What If US Collapses? Soviet Collapse Lessons Every American Needs To Know

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I’m convinced that the U.S. economy is on the verge of collapse. If I’m right—what then? I envision food shortages, riots, possible (even probable) cities aflame. But I’ve thought for some time that to accurately predict what’s likely to happen after a U.S. economic collapse, we’d do well to study the aftermath of the economic collapse that accompanied the demise of the former Soviet Union.

Dmitri Davidov was a eyewitness to the A.D. 1991 collapse of the Soviet Union and the ensuing decade of troubles for the Russian people. What follows is the text of a slide presentation by Mr. Davidov in which he analyses the consequences of the Soviet economic collapse and projects similar results likely to follow a U.S. economic collapse. Mr. Davidov’s analysis and projection of likely consequences for the U.S. is the best—and perhaps most frightening—I’ve seen to date.

I have, of course, inserted my two (or twenty-two) cents’ worth in the bold, bracketed blue comments. The rest is Mr. Davidov’s text:

Good evening, ladies and gentlemen. I am not an expert or a scholar or an activist. I am more of an eye-witness. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is.

My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the “Collapse Gap” – to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War.

My Premises

The Soviet Union (SU) collapsed about 17 years ago. The United States (US) will collapse (economically and politically) at some point.

Exact dates of collapses are impossible to predict. But one of the best-known facts about empires is that they do collapse. No exceptions.

Soviet collapse was harder to predict because of secrecy. Many signs of trouble for the US indicate that it could collapse at any time.

[It’s true that evidence of an approaching U.S. collapse is available to all. However, only a handful of Americans appreciate the problem since a kind of “secrecy” still predominates in that incumbent politicians (especially during this election cycle) will not dare to mention the real threat of collapse to the American people until after the fact. Therefore, the people will not be prepared to deal with the collapse. In other words, while the USSR may have had nearly absolute secrecy, the US has predominate secrecy. The difference isn’t as great as the author suggests.]

The Soviet collapse has a lot to teach US. The differences are just as interesting as the similarities.

[As you’ll read, the “differences” between the U.S. and the USSR aren’t merely “interesting”—they’re frightening. The author doesn’t say so directly, but the “differences” suggest that the consequences of an economic collapse may be dramatically worse for the people of the U.S. than they were for the people of the former USSR.]

The subject of economic collapse is generally a sad one. But I am an optimistic, cheerful sort of person, and I believe that, with a bit of preparation, such events can be taken in stride. . . .

[Again, if the American people are given no warning of an impending collapse, they will be no general “preparation”. Incumbent American politicians, running for reelection at the same time evidence of a collapse is mounting, will not dare to admit we may be on the verge of a collapse. Even if the election were not proximate, the incumbents would still not dare to warn of an economic collapse for fear of precipitating that collapse. Result? American people will not be warned, will not be prepared, and the collapse will not be “taken in stride”.]

. . . . From what I’ve seen and read, it seems that there is a fair chance that the U.S. economy will collapse sometime within the foreseeable future. It also would seem that we won’t be particularly well-prepared for it. As things stand, the U.S. economy is poised to perform something like a disappearing act. . . . .

Symmetries between USSR and US

Two post-WWII military-industrial empires.

Predicated on technological progress and economic growth.

Tried to spread their ideology over the entire planet.

Exercised political and economic control over many countries.

Remained evenly matched for several decades.

Eventually went bankrupt.

[And what “ideology” has our gov-co tried to spread over the entire planet? Democratic capitalism.

Q: What “ideology” is guaranteed at Article 4 Section 4 of the Constitution of the United States?

A: the “republican form of government”.

In fact, the words “democracy” and “capitalism” do not appear in our Constitution. Are “democratic capitalism” and the “republican form of government” synonymous? Absolutely not. The U.S. has been expending its resources to the point of national bankruptcy to promote an “ideology” that’s not even mentioned in our Constitution.

This unconstitutional and arguably treasonous promotion by war and bribery of “democratic capitalism” will help to collapse our economy and perhaps destroy our nation.]

. . . [H]ere are two 20th century superpowers, who wanted more or less the same things – things like technological progress, economic growth, full employment, and world domination – but they disagreed about the methods. And they obtained similar results – each had a good run, intimidated the whole planet, and kept the other scared. Each eventually went bankrupt.

[It is unsettling to suppose that the author might be correct in asserting that the former “evil empire” USSR and today’s U.S. are fundamentally indistinguishable—except for their choice of “methods”.

Nevertheless, I think the author is right. The USSR had communism, we have fascism. Both are collectivist forms of government where the people are deemed to be mere cogs in the “machine” to be managed by the central government or the super-rich. In both cases, the people are deemed by government to be without the God-given, “unalienable Rights” declared in our “Declaration of Independence” to the cornerstone of our society and our “republican form of government”.

In truth, the modern U.S. government (especially under the Bush administration) is every bit as sinister as the former Soviet Union and just as unworthy to survive. At first glance, it’s sad to think that the Soviet and American people will suffer extreme poverty due to their government’s idiocies. But—why not? Why shouldn’t the people pay for their government’s acts? Aren’t the people ultimately responsible for the crooks and con-artists they allow to rule them? Yes. Therefore the people are not innocent in economic and political matters and should rightfully pay whatever price is associated with an economic collapse.

If the American people are dumb enough to keep voting Republican and dumb enough to keep voting Democrat, then the American people are dumb enough to be held accountable for the inevitable social, political and economic collapse.]

Winner or Runner-up?

Space Race

Arms Race

Jails Race

Hated “Evil Empire” Race

The USA and the USSR were evenly matched in many categories, but let me just mention four.

The Soviet manned space program is alive and well under Russian management, and now offers first-ever space charters. The Americans have been hitching rides on the Soyuz while their remaining spaceships sit in the shop.

The arms race has not produced a clear winner, and that is excellent news, because Mutual Assured Destruction remains in effect. Russia still has more nuclear warheads than the US, and has supersonic cruise missile technology that can penetrate any missile shield, especially a nonexistent one.

The Jails Race once showed the Soviets with a decisive lead, thanks to their innovative GULAG program. But they gradually fell behind, and in the end the Jails Race has been won by the Americans, with the highest percentage of people in jail ever.

The Hated “Evil Empire” Race is also finally being won by the Americans. It’s easy now that they don’t have anyone to compete against.

[Remember Ronald Reagan? Remember him railing against the Soviet’s “evil empire”? I wonder what he’d say today about his “heir”—Geo. W. Bush. What would Reagan say about the U.S. blitzkrieg invasion of Iraq for no valid reason? What would Reagan say about a U.S. government that authorized torture? What would Reagan say about a U.S. government that continued killing Iraqis in an unjust war simply to avoid admitting defeat? What would Reagan think of the Republican party that twice nominated and elected that drunken thug Bush?

I supported Bush when he first ran for the White House. I’ve come to despise the bastard. For me, he’s achieved what I thought impossible: he’s made me ashamed to be an American. He’s made me feel as if I have to apologize to everyone I meet if I travel to a foreign country.

I hate to say it. I absolutely hate to say it, but the truth is that under George W. Bush, we have clearly earned the world’s contempt. We are not misunderstood. We have truly become (temporarily, I hope) the world’s most “Hated Evil Empire.” If and when we collapse, as much of the world will cheer as once cheered the fall of the Soviet Union.]

U.S. faces many of the same problems

that caused the Soviet collapse

Unwinnable wars (Afghanistan, Iraq . . . Iran?)

Declining oil production (Soviet oil production peaked a few years before collapse).

Out of control military budgets

Unsustainable deficits and foreign debt

Balky, unresponsive, corrupt political system, incapable of reform

Delusion of grandeur prevent honest discussion of problems

[The author is right to describe our political system as “corrupt”. Thanks to unbridled political campaign contribution and unrestricted lobbying laws, our Congress and Senate has become a cathouse where virtually all the members are whores for sale to the highest bidder. If you’ve got the money, they’ll write a law to help you extort even more money from the American people.

Anyone who thinks our government is not corrupt, explain the $700 billion bailout for Wall St tycoons and the fact that the average government employee is paid twice what he could earn in the private sector. Government is not corrupt? Explain our judicial system.

Government may have always been a racket, but that corruption was generally concealed. Today gov-co is openly corrupt.

Do you know anyone who seriously believes our government is not corrupt? I don’t.]

Continuing with our list of superpower similarities, many of the problems that sunk the Soviet Union are now endangering the United States as well. Such as a huge, well-equipped, very expensive military, with no clear mission, bogged down in fighting Muslim insurgents. Such as energy shortfalls linked to peaking oil production. Such as a persistently unfavorable trade balance, resulting in runaway foreign debt. Add to that a delusional self-image, an inflexible ideology, and an unresponsive political system.

[Again, the author is spot on. In eight years of Bush-it, the U.S. has fallen from the status of the world’s only super-power to an international joke on the verge of an economic collapse that might reduce us to the status of a third world nation.

Why? In part, because Bush & Co. actually believed we could invade Iraq without reason and get away with it. In part, because the Republicans talk about “conservative values,” “reducing the size of government,” and “right to life”—but, in the end, only gives a damn about power, money and reelection. Can the “moral majority” point to a party that has any morals? No.

And as much as I condemn Bush and the Republicans, who believes the Democrats will be any better? Who believes the next Democratic Congress won’t be for sale to the highest bidder? Who thinks the Democrats won’t appoint a Secretary of the Treasury to bail out Democrat “fat cats”? In just a couple more weeks, We duh Peepul will rightfully throw the Republican thieves out of office—but we’ll also elect a new cadre of Democrat thieves to take their place.

Will anything really change before we hit the collapse?

Hell, no.]

Economies are susceptible

to “cascading failures”

Unsolvable problems accumulate over time.

Compensation mechanisms are only useful to a point

Any number of events can put the economy into a state of shock.

Multiple knock-on effects prevent return to business as usual.

Downward slide takes on a momentum of its own.

Political system remains intact but suffers paralysis.

An economic collapse is amazing to observe, and very interesting if described accurately and in detail. A general description tends to fall short of the mark, but let me try. An economic arrangement can continue for quite some time after it becomes untenable, through sheer inertia. But at some point a tide of broken promises and invalidated assumptions sweeps it all out to sea. One such untenable arrangement rests on the notion that it is possible to perpetually borrow more and more money from abroad, to pay for more and more energy imports, while the price of these imports continues to double every few years. Free money with which to buy energy equals free energy, and free energy does not occur in nature. This must therefore be a transient condition. When the flow of energy snaps back toward equilibrium, much of the US economy will be forced to shut down.

Post-collapse environment—

the immediate consequences:

Social dislocation, joblessness, homelessness, despair.

Authorities no longer command respect. Law enforcement is overwhelmed, replaced by local self-defense and private security. Many laws universally ignored.

Widespread shortages of many basic commodities, especially food, fuel, and medicine.

Basic maintenance foregone or rationed. Infrastructure decays and fails. Many disasters, big and small.

No long-term planning possible. Large new projects not even considered. All successful adaptations rely on existing infrastructure and inventory.

I’ve described what happened to Russia in some detail in one of my articles, which is available on SurvivingPeakOil.com. I don’t see why what happens to the United States should be entirely dissimilar, at least in general terms. The specifics will be different, and we will get to them in a moment. We should certainly expect shortages of fuel, food, medicine, and countless consumer items, outages of electricity, gas, and water, breakdowns in transportation systems and other infrastructure, hyperinflation, widespread shutdowns and mass layoffs, along with a lot of despair, confusion, violence, and lawlessness. We definitely should not expect any grand rescue plans, innovative technology programs, or miracles of social cohesion.

Post-collapse environment—what comes next?

New subsistence/barter economy emerges almost immediately.

Old capital—stocks, bonds, capital equipment, cash—all worthless. Connections, favors, access to supplies—prove to be of abiding value.

Asset stripping: assets dismantled and reused, stockpiled, or sold as scrap. Many items of value exported (especially art objects, antiques, scientific and industrial equipment).

Elements of organized crime, former military, and former law enforcement meld into new power structures (very messy).

When faced with such developments, some people are quick to realize what it is they have to do to survive, and start doing these things, generally without anyone’s permission. A sort of economy emerges, completely informal, and often semi-criminal. It revolves around liquidating, and recycling, the remains of the old economy. It is based on direct access to resources, and the threat of force, rather than ownership or legal authority. People who have a problem with this way of doing things, quickly find themselves out of the game.

[Mr. Davidov’s notes that in the Soviet Union's collapse, a new subsistence/barter economy emerged almost "instantly".  He implies that such "subsistence/barter economy" would also quickly emerge if the U.S. suffered a financial collapse.

No doubt that in the event of a U.S. economic collapse, some sort of "subsistence/barter economy" would emerge, but I doubt that it would happen as quickly or painlessly as happened in the former USSR.  Because the Soviet government always sought to maintain maximum control over the people, even while the USSR was in power, there was a strong "black market" supplying "contraband" (western clothes, food, etc.) to the Soviet people.  When the USSR collapsed, the underlying structure for the "black market" was already in place and both ready and eager to profit from the loss of "Big Brother".

Here in the U.S., our only established "black market" is that of illegal drugs.  The average American is not familiar with a "black market" and it'll take some time to establish that "familiarity".  Therefore, we probably won't see an "instant" emergence of a subsistence/barter economy after a U.S. economic collapse.  Instead, it may takes several months for such black market/free market to develop.

Ironically, those best equipped to deal with a U.S. economic collapse may be drug dealers and organized crime.  Their "black market" infrastructure is already established and will not only continue to function after a collapse, but will be in higher demand to not only provide drugs, but also food, toilet paper, clothes, batteries.]

These are the generalities. Now let’s look at some specifics.

Housing

USSR: Owned by state USA: Owned by banks/corporations

USSR: Free rent USA: Foreclosures/evictions

USSR: Accessible by public transportation USA: Largely inaccessible except by car

USSR: Everyone stays put USA: Flood of refugees from suburbia

One important element of collapse-preparedness is making sure that you don’t need a functioning economy to keep a roof over your head. In the Soviet Union, all housing belonged to the government, which made it available directly to the people. Since all housing was also built by the government, it was only built in places that the government could service using public transportation. After the collapse, almost everyone managed to keep their place.

In the United States, very few people own their place of residence free and clear, and even they need an income to pay real estate taxes. People without an income face homelessness. When the economy collapses, very few people will continue to have an income, so homelessness will become rampant. Add to that the car-dependent nature of most suburbs, and what you will get is mass migrations of homeless people toward city centers.

Transportation

USSR: Public USA: Private, mostly cars and trucks

USSR: Continues to run USA: Breaks down due to fuel shortages

USSR: Compact cities along railways USA: Sprawl, dead downtowns

USSR: Maintainable infrastructure USA: More potholes than road

USSR:   “All aboard” USA: On foot, bicycles, shopping carts

Soviet public transportation was more or less all there was, but there was plenty of it. There were also a few private cars, but so few that gasoline rationing and shortages were mostly inconsequential. All of this public infrastructure was designed to be almost infinitely maintainable, and continued to run even as the rest of the economy collapsed.

The population of the United States is almost entirely car-dependent, and relies on markets that control oil import, refining, and distribution. They also rely on continuous public investment in road construction and repair. The cars themselves require a steady stream of imported parts, and are not designed to last very long. When these intricately interconnected systems stop functioning, much of the population will find itself stranded.

Employment

USSR: Predominantly public USA: Predominantly private

USSR: Slowdowns USA: Shutdowns

USSR: Salaries delayed USA: Mass layoffs

USSR: Massive levels of inventory USA: Just-in-time inventory

USSR: Continued access/barter USA: Liquidation

USSR: Gradual transition USA: Instant retirement

Economic collapse affects public sector employment almost as much as private sector employment, eventually. Because government bureaucracies tend to be slow to act, they collapse more slowly. Also, because state-owned enterprises tend to be inefficient, and stockpile inventory, there is plenty of it left over, for the employees to take home, and use in barter. Most Soviet employment was in the public sector, and this gave people some time to think of what to do next.

Private enterprises tend to be much more efficient at many things. Such as laying off their people, shutting their doors, and liquidating their assets. Since most employment in the United States is in the private sector, we should expect the transition to permanent unemployment to be quite abrupt for most people.

Families

USSR: 3 generations under 1 roof USA: Singles, nuclear families

USSR: Close-knit (but unhappy?) USA: Alienated (and unhappy?)

USSR: Clustered geographically USA: Spread out geographically

USSR: Accustomed to hardship USA: Feelings of entitlement

USSR: Life goes ever onward USA: Stranded among strangers

When confronting hardship, people usually fall back on their families for support. The Soviet Union experienced chronic housing shortages, which often resulted in three generations living together under one roof. This didn’t make them happy, but at least they were used to each other. The usual expectation was that they would stick it out together, come what may.

In the United States, families tend to be atomized, spread out over several states. They sometimes have trouble tolerating each other when they come together for Thanksgiving, or Christmas, even during the best of times. They might find it difficult to get along, in bad times. There is already too much loneliness in this country, and I doubt that economic collapse will cure it.

Money

USSR: Of token value USA: “Wherewithal”

USSR: Shared among friends USA: Hardly ever shared

USSR: Income not essential USA: Income essential for survival

USSR: Friends more important USA: Money more important

USSR: Broke, but no matter USA: Broke and helpless

To keep evil at bay, Americans require money. In an economic collapse, there is usually hyperinflation, which wipes out savings. There is also rampant unemployment, which wipes out incomes. The result is a population that is largely penniless.

In the Soviet Union, very little could be obtained for money. It was treated as tokens rather than as wealth, and was shared among friends. Many things – housing and transportation among them – were either free or almost free.

[Mr. Davidov’s references to “money” and “tokens” are to Soviet “legal tender”—not to gold or silver coin. It was the paper ruble (promise to pay) and savings denominated in paper rubles that were “wiped out” by hyperinflation. I doubt that many Russians had any gold or silver coins, but if they did, those coins would be valued far more highly than “mere tokens”.

In any case, insofar as the Soviet and U.S. economic collapses are similar, both might result in hyperinflation which would destroy the value of the paper ruble or the paper dollar. Because the Soviet system provided free rent and transportation, the Russian people only had to figure out how to scrounge up food and clothing. In their system, “money” was of a lesser importance. But in the U.S. system where free housing and free transportation can’t be provided by our government, some form of money will be of crucial importance. If the paper and digital dollars are due to die at the hands of hyperinflation, then if you’re going to need money, you’re going to need silver and gold coins.]

Consumer Products

USSR: A cost to the government USA: Profits to the Chinese

USSR: Product-based economy USA: Service-based economy

USSR: Shortage of products USA: Shortage of money

USSR: Up to you to make it work USA: Planned obsolescence

USSR: Technological heirlooms USA: Disposable everything

USSR: Fix it yourself USA: Recycling the trash

Soviet consumer products were always an object of derision – refrigerators that kept the house warm – and the food, and so on. You’d be lucky if you got one at all, and it would be up to you to make it work once you got it home. But once you got it to work, it would become a priceless family heirloom, handed down from generation to generation, sturdy, and almost infinitely maintainable.

In the United States, you often hear that something “is not worth fixing.” This is enough to make a Russian see red. I once heard of an elderly Russian who became irate when a hardware store in Boston wouldn’t sell him replacement bedsprings: “People are throwing away perfectly good mattresses, how am I supposed to fix them?”

Economic collapse tends to shut down both local production and imports, and so it is vitally important that anything you own wears out slowly, and that you can fix it yourself if it breaks. Soviet-made stuff generally wore incredibly hard. The Chinese-made stuff you can get around here – much less so.

More- http://madconomist.com/what-if-us-collapses-soviet-collapse-lessons-every-american-needs-to-know

LESSON: As compared to the U.S. economy, the Soviet centrally-planned economy was less able to generate profits and a high standard of living when its economy was strong, but better able to withstand an economic collapse.

The U.S. economy was based on an inherent “optimism” and better suited to generate a high standard of living; the Soviet economy was “pessimistic” and better suited to cope with and survive a collapse. The U.S. economy was built on an expectation of success; the Soviet economy was based on an expectation of trouble. The Soviet economy reflected a Soviet mindset that expected to be invaded by Nazi’s, Chinese, Muslims or American ICBMs. The American economy, on the other hand, was based on a mindset that presumed that if any invasions were going to take place, we’d be the ones to do the invading.

IMPLICATION #1: A economic collapse in the U.S. will be worse than it was in Soviet Union—at least initially. Why? Because the Soviet economy was based on an expectation of trouble and was therefore better able to cope when trouble finally happened. On the other hand, America’s “shop ‘til you drop” economy will be totally unprepared for a real collapse. Our “shoppers” will be mentally disabled, disoriented and distraught the first time they find out their Master Card has died.

I’d bet that once the U.S. hits bottom, the U.S. may come out of the collapse more quickly than did the remnants of the former USSR and may eventually return to a stronger, more optimistic standard of living. But initially—perhaps for a period of one to three years—a U.S. collapse may be far more devastating than the Soviet collapse. That’s scary.

IMPLICATION #2: In the event of a U.S. economic collapse, the American people’s mindset will shift from an optimistic expectation of success to a pessimistic expectation of trouble. As that shift takes place, the people and national politics will move “left” towards big government, centralized cities, public transportation, public housing, etc.—just as they did in the 1930s under FDR’s “New Deal”.

We can already see some of that beginning to happen. For example, to mitigate the current mortgage crisis, government will ultimately have to “buy” the homes (guarantee the mortgages) and then “lease” them at reduced terms to the occupants. That’s not the same as “state ownership,” but it’s coming close. Likewise, high gas prices have caused some automobiles (private transportation like SUV’s) to become prohibitively expensive to operate. Many people are already opting for public transportation. GM and Ford may be on the brink of bankruptcy. The cost of traveling from homes in suburbs to jobs in central cities is proving too expensive for some to maintain, resulting in lowering prices for homes in suburbia as workers begin to “migrate” back into central cities.

ONE MAJOR OMISSION: Mr. Davidov’s presentation is excellent—almost superb. But he neglected to mention one very important consequence of the collapse of the Soviet Union’s economy: the disintegration of the Soviet Union, itself. In the aftermath of the Soviet economic collapse, the mighty Soviet Union ceased to exist as a political entity.

If Mr. Davidov’s parallels between the collapse of the Soviet Union’s economy and the possible collapse of the U.S. economy are valid, then it’s entirely possible that in the aftermath of a U.S economic collapse, the United States, itself, might also cease to exist.

That means that as a possible consequence of an economic collapse, the United States might break up into several “sub-nations”.

How many? No more than 50 (one for each “state”) and probably more like five to ten “regional” nations. These “regions” might develop based on simple geographic boundaries or even economic concerns. Alaska could certainly become its own “nation”. So could Hawaii. And Texas? Well, you can bet that most Texans would gladly declare themselves to once again be their own “Republic”.

But what about California, Arizona and New Mexico? Could they break off as a separate Hispanic “nation” where the determining factor wasn’t geography but race? Could Alabama, Mississippi and Georgia become a single “black” nation? Could Utah and maybe Idaho become a Mormon nation? Could New York City, San Francisco and Las Vegas become a small atheist nations or enclaves?

To say we live in “interesting times” does not begin to describe our current circumstances.

Nevertheless, a close reading of Mr. Davidov’s observations may provide a very good indication of just how “interesting” things might yet become. Evaluate his observations closely and, if you agree, govern yourself accordingly.

Forewarned is forearmed.

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