Lessons from the Economic Sanctions Against Russia
Before reviewing some lessons from the “sanctions against Russia,” we should realize how misleading this expression is. They are not, properly speaking, sanctions from “Western nations” against “Russia,” but from Western countries’ states against residents of Western countries who trade with Russian government rulers and entities. They will hit Russians because they hit Americans (and other individuals in the West) first (see my previous posts on this general point). And they will hit ordinary individuals in both the West and Russia.
One lesson of the current sanctions is that they are quite certainly preferable to World War III. They do involve discrimination against individuals and companies (which are made of people) in our own countries, but it is a safe assumption that virtually all the individuals hit would prefer the sanctions to actual war. My formulation tries to avoid the standard cost-benefit approach in favor of the constitutional-economics approach proposed by James Buchanan: which general rules would individuals unanimously accept ex ante?
Note, however, that the sanctions may themselves provide another casus belli to the autocrat and the authoritarians who rule the Russian state. Putin has been showing his nuclear teeth. Heightened tensions increase the probability of a fatal miscalculation or error. A cornered tyrant is not necessarily less dangerous than an unchallenged one. Difficult game.
Anther lesson, it seems to me, is the following: the situation illustrates how dangerous a world government would be. Observe the enormous power that a cartel of states (in this case: NATO, the G10, the European Union or, more fuzzily, states sharing the Western culture) can wield to “cancel” individuals and groups by crippling them economically and making them international pariahs (to use Joe Biden’s terminology). This power rests on the power of each government to control its citizens’ or subjects’ assets and economic transactions. In the normal course of things, thanks God, a national government’s power to cancel an individual or group is limited by the decentralization of political authority in the world. Individuals can, at some cost, escape a too powerful state.
I agree on the necessity of making Vladimir Putin an international pariah, but a world government would have the power to do the same against any individual or group as a matter of course anywhere on earth. It could “disconnect” a rebellious individual or group of individuals from even a nominally private payment system (as illustrated by the partial disconnection from Swift that we are witnessing).