Today, thinking about the long-term consequences of the Iran War, what do the following things

have in common?

The death of the Soviet Union, the rise of the modern Republican Party, and Nintendo.

The answer is an energy crisis. In October,

1973, Arab members of OPEC launched an oil embargo against the U.S. and its allies. Within months,

the price of a barrel of crude quadrupled. In the U.S., the immediate effects that you surely know

from looking at photographs or having lived through it were gas lines and a national speed limit.

A second shock followed during the Iranian Revolution of 1979, and gas prices surged again.

The combined effect of these two energy crises was the toxic union of stagflation and inflation.

Two things that economists had previously suggested

were practically incapable of coexisting. Those immediate effects, gas lines, recession,

were actually the least interesting consequences of this historical moment. The arms of the 1970s

oil crisis truly reached around the world.

In the USSR, oil shocks were a windfall for the Soviet petro economy, and oil money allowed

Moscow to paper over the dysfunction of its planned economy for years.

But in the 1980s, oil prices fell, and Gorbachev's petro economy collapsed, contributing significantly to the demise of the

Soviet empire. In Japan, heavy industry relying on cheap oil had powered that economy in the 1960s,

but expensive oil threatened that model of growth. In the 1970s, industrial policy was rerouted

towards smaller manufactured goods that required

less energy, things like computer chips, circuits, robotics.

The famous consumer electronics revolution of the 1980s in Japan, the Walkman, the VCR,

Nintendo was an echo of the 1970s oil crisis.

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