WESTON, Mass., Oct. 30 (UPI) -- Until 1981, the United States competed mainly on its side of the playing field. This was a good defensive effort called Containment, but it avoided taking the competition into the Soviet side. The Reagan administration would undertake to "win the cold war" by taking advantage of every Soviet weakness and every U.S. competitive advantage.
By November 1982, after 22 months of effort, Reagan received a report from Henry Rowan, the head of the National Intelligence Council that predicted that the Soviet system would implode in that decade if the United States continued the burdens being created.
In 1980 the Soviet Union and its ruling elite felt their country was winning the Cold War. Yes, they were worried about the Soviet Union's low economic growth, reliance on foreign sources for critical equipment and technology and low labor productivity. But the Soviet Union had good hard currency earnings and high expectations of a lot more from oil and gas exports to the West; it was buying and smuggling western technology complete with instructions; it had taken over Afghanistan and was in a position to press on in the Middle East.
The Soviets had updated their weapons, "secretly deployed SS-20 missiles in Europe unilaterally" and had support in the West for disarmament and a nuclear freeze.
The CIA had estimated 1980 per capita Soviet gross national product at $6,500 per year vs. $14,000 for the United States. But instead of looking at Soviet statistics and articles by Western economists enamored with the efficiency of a centrally planned economy, Reagan and CIA Director William Casey asked themselves what was the Soviet Union like and what percent of U.S. GDP did that indicate?
In 1980, except for the elite, most Soviets were inadequately housed. Not only were apartments small, but only two-thirds had running water and only half of those had hot water. Only 18 households per 1000 owned a car and there were fewer than nine telephones per 100 people. Gorbachev has written, "With no incentive to compete, to rationalize and to innovate, the Soviet Bloc had become monuments to bureaucratic inefficiency and counter-productive extravagance."
The Soviet government subsidized food prices to discourage civil unrest. Yet at the same time, private plots were limited to 4 percent of arable land even though they were producing 25 percent of the food. A large percentage of Soviet hospitals lacked hot water, basic sanitation, and adequate sewage. Exports into the free market consisted of natural resources and no significant manufacturing except for weapons. Soviet 1980 exports for hand currency were only one-third of Italy's exports.
Reagan and Casey came to the conclusion that the Soviet economy was not half of the U.S. economy. Rather it was one-sixth of the U.S. economy. This meant the Soviet military and foreign expansion costs were consuming over 30% of the Soviet GNP in 1980 -- not the often estimated 10 percent.
Reagan believed that the Containment policy embraced since Truman was taking too long and would eventually work against the United States. Democracies are very effective when focused, but they have short memories and don't sustain high military spending. The Europeans were eager to loan money to the Soviet Union to improve Europe's own sales. "Reagan, nearly alone, truly believed that the Soviet system was vulnerable, not in some vague, long range historical sense, but right then," according to Robert M. Gates, director of the CIA under George Bush.
The emphasis would be to avoid helping the rigid Soviet economy and let it exhaust itself competing with the United States. Starting in January 1981 the Reagan administration implemented seven strategies that used America's competitive strengths to take advantage of what they saw as moral, economic and systemic weaknesses in the Soviet bloc.
1. Support internal disruptions with special emphasis on Poland. Sell Freedom.
2. Dry up sources of hard currency so the Soviet Union could not buy or pay its debts.
3. Overload the economy with a technology-based arms race.
4. Work to stop the flow of any Western technology with economic value.
5. Weaken support for leaders of the Evil Soviet Empire.
6. Raise the cost of the various wars the Soviet Union was supporting.
7. Demoralize the Soviets and generate pressure for change in their system.
Reagan's strategy was not lost on his closest ally, Margaret Thatcher, prime minister of Great Britain. She wrote in her memoirs, "...From the first I regarded it as my duty to do everything I could to reinforce and further President Reagan's bold strategy to win the Cold War which the West had been slowly but surely losing."
(Warren Norquist is a retired corporate executive. This piece is taken from a paper, "How the United States Used Competition to Win the Cold War" he presented in October at the American Society of Competitiveness Conference in Arlington, Va. This is the first of two parts.)