The CCP and the USSR: It's like Deja Vu All Over Again

April 25, 2025

Greetings Munchkins:

While sipping my morning coffee and contemplating current events, I am reminded of the New York Yankees legendary catcher Yogi Berra. Yogi had many memorable quotes, but perhaps my favorite was this: "It's like Deja Vu all over again!"

History is a funny thing. Deja Vu is the feeling that you've been here before. And for those over 50 years of age, we have been here before. The players and the technology have changed. But we have been here before in the recent past.

I'm referring of course to our last epic struggle with an existential threat. The last existential threat we faced was the USSR. The current existential threat is the CCP. There are differences of course, and I don't have time to cover the differences in this rant. But the similarities are striking and provide us with a road map around how best to proceed to emerge victorious.

Growing up in the 60's, 70's, and 80's all you heard from the media was the power of the Soviet Union, and how it would soon overtake the United States. And to the superficial observer, this appeared to be true.

Back then, country after country took on communism as its form of government. Cuba, Laos, Vietnam, Romania, Yugoslavia, Yemen and the Congo were just a few of the countries that went communist in the '70's. And the leftist press was ever happy to blow the loudspeaker on the imminent demise of the United States by loudly proclaiming Soviet "wins" from every outlet. This was the national gestalt.

Then your mom and I took a course in the spring of 1980 entitled: "Soviet Life and Culture" from a Russian professor who had escaped from the Soviet Union. In that course we learned that the Western Press was either grossly ignorant around the internal problems of the Soviet Union or lying by omission. What we learned from that dissident professor was that the Soviet Union was NOT the hegemonic superpower about to overtake the United States. What we learned was that the USSR was a giant paper tiger on the brink of imminent collapse from within.

In his course we learned of the disastrous results that communism produced inside the Soviet Union. We learned that the Soviet Union was unable to produce enough food to feed itself and as a result, had to import food from Western Democracies. In other words, the leading communist country had to import food from the leading capitalist country just to feed itself.

What bigger indictment of communism can there be? The system that claimed to be superior to capitalism is reliant on capitalism for its very survival.

We learned that the quality of products produced in Soviet factories was atrocious. The national airline Aeroflot was so dangerous that you had to be a profile in courage just to board a flight. Cars produced in communist countries were stupendously atrocious (See the Yugo). And the industrial accidents were truly legendary. Everyone has heard of the infamous Chernobyl nuclear accident. But few have heard of the 1957 Kyshtym nuclear accident where a city of 270,000 had to be evacuated; or the Ufa Train accident where a leak from a gas pipeline led to an explosion which killed 575 people and maimed 623 more.

The Ruble was so worthless that the country was essentially running a barter economy. If a Soviet citizen saw a line, they just got in the line without even knowing what was being sold on the other end. When you got to the front of the line, you bought whatever was being offered and then attempted to trade it for what you really needed. The country was literally running a barter economy.

We learned that women spent 30% of their waking hours in line. Try to imagine spending 5 hours per day in line. At least at Disneyland you know what you're going to get at the end of the line. And I haven't even mentioned the constant ethnic tensions, border disputes, or the war in Afghanistan where the Soviets lost 15,000 soldiers, and the Afghanis lost 80,000.

The Soviet Union was spending 12-15% of GDP on defense vs. the United States spending roughly 5% of GDP on defense. In the contest over guns and butter you must first have the butter before you can buy the guns. Poor countries can't win wars. Kinetic war is a losing proposition for a communist country. The economics simply didn't work for the Soviet Union in the 20th Century, and I don't believe that they work for the CCP in the 21st Century.

The Soviet Union was a paper tiger that only needed a proper nudge to cause it to topple in 1989. And the combination of Ronald Reagan, Pope John Paul III, and Margaret Thatcher were enough to push it over the precipice.

My suspicion is that the CCP in 2025 is a paper tiger just like the Soviet Union was in 1985; the CCP only needs a proper nudge to cause it to topple. Let me explain.

The biggest danger to any communist regime is that its enslaved citizens learn just how badly they are living compared to their Western counterparts, and that their leadership is living large Western standards at their expense. When this happens, the Ceausescu moment is sure to follow.

The Soviet Union's Gorbachev saw the danger and tried to transition to a "kinder, gentler" communism that they called "glasnost". But when people get a little freedom, they suddenly want a lot of freedom. The Soviet citizens got to see how people lived in the west. And that opening led to the collapse of the Berlin Wall, the collapse of the Warsaw Pact, and the collapse of the Soviet Union.

I submit to you that the CCP in 2025 is in a situation very similar to the situation the Soviet Union was in back in 1989.

The average citizen in China is not flourishing. Yes, China is now the world's second largest economy in GDP. But what matters most is a country's GDP per capita. This number gives you a sense around how the average citizen is living. And by this measure, China is in the toilet. The average per capita GDP in China is $13,300 per year. This compares to the average per capita GDP in the United States of $87,000. China's rank in GDP per capita is 73rd; right after such industrial heavyweights as Montenegro and Serbia. A country without a middle class is a revolution waiting to happen.

About 14% of China's population makes over $13,000/year. This means that 86% of the population is living in grinding poverty. When 900 million people find out they've been bamboozled by the top 10% that control the CCP, there will be hell to pay. This is the great fear of the leadership of the CCP. It is the greatest fear of all dictators everywhere and at all times. This is why they tightly control information.

Reagan used the Strategic Defense Initiative (SDI) to demonstrate to Gorbachev that a communist economy simply can't produce the resources to both feed the citizens and cover defense expenditures. Gorbachev tried to open a closed society to catch up and found out that it couldn't be done.

My guess is that Trump is using tariffs to expose Xi Jinping the same way that Reagan used SDI to expose Gorbachev.

Over the last 20 years, the United States has lost almost 5 million manufacturing jobs. You can bet a large percentage of those jobs were lost to China. China has given a virtuoso performance on how to use excessive tariffs and unfair trade practices to its advantage.

But the great weakness in the strategy of the CCP is that China doesn't have consumers. It's hard to have consumers when your GDP is $13K per citizen. So, they have to sell their products overseas, primarily to the United States. An export driven economy is hugely vulnerable to the trade policies of other countries. And if your largest customer decides to stop buying from you, then this is going to present a huge problem.

So now China has the following problems:

* A massive real estate crisis. It is reported that China has 70 million empty apartments.

* High unemployment among the young. The unemployment rate among the young is over 20% in urban areas.

* Young people have checked out by doing just enough to get by. The "Let it Rot" culture is huge among the young.

* China has a demographic disaster due to the one child policies of the 70's. The average number of children per family is now at 1.3; well below the replacement rate.

In the midst of those problems the CCP must now deal with the massive unemployment rate that will surely result from cargo ships being turned back to China due to the Trump tariffs. It's a bad idea to tick off your biggest customer in any business.

So, Xi Jinping is now in the unenviable position of keeping the masses happy enough to not create the "Ceausescu moment".

The uneducated observer thinks that this is just a trade war.

The educated observer of history recognizes that this is an asymmetrical war that has been waged by one side only until the last couple of months.

And it is an asymmetrical that must be won by either the United States of America or the Chinese Communist Party.

The CCP and the United States can co-exist about as well as the PLO and Israel. When your adversary doesn't think you have a right to exist there is nothing to negotiate.

The best we can hope for is that this asymmetrical war doesn't go kinetic.

And keeping the CCP economically weak is the best way to prevent this until such time as the CCP no longer exists, and another form of government takes over in China.

My guess is that the short-term strategy of the Trump administration is to bring back manufacturing jobs to the United States.

But the long-term strategy is the defeat of the CCP in an asymmetrical war without firing a shot.

Reagan effectively defeated Gorbachev and Soviet Communism in 1989 using the threat of SDI as the weapon, without firing a shot.

Trump is seeking to defeat Xi Jinping and Chinese Communism using the threat of tariffs in 2025, without firing a shot.

Like Mark Twain observed: “History doesn’t repeat itself, it just rhymes.”

True victory is the destruction of communism and China moving towards a different form of government.

Now of course that's dad's speculation. I could be wrong.

But that speculation is based on historical evidence.

I think it's rather compelling.

Peace Out,

Dad