Sarah Paine: evaluation

Transcript context

…Speaking of plastics, I didn’t realize before preparing for this lecture the overwhelming role that oil played in first explaining why the Soviet Union was able to sustain itself for so long and then why it collapsed. By the late 50s, Soviet growth rates were already starting to go down, especially compared to the postwar boom that America is experiencing. In ‘59, they discovered these massive oil fields in Siberia. And then from 1973 to 1985, I think, 80% of the Soviet Union’s hard currency earnings were just from oil. They use this because central planning can’t produce even grain, let alone advanced technology. They use this to import a bunch of stuff to sustain the Red Army, to sustain the population, to subsidize Eastern Europe. And then of course, prices collapsed in 1985. Do you think that if the Siberian reserves weren’t found in the late 50s, that it’s possible that the Soviet Union would have collapsed 30 years prior? I don’t know, but they wouldn’t have been able to do all the Africa program and things. It just would be too expensive. So certainly it would have been a reduced thing. It’s also the gas reserves they got up in like the north central Soviet Union. I can’t remember the places, but this is the gas that gets pumped to Europe because that’s the better place. They make those big investments and it takes a while for them to pay off. That was a big deal because they needed help from Western oil companies or whoever does the gas pipelines, compressors, whatever it is you need. There was a big to-do about that, about whether we should sell the stuff or whether we shouldn’t sell the stuff. The Europeans wanted to sell. We were trying not to. This was going on under Reagan as well. But anyway, they had built a lot of it and it was essential to their pocket change. But then when they got all the pocket change, they never saved. Whatever the oil wealth was, they spent up to the max. Doesn’t it sound familiar? Governments, you have money, you spend it. Forget about rainy days. So after the Soviet Union collapses, there was a period when Putin was still winning somewhat free elections. So if you look at why Russia’s economy recovers and why Putin was so popular in the 2000s, from 2000 to 2008, oil goes from $10 a barrel to $140 a barrel. This goes to your point about how we give credit or blame to political leaders for often what are just long-run macro trends.…

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