beoShaffer comments on The Importance of Goodhart's Law - Less Wrong
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There are several points here. What I endorse is what I took to be TAW's original point: people laugh at these stories and reinforce basically false beliefs about Soviet efficiency. The stories about tiny nails are true, but they are not representative. For these purposes, it is irrelevant if the goal of the efficiency was military production. The work camps are relevant if that is how they achieved efficiency, but I don't think that's a popular belief.
Also, people compiling GDP, like the CIA, try not to count worthless goods. They also compiled civilian consumption, if you'd like to try to exclude military spending, but I don't know where the data is.
I'm not sure I endorse the use of GDP for general success of society. It is very convenient to talk about relative changes in GDP, though. No one is claiming that the USSR was a rich society, only that its GDP was multiplied by a reasonable number over the course of the century. But I am claiming that it didn't suffer mass starvation after Stalin.
Do I have a source for this? Every thing I can find seems to point towards it being a joke.
The story of the giant nail is a joke, appearing in Krokodil, c1960. I switched back to the tiny nails because it was pretty close to anecdotes I've heard that I'm pretty sure were not jokes. But those were oral, so I can't cite them. Do you accept anecdotes from Alec Nove? I see quoted from p94 of his 1977 Soviet Economic System "It is notorious that Soviet sheet steel has been heavy and thick, for this sort of reason. Sheet glass was too heavy when it was planned in tons, and paper too thick." On p355 of the his 1969 Economic History of the USSR (or p365 of the 1993 edition):
Ok, that makes sense.
Here's the original nail joke. bigger

– Кому нужен такой гвоздь?
– Это пустяки! Главное – мы сразу выполнили план по гвоздям...