Ted Willams, Marine fighter pilot and also a pretty good baseball player, said that hitting a baseball was the hardest single thing to do in sports. In Major League Baseball the average “average,” for hitting varies from year to year; the lowest two averages before 1900 were .243 in 1884, and .239 in 1888. In the modern era (after 1900), the lowest league averages were .239 in 1908, .237 1968, .243 in 2022 and 2024. That means getting a hit less than 1 in 4 at bats; these are the worst yearly average “averages.” Remember those numbers.
There is an argument that says that Ukraine – and that means Europe and the US – just needs to sustain the fight in eastern Ukraine for another year because Russia will suffer an economic collapse before the end of 2026. Then Ukraine will be able to recover all its lost territory, either by force of arms or by direct, forceful negotiations, as, being “out of Schlitz,” Moscow will have to yield.
The key assumption here is that, in fact, Russia’s economy will collapse and Russia will be unable to sustain the war.
Of course, what does economic collapse mean? And exactly how well can we forecast such an event?
And having touched on that, how well can it be applied to Russia?
To begin, economic collapse is a very broad concept, ranging from a severe recession (the word depression is not, apparently, used anymore) featuring high bankruptcy rates and high unemployment, to a complete breakdown in daily commerce, hyperinflation and general social disorder.
The first thing that should strike you is the use of a lot of adjectives and adverbs, qualitative terms but not quantitative ones, to the point that it really tells you nothing. It would be handy, in some alternate, accountant’s universe, that you could definitively state that 14.7% unemployment, an economy that has contracted more than 2.73% for each of the last 3 quarters, and a bankruptcy rate that is 3.4 times the norm equals social collapse. But that is hooey. The unemployment rate that would lead to social collapse in Mali is not the same as would lead to a breakdown in social order in Monaco. Or Russia.
So, in fact, we’re left with a vague, fuzzy idea which we can at best modify to something like: Country X will face worsening economic conditions that lead to such social distress that the government will be unable to continue to conduct operations as normal. (Given risk averse bureaucracies, this is likely to be stated as: “It is probable that Country X’s economy may contract to a point that social distress becomes more likely, leading to a possible social collapse.”)
Given all that, how well can this sort of thing really be forecast?
Before we start to forecast someone else’s economy, particularly one such as Russia’s (Or China’s) both of which are more command economies than anything else – and both of which are notorious for bald-faced lies when it comes to virtually any economic indicator – let’s ask a simple question: how well do the forecasters perform when given all the data? That is, how well do forecasters predict US economic futures?
Well, as it turns out the University of California, Berkeley, Haas School of Business has been keeping statistics on just that thing. And US economic forecasts – out of a sample size of more than 16,000 forecasts, are right 23% of the time – a .230 batting average, if you will. Worse than baseballs worst “average” average since 1871. And one of the things that they have found alongside this rather poor “batting average” is that forecasters are confident of their forecasts 53% of the time. So, they think they are right more than twice as often as they are in fact right…
But it doesn’t end there. The St. Louis Federal Reserve looked at the question of forecast accuracy and showed that the accuracy for predicting a recession one quarter away (will there be a recession next quarter?) was fairly accurate, nearly 40% accuracy (not great, but better). However, trying to predict a recession 3 quarters away was less than 2% accurate and for 4 quarters away was 0.1% accurate. That would be a batting average of .010…
Said differently, making economic predictions even when you have all the data – such as the Federal Reserve has – is more difficult than hitting a baseball…
How well then, should we assume, we can predict Russia’s economic performance in the next 12 months, particularly given that we don’t have all the relevant data and what data we do have is almost to a certainty massaged? Should it be more accurate than the Fed’s predictions about the US economy? Or less?
And there’s the question whether what the US population is, perhaps, unwilling to accept closely matches what the Russian population is unwilling to accept? Or is there a difference? How great is that difference? Might the Russians be willing to suffer?
Meanwhile, Russia will continue to pump 9 million or more barrels of oil per day. Russia will continue to be one the largest producers and largest exporters of natural gas. Russia will continue to farm hundreds of millions of acres of farmland. Russia will continue to be one of the world’s leaders in the production of fertilizers. The Russian people will, presumably, continue to demonstrate their remarkable ability to endure.
Which is another way to say Russia’s economy may collapse next year, or it may not.
There was an article recently, written by a Ukrainian, that points out 4 reasons why Russia will collapse: demographic collapse, geography, corruption in government, and a broken, atomized society. Yet Ukraine’s population (1/5th the size of Russia’s) is shrinking at twice the rate of Russia’s. Geography – he argues that the nation is really big and is sparsely populated and therefore hard to control and smaller states are more economical – for which there was an argument 200 years ago, but hard to see today. Australia’s population density is less than 1/2 of Russia’s; is anyone worried about Australia? Corruption – how many governments have severe corruption? North Korea? China? And Ukraine is not exempt from that accusation. Is anyone predicting China’s collapse next year? Or Ukraines? And Russia has a “broken, atomized society.” Yet Russians still support the Putin government.
It’s true that oil prices have dropped and Russian oil revenue is down – and that is excellent leverage to bring Putin to a ceasefire and embrace peace talks. But labeling inflation as “rampant” when it’s at 9%? The US had de facto inflation rates as high or higher under the previous administration. Did the US collapse?
We need to stop reading tea leaves and focus on points that provide leverage: like oil and gas prices, and perhaps grain prices, and do what can be done to keep production up and prices down and reduce Russian revenues. And as we do that, pressure Russia – through those prices and through 3rd party embargoes, to agree to a ceasefire and negotiate an agreement.
Just because someone “predicts” that Aaron Judge will hit a home run at his next at bat, and he does, doesn’t mean that guy has any insight into the future. His good fortune is purely the result of a guess.
Equally, someone may predict Russia’s economic collapse but there is no evidence to suggest that anyone can make the prediction accurately, They may, in fact, be “lucky” and Russia does collapse, but it would still be a guess.
And they still cannot answer the question: Would Putin use nuclear weapons to try to prevent defeat if Russia began to collapse? And if the country does collapse, what happens to 5,000 nuclear weapons? Has the Oracle at Delphi told them that yet?
Holding out for a Russian economic collapse, when such a thing cannot be accurately predicted, means letting this war drag on, the plan centered on something happening about which, for all intents and purposes, there is zero control, and nearly zero accuracy in predicting. This is not a plan, this is hope. And that’s a bad idea when it comes to geopolitics, especially when there is a war being fought, and in particular being fought with a nuclear armed state.
