by nz | 2026-02-19 13:03:23+00:00
This is not really a contradiction. When the world became bipolar, there was a lot of alpha in arbitrage. The most valuable Yugoslav (state owned) company was Genex, which was an import/export company -- it would import from one bloc and export to the other bloc, because neither bloc wanted to admit that the other bloc had something they needed. (This set the Yugoslavs up for failure, like so many other countries that believed that the global market would make them rich).

The Soviets and their satellites (like the DDR), had another problem related to arbitrage, and that is that their professionals (such as doctors and engineers and scientists, all of whom received high quality, free, state-subsidized education), were being poached by the Western Bloc countries (a Soviet or East German engineer would work for half the local salary in France or West Germany, _and_ they would be a second class citizen, easy to frighten with deportation -- the half-salary was _much_ greater than what they could earn in the Eastern Bloc). The iron curtain was erected to prevent this kind of arbitrage (why should the Soviets and satellites subsidize Western medicine and engineering? Shouldn't a capitalist market system be able to sustain itself? Well no, market systems are inefficient by design, and so they only work as _open_ systems and not _closed_ systems -- they need to _externalize_ the costs and _internalize_ the gains, which is why colonialism was a thing to begin with, and why the "third world" is _still_ a thing).

Note that after the Berlin Wall fell, the first thing to happen was mass migrations of all kinds of professionals (such as architects and doctors) and semi-professionals (such as welders and metal-workers), creating an economic decline in the East, and an economic and demographic boom in the West (the reunification of Germany was basically a _demographic_ subsidy -- in spite of the smaller size, East Germany had much higher birth rates for _decades_; and after the East German labor pool was integrated, Western economies sought to integrate the remaining Eastern labor pools (more former Yugoslavs live abroad in Germany than in any other non-Yugo part of the world [the USA numbers are iffy, but if true Croatians are the only exception, with ~2M residents in USA, which seems unlikely]).

The problem, in the end, is that all of these countries are bound by economic considerations (this is thesis of Marx, by the way), and they cannot escape the vicious arbitrage cycle (I mean, here in the USA, we have aggressively been brain-draining _ourselves_ since at least 1980, which is why we have the extreme polarization, stagnation, and instability _today_ -- it is reminiscent of the Soviet situation in the mid 1980s to late 1990s). Not without something like a world government (if there is only one account to manage, there is no possibility of deficit or surplus, unless measured inter-temporally), or an alternative flavor of globalization.

Internationalism is a wonderful ideology, and one that I support. You can make the case that Yugoslavia, the USSR, etc, were an early experiment in Internationalism, that each succumbed to corruption and unclear thinking (a citizenry that is _inclusive_ by nature and can _think_ clearly is a hard requirement for any successful polity). Globalization, on the other hand, has a bit of an Achilles Heel: when countries asked why they should open their borders and economies to outsider/foreigners, they were told, "so that we can all get rich!". The problem is that once the economic gains get squeezed out of globalization, countries will start looking for new ways to rich, even if it means reversing decades of integration. Appealing to people's greed only works to the extent that you can placate their appetites. We should have justified Internationalism using _intrinsic_ arguments: "we should integrate because learning how others see and experience the world is intrinsically beautiful, and worth struggling for".

Note that most of these economic pathologies disappear, when the reserve currency (dollar) is replaced with a self-balancing currency (like Keynes' Bancor: https://en.wikipedia.org/wiki/Bancor). We have the tools, but everyone wants to feel like the only/greatest winner. These are the first people that have to be exiled.