Tuesday, 24 August 2010

The efficiencies of central planning

John Taylor writes at this blog Economics One:
That’s why I was so interested in Paul Gregory's recent blog about this summer’s grain export ban in Russia. It’s a current event well worth telling students about. After the damage from the heat to Russia’s grain crop, Prime Minister Putin imposed a ban on grain exports. But as Paul Gregory shows the reason the story is worth telling is that Russia is now an exporter of grain. In contrast the Soviet Union actually had to import grain from the United States and other countries, because of the inefficiency of the collective farms and misallocation of resources under central planning. Recall that President Carter put an embargo on U.S. exports of grain to the Soviet Union, using it as a lever to get the Soviet’s to leave Afghanistan.

In the years before the Russian Revolution, Russia was an exporter of grains. Ukraine was considered the breadbasket of Europe. Now after the collapse of the Soviet Union, Russia and the Ukraine are exporting again. So this fall the inefficiencies of central planning in the Soviet Union can be explained with a current event after all.
Before central planning, a grain exporter, during central planning grain importer, after central planning grain exporter again. I'm sure there is a message here somewhere .................

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