Why did USSR stagnate and collapse when it was prosperous in 1960s

We choose to go to the Moon! …We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard” – John F Kennedy

What Kennedy was not including in his things to do that he tells in his famous speech, was that he was creating an arms race. 

It was intended to strangle soviet economy, and was thought of as a measure against one of the biggest problems sending kennedy administration running around in underpants:

Recently declassified papers of Kennedy Admn. show a high amount of fear regarding how USSR was developing way too fast and that other countries (us satellites) would take them as an example and try ‘independent development’. Independent development being choosing not to be US satellite states and letting us corps to plunder their resources, and instead using them nationally to create an immediate betterment in life standards of the people. (Socialism, basically).

So one of the measures thought of was to start an arms race to divert soviet GDP to military industry than consumer industry. Along with other things like pumping radical islamism into middle east to control the oil and subvert soviet allies through that.

That stuff worked.

In 10-20 years, soviet consumer industry lagged behind. Visibly. This created the discontent with the consumer-side of soviet system. They didnt have any complaints with other aspects of the system – like total employment, total healthcare, total free education, childcare (considered the best then, and since then) social guarantees, retirement, social programs, state provided amenities like sports, clubs and whatnot and so on.

They thought the west had all of those. That the west had all of those AND consumer goods that they saw in bootlegged movies and when going abroad.

Of course, few of them knew about harlem, slums in major US cities, or hell, anything about trailer parks, project housing, or the people who lived in worse conditions in many places around usa than soviet siberia because those places were considered ‘backwater’ places and little investment (private or state) went to those places.

Even the east germans thought free guaranteed healthcare, education were a given in west germany. They were very surprised to find out the reality.

So basically this created the consumer goods slump and the accompanying dissatisfaction in ussr. Along with usa successfully subverting and taking over soviet allies through radical islamism or puppet dictatorships (middle eastern states, indonesia, african states etc), soviet economic relationships dwindled – which further exacerbated the effect of consumer goods slump.

Make no mistake – US also went bankrupt, nearly at the same time with USSR. Except, three things delayed the effect until 2008 – wall street being given a free reign to create nonexistent money (unregulated fractional reserve lending – bush admn even declared they wouldnt enforce the regulations on that), fed probably printing money like a banana republic (still doesnt let themselves to be audited, so no one knows what they are doing), and unprecedented US govt. debt borrowing. 

Surely, things like plundering the resources of ex soviet countries also helped create a temporary reprise in the economy. 

But today you see the real beast  – since 2008, the economy is in deeper recession than great depression, and no signs of recovery – contrary to whatever us govt claims.

So long story short: Arms race.

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