[fiddlerwoaroof]

Yeah, as far as I can tell we only really have three options when dealing with a trading partner that will subsidize exports: either we ban importing from that country until they drop the subsidies or we levy duties and other taxes to offset the subsidies or we subsidize ourselves. “Free market” thinking won’t work because the market already has been interfered with by a foreign government.

[jkepler]

Wait - wasn't it relatively free-markets and rule-of-law property rights that enabled the west to outcompete the USSR, spending just a small fraction of GDP on defense compared to the Soviet defense percentage of GDP? And didn't relatively free markets succeed while soviet communism collapsed under its own economic weight?

[magicsmoke]

You could model economic systems as alternating layers of centralized and decentralized decision making. Individual teams in a company make decentralized decisions about how products should be made, but the centralized decision about what the company's strategic direction should be is made by company executives. Likewise, individual firms compete in a decentralized economy, but the government makes centralized decisions about what sectors are crucial to national security and are subsidized.

The USSR had no decentralized layer of decision making at the firm level, all firms produced according to quotas made by the central government, and were ultimately less efficient than the US's decentralized layer of competing firms. This does not mean that centralized layers aren't necessary. Both the US and the USSR had a layer of centralized decision making at the government level subsidizing key national industries during the cold war. Both kinds of layers are necessary, but after the cold war the US saw that their decentralized layer of firms made them more economically successful than the USSR, thought that was the whole formula, and tossed national economic strategy out the window to let the firms do whatever they liked. Now the pendulum's swinging back to correct this misconception with China growing quickly using a layer of centralized national economic strategy that the US discarded.

[Ericson2314]

Not really.

a) It's amazing Russia went from just out of feudalism to as industrial as it did.

b) If there even was a mistake, it is probably that more demand and nicely flexible demand (as the consumer economy can provide) would have helped. But that's not about free trade per se.

Pretty sure West-East trade was already pretty limited from both sides, and I don't think there were many intra-USSR limitations to trade. For example, the border between Russia and Ukraine has caused many economic issues in the years since.

[SuoDuanDao]

it might be more accurate to say free-er markets won. The US has been subsidising some industries for a long time.

[AnthonyMouse]

> Wait - wasn't it relatively free-markets and rule-of-law property rights that enabled the west to outcompete the USSR, spending just a small fraction of GDP on defense compared to the Soviet defense percentage of GDP?

This worked when the US and USSR had approximately the same population size and the USSR was trying to keep up with US military spending. Probably not as well when China has three times the population of the US and doesn't care to install the number of troops in Cuba that we pay to maintain in Japan and South Korea.

> And didn't relatively free markets succeed while soviet communism collapsed under its own economic weight?

The USSR and China are both described as "communism" but they're not using the same system at all.

The USSR was a democracy and so its government was plagued by all the corruption and principal agent problems inherent in government spending by a large centralized elected government, except that in their case it was the whole economy.

China is basically operating a country like Rockefeller operated a monopolistic corporation. It's less centrally planned than the USSR. They use internal competition. The principle difference from the US economy is that it's not an elected constitutional government. There is no takings clause, no EPA or FTC, no National Association of Realtors, no free press. They call themselves communists but they're really fascists -- the merger of state and corporate power. What the robber barons would be if they were also kings.

That doesn't collapse like the USSR.

[havernator]

> They call themselves communists but they're really fascists -- the merger of state and corporate power.

The “corporate” in Mussolini’s famous quote re: fascism meant something else.

https://en.m.wikipedia.org/wiki/Corporatism

[AnthonyMouse]

Not exactly. Mussolini's "corporatism" was more encompassing -- not just industry but also guilds, clans, the military. But what hasn't been merged with the power of the state in China?