Was Stalin Necessary for Russia's Economic Development?

Some of the he-was-a-baddie-but-at-least-he-modernized-the-place say "yes"*. New research by a team of Russian economists says "no":

This paper studies structural transformation of Soviet Russia in 1928-1940 from an agrarian to an industrial economy through the lens of a two-sector neoclassical growth model. We construct a large dataset that covers Soviet Russia during 1928-1940 and Tsarist Russia during 1885-1913. We use a two-sector growth model to compute sectoral TFPs as well as distortions and wedges in the capital, labor and product markets during the two periods. We find that most wedges substantially increased in 1928-1935 and then fell in 1936-1940 relative to their 1885-1913 levels, while TFP remained generally below pre-WWI trends. Under the neoclassical growth model, projections under these estimated wedges imply that Stalin's economic policies led to welfare loss of -24 percent of consumption in 1928-1940, but a +16 percent welfare gain after 1941. A representative consumer born at the start of the Stalin's policies in 1928 experiences a reduction in welfare of -1 percent of consumption, a number that does not take into account additional costs of political repression during this time period. The projected performance under both Tsarist' and Stalin's wedges is much worse than the economic performance of Japan, which in 1885-1913 had similar levels of per capita GDP and distortions as Tsarist Russia, but experienced a rapid acceleration of non-agricultural TFP during the interwar period. Relative to this benchmark, the welfare loss of Stalin's policies are about -31 percent of consumption.

Via Cheap Talk, who notes that one of the economists -- Sergei Guriev -- has just left the country under duress from public officials.

The story that Russia's development was impossible or unlikely absent Stalin's repression always seemed unlikely to me. Other places have developed without those levels of repression (e.g. Japan, as the authers note, but not just), or have had repression without growth. The repression-growth relationship is not strictly positive and linear, in other words, so any story about Stalin and development has to be particular to Russia. And, frankly, I've yet to hear one that's had any solid theory behind it. (Perhaps someone could point one out to me in the comments.) I've heard mumblings that "Russia was a backwater hellhole" -- this was more or less Marx's view, although it's not true that Marx believed that socialism could not work there -- but every place is a backwater hellhole before they develop. Yes, Tsarism was bad, but plenty of regimes were bad in the 19th century.

I'd never really considered the possibility that all those supposed gains under Stalin didn't actually happen and in fact made things worse. It puts a new spin on the Cold War races for economic, military, and technological superiority.

I'm not sure I fully believe the two-sector growth model the authors use, which is pretty standard as these things go, but even the descriptive evidence is useful.

P.S. Here are some pictures of Soviet life in the 1950s.

*Terry Eagleton is of this sort, in his execrable recent book which manages to both misunderstand Marx and his critics at the same time. One relevant bit is quoted here.

Against (Secret) Death Panels

This is well outside of my normal purview, but since the assassinations of Anwar al-Awlaki and Samir Khan, both American citizens, I've been thinking a good bit -- not for the first time, thank you -- about the wide space between our conception of the checks and balances on the capricious exercise of government power, and the reality of it. People talked about this some during the Bush administration, but I'm now of the opinion that the primary difference between the Bush administration and others in recent history is the former's simple brazenness: Bush would come right and say "I'm the decider", and he'd have his lawyers so obviously butcher the tradition of law to rationalize his policies, and his Vice-President would declare himself a member of neither the executive nor legislative branches and therefore not subject to any oversight from anyone ever, and his ambassador to the UN openly advocated abolishing the UN... Bush just didn't give a damn. He'd practically dare anyone to do anything to slap his wrists. Every other president before or since has at least pretended to uphold the law. Bush said that wasn't necessary, since any action taken by the president was ipso facto permissible.

In other words, the difference between the Bush administration and other administration is that the former was brazen. But that may be the only difference. The Bush administration may have lied to get the US into a war -- or been selective in their disclosure of the known facts, depending on how charitable your interpretation is -- but the Reagan administration lied about the existence of a war. I'm not going to go down the list, but it's now indisputable that every presidential administration since World War II* has used the tools of war at their own discretion, with essentially no accountability. Alright, I know this is no new news.

But this is, to me at least. It seems that the Obama administration convenes a panel of NSC folks who determine who the US will attempt to assassinate. Without legal mandate or any oversight, of course. Here's how Reuters puts it:

There is no public record of the operations or decisions of the panel, which is a subset of the White House's National Security Council, several current and former officials said. Neither is there any law establishing its existence or setting out the rules by which it is supposed to operate.

This is, of course, completely obscene. There may be a case to be made that the president needs the authority to attack high-level targets at short notice, and use lethal force if that's the best or only option. I would hope that decisions involving the use of lethal force would be reviewable by some sort of oversight committee, but I could understand the argument in favor of such a policy. But as far as I can tell the president does not possess that power in any established legal sense. That makes this panel as it exists today no more than the District of Columbia's branch of Murder, Inc. but with the full resources of the United States government at their disposal. Legal immunity too.

I don't see how this is an acceptable state of affairs.

*And possibly before, although my knowledge of American history is murkier before then.

(Via @interfluidity)

Aid Incentives Matter (?)

Here’s the simple version: If people give you money because of A, then you don’t do anything to stop A. Even better, make A bigger so you get more money. ...

What’s interesting in Polman’s book is the way that warlords and crooked politicians [in the developing world] are actively making poor people worse off, to raise their profile and increase the flow of “do something!” money funneled through the Angelina-Bono-Geldof-Sachs pipeline.

That's David Zetland at William Easterly's place, building off of his short Public Choice piece (pdf). More discussion is here. The Jolie/Bono/Geldof/Sachs money is then appropriated by warlords and crooked politicians of course rather than going to the needy. Thus the needy stay needy, so they get more aid, which is also stolen by warlords, etc. It can be a vicious cycle.

The argument is that aid actually encourages oppression from autocrats, because they get more aid the more destitute and brutalized the populace is. More research is clearly needed on the question, but the I think the hypothesis is plausible. It reminded of this Acemoglu/Robinson paper (pdf), which I don't think is very convincing but points towards a similar dynamic whereby leaders actively harm their populations in order to secure positions of power.

I don't think we know enough yet to judge how prevalent this phenomenon is, but apparently Linda Polman makes the case in a new book that it's common enough to take seriously. I haven't read the book so I can't comment on it, but there is a logic here that is hard to dismiss out of hand.