Sometimes a single sentence or phrase jumps out at me, offering many questions in just a few words. Reading an article about the Soviet Union and its unexpected collapse, I read this, "Budget deficits, which since the French Revolution have been considered among the prominent portents of a coming revolutionary crisis, equaled less than 2 percent of GDP in 1985."
Obviously budgets don't need to be balanced perfectly at all times. A bit extra now can compensate for by a bit less then. Or the reverse. Maybe some bills are left unpaid, which in effect would be a spending cut rather than an actual deficit. It's not as if a totalitarian regime has much to worry about if some peasant doesn't get their expected government benefits.
But an actual deficit, to spend more money than it taken in, without having a reserve of cash that is being run down, means the money must come from somewhere. Where? It could have simply been printed or inked, but that would be inflation, not a deficit. It must have been loaned, but who loans money to the Soviet Union? Other, similarly poor communist states? From the similarly deficit-ridden West?
Were capitalist bankers loaning money to the Evil Empire? That would be quite amusing to me: the communists dependent on the evil capitalist pigs, while the evil capitalist pigs happily get richer from communism. On top of that, it seems to me that a totally government-controlled economy would be incapable of running a deficit. With no private wealth to borrow from, it would have to balance its books and economy. Or there is the North Korean model of progressive starvation, extracting more work from citizens than the food required (or even less, if you count foreign aid), but eventually even that must be balanced, if only by the physical necessity of needing the population alive to get anything done.
Maybe the Soviet Union just needed a balanced budget amendment.
The paradox of progress
1 hour ago