However under harsh military rule labor camps work well to produce high tech. German V2-rockets and Curta calculators prove that. But there is time limit for that. You will run out of people.
You can clearly see in the Netflix-movie that cosmonauts were living in a creepy military camp, while american astronauts drove home to their family after hard day of space flying.
Also about appointing first cosmonaut by looks is not something strange. After all strict selections there's almost no difference among final candidates in health condition, skills or cognitive abilities. They are all as healthy as human can be and quite smart and trained. So final pick by these criterias would be pretty random anyway (even now for modern candidates it still is). And given that sending first human in space was a big deal about political prestige it's no wonder that it was made by the looks of candidates.
Plot: Khrushchev selected Gagarin because good teeth and nice smile.
However it's true that soviets failed "consumer IT".
Wasn't also Manhattan Project an example of this?