Opportunity cost

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Introduction
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A Journey of Choices

• Opportunity cost the benefits of the foregone
  (next best) alternative

The Economic Demise of the Soviet Union
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Choosing
Is
Refusing
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1917

• 3 literacy
• serfdom
• just beginning to industrialize
• Wealth held by Romanovs

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1921 New Economic Policy (NEP)
We are taking one step backward in order to take
two steps forward.
farmers market
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Results Five Year Plan, 1928-33

• Burden on consumer

• Benefits

• Slow growth in consumer goods
• increase of 1
• food rather than other consumer goods
• Livestock production fell 8

• Urban electrification
• New towns, factories, mines
• Growth outpaced West (Great Depression)
• 48 increase in GDP 1928-33
• 113 increase in producer goods output
• 227 increase in electricity

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Step 1 de-kulakization
A parade under the banners "We will liquidate the
kulaks as a class" and "All to the struggle
against the wreckers of agriculture. http//www.y
ale.edu/annals/siegelbaum/images/siegelbaum_photos
.htm
"Endless fields of people - women, children, old
people - and universal wailing. They were being
loaded on to cattle trucks to be sent off to
Siberia. I was there for fifteen minutes and I
asked the station master there, ' What's this?
What's happening here?' and he said, ' What's up
with you? Have you just landed from the moon or
maybe you've just arrived from Persia? This is
the collectivisation and the elimination of the
kulaks as a class.' And it turned out there were
so many people, and not enough trains that, with
the cold weather, people were literally just
dying there . https//whewert.wikispaces.com/5-F
ocus3
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Nazis Invaded USSR, June 1941 . . .
and . . .
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. . . lost the war
German POWs in Moscow
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USSR world power
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Choice nuclear weapons program
Lightning 1 1st Soviet atomic bomb test 1949
Joe 1 1st Soviet atomic bomb
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Choice education
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1950s - Golden Years of the Soviet Economy
Period Avg annual growth GDP
1940-50 2.2
1950-60 5.2
1960-70 4.9
1970-80 2.5
1980-85 1.8
1986-90 1.3
SOURCE Ofer, 1987 Laurie Kurtzweg, Trends in
Soviet Gross National Product in United States
Congress, Joint Economic Committee. Gorbachevs
Economic Plans, Vol. 1, Washington D.C., pp.
126165 James Noren and Laurie Kurtzweg, The
Soviet Economy Unravels 198591 in United
States Congress, Joint Economic Committee. The
Former Soviet Union in Transition, Vol. 1,
Washington D.C. pp. 833, 1993 Angus Maddison.
Monitoring the World Economy 18201992, OECD,
Paris, 1995 Angus Maddison, The World Economy
A Millennial Perspective, OECD, Paris, 2000.
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Thaw in the Cold War
Khrushchevs U.S. tour
Yale University Choir in Red Square after Lacy
Zarubin Agreement
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the Secret Speech - 1956
On the Cult of Personality and Its Consequences

• called for return to Leninist ideals
• begins the de-Stalinization of the USSR
• Denunciation of Stalins military and party
  purges
• Note did not denounce coercion of populace used
  to advance the interests of the party and the
  state

Twentieth Congress of the Communist Party of the
USSR
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Leonid Brezhnev 1964 - 1982
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Good Ol Boy Communism
Brezhnev opened the Olympic Games in Moscow,
1980 to showcase the Soviet Union to the world
Brezhnev years characterized by emphasis on image
and Soviet prowess on the world stage, while
ignoring serious underlying problems in the
Soviet economy
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Behavior encouraged by Output Target Incentives

• Characteristics of Factory Directors
• anti-innovation
• risk-averse
• hoarder
• defend status quo
• understate capacity
• overstate (ratchet) resource needs

tolkachi procurers of production supplies by
trading with other factories hoarding
misallocated supplies, or through the black
market.
The Economic Demise of the Soviet Union
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no bridge from invention to innovation

• Innovation
• application of knowledge to production

• Invention
• new knowledge or ideas

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BZ1-C Redline C-Core Baseball Bats
                                      The
world's best baseball bat patented Carbon Core
technology combines   Easton's exclusive Sc500
Scandium alloy walls, the strongest in the game,
with   carbon graphite reinforcement, resulting
in the thinnest walls ever without sacrificing 
 durability.     Extended barrel for maximum
hitting area.   Alloy Sc500/graphite 
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no bridge from invention to innovation

• Invention
• scandium alloy

• Innovation
• baseball bats
• bicycle frames

Scandium alloys were first made commercially
available in 1996 by the Ashurst Technology
Group. Easton Sports first used Scandium alloys
in February 1997, the product was the Redline
C-Core bat. http//www.precision
tandems.com/eastonscandium.htm
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End of the Brezhnev Era
Yuri Andropov November 1982 February 1984
Konstantin Chernenko February 1984 March, 1985
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Mikhail Gorbachev 1985-1991
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The Demise of the Soviet Union - 1991
Major blows to citizen support of the Soviet
regime

• Reagans presidency
• Afghanistan
• Chernobyl

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Reagan On-going Challenge
Strategic Defense Initiative (Star Wars)
 The Soviet Union is an Evil Empire, and Soviet
communism is the focus of evil in the modern
world March 8, 1983
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Afghanistan Dec. 1979 Feb. 1989
Soviet casualties Killed 15,000 Wounded
30,000 Served 600,000 Avg Troop strength
100,000
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Chernobyl Nuclear Accident April 26, 1986
The Economic Demise of the Soviet Union
Message they dont care about us
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Gorbachevs Reforms Glasnost
Perestroika

• Glasnost

Solzhenitsyn in gulag, 1953

• political opening
• allowed dissent
• ended party monopoly of elected regional local
  offices
• greater regional representation
• encouraged social research
• admitted social problems

despite Gorbachevs invitation, Solzhenitsyn
didnt return to Russia until 1994, 20 years
after being exiled
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Gorbachevs Reforms Perestroika

• Perestroika

• economic restructuring
• allowed some private (cooperative) business
• some decentralization of control over state
  production

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Russian Dissident Chess Champion Wins Human
Rights AwardGarry Kasparov to Receive UN Watch
Prize at League of Nations Hall in Geneva (April
2013)
Gorbachev had as much to do with the fall of the
Soviet Union as Louis the XVI had to do with the
French Revolution.
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August, 1991
Boris Yeltsin declares Russias independence from
the USSR
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1940 Katyn Forrest Massacre
I was dumb I believed it all. I would have
given my life for the Motherland.
Lenins Tomb by David Remnick
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