The tragic Russian invasion of Ukraine has generated understandable, though sometimes misguided, responses.
One can argue the pros and cons of Facebook and YouTube blocking Russian media access, MasterCard and Visa ending Russian operations, and northeastern U.S. consumers boycotting Lukoil filling stations. But those pouring Smirnoff vodka down the drain perhaps don’t realize Smirnoff is now a British brand produced in Connecticut. Even so, let’s hope these actions, coupled with a new ban on the importation of Russian oil, will help bring the war to an early end.
As University of South Carolina emeritus professor Charles Kegley suggests, Russian President Vladimir Putin’s “invasion has presented the world with a common enemy around which unprecedented levels of unity have crystallized.” Furthermore, human communities have an almost instinctive tendency to respond tribally when threatened. Yet, even when we feel compelled to close doors, shut down harbors, and limit engagement with the world, it must be recognized as costly behavior.
Of course, our human tendency may be instinctive for a reason, and trying times come with costs and few easy answers. But when a more peaceful world does come, to the extent that we’ve limited human interaction, it will be poorer.
The combination of business and government-imposed sanctions is taking a heavy toll on the Russian economy and the lives of ordinary people. We should hope their combined effect will be persuasive. The value of the ruble has collapsed, the means for international travel have been practically eliminated, unemployment is rising, and the ability of Russians to access cash and Russian banks to operate internationally have been sharply constrained. International credit agencies have sharply downgraded Russian bonds, and other forecasters predict the Russian economy will soon slip into a deep recession.
Still, the war continues, and for now, we’ll have to weigh one cost against another. Although this invasion is distinct in its horror as a post-World War II European conflagration, the sanctions and negative responses are not unique — only more visible today.
In an example unrelated to war, consider former President Richard Nixon’s 1971 decision to abandon the gold standard and impose wage and price controls and tariffs to calm inflationary forces. This was primarily a response to France’s effort to convert dollars to gold.
At the time, the U.S. economy was trembling. France was convinced the United States would devalue the dollar, which had been pegged as being equal to gold at $35 per ounce. French President Charles de Gaulle even sent a battleship to fetch his country’s gold from the New York Federal Reserve Bank. As I recall vividly, many Americans demonstrated their disappointment by refusing to buy French products. One economic slight exchanged for another, and both nations were left slightly poorer.
Today, with the U.S. polity already in an isolationist mood, a new tragedy inspires the tribal tendency again. An enhanced “buy American” law has just passed. We are again being asked to turn away from more products with a foreign origin.
Yet, even as the horrors of the war unfold, let’s not forget trade can be a substitute for raid and that peace is far less costly than war. Those who prefer peace, trade, individual rights, and freedom will have to be eternally vigilant and grapple with these hard questions.
Bruce Yandle is a distinguished adjunct fellow with the Mercatus Center at George Mason University, dean emeritus of the Clemson College of Business and Behavioral Sciences, and a former executive director of the Federal Trade Commission.
