Why did the Cold War arms race bankrupt the USSR but not seem to affect the USA economically?

In the West, technological advances from the cold war made their way into consumer products and services. Also, gubmint engineers were allowed to come and go from government to private sector to academia and back again.

Internet, GPS, aerospace, transistors, semiconductors, LEDs... you name it.

Soviets were still using solid-state tech... and TUBES!

All hail the profit motive.

As a follow-up, the profit motive drives innovation: "better, faster, cheaper."

Right down to silly stuff. How has pre-fab affected housing construction? How has automation (and GPS) affected snow plowing or road building or farming?

I would guess that these innovations do not erupt as frequently in centrally planned economies...

The Soviets were spending somewhere upwards of 30 percent of GDP (some have placed it at 70 percent, others at 50) on the military. That is unsustainable. Add to that the whole system was breaking down with the gerontocracy in office. Maybe the fear was gone but productivity had plummeted. And look at Russia under Putin: as soon as oil prices fell, the economy collapsed.

Yes, but can they fix the potholes in our streets?

Mathias Rust had more of an effect upon the drawing down of the Cold War than Ronald Reagan.

Factoid wrote:

DiscoGary wrote:

It did effect us. It's just that we could afford to outspend the Soviets and drive their economy to collapse. This was Reagan's explicit strategy to win the Cold War, and it worked without starting WWIII.

This is why I consider Reagan to be the greatest US President since Washington, not because he won some horrific war, but because he was smart enough to know how to win without one.

Interesting that people still resent him for avoiding one of the greatest wars that never happened.

As did 6 previous presidents

yeahyeahyay wrote:

In the West, technological advances from the cold war made their way into consumer products and services. Also, gubmint engineers were allowed to come and go from government to private sector to academia and back again.

Internet, GPS, aerospace, transistors, semiconductors, LEDs... you name it.

Soviets were still using solid-state tech... and TUBES!

All hail the profit motive.

Stop P.R.ing L.A. Shut the hell up you L.A. whores. L.A. SUCKS.

For anyone who needs a Cold War throwback: https://www.youtube.com/watch?v=Wue02Y0lS38

Factoid wrote:

DiscoGary wrote:

It did effect us. It's just that we could afford to outspend the Soviets and drive their economy to collapse. This was Reagan's explicit strategy to win the Cold War, and it worked without starting WWIII.

This is why I consider Reagan to be the greatest US President since Washington, not because he won some horrific war, but because he was smart enough to know how to win without one.

Interesting that people still resent him for avoiding one of the greatest wars that never happened.

This is the problem. How do you explain to someone that they might never have been born if Reagan had not been President and some Jimmy Carter type stumbled into WW III getting millions of people killed.

That's why I like the picture of North versus South Korea at night from space. You can actually SEE the consequences of choosing a centrally controlled economy versus free market capitalism.

From a well stated Reddit post that responds to your exact question at:

https://www.reddit.com/r/AskHistorians/comments/3vo6a8/why_did_the_cold_war_bankrupt_the_ussr_but_not_usa/

"That said, the Soviet Economy grew rapidly, expanding to $2 trillion by the 1970's from several hundred billion dollars in the 1920's. It's not that the Soviet Economy failed, it grew rapidly and consistently, even in per capita terms but what it didn't do was keep pace with US GDP growth. When the Soviets hit $2 trillion the Japanese hit $3 trillion and the United States hit $5 trillion. Basically, the tax base of the United States expanded so rapidly and was so much larger that by the 1980's a comparatively casual effort by the United States was a major budgetary decision on the part of the Soviet Union."

In other words, the USA economy was so much bigger than the USSR we could afford to outspend them. And right now the GDP of the USA is about equal to all the countries in EU put together.

Ashenden wrote:

For anyone who needs a Cold War throwback:

https://www.youtube.com/watch?v=Wue02Y0lS38

A far better cold war throwback is the Top Gear episode where Clarkson and May tried out communist-bloc cars. The cars were s__t, but the episode was hilarious.

Is the cold war truly over?

During the Cold War the US didn't count public spending, financial services, and entitlements in GDP figures. The old GNP only counted real economic output. Thus, today's GDP calculations are an overstatement of true output. I'd say about 60% overstated.

Planned Economy wrote:

The same reason Venezuela is collapsing today.

The USA is strangling it as punishment for nationalizing the oil industry

Gospodinov wrote:

Mathias Rust had more of an effect upon the drawing down of the Cold War than Ronald Reagan.

Reagan didn't do anything to end the Cold War. The machines to challenge the USSR were set in motion in Europe by previous presidents and in Asia by Japan who bribed and bought their way with China. Reagan just happened to be in office at the time the Soviets ran out of money. Reagan may have looked good in comparison to Gorbachev, but recall Cuba agents wiped out the CIA and Mossad in the Southern African continent and forced Reagan to buckle under and give up support for the South African apartheid regime.

spending on the military and government controlled GDP were huge in the falling of USSR, but i think what killed them is NASA

we "set" 12 people on the moon....this is what bankrupt the country. we used hollywood and NASA to create a huge lie that we made it there not once...BUT LOTS

the soviets had so many "failures" in their space program, never once getting a man past the ionosphere. the hoax wasnt just a lie and propoganda for americans but it ruined the soviets. supposedly we had better rockets, we supposedly made it to the moon, so in theory we could nuke the hell out of them. they gave up on the space race and tried to spend more and more on the arms race.

to this day we havent gone back to the moon even though the original iphone is a million times more badass than the computers they had in 1969, our technology is waaaaay better but yet we cant, and the excuses are lame and flail. we cant "go" back cause we never made it, one day the world will see it was the biggest lie in the history of the world, but it ended the USSR.

You want me to come and give you a swift one to the chin?

I am not so sure we actually won the Cold War in the long run. Gorbachev was way ahead of Reagan on what he was willing to do in terms of disarmament, including a plan to completely eliminate nuclear weapons. By contrast, Reagan did everything he could to keep the US population in a state of fear of the big bad Soviets even as it became clear that the USSR was not so big or bad anymore. Reagan was very beholden to his West Coast defense contractor backers and needed to keep the USSR as a threat to the US to justify massive defense spending and radical deficit spending. This kept Gorbachev from being able to advance his agenda of peacefully unwinding the Soviet empire through a radically new democratic process and caused hardliners to attempt a coup in 1989. The result was a very chaotic unwinding of the Soviet Union. The chaos in Russia allowed the rise of the oligarchs who picked Putin as their protector. Putin has predictably turned to his KGB roots and has renewed conflict with the West in order to keep the domestic population from turning against him for his failures on the economy. Had Reagan embraced Gorbachev and moved quickly to de-escalate tensions between the West and the USSR, we could have had a lasting peace and a successful transition from the old Soviet system to the current Republic. Instead, Reagan rebuffed the majority of Gorbachev's bold initiatives, forcing the USSR into a clash between Gorbachev's moderate reformers and the old guard. Now we are quickly going back to square one as there was never a true resolution of all the security issues between Russia and the West. Reagan made sure that there was no true and lasting peace and blew the best opportunity to truly end the conflict.

Because the US won the race, so they got the prize money.