Could America Go the Way of the Soviet Union?

A disturbing new poll conducted by Quinnipiac University finds that 67 percent of Americans are concerned that democracy in the United States is in danger of collapse. Can this be possible? What does it mean for the future of the United States? Is it too late to bring about a major course correction?The poll’s findings were published on Wednesday — one day after the death of Mikhail Gorbachev, the last leader of the Soviet Union. For Gorbachev, it must have seemed just as impossible to conceive that the Union of Soviet Socialist Republics — a bastion of communism, a military superpower — would ever collapse.And yet it did. The continent-spanning nation that was formed by treaty in December 1922 under Vladimir Lenin was officially dissolved in December 1991. Yet when Gorbachev came into power as General Secretary in March 1985, his goal was not to cause the country to disintegrate but rather to strengthen and solidify it.Gorbachev saw the chief challenge mostly in economic terms: Socialist doctrine assumes that economic forces can be perfectly coordinated to maximize efficiency, but corruption and financial mismanagement had brought about stagnation and worker discontent.Gorbachev’s proposed remedy was to permit more transparency (glasnost) about the need for economic restructuring (perestroika) at home — while also pursuing investment capital from abroad to fund the transformation.A rising star on the global political stage, Gorbachev was successful in cultivating friendships with such canny leaders as Margaret Thatcher, who was Britain’s prime minister between 1979 and 1990 and who famously announced that the West and the new Soviet leader “can do business together.”This thaw in hostilities opened the door for Soviet borrowing through a myriad of new options. In addition to obtaining loans from Western commercial banks and permitting foreigners to channel capital into the Soviet Union through joint ventures, Gorbachev settled with Britain and Switzerland on outstanding tsarist debts and floated the Soviet Union’s first public bond offering on international capital markets in January 1988.Yet beneath Gorbachev’s personal charm and appeal for more cooperative relations with Western nations was a growing sense of anxiety. The more glasnost and perestroika exposed the rottenness at the core of the central planning model, the more critical it became to secure funding for imported consumer goods and technology to satisfy the Soviet Union’s increasingly restless citizens and augment its increasingly expensive military capabilities.My own involvement with these historical developments begins to coincide at this point — as the recipient of a postdoctoral fellowship at the Hoover Institution at Stanford University. Concerned about the lack of comprehensive statistics on Soviet indebtedness, I had submitted a proposal in November 1984 to analyze the impact of Western capital on the Soviet economy. Initial research indicated that published data on loans from Western governments and commercial banks significantly understated the level of exposure; moreover, I suspected that the internal fiscal and monetary condition of the Soviet Union was far worse than its government claimed.The story, though, would end up going considerably beyond simply pointing fingers at a major borrowing nation that would likely prove incapable of paying back its debts. My scholarly analysis was transformed into a public policy book entitled “The Coming Soviet Crash: Gorbachev’s Desperate Pursuit of Credit in Western Financial Markets.”It would make the seemingly implausible assertion that the Soviet Union was going bankrupt. And if our Cold War nemesis were no longer economically viable, what would that mean for the West? Could the Soviet Union continue to exist as a political entity, as a military superpower, were it deprived of Western capital?What had started as an international banking concern turned into a critical matter of national security with strategic implications for the Western defense alliance. My former green-eyeshade scrutiny of Soviet ledgers would evolve into Pentagon-sponsored wargaming exercises, and academic theorizing gave way to sober contemplation of unimaginable scenarios.All of which is not to suggest that the United States is treading a parallel path of economic dissipation and political discontent. Still, it is disturbing to witness the steady decline of our nation’s fiscal condition as government expenditures continue to exceed revenues.“The biggest threat to the continued global authority of the Soviet Union and its status as a working model of socialism is the massive budget deficit it is carrying,” my 1989 book affirms. “For years, the Kremlin has had to resort to printing money to paper over chronic revenue shortfalls. That is a recipe for inflation, no matter what the ideological tenets of the system.”The Soviet Union’s pending fiscal and monetary breakdown under Gorbachev’s reign was compounded by its worsening moral bankruptcy: The founding vision of a workers’ paradise under one-party socialism had failed to deliver on its promises. When citizens lose faith in the basic premise and principles that define their nation — and justify their allegiance to it — it must be taken as an earnest warning sign for its leaders.The United States stands for democratic capitalism. We need to renew our commitment to sound finances and sound money as the appropriate foundation for a self-ruling nation devoted to personal liberty, free-market outcomes, opportunity, and prosperity.

Could America Go the Way of the Soviet Union?

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