Alexei Bayer: A Tale of 2 Industrial Declines

Alexei Bayer, a native Muscovite, is a New York-based economist. 

At the height of the Cold War in the 1960s, some political scientists predicted that the Soviet Union and the United States would eventually come to resemble each other. The role of the state in capitalism was expanding, while communism seemed to be mellowing and liberalizing. Strangely, Russia and the United States did become more similar, but only after the end of the Cold War — and in ways those pundits would have probably found disturbing.

Take, for example, Bethlehem, Pennsylvania, once home of one of the world’s largest steel mills. In its heyday, Bethlehem Steel employed more than 300,000 people. It helped the United States win World War II, producing armor for some 400 Navy ships. It was what made the United States a leading global economic power and marvel of civil engineering. It made steel beams for the Empire State Building and the Golden Gate Bridge. But the company went bankrupt in the 1990s and closed in 2003. Its multistory blast furnaces loom like rusty dinosaurs over the city, and its grounds have been taken over by a new hotel and casino. In Bethlehem, as elsewhere in the U.S. heartland, once proud, productive and prosperous workers have sunk into poverty and irrelevance.

The decline of Russia’s vast hinterland is also well documented...