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Sanctions work on the timescale of decades. They cut your GDP growth by 1-2 percent points. After 50 years you become North Korea. Let's see if Russia is a pro

by ajuc 2y ago

Sanctions work on the timescale of decades. They cut your GDP growth by 1-2 percent points. After 50 years you become North Korea. Let's see if Russia is a problem in 50 years :)

pydry 2y ago
The sanctions cut GDP growth and pushed up inflation in the first year, but that stabilized well over a year ago. Russian growth is now 5.5%, higher than all Western economies. It's difficult to see what sanctions would do that they haven't recovered from already.
- ajuc 2y ago
  This is just military production. It's like the growth you have when a hurricane destroys a city and you have to rebuilt it. It doesn't accumulate, it's just a waste. BTW look up North Korean economy growth after the war :) North Korea was always the rich part. It was developing so fast after the war. And somehow now the South Korea has Samsung and Kia and Subaru, and North Korea has starvation. https://www.researchgate.net/profile/Keun-Lee/publication/222679804/figure/tbl1/AS:669128381702154@1536544046524/arious-estimates-of-North-Koreas-annual-growth-rates-compared-with-those-of-South-Korea.png https://www.researchgate.net/profile/Keun-Lee/publication/22...
  - pydry 2y ago
    North Korea was totally isolated from the world economy after the Soviet Union fell. The only economic bloc which cut Russia off was American allies and there's nothing Russia gets from them which can't be supplied elsewhere. Russia switched from buying German cars to buying Chinese cars and changed the logo on their McDonalds and Starbucks branches. They now have access to inferior imitation brie and french wine is 2x the cost now but they'll probably cope. If military spending were the only thing pushing GDP up, the deficit would be showing up in throttled consumer spending. It isnt. Indeed, if the sanctions were working as intended the military wouldnt be able to produce either, but they obviously are.
    - FredPret 2y ago
      Sanctions limit supply of goods but that’s not the real way they bite. They slow down the economy a bit. Worse alternatives are used. Domestic sales are lower. That slowdown accumulates as lost growth. Brie and Mercedes’s aren’t the point in and of themselves. And for specialized items such as aircraft parts and chips, it forces them to do without or invent an equivalent local supply chain at enormous cost. All that wasted money is diverted from making Russia stronger. Russia is such a poor country compared to its neighbours that it’s very easy for them to have a lot of catch-up growth.
    - ajuc 2y ago
      USSR and China were sanctioned as well during the cold war. There was intentional difference in how they were sanctioned to cause them to split off. Both of these things worked as intended, causing USSR and China to work against each other and ultimately causing USSR to collapse. USSR was growing faster than the west early on. By 80s its economy was barely working. It just takes time. Russia is in much worse starting condition already than USSR was in 70s, it is more isolated, it has less allies, it's further behind in tech. If you want to believe Russia is doing fine, go ahead, it's just a very weird take.

by ajuc 2y ago

Sanctions work on the timescale of decades. They cut your GDP growth by 1-2 percent points. After 50 years you become North Korea. Let's see if Russia is a problem in 50 years :)

pydry 2y ago

The sanctions cut GDP growth and pushed up inflation in the first year, but that stabilized well over a year ago. Russian growth is now 5.5%, higher than all Western economies. It's difficult to see what sanctions would do that they haven't recovered from already.

ajuc 2y ago
This is just military production. It's like the growth you have when a hurricane destroys a city and you have to rebuilt it. It doesn't accumulate, it's just a waste. BTW look up North Korean economy growth after the war :) North Korea was always the rich part. It was developing so fast after the war. And somehow now the South Korea has Samsung and Kia and Subaru, and North Korea has starvation. https://www.researchgate.net/profile/Keun-Lee/publication/222679804/figure/tbl1/AS:669128381702154@1536544046524/arious-estimates-of-North-Koreas-annual-growth-rates-compared-with-those-of-South-Korea.png https://www.researchgate.net/profile/Keun-Lee/publication/22...
- pydry 2y ago
  North Korea was totally isolated from the world economy after the Soviet Union fell. The only economic bloc which cut Russia off was American allies and there's nothing Russia gets from them which can't be supplied elsewhere. Russia switched from buying German cars to buying Chinese cars and changed the logo on their McDonalds and Starbucks branches. They now have access to inferior imitation brie and french wine is 2x the cost now but they'll probably cope. If military spending were the only thing pushing GDP up, the deficit would be showing up in throttled consumer spending. It isnt. Indeed, if the sanctions were working as intended the military wouldnt be able to produce either, but they obviously are.
  - FredPret 2y ago
    Sanctions limit supply of goods but that’s not the real way they bite. They slow down the economy a bit. Worse alternatives are used. Domestic sales are lower. That slowdown accumulates as lost growth. Brie and Mercedes’s aren’t the point in and of themselves. And for specialized items such as aircraft parts and chips, it forces them to do without or invent an equivalent local supply chain at enormous cost. All that wasted money is diverted from making Russia stronger. Russia is such a poor country compared to its neighbours that it’s very easy for them to have a lot of catch-up growth.
  - ajuc 2y ago
    USSR and China were sanctioned as well during the cold war. There was intentional difference in how they were sanctioned to cause them to split off. Both of these things worked as intended, causing USSR and China to work against each other and ultimately causing USSR to collapse. USSR was growing faster than the west early on. By 80s its economy was barely working. It just takes time. Russia is in much worse starting condition already than USSR was in 70s, it is more isolated, it has less allies, it's further behind in tech. If you want to believe Russia is doing fine, go ahead, it's just a very weird take.