Mar 10, 2022·edited Mar 10, 2022Liked by Arnold Kling
The Brits developed a very similar plan based on their position as the global financial clearinghouse in the early 20th Century and implemented it against Germany in 1914. It didn't work out quite as well as they hoped. Here's a review of the book 'Planning Armageddon' that explains it - https://warontherocks.com/2013/08/suicide-is-not-a-war-winning-strategy/
I ran across an interesting factoid when reading the book 1913 (a broad review of the status of the world in 1913 written without attempts to foreshadow WWI, and a bit of bias towards projections that postulate it not happening). Even with the 1920s and 1950s booms, global trade did not return to its 1913 share of global output until *1970*.
I completely agree with the first part of your assessment. War is terrible and it seems understating it to say that it creates huge negative externalities.
Why make them worse with sanctions then? Because sanctions deter war. Yes, there are still wars, but if we reduce the cost of waging war, it will become a more acceptable tool of policy. This has been proven time and again throughout human history.
Second, if you come all the way around to the point of saying something like "civilian sanctions are tanamount to war crimes" (I'm seeking to clarify here... are you saying that?) this seems to strongly undercut the basic freedom we (should) have to trade with whom we choose. Why should I be forced to produce, against my will, for someone engaged in criminal and immoral action? I shouldn't.
I think as a matter of economics, most boycotts are stupid, but people should still have a right to it, just like they have a right to do all sorts of other stupid things they shouldn't do.
Re: "Let me try to draw a line between war sanctions and civilian sanctions. War sanctions would be attempts to keep Russia from re-supplying its military. I support war sanctions."
This is an instance of a keyhole solution -- a policy tailored (a) to remedy a problem and (b) to refrain from causing collateral harms.
The question naturally arises: What are keyhole solutions in policy toward Ukraine?
Should one support foreign attempts to re-supply Ukraine's military? What is the probability that re-supply of Ukraine's military will shorten the war? What is the probability that the Ukrainians will get a better deal from Russia as a result of re-supply of Ukraine's military?
Answers to these questions are colored by informal norms or implicit conventions about "red lines" for what constitutes "aggression," "entry into war," and the like. Remarkably, red lines are at once arbitrary, salient, and common knowledge -- and variously taken for granted, contested, and prone to unravel. They straddle game theory and psychology.
Is bloc membership by Ukraine a red line? Are sanctions acts of war? Why do rival red lines converge (for the moment) at fighter jets and no-fly zones, rather than at foreign re-supply of missiles and ground weaponry?
It seems that both Putin and the West erred badly by expecting a swift end to the invasion. The West had no answer for a prolonged war. It sanctions were focused on preventing Putin from invading the next country. The resistance by the Ukranian people, heroic at first and now tragic, has exposed the emptiness of the support from the West. We are allowing Ukraine to suffer because we are unwilling to do what we needed to do to stop Putin: take arms against the aggression.
That may never have been an option in the minds of the architects of NATO and the EU, which means that they (we) are essentially sanctioning the suffering of Ukraine. Put another way, the West is not to blame for the suffering, but we are responsible for participating in it. Sadly, ironically, tragically.
Shouldn't we presume private sanctions to be efficient and government sanctions inefficient? Private sanctions are market choices. We laugh at private companies "virtue signaling", but the bottom line is that they are giving up profitable transactions. Government sanctions can't make that sort of claim. Further, we should expect private companies to want to go back to making that money as soon as they can. So we shouldn't be too concerned about whether private sanctions will extend too long.
The fantasy, I think, is something like the Arab Spring, when high food prices and Twitter-organized mobs (ie, real life mobs, not virtual ones) helped topple dictatorships in MENA countries, so perhaps one could make the case (I wouldn't) that international sanctions could legitimately cause a popular uprising, the outcome of which is that Putin ends up like Colonel Gadhafi. To the extent there's any rational thought behind this at all, I think this is it.
On the other hand, I would posit that the success of the George Floyd protests in the West (in terms of causing everybody in a position of authority to soil themselves and fall all over one other in a desperate rush to capitulate harder, faster, and more strenuously than the next guy) has caused woke westerners to drastically overestimate the value of public protest in the face of institutional hostility or indifference.
I'd hazard to say that this misinterprets the purpose of the sanctions. To my mind, the idea of these wide-range, crushing sanctions from across the Western world is to outright destroy the Putin regime. Ukraine is not going to get a better or worse deal from that regime, it is going to deal with its successor.
This is basically a war with Russia, which is the only appropriate response to the war that Russia is waging. But the West cannot yet (and hopefully will not ever) get involved into an outright "hot" war with Russia; that would be WW3. Instead, it uses some of the heftiest cold war measures to induce an economic collapse of the current Russian regime. It sadly includes making lives of the population (more) miserable, hopefully without causing any casualties; I suppose that shipping e.g. medical supplies to Russia will never be banned.
This is a big bet on the West's side. It is risky. But not doing that also has poor historical record (Sudetenland, 1936), so it's understandable. Also it conveniently would remove Russia as a major player and competitor, without removing it as a market, if the cold war counterattack succeeds.
Hanania makes many interesting observations about the fog of war; and explains what guides his thinking. Here are his current forecasts (my distillation):
(a) Russia achieves Ukraine neutrality and international recognition of new status of Crimea and Donbas: 35%
(b) Same as (a) above, plus territory along the Black Sea and also Kharkiv in the North: 25%
(c) Same as (b) above, plus Kiev and western Ukraine: 10%
(d) Stalemate: 15%
(e) Ukrainian victory (pro NATO, contra independent Crimea, Donbas): 10%
Re: "I believe that the chance of another financial crisis within the next three years is at least 70 percent, although it probably will start outside the United States."
At Metaculus, there is a question about when the next financial crisis will occur in the United States:
The question was posted eight months ago. Only 24 forecasters have participated. During the first week of the Russia-Ukraine war, the "community prediction" temporarily bumped from June, 2026 to March, 2028. The current prediction is December, 2025 (so, within four years). I am curious to see if forecasting will get 'thicker' on this question.
Great piece with many excellent points. There is one assumption in here that may be accurate, but which it seems that you take as a given:
"Who is feeling the pain in Russia—Putin, his allies, his opponents, or ordinary Russians who have no influence on him?"
The assumption (it seems) is that the ordinary Russians have no influence on him. That's possible, but as you allude to, one could argue that the sanctions create enough dissatisfaction that it pushes Putin out.
I'm not sure that is the likely outcome, but it doesn't seem totally farfetched.
I agree with your analysis re: deficit spending as a response to the crisis. I don't think that analysts who forecast that the US will allow the stock and real estate markets to crater are really thinking through the playbook that the government works from. They project what they would do when faced with the same circumstances (realize that prices are supposed to reflect reality and capitulate) versus how the policy makers tend to see such things: they will remove whatever obstacles appear before them, and the government will comply with altering the rules. In my view, yes, they should allow asset markets to crater (even though this would be very bad for me personally), because that reflects the effects of a world of shriveled international trade.
The sanctions strengthen Ukraine's hand, but does it make them less likely to play that hand?
My understanding is that there is a peace offer on the table to Ukraine that is very generous and gives up extremely little compared to the status quo. To not accept it we have to believe either that:
1) Ukraine thinks it can do better
2) Ukrainian leadership can't accept due to internal politics
I was listening to the beginning of a Hoover Institute round table and one of them was going off about how giving up Donbass and Crimea (how do you give up what you don't hold and doesn't want to be a part of you?) was unacceptable because it would mean "Putin wins". This may be one of those ways in which our help isn't actually helping.
The only way out for Ukraine is a peace deal. Peace and peace terms are going to get less generous over time. Maybe Russia's economy will collapse, but that probably isn't going to happen in the next month. Meanwhile, Russia's going to advance deeper and deeper into Ukraine over the next month, and those terms will get worse and worse.
Why should we allow Twitter mobs to arbitrate which wars are just our not, and dictate our policy response through sanctions against the warring party? It is certainly possible to justify Russia's intervention on the grounds that allowing it's neighbor to become a military proxy for it's rival is an existential threat for Russia. This is an easy case to argue practicing just a tiny bit of Robert Wright's cognitive empathy. And yet the narrative has been so tightly controlled by the West that even saying that is potential cancel fodder.
Compare that to the jingoism about America's invasions on the other side of the world, with far weaker claims to self defense as justification. Or compare that to the silence over the endless cruelty in Yemen.
The point is that Twitter mobs are fickle, biased and their attention easily manipulated. I don't think they should be arbitrating which wars are just and therefore subject to sanction.
The Brits developed a very similar plan based on their position as the global financial clearinghouse in the early 20th Century and implemented it against Germany in 1914. It didn't work out quite as well as they hoped. Here's a review of the book 'Planning Armageddon' that explains it - https://warontherocks.com/2013/08/suicide-is-not-a-war-winning-strategy/
I ran across an interesting factoid when reading the book 1913 (a broad review of the status of the world in 1913 written without attempts to foreshadow WWI, and a bit of bias towards projections that postulate it not happening). Even with the 1920s and 1950s booms, global trade did not return to its 1913 share of global output until *1970*.
I completely agree with the first part of your assessment. War is terrible and it seems understating it to say that it creates huge negative externalities.
Why make them worse with sanctions then? Because sanctions deter war. Yes, there are still wars, but if we reduce the cost of waging war, it will become a more acceptable tool of policy. This has been proven time and again throughout human history.
Second, if you come all the way around to the point of saying something like "civilian sanctions are tanamount to war crimes" (I'm seeking to clarify here... are you saying that?) this seems to strongly undercut the basic freedom we (should) have to trade with whom we choose. Why should I be forced to produce, against my will, for someone engaged in criminal and immoral action? I shouldn't.
I think as a matter of economics, most boycotts are stupid, but people should still have a right to it, just like they have a right to do all sorts of other stupid things they shouldn't do.
Re: "Let me try to draw a line between war sanctions and civilian sanctions. War sanctions would be attempts to keep Russia from re-supplying its military. I support war sanctions."
This is an instance of a keyhole solution -- a policy tailored (a) to remedy a problem and (b) to refrain from causing collateral harms.
The question naturally arises: What are keyhole solutions in policy toward Ukraine?
Should one support foreign attempts to re-supply Ukraine's military? What is the probability that re-supply of Ukraine's military will shorten the war? What is the probability that the Ukrainians will get a better deal from Russia as a result of re-supply of Ukraine's military?
Answers to these questions are colored by informal norms or implicit conventions about "red lines" for what constitutes "aggression," "entry into war," and the like. Remarkably, red lines are at once arbitrary, salient, and common knowledge -- and variously taken for granted, contested, and prone to unravel. They straddle game theory and psychology.
Is bloc membership by Ukraine a red line? Are sanctions acts of war? Why do rival red lines converge (for the moment) at fighter jets and no-fly zones, rather than at foreign re-supply of missiles and ground weaponry?
Spot on.
It seems that both Putin and the West erred badly by expecting a swift end to the invasion. The West had no answer for a prolonged war. It sanctions were focused on preventing Putin from invading the next country. The resistance by the Ukranian people, heroic at first and now tragic, has exposed the emptiness of the support from the West. We are allowing Ukraine to suffer because we are unwilling to do what we needed to do to stop Putin: take arms against the aggression.
That may never have been an option in the minds of the architects of NATO and the EU, which means that they (we) are essentially sanctioning the suffering of Ukraine. Put another way, the West is not to blame for the suffering, but we are responsible for participating in it. Sadly, ironically, tragically.
Shouldn't we presume private sanctions to be efficient and government sanctions inefficient? Private sanctions are market choices. We laugh at private companies "virtue signaling", but the bottom line is that they are giving up profitable transactions. Government sanctions can't make that sort of claim. Further, we should expect private companies to want to go back to making that money as soon as they can. So we shouldn't be too concerned about whether private sanctions will extend too long.
The fantasy, I think, is something like the Arab Spring, when high food prices and Twitter-organized mobs (ie, real life mobs, not virtual ones) helped topple dictatorships in MENA countries, so perhaps one could make the case (I wouldn't) that international sanctions could legitimately cause a popular uprising, the outcome of which is that Putin ends up like Colonel Gadhafi. To the extent there's any rational thought behind this at all, I think this is it.
On the other hand, I would posit that the success of the George Floyd protests in the West (in terms of causing everybody in a position of authority to soil themselves and fall all over one other in a desperate rush to capitulate harder, faster, and more strenuously than the next guy) has caused woke westerners to drastically overestimate the value of public protest in the face of institutional hostility or indifference.
I'd hazard to say that this misinterprets the purpose of the sanctions. To my mind, the idea of these wide-range, crushing sanctions from across the Western world is to outright destroy the Putin regime. Ukraine is not going to get a better or worse deal from that regime, it is going to deal with its successor.
This is basically a war with Russia, which is the only appropriate response to the war that Russia is waging. But the West cannot yet (and hopefully will not ever) get involved into an outright "hot" war with Russia; that would be WW3. Instead, it uses some of the heftiest cold war measures to induce an economic collapse of the current Russian regime. It sadly includes making lives of the population (more) miserable, hopefully without causing any casualties; I suppose that shipping e.g. medical supplies to Russia will never be banned.
This is a big bet on the West's side. It is risky. But not doing that also has poor historical record (Sudetenland, 1936), so it's understandable. Also it conveniently would remove Russia as a major player and competitor, without removing it as a market, if the cold war counterattack succeeds.
Your post made a lot of sense to me.
Here is an article that takes a similar thoughtful, "seeing around corners" approach.
https://theintercept.com/2022/03/10/ukraine-russia-nato-weapons/
Re: The difficulty of making well-founded subjective probability estimates of various possible outcomes of the Russia-Ukraine war.
See Richard Hanania's latest essay, "Why forecasting war is hard":
https://richardhanania.substack.com/p/why-forecasting-war-is-hard?s=r
Hanania makes many interesting observations about the fog of war; and explains what guides his thinking. Here are his current forecasts (my distillation):
(a) Russia achieves Ukraine neutrality and international recognition of new status of Crimea and Donbas: 35%
(b) Same as (a) above, plus territory along the Black Sea and also Kharkiv in the North: 25%
(c) Same as (b) above, plus Kiev and western Ukraine: 10%
(d) Stalemate: 15%
(e) Ukrainian victory (pro NATO, contra independent Crimea, Donbas): 10%
(f) International escalation of war: 5%
Re: "I believe that the chance of another financial crisis within the next three years is at least 70 percent, although it probably will start outside the United States."
At Metaculus, there is a question about when the next financial crisis will occur in the United States:
https://www.metaculus.com/questions/7467/next-great-financial-crisis-in-the-us/
The question was posted eight months ago. Only 24 forecasters have participated. During the first week of the Russia-Ukraine war, the "community prediction" temporarily bumped from June, 2026 to March, 2028. The current prediction is December, 2025 (so, within four years). I am curious to see if forecasting will get 'thicker' on this question.
https://twitter.com/RnaudBertrand/status/1501741668231364608
Hospital in Germany says it won't treat Russian patients. As we all know expats living in Munich are a hotbed of Putinism.
They already denied 20 year olds treatment over vaccine status, and closed the bank accounts of Canadian truckers and anyone that sent them $5.
Great piece with many excellent points. There is one assumption in here that may be accurate, but which it seems that you take as a given:
"Who is feeling the pain in Russia—Putin, his allies, his opponents, or ordinary Russians who have no influence on him?"
The assumption (it seems) is that the ordinary Russians have no influence on him. That's possible, but as you allude to, one could argue that the sanctions create enough dissatisfaction that it pushes Putin out.
I'm not sure that is the likely outcome, but it doesn't seem totally farfetched.
I agree with your analysis re: deficit spending as a response to the crisis. I don't think that analysts who forecast that the US will allow the stock and real estate markets to crater are really thinking through the playbook that the government works from. They project what they would do when faced with the same circumstances (realize that prices are supposed to reflect reality and capitulate) versus how the policy makers tend to see such things: they will remove whatever obstacles appear before them, and the government will comply with altering the rules. In my view, yes, they should allow asset markets to crater (even though this would be very bad for me personally), because that reflects the effects of a world of shriveled international trade.
The sanctions strengthen Ukraine's hand, but does it make them less likely to play that hand?
My understanding is that there is a peace offer on the table to Ukraine that is very generous and gives up extremely little compared to the status quo. To not accept it we have to believe either that:
1) Ukraine thinks it can do better
2) Ukrainian leadership can't accept due to internal politics
I was listening to the beginning of a Hoover Institute round table and one of them was going off about how giving up Donbass and Crimea (how do you give up what you don't hold and doesn't want to be a part of you?) was unacceptable because it would mean "Putin wins". This may be one of those ways in which our help isn't actually helping.
The only way out for Ukraine is a peace deal. Peace and peace terms are going to get less generous over time. Maybe Russia's economy will collapse, but that probably isn't going to happen in the next month. Meanwhile, Russia's going to advance deeper and deeper into Ukraine over the next month, and those terms will get worse and worse.
Why should we allow Twitter mobs to arbitrate which wars are just our not, and dictate our policy response through sanctions against the warring party? It is certainly possible to justify Russia's intervention on the grounds that allowing it's neighbor to become a military proxy for it's rival is an existential threat for Russia. This is an easy case to argue practicing just a tiny bit of Robert Wright's cognitive empathy. And yet the narrative has been so tightly controlled by the West that even saying that is potential cancel fodder.
Compare that to the jingoism about America's invasions on the other side of the world, with far weaker claims to self defense as justification. Or compare that to the silence over the endless cruelty in Yemen.
The point is that Twitter mobs are fickle, biased and their attention easily manipulated. I don't think they should be arbitrating which wars are just and therefore subject to sanction.
Excellent points