Korobeiniki

Why did the Soviet Union lose the Cold War? Mathematics has an answer to that question.

During the height of the global conflict between the United States and the USSR, American military expenditures amounted to roughly 5% of GDP. This means that, each year, 1/20th of the profits our economy was generating went to funding munitions, warships, aircraft, etc.

Now, that level of spending might seem exorbitant, but it paled in comparison to the Soviet Union, which spent 20% of its economy on its military. One out of every five dollars the Soviet economy created went to the Red Army.

So why then was that a problem? Well, spending a nation's money on military is money that is not re-invested into its economy. It is essentially money thrown down the drain. It can only be considered an investment if the military is used to conquer more territory, as the Axis Powers did in the days leading up to World War II.

To put it concisely: successful military investments necessitate expansionist policies. The only problem was that the Soviet Union had nowhere to expand to. So all the tanks, aircraft, and munitions they produced just sat around in warehouses gathering dust, until they became so obsolete that it was more cost-effective to simply scrap them than to keep them maintained.

Therefore, year after year, and decade after decade, the USSR's economy steadily underperformed that of the United States, until the situation finally became so severe that Communism in Eastern Europe fell. They essentially were forced to admit the truth: that their system of governance was not as conducive to economic growth as that of the West, and that with each year that passed, they lost ever more the ability to compete internationally with their rivals.

There is a modern lesson in that historical story. As of now, the United States still spends about 5% of its economy on its military. But there is another global power that spends even less: The People's Republic of China. Their expenditures are less than 2%. And the disparity between their monetary policies and those of the United States is beginning to show.

While the United States economy is growing at 2% per year, China's economy is growing at 4%. And more or less the same principal is involved. Money the Americans are throwing down the drain, the Chinese are re-investing in their economy.

Again, the results of this disparity are quite predictable. So long as America gets drawn into foreign entanglements that necessitate greater military expenditures, and so long as China keeps itself at peace with the rest of the world, China's economy will overtake, and subsequently dwarf, that of America's. The only question is when.