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Sat Dec 20, 2014, 05:07 AM

What the US Should Learn from Russia’s Collapse

http://www.commondreams.org/views/2014/12/19/what-us-should-learn-russias-collapse

After months of whispered warnings, Russia’s economic troubles made global headlines when its currency collapsed halfway through December. Amid the tumbling price of oil, the ruble has fallen to record lows, bringing the country to its most serious economic crisis since the late 1990s.

Topping most lists of reasons for the collapse is Russia’s failure to diversify its economy. At least some of the flaws in its strategy of putting all those eggs in that one oil-and-gas basket are now in full view.

Once upon a time, Russia did actually try some diversification — back before the oil and gas “solution” came to seem like such a good idea. It was during those tumultuous years when history was pushing the Soviet Union into its grave. Central planners began scrambling to convert portions of the vast state enterprise of military production — the enterprise that had so bankrupted the empire — to produce the consumer goods that Soviet citizens had long gone without.

One day the managers of a Soviet tank plant, for example, received a directive to convert their production lines to produce shoes. The timetable was: do it today. They didn’t succeed.

<snip>

As we in the United States struggle to understand what’s going on in Russia and how to respond to it, at least one thing is clear: Moscow’s failure to move beyond economic structures dominated by first military production, and now by fossil fuels, can serve as a cautionary tale and call to action.

Diversified economies are stronger. They take time and planning. Wait to diversify until the bottom falls out of your existing economic base, and your chances for a smooth transition decline precipitously. Turning an economy based on making tanks into one that makes shoes can’t be done in a day.





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Response to eridani (Original post)

Sat Dec 20, 2014, 05:18 AM

1. You'd think it would dawn on the US government

that shipping off all our basic industries like textiles and shoes, not to mention car parts and electronics, has left us in a very weak strategic position.

Any attempt to get this country's economy back from stagnation has got to involve taxing the ill gotten gains from siphoning money out of the stock market into oblivion and allowing large tax breaks for rebuilding US industry.

Right now, there is no way this country could survive a trade disruption, let alone a shooting war.

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Response to eridani (Original post)

Sat Dec 20, 2014, 06:09 AM

2. Communities and countries need to become more self-sufficient IMO.

The new banking and free trade initiatives are designed to take democratic and economic control out of the hands of citizens and into those of the corporate oligarchy.

The way to defeat that is to produce/recycle/reuse as much as you can yourself and use local sources and networks.

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Response to eridani (Original post)

Sat Dec 20, 2014, 08:42 AM

3. Diversify, like us. Oil, war, bedpans, french fries. They better look out. n/t

 

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Response to eridani (Original post)

Sat Dec 20, 2014, 02:57 PM

4. it's called "Dutch disease," where one sector is so big the others are squeezed out

http://en.wikipedia.org/wiki/Dutch_disease

the Netherlands often goes months without a Government

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Response to MisterP (Reply #4)

Sat Dec 20, 2014, 08:06 PM

5. and the Netherlands is probably better off without one

 

self-sufficiency on a local community level...

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Response to eridani (Original post)

Sun Dec 21, 2014, 09:24 AM

6. war, surveillance, prisons and bubbles. our economy is so much more resilient.

 

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