gonna do is what the army didn't do. Uh, some would argue that the Red Army should have done exactly what Deng Xiaoping ordered his army to do, you just send, uh, the... send tanks against civilian demonstrators and they will truly crush them, and it'll be over. Communist Party is still in power in China 30 years later. So, there are some people who believe that this was a terrible mistake. So, this argument would be that timely tank deployments, TTD, my contribution to military acronyms-

   2. NANarrator36:39

      (laughs)

   3. SPSarah Paine36:39

      ... would have changed the outcome of the Cold War. All right. Others, we back to the great men of history and sins of omission, and they wouldn't be picking on Gorbachev but his successor, Boris Yeltsin, who... And there are two big pieces of evidence we look. He, um, removed Article 6 from the Soviet constitution which basically guaranteed that the Communist Party would always be the, um... it would monopolize power. And then in addition, the following years... So, Yeltsin's the head of Russia. He gets together with the heads of Ukraine and Bela- uh, Belorussia, and they signed the Belovezha Accords which then formally dissolved the Soviet Union. So, um, according to this way of thinking, um, it's his fault, it's suicide, uh, on purpose, and what it does is it opens the door for multiple parties and for the nationalities within the Soviet Empire to become

4. 37:33 – 48:31

   German unification and NATO expansion

   1. SPSarah Paine37:33

      independent. All right. So, I've given you internal explanations, I've given you external ex- explanations. Now I'm gonna give you some umbrella exp- uh, explanations. And it's all- and they're based on all the preceding evidence, and they come to opposite conclusions. The first one was, well, any of the above, uh, it's inevitable. And the opposite conclusion from the same evidence is, no, no, no, it took all of the, uh, all of the above. The West barely won. So, I'm gonna start with, uh, any of the above. You could argue with this many serious problems, it was a matter of time before the Soviet Union collapsed. And, um, it was, uh, an objectionable system for precisely the reasons the West didn't like it. It had a brutally inefficient economic system, and Russians who invented the thing, at the end of the day, didn't want it either. So, by this way of looking at it, you have people like, um, Yuri Ryzhkov, uh, a genuine rocket scientist who says, "Look, the main reason for the collapse, uh, of the Soviet Union is the rottenness of its system." And then here's a journalist, Timuraz Stepanov, who said, "Look, I think from the beginning, the genes of disintegration were contained in the genetics of this governmental political formation." Don't you love the products of the Soviet educational system? Uh, don't ever use wording like that. All right. So, you could argue that the Soviet Union was destined to, to fail with this many problems. Others would come to the opposite conclusion. They would say, "No, it took every single one of them for the Cold War to end on Western terms." And here's back to Anatoly Koval- uh, Kovalyov, the Deputy Foreign Minister. He said, "Look, all these factors merge. Internal, ideological, economic, military, it took all of them. You remove any one of them and you get a different outcome. Maybe the Cold War ends, but it might end completely differently. So, by this line of r- reasoning, the best w- uh, barely one should feel very fortunate that it did." One can take this last argument and say, "It was more than that. It also took the confluence in office of two very talented leaders, Helmut Kohl of Germany and George Bush Sr. of the United States." Not, not the son who got in- got into those forever wars, but the dad who didn't. Uh, George Bush Sr. had one of the most amazing resumes of any president ever to o- um, any, any person to become president of the United States. Just look at him. When he's really young, he's a, a war hero in World War II. He's a Navy pilot. Dangerous thing to do. He did it. And then he comes back and he gets his BA at Yale and graduates with honors, and then, uh, he becomes a representative for this, uh, a district in, in Texas after he's already made himself a millionaire by the oil business that he started. And then he come, becomes ambassador to the UN, followed by US representative to the PRC. It's before we had formal diplomatic relations, so he's the guy who's sending that off. Becomes director of the CIA, and then he is Ronald Reagan's understudy for eight years as vice president. He is incredibly, uh, fit for the job. And Helmut Kohl is equally fit for the job. He is the longest serving chancellor in, uh, German history since his illustrious predecessor Otto von Bismarck. He, uh, starts out getting a PhD in history and political science. He also starts out in business, but then he works for state government initially as a representative, then as a governor. And, um, he becomes chairman of his political party, the Christian Democratic Union, uh, for a quarter of a century. Once he gets in, he decides he's gonna buy up East Germany one tourist at a time. How does that work? East Germans, turned out, really liked to travel. West Germans had always been able to travel to East Germany, or they long had been able to travel to East Germany, but East Germans definitely could not, uh, easily travel to West Germany. Why? 'Cause they have a habit of staying. But all of a sudden, East Germany eases up on the travel regulations, and you might ask, "Why?" And the answer would be money. Just like the Poles, the East Germans were deep in an economic mess of their own making. Would-be tank man Erich Honecker, who got the boot at the very end, well, his, uh, uh, staying-in-power paradigm that he implements in 1971 is gonna be... he's only gonna live off debt. He needs to make certain, uh-... social benefits available and consumer benefits ale- available for labor, uh, stability, not having labor unrest. And the way he's gonna do that is he's not gonna do a- a many domestic investments and he's gonna do a lot of borrowing for, uh, particularly from, um, West Germany. Well, that's unsustainable long term. So by the time you get to the end of the Cold War, if he's gonna fix that and, uh, even out the accounts, it would be a 30% decline in East German standard of living. So he really needs the pocket change from the tourists. So what, uh, s- Kohl does is a brisk, uh, uh, a gr- a- a brisk business of tourists and things. What he does in return for the, uh, easing of tra- uh, travel restrictions, uh, he pays East Germany several hundred million, uh, Deutschmarks extra to allow that to happen. And then he gets the Hungarians to go along. He gets the Hungarians to open up their Austrian border to let East Germans out that way and he gives them a half a billion Deutschmarks for that little favor. And then, uh, when Kohl introduces his 10-point unification program, 'cause now he's thinking he's gonna get both Germanys together, um, this is when he starts doling out big bucks to the Soviet Union, whose economy is unraveling. And Gorbachev is gonna be desperate for this cash as that's happening. So, um, uh, West Germany provides 100 million in food, especially in meat, for the Soviet Union that doesn't have these things. Uh, nevertheless, these, the unrest, uh, just keeps on going. Uh, the Berlin Wall, as I've told you, is breached, and then you wind up with a West German caretaker government and the financial situation in Russia itself is unraveling. And by the time you get to January 1990, Bush and Kohl get together and they've decided they wanna really fast-track German reunification. Why? 'Cause they gotta get it done before this unraveling crisis, uh, that Gorbachev falls, uh, from power as a result of it. So they are, uh, have got a- a game going, the two of them. And it's complicated, and here's why. Uh, Gorbachev was dead against, uh, Germany, a united Germany and NATO. He's not keen about really a united Germany, let alone one in NATO. The US State Department experts, the guys who know everything, are saying, "No, no, no, you wanna go slow on this unification business." Uh, and then, uh, Kohl is running a coalition government. There are people in that government he cannot fire, who are, 'cause they're from different, uh, political parties. One of them is his foreign minister, this guy Genscher, who is very skeptical about Germany being part of NATO. And then it turns out, although Britain had talked a good peace during the Cold War, it didn't actually want a unified, uh, Germany, nor did France. Why? Because that, uh, unified Germany would eclipse theirs economically and they didn't want that to happen. So Kohl and Bush divide up the tasks. Kohl is gonna reshu- reassure the Soviet Union that Germany's not gonna be belligerent or do horrible things, and Kohl's gonna work on the financial unification. 'Cause the Soviets are thinking in terms of military unification. You know, where you deploy your troops, that determines things. Uh-uh, wrong instrument of national power, uh, precisely 'cause the Soviets didn't understand finance, that's why they're in such a mess, whereas the Germans do. What they're gonna do is get East Germany on the West German Deutschmark, and at that point, they will control all the money and they will control decisions, but the Russians aren't gonna see that coming. Meanwhile, Bush is supposed to work, uh, the alliances with, uh, particularly Britain and France in the West. There were all sorts of meetings that were coming up. And Bush's job is to deli- delay those meetings for as long as possible so German unification can proceed as far as possible. And the two of them are doing a tag team diplomacy with Gorbachev that he just can't keep up with, with given that, uh, his own home economy is go- got this double-digit sh- uh, shrinkage rates. So here's how they go. As the trades get bigger, the amount of money you pay Gorbachev gets bigger. So first of all, it's just to get e- uh, a unified Germany. Then it's to get a unified Germany with West Germany still in NATO. Then it's to get unified Germany with all of Germany in NATO. So here's how the money goes. Gorbachev agrees to German unification. We are no longer paying hundreds of millions of Deutschmark. We're paying billions of Deutschmark, five billion dom- uh, Deutschmark for that one. Then Gorbachev agrees that states can choose their own alliances, i.e. whether or not to jo- join NATO. And then he gets, the US offers nine assurance but he, uh, it's also a con- trade agreement that Gorbachev really wants. And then the economic union goes into effect. So we've now done the financial reunifi- unification of Germany and this is when London, there's a London declaration that's inviting Eastern European countries to coordinate more closely with NATO. And then in return, Gorbachev has got a promise of a G7 summit meeting that's gonna fast-track aid to him, which it will do. And then Gorbachev agrees to German NATO membership, and at this point, big, m- even bigger things are happening. Germany's gonna agree to its bo- uh, border with Poland. I'll get there and explain. And Germany provides 15 billion in Deutschmark, including building all kinds of new apartment buildings for repatriated Soviet soldiers who are going home. Why are you doing that? 'Cause you want those soldiers focused on buying furniture, not running a military coup. That's what they're doing. So, uh, the unification happens in mid-September 1990. Uh, and here's the Polish borders. At the end of World War II, Stalin moved Poland 200 kilometers to the west, and it winds up taking a third of German territory by the time that's all over. And so the Germans, uh-... don't really wanna sign all that away. And in addition as part of that, there were 12 million German refugees who were thrown out of where they were living to send them back to Germany, of whom two million died. So this is a big deal and it's in living memory. Germany agrees to this, that the borders are done. German bo- uh, Polish, uh, borders are set.

5. 48:31 – 56:10

   The Gulf War and the Cold War endgame

   1. SPSarah Paine48:31

      Complicating factor. A month and a half before this unification treaty is signed, Saddam Hussein decides he's gonna invade Kuwait because he's broke, because he's had a, a long war with Iran, huge debts, many owed to Kuwait, which he doesn't want to pay back. So if you invade them, that solves that problem. And also, he would take over, uh, Kuwait's very rich oil fields and together that would make Iraq probably the swing producer of oil. So he thinks that's a great idea, except, uh, the Cold War's over actually, and the Russians are more than willing to cooperate with the United States. Gorbachev really needs more money and he is willing to go along with Iraq out of Kuwait, but not with regime change in Iraq, 'cause think about it, Iraq is a very important creditor state to the Soviet Union. It owed them between $10 and $13 billion. That's a lot of money for a broke creditor. But Gorbachev is being extraordinarily cooperative with Bush Sr. He sends Evgeny, uh, Primakov on multiple missions to Baghdad and the first one, Primakov gets all Russian hostages out of, um, Iraq. And then on the second trip, he gets all Westerners out, Americans included. Third trip, not so lucky. He's there for the, for the coalition force bombing. I don't think he liked that very much. Um, but imagine that bombing going on if there were western human shields going down with every target. Russia took that card right off the table, and here's some of the reasoning. Sergey Tarassenko was an aide to Foreign Minister Shevardnadze and, um, they understood that the United States was gonna do something about this invasion of k- of Kuwait and, uh, so the Russians thought it'll be better if we force all of this to go through the UN, where Russia has a veto power. And he said, "Look, um, there was a division of roles. It, it extends to China, the help that Russia provided. Uh, when the Americans asked us to work with the Chinese, we told the Chinese, 'Think about it. You're one of the big five with veto power. Y- y- do- doesn't it suit, suit your interest to funnel everything through the UN where you can put your foot down?'" And the Chinese came around to that idea. Um, however, the Russians had red lines, and here's Anatoly Kovaliov again, the Deputy Foreign Ministry. The red line is American troops stay out of Iraq. No regime change in Iraq. You do that and you will tank c- termination of the Cold Wa- uh, Cold War, and that would be the goal of the, the, uh, the goal. Here's Kovaliov saying, "I advanced the basic principle that we must support the territorial integrity of Iraq. This was our sacred position, uh, but we, uh, must not permit a division of Iraq." So if you wonder why the ground war ended after 100 hours, this is it. That, um, the, the, the big thing out there is war termination of the Cold War. That's the big thing. Saddam, uh, in say- uh, Hussein is, um, a minor event over there. Sorry, but he was. Anyway, um, so, and if it had tanked Cold War termination or upset, uh, the reunification of Germany, France and Britain might have been very happy because Francois Mitterrand, who was the President of France, and Margaret Thatcher, Prime Minister of Britain, were against German unification. They knew it would marginalize their own country when Germany's gonna be a bigger economy, which it is. Uh, Francois Mitterrand eventually found solace in expanding the European Union, uh, European Community to the European Union, uh, when you're incorporating all these Eastern, uh, Bloc countries into it. And he, uh, plays a really important role in concluding the Maastricht Treaty that, that forms the European Union. But Margaret Thatcher just plain lost. Uh, she was just upset about the whole thing. She said, "Germany will be the Japan of Europe and worse than Japan." I guess she hadn't been to Japan lately. Uh, she said, "The Germans will get in peace what Hitler couldn't get in war." And she wanted to leave Red Army troops in Germany for the duration. Imagine if that had been the case and now dealing with Putin. If he had troops in Germany, we would be in trouble. But, um, uh, Bush and Kohl worked around all of them. And Bush said to Kohl at the end of it, he said, "Look, I'm not gonna beat my chest and dance on the Berlin Wall." Both of them were very careful never to humiliate Gorbachev about the Soviet loss of the Cold War. Why? Because they didn't want... They knew that if they did that, he might fall from power sooner rather than later. Also, they were afraid that if they did that, the hardliners would come to power much more rapidly, uh, than they actually did. It was 20 years before Putin st- uh, consolidate, started consolidating his power and the new count- uh, the newly independent countries of Eastern Europe needed those 20 years to integrate militarily, politically, economically with the West so that the s- the cement could s- uh, set before you got the Russians trying to destabilize them. So, uh, they bought them 20 years to do this. But there's a cost to all this. Bush never got credit for his essential role in ending the Cold War on Western terms, so he was not reelected for a second term. Uh-... uh, but anyway, when it came time for Nobel Prizes and why the Cold War ended, Anatoly Adymushin, this Soviet Foreign Service officer said, "Look, it's difficult to deny the Soviet Union was the one that ended the Cold War." And Edwin Meese, who was a councilor to Reagan, also his attorney general, said, "Look, the Cold War began because of the Soviet policies, and it ended, in a sense, because of Soviet policies." And the Nobel Prize committee agreed. They awarded the prize to Gorbachev, not to Bush, for his role in liberating Eastern Europe. So, when you're thinking about this question of why Russia lost the Cold War, I hope you will come up with a more complicated answer than, "Well, Ronnie did it." Um, that there are probably other causes at work as well. Anyway, thank you for your attention. That's what I have for you this evening.

   2. DPDwarkesh Patel55:02

      (audience applauds) So, I've been trying to hire a writer for the podcast. But I ended up getting way (laughs) more applications than I anticipated. But as I started to go through them, I noticed that many of them didn't feel like they were actually written and submitted by real human beings. So, I started looking for a way to detect botnet submissions, and I ended up using Sardine. Sardine was built to assess customer risk for banking and retail, but it's also useful for spotting fraudulent job apps. Implementation was hilariously straightforward. It took my general manager, Max, less than an hour to VibeCode Sardine's SDK into our hiring flow. Now, Sardine is assigning every single application we get a risk score based on a ton of different rules and signals. Did the candidate use a throwaway email? Is the device they're on already associated with another application? Is the candidate's IP address matching the country that they said they're from? The list goes on. I'm just using a basic web form, but you can integrate Sardine into any application. So, if you need help with risk, whether that's for hiring or any other type of fraud prevention, go to sardine.ai/borkesh, and ask your ATS if they're using Sardine. All right, back to Sarah.

6. 56:10 – 1:14:46

   How central planning survived so long

   1. DPDwarkesh Patel56:10

      Sarah, thank you so much for doing this.

   2. SPSarah Paine56:12

      Thank you for having me. That would be the more important thing.

   3. DPDwarkesh Patel56:15

      (laughs) There's an interesting question of why the Soviet Union collapsed when it did. I think, um, the even more interesting question is, why a system that was so centrally planned, monstrously inefficient, brutal, a colonial land empire, how such a country could survive for so long into the 20th century. Um, so I, I feel like that's the thing that actually needs explanation. How did the S- regime last for 74 years?

   4. SPSarah Paine56:42

      But there are loads of dysfunctional places all over the planet that have been dysfunctional forever, and you look, "Well, why are they dysfunctional?" And, um, uh, uh, you look at, to me, the answer to that one, in a way, is the example of North Korea. You go, "Of all countries that should fall, a place that has ongoing famines in the 21st century, and it used to be the richest part of the Korean peninsula?" So, uh, these authoritarian regimes are really good at, uh, maintaining the coercive powers. But think about it. In order to educate someone, it takes years as a parent to bring up a little person, and then you get them educated, and maybe they're an A-list possi-, uh, politician. It takes ses- seconds to assassinate them. It's the asymmetry between construction and destruction. Destruction is so easy that these guys are, uh, uh, dictators, uh, tend to be, uh, uh, d- dictatorships are all over the world. It's a, it's a sad part of the human condition.

   5. DPDwarkesh Patel57:46

      Mm-hmm.

   6. SPSarah Paine57:46

      They clearly know what they're up to. In the case of, um, the Soviet Union, there were multiple intelligence organizations. That's what Stalin was using to keep track on everyone. So, you want to monopolize information so that you know of more information than other people. And then they have a whole bunch of people who are the winners of nomenklatura, are the elites there. You make sure you pay all them off.

   7. DPDwarkesh Patel58:09

      Mm-hmm.

   8. SPSarah Paine58:10

      And, uh, I mean, think about it. Human society is slaves, serfs. I mean, we humans have been doing these things to each other for a long time.

   9. DPDwarkesh Patel58:18

      Mm-hmm. So, dictatorships can certainly sustain themselves for a long time, but the Soviet Union was special in that, by the '60s and '70s, they have a GNP that's 60% of America's, this incredibly dynamic economy. Um, in the '40s and '50s, they have much higher growth rates, so much so that prominent economists like Paul Samuelson are saying that by the '90s, based on what they're seeing at the time, um, the Soviet Union will have a bigger economy than America. And this is just quite surprising that they would have such high growth rates. Um, if you just think about how central planning works, people are gonna tell you how much steel you can make and which company gets to use the cotton fabric and cement and et cetera. And you have hundreds of millions of people living under this system, and it has the, it's just actually quite shocking that they actually had notable growth rates after World War II-

   10. SPSarah Paine59:06

       Mm-hmm.

   11. DPDwarkesh Patel59:07

       ... for decades on end.

   12. SPSarah Paine59:07

       Well, first of all, it's a war economy, essentially. You're putting all your money, so you have a big military, and Russians define greatness, this is part of it, of being a big power, and it's military power with territory. So, um, and most countries in wartime have, uh, they mobilize for the military, right? This country did it in World War II, all kinds of rationing, right? Uh, w- we're not using market prices. You're setting different prices, giving people ration cards and things. Uh, the thing is about the Soviets is they kept it forever. They never got rid of it. So, that's one piece. Another problem with the Soviet Union are, is all of the data. So, I don't know what data you've seen, and I know the data I've seen is, it's hard to know because, because n- uh, the ruble's a non-convertible currency, and a lot of things they measure in weight and other things, like, they're the greatest TV producer in the world, they said. Why? 'Cause they, uh, made the heaviest TVs in the world.

   13. DPDwarkesh Patel1:00:04

       (laughs)

   14. SPSarah Paine1:00:05

       (laughs) Right? Uh, I'm serious. When I was there, this was it, and they would spontaneously combust, which is not the normal thing a TV should do for you, (laughs) burn down the apartment building. So, uh, so they're gonna measure their heavy TVs as a positive. And the ruble is non-convertible, so there was a guy named Murray Feshback, um...And I can't remember which part of the US government w- he was, but he was really good at looking at their statistics and then adjusting them. And people didn't know, and I gave you the CIA ones, where the CIA, they're not stupid people. They've got the best data they could find and they're coming up with 20% of the Soviet budget is probably, uh, devoted to military. Then after the Cold War is over, they go, "Whoops. (laughs) We missed. It's at least double that, and maybe triple." So it's really hard to know, even with the statistics you're getting. Certainly what Paul Samuelson had wouldn't be accurate.

   15. DPDwarkesh Patel1:00:57

       Mm-hmm.

   16. SPSarah Paine1:00:57

       It's just a guess.

   17. DPDwarkesh Patel1:00:58

       My, my favorite example of this is, um, so there were top-down commands that you gotta produce a certain amount of steel. And a steel factory would then be incentivized to make thicker bars of steel rather than thinner bars, because that would count towards greater production. Except a lot of inputs actually do require the thinner sheets, so then the other factories have to thin down the steel. But that also counts toward GDP. (laughs) So producing the inefficient steel and then cutting it down to size is both being double counted towards GDP.

   18. SPSarah Paine1:01:26

       Oh, and just the whole waste of it. Your... Uh, like the heavy TVs, they probably have four times the inputs that they need to make them that would be good for other things. Yeah, it's, uh, this notion that you can, uh, actually plan an economy. Prices are a miracle. It's good old Adam Smith, the magic hand, right? Or the invisible hand. That was what it was.

   19. DPDwarkesh Patel1:01:48

       (laughs)

   20. SPSarah Paine1:01:48

       That prices are the way to go in markets.

   21. DPDwarkesh Patel1:01:50

       Mm-hmm.

   22. SPSarah Paine1:01:50

       It, it's more efficient.

   23. DPDwarkesh Patel1:01:52

       I wonder if one thing that's going on is in the early and mid-20th century, you have economies which are much simpler, at least compared to today. So even then, obviously, command and control is less workable than capitalism, but if you just have heavy industry, you need a certain amount of cement, steel, concrete, uh, fabrics, coal, that's much more workable than, like, we gotta essentially command what SaaS tools your enterprise is allowed to use.

   24. SPSarah Paine1:02:17

       Oh, yeah. Well, it's interesting on the development thing. So the communists have insisted on heavy industry. That's the thing that they want.

   25. DPDwarkesh Patel1:02:24

       Right.

   26. SPSarah Paine1:02:24

       Forget about the consumer goods. If you look at the countries that really have made it, like Japan, uh, in the Meiji Restoration, they're doing a lot of light industry and consumer goods.

   27. DPDwarkesh Patel1:02:34

       Mm-hmm.

   28. SPSarah Paine1:02:35

       And then they move into heavy, but they've already got people on bicycles, and they got textiles and other things up and running. And that would also apply to Taiwan and Korea. And they g- a- and they do, by all means, they do get heavy industry, but that's not the starter program. The starter program is basic standard of living. And it turns out, and I don't... I'm no economist, but it turns out, uh, if you just look at who's rich and who's not, th- that seems to be the more workable thing.

   29. DPDwarkesh Patel1:03:00

       Yeah. There's also the fact that, um, the centralized regime is building things according to the '30s plan. And even after post-war re-construction, they're still calling back on these plans from the '30s that called for heavy industry for a bygone era. And in the '70s, '80s, we have our Rust Belt collapse of manufacturing. And people complain about this as, "Look, the US has this hollowed-out manufacturing base." But it's much better to have industries which are left behind so that the whole economy, as a whole, can be more dynamic and move on than the Soviet Union where the entire thing became a Rust Belt, right, because they couldn't move on.

   30. SPSarah Paine1:03:32

       It's more exciting than that. And again, I'm not an economist, but apparently they missed the plastics revolution.
7. 1:14:46 – 1:27:24

   Sarah's life in the USSR in 1988

   1. DPDwarkesh Patel1:14:46

      Um, okay, so you were mentioning the problem that Eastern European countries especially had, which is that they're going more and more into debt, um, because they are not able to produce globally competitive exports, um, and in order to... So th- they have this, like, last ditch effort that we're gonna, uh, we're gonna solve our problems with some technological miracle. We need to have, go even, be, get even more over leveraged. We'll get some Western machinery or technology and then we'll be able to finally produce something that the world wants. Um, I'm curious up to what point this was a plausible hope. You know, through the '80s and e- even till the end of the '80s, they still believed that, you know, Czechoslovakia or East Germany or something could catch up with West Europe and-

   2. SPSarah Paine1:15:30

      They're desperate, right?

   3. DPDwarkesh Patel1:15:31

      ... bring them back in.

   4. SPSarah Paine1:15:32

      It's... Think about it. If you're a communist leader, uh, how many other cards are there to play? You're looking, "Okay, this is the only card I got," and they're doing other things because of the sp- social unrest. They wanna import food and consumer products because they've been so ne- uh, neglected these things. So... And then there's another piece, which is, um, t- VCRs, you know, the videos. All of a sudden, those things came around. I remember, uh, this... So we're in Soviet Union, uh, the academic year of 1988, '89, and had, um... One of my classmates had, uh, been an English language tutor of this person in Moscow and set me up because that was the only way to get a good meal once a week. I would do... For a, for a meal, I would te- do... talk English for an hour and, uh, yeah. That... The... What that family wanted more than anything else was a VCR player and, uh, they had a diplomatic, um... You could have hard currency and buy at the diplomatic whatever it was. So I basically, um, got them a VCR by going to the diplomatic thing with my very limited foreign currency, bought an over, uh, overpriced VCR for them, and then got all kinds of meals for the rest of the year.

   5. DPDwarkesh Patel1:16:49

      (laughs)

   6. SPSarah Paine1:16:49

      But, but it meant that they could all of a sudden get Western movies and, um, there are things like in movies where, oh, like, there'll be a picture of, I don't know, a fugitive running by, I don't know, the fruit section of the Berkeley Bowl, and (laughs) the Russians would be (gasps) , you know? Just... It's unbelievable. The, um... I think that Raisa Gorbachev, Gorbachev's wife, when she came and visited, she must have realized that a welfare mother on food stamps had better buying power than she did by just being able to have access to Walmart, right?

   7. DPDwarkesh Patel1:17:25

      Yeah.

   8. SPSarah Paine1:17:26

      I think the elites as they're traveling, and I have no statistical data on this, but as you travel, it's like I'm comparing me getting sour cream in a jar and... Oh yeah, that was the other thing. Counting up all the things in a Soviet, uh, supermarket, and the total was something like 77 items total in this supermarket. I don't think that compares favorably to a candy rack as you leave, I don't know, a 7-Eleven, right?

   9. DPDwarkesh Patel1:17:56

      (laughs)

   10. SPSarah Paine1:17:56

       And, oh yeah, when you went by the meat section, the smell just about knocked you out of rotten meat. It was really disgusting.

   11. DPDwarkesh Patel1:18:04

       Mm-hmm.

   12. SPSarah Paine1:18:04

       Yeah, I got to make... I got really good at making borscht, go to the peasant market, pay hard currency for bones 'cause couldn't afford any meat but I could afford the bones, and then, um, would buy... The Russians produced really good sugar beets. You got beets, and then you're starting to get rotten apples, uh, over the winter but they at least come from Hungary. Russians don't even produce apples in those days but Hungarians did. And, oh, the Romanians provided the toma- canned tomatoes and I could do a credible borscht, but you're talking about... This is Moscow, the center of everything, and we're, we're dealing... Oh, I remember buying potatoes at the market and the rotten spots felt gelatinous.... so you'd have to cut those out, and then you're wondering how much, how many nutrients are in the rest of that potato.

   13. DPDwarkesh Patel1:18:49

       Hmm.

   14. SPSarah Paine1:18:49

       It was a really gross year. And then, uh, yeah, I remember going to the candy store and I, I, you know, like... I'm just... I would buy caramel from Poland or somewhere. It was like a food item (laughs) because it was actually edible.

   15. DPDwarkesh Patel1:19:03

       At this point, I bet you are wondering why you didn't write a biography of Napoleon and so you could just visit Paris instead. (laughs)

   16. SPSarah Paine1:19:08

       Yeah, well, my brother's comment is, "You're studying Russia and China, two countries in the breakdown lane."

   17. DPDwarkesh Patel1:19:13

       (laughs) Um, by the way, the, the, the point about the s- the grocery stores having 74 items, um, it's interesting in two ways. One, central control, uh, works much better if you have a much smaller amount of items to optimize over. So, if you have... things are standardized, you know, they can work much better. And second, to your point about GDP being hard to compare between the Soviets and the United States-

   18. SPSarah Paine1:19:35

       Oh.

   19. DPDwarkesh Patel1:19:35

       ... how do you compare a Ruan tomato or a Ruan potato, um, to the Idaho ones that you can get at H-E-B or-

   20. SPSarah Paine1:19:41

       Oh, they would compare it by pound, right?

   21. DPDwarkesh Patel1:19:42

       Exactly, right.

   22. SPSarah Paine1:19:43

       Yeah.

   23. DPDwarkesh Patel1:19:44

       Oh, so you said you were there in '88 and '89.

   24. SPSarah Paine1:19:46

       Yeah.

   25. DPDwarkesh Patel1:19:46

       So, this is before the Berlin Wall has fallen.

   26. SPSarah Paine1:19:48

       I was watching Tiananmen fall, the Tiananmen demonstrations-

   27. DPDwarkesh Patel1:19:52

       Yeah.

   28. SPSarah Paine1:19:52

       ... on Soviet TV, and the only reason you got that TV coverage is 'cause Gorbachev was in Beijing.

   29. DPDwarkesh Patel1:19:59

       Hmm.

   30. SPSarah Paine1:19:59

       So, all the press was there. That's why you have the coverage, and they stayed on because the students were demonstrating, and the Chinese closed society weren't aware of power of television of, "Guys, they're going to film you doing, doing all of this stuff, and they will get the film out."

Episode duration: 1:54:54