Streetwise Professor

February 21, 2013

Chasing Russian Unicorns, Foreign Policy Edition

Filed under: Military,Politics,Russia — The Professor @ 4:42 pm

Putin and Russia generally have sharply ramped up the anti-Americanism since his election, and the protests.  This is overdetermined.  Partly it is playing on the prejudices of a domestic audience, but it also reflects Putin and the elite’s belief that the US is actively trying to undermine their rule by fomenting an Orange-y revolution in Russia-hence the clampdown on NGOs and the demonization-and worse-of anyone who receives western funding.  With regards to foreign policy, it reflects Russian zero sum thinking and a belief that Russian interests and American interests are at odds generally, and in specific areas like Syria and Iran.  It also reflects a deep seated suspicion of, and hostility to, the West generally and the US specifically that traces far back before Soviet times, but was inculcated in everyone in the Soviet Union, especially those in the security apparatus and the Party-individuals who dominate the Russian hierarchy today, including notably Putin.

Given this, Obama’s Reset was unrealistic, romantic, and even delusional when first announced in 2009.  It only became more unhinged from reality thereafter, as developments in the past years, including the protests, the Arab Spring, and the fall of Khadafy all reinforced all of the foregoing tendencies.  (Note the slick video attacking Medvedev that went viral: one of the main charges leveled against Mr. #Pathetic was that he acquiesced to the NATO takedown of Khadafy.)

Hence, it is truly bizarre to read David Ignatius’s piece in the WaPo advocating Obama make another go at “aligning” American and Russian interests.

How do you align the orthogonal?  Just asking.

Yes orthogonal probably overstates things, but only a tad.  Certainly in Putin’s zero sum mind the areas of common interest are quite limited indeed.  These are particularly true in the three areas Ignatius argues that the US could use Russian assistance: Syria, North Korea, and Iran.

With regards to Syria, Russia has vigorously protected its client Assad, and obstructed every effort to resolve the conflict.  “No more Libyas” is clearly the Russian watchword here.  It conducted naval operations off the Syrian coast at the end of last month, and just announced that it is looking to maintain a continuous deployment there.  This is obviously serving as a tripwire to deter any NATO/US action against Syria.

With regards to North Korea, in the aftermath of the NoKo’s recent nuclear test, Lavrov dodged calls from Kerry to discuss matters, claiming he was too busy on his Africa tour to Algeria, South Africa, Mozambique and Guinea to pick up the phone.  On the last stop Lavrov tried to cajole the Guinean government to restore Deripaska’s aluminum smelting concession.  “I can’t talk to you about NoKo nukes because I’m talking to Guinea about Deripaska” tells you exactly how much they are interested in cooperating on this issue.  They also continued to oppose any additional sanctions on North Korea that would affect “normal trade.”  Uhm, what “normal trade” does North Korea have?  (Not counting drugs or counterfeiting.)  Perhaps they are still holding out hope for that trans-Korean gas pipeline.

With regards to Iran, Ignatius pixels (as in pixilated) three of the most delusional paragraphs I’ve read in a while:

So what’s the answer to this classic foreign-policy dilemma, where U.S. interests and values are in conflict? I’d argue that the benefits of a more cooperative U.S.-Russian relationship — on Syria, Iran, North Korea, arms control and other issues — are so substantial that they are worth the cost. That’s a heavy burden, especially since it’s likely to be borne by Russian human-rights activists. [There’s always more room under the Obama Bus!]

The Obama administration made a similar strategic choice in its first term, when it decided that a positive “reset” with Russia was a top priority and placed missile defense, NATO expansion and other issues lower on its list. This decision opened the way for Russian support of U.N. resolutions sanctioning Iran.

A second presidential term isn’t a clean slate, but it offers a new chance to test whether Russia’s interests and America’s can be aligned. To get where he wants over the next four years, Obama needs to unlock the Russia door.

Yeah.  The Russian support for sanctioning Iran has been so helpful.  So much progress has been made with Russia’s assistance.

If Obama needs Russia’s help to get to where he wants to go, it’s a case of I know where you’re going, but you can’t get there from here.  Indeed, the zero sum mindset means that if Putin believes he is helping Obama get what he wants, he’s less likely to do it.

I’m not saying to go all confrontational, although showing some spine on the Russian tantrum on Magnitsky and the tragic case of the death of an adopted Russian child in Texas would be desirable.  (I will write on that latter issue, especially the role of the truly execrable Pavel Astakhov, when the results of the Texas authorities’ investigation are released.)

But chasing after Russian unicorns is completely counterproductive.  A serious deal with the Russians on Syria, Iran, or North Korea is about as likely as finding a silky, single-horned animal grazing on the White House lawn.  So get real and move on.

Indeed, Obama’s best strategy for dealing with Putin is one that comes naturally to him: pretty much ignoring.  Obama is focused on domestic issues, and is naturally aloof with even the members of his own party in Congress, let alone with foreign leaders.  That aloofness drives Putin crazy: it’s hard to figure what he hates worse, when the US pays attention to Russia, or when it doesn’t.  So here’s one case where Obama’s personality and personal style actually pays dividends: by being his superior self, he doesn’t waste time pursuing the impossible, avoids doing a stupid deal with Russia, and drives Putin around the bend in the bargain.

So here’s one time I encourage him to channel his inner ‘Bam, and avoid the temptation to listen to David Ignatius’s blathering about the beautiful unicorns that roam the steppes.

Print Friendly, PDF & Email


  1. It’s the US/UK who is playing zero sum game, and has since the end of the Cold War.

    – Anytime Russia forges links with its neighbors (Eurasia Union, SCO, etc.), US/UK will have nothing of it. Say Russia imperialistic. Then the US/UK try to forge links with these same neighbors (Eastern Partnership, New Silk Road, etc.), leave Russia out. If this is not zero sum game, don’t know what is

    – Many of the countries that try to forge friendships with Russia have been attacked militarily or economically: Serbia, Libya, Greece, Syria, Venezuela, Argentina. There was an article yesterday that once it became clear that Berlusconi was a pal of Putin’s the US made it a prerogative to get him removed. Wouldn’t be surprised if same with Chirac, Schroeder. US/UK seems to be mad if sovereign nations have cordial relations with Russia

    – When Yeltsin was with Russia and Russia was a poodle of the US/UK, relationship was fine. US/UK like Russia that is not standing up for itself and its friends. As if Russia standing up for itself is bad for US/UK dreams and wishes. Zero sum game mentality

    – Not totally related, but Russia is treated unlike any other country by US/UK. Like Gary Hart wrote in The NYT this week, China doesn’t get nearly as much condemnation as Russia does even though compared to it Russia is an alter boy (not to mention the GCC, which is far worse even than China including on issues like women’s and religious rights, and is not talked about at all). This hypocrisy is trashy and goes to show you that Russia is looked upon as an enemy (Mitt Romney verbatim), not a partner, whatever it does. Like Gary Hart writes, too much Cold War thinking in Washington

    So to sum it all up. In the minds of the US/UK, Russia will be good if:
    * It doesn’t trade with its neighbors
    * It closes all of its foreign embassies
    * It gives carte blanche to the US/UK to police/rule/conquer the rest of the world, militarily, economically, culturally, and/or through puppets
    * It stops being patriotic and instead of celebrating its victory in WWII and the Napoleonic War, touting its cultural and athletic achievements, and reminding the world of its space breakthroughs and technological achievements, it just singles out all the bad things that it’s done throughout history, no matter how small, no matter how exaggerated these bad things have turned into it
    * It becomes a modern-day s*hole. Sex in cathedrals. Crosses axed down
    * It sells its orphans to the highest bidder
    * It privatizes its resources for pennies on the dollar

    Anyway, Russia will hopefully not do these things. The world needs a strong Russia to stop the zero sum game played by the US/UK. What kind of game is Russia playing? Realpolitik. Defending its interests. Standing up for itself, its citizens, and its friends, to whatever point it can. US/UK need to understand this about Russia. Like has been said many, many times before, after end of Cold War US/UK treated Russia as loser, dictated terms to it, wanted to make sure it never rose from its knees. This mentality brought us to this point. Where will it lead?

    Comment by colleen — February 22, 2013 @ 1:00 am

  2. The Kremlin unicorns would love nothing better than to find BO looking for that dropped bar of soap. Can Ignatius possibly be that foolish or is it globalist ideology eliminating his capacity for realistic analysis?

    Comment by pahoben — February 22, 2013 @ 8:16 am

  3. […] See full story on […]

    Pingback by Chasing Russian Unicorns, Foreign Policy Edition | Fifth Estate — February 22, 2013 @ 10:52 am

  4. Colleen. Huge, huge inferiority complex. A big problem for the world. Would be wise to nip in the bud, before it’s too late.

    Comment by LL — February 22, 2013 @ 9:10 pm

  5. @collen

    Under the best case scenario the comment attest to the lack of command of the raised topic. It is too long of a comment to address all of the issues raised there thus I will touch only upon a couple .
    It is a gross misrepresentation resulting perhaps from lack of knowledge to imply that “Russia forges links with its neighbors (Eurasia Union, SCO, etc.), US/UK will have nothing of it.” There have been such efforts coming from Russia indeed. But those who “want to have nothing with it” are not UK/USA but the very Russian neighbors whose arms are being twisted in order to have them join these fictional unions the essence of which is not even defined and there is no rational argument as to why it is beneficial to join it other than to make Russia return its former imperial glory.

    All of the neighbors of Russia are interested in trade – the Russian market is something none can afford to neglect or not to aspire for. It is Russia who creates barriers to trade – economic or geographic (blockades) and on the ground problems (try to clear anything through the Russian customs). Even Russian citizens cannot do export-import trade in their own country without paying excessive price for it or being chocked by their powerful competitors who through their influence over the corresponding customs offices can impose arbitrary customs fees making it impossible to do business. UK/US has nothing to do with it.

    There is nothing in common between the listed companies “trying to forge friendship” with Russia (and I think this list is somewhat inflated). The only thing uniting these countries with Russia is the anti-American sentiment and the totalitarian structure of their respective countries. Furthermore, I don’t remember Greece or Argentina being militarily or economically attacked due to an aspiration to trade or engage in political relations with Russia.

    As to Serbia, to allege that it was attacked because of its traditional kinship with Russia is paramount to a venting of a person who has no soul. Serbia was conducting the most vicious genocidal campaign of the second half of the 20th century. If at the time it was not quite clear because the situation was too much spaghetti-like in order to understand, I cannot see how today an informed person standing up for Serbia of 1990s can look at himself in the mirror every morning and not feel ashamed.

    Finally knowing quite well some of the countries which have had very close relationship with Russia for centuries now, who at the same time enjoy rather good relationship with US/UK as well, I don’t recall this country ever being attacked because of their relations with Russia. To the contrary, UK/US have only encourage further improvement of relationships with Russia and some of the policies of UK/US towards these countries have been in fact qualified as betrayal of values of the western civilization and surrender of the region to Russia.

    Comment by MJ — February 22, 2013 @ 11:39 pm


    Russian army: nobody took us seriously, but now all will be different because Putin promised us $666 billion

    Comment by Ivan — February 23, 2013 @ 10:14 am

  7. I still am able to remember certain events taking place during my childhood and value those episodes, simply due to the fact that they stayed in my memory like for ever and, therefore, they must have made a great impression onto my still developing personality. It is not a matter of assessing those experiences in themselves but to consider their significance in how they influenced my future conduct as adult. It also explains the notion that changes in the individual’s behaviour take place in a very slow motion as we were exposed to past principles during the years when our personality was formed.

    Monday was the most important work day in my father’s working life. Furnished with a substantial amount of cash he went early morning between 3 and 5 a.m. on his way to collect all those calves he purchased the previous week by driving from farmstead to farmstead in order arrive with the fully loaded truck at the marketplace by latest 8 a.m. As earlier as better, as the purchasing agents of slaughter houses and feeding operators may otherwise have covered their needs already. Of course, his long experience and net work was helpful to him, nevertheless, a minor doubt seemed to always remain, as he had to work hard to arrive at the present situation in his life when he dared the first step into independence after having worked as a simply employee at the train station where, beyond other duties, he was assigned to attend the station’s large weighing scale and consequently was able to establish some contacts within and knowledge of the cattle trade. He was fully aware that the wellbeing of his 6 children and wife at home depended on his success. His irregular anxiety attacks during the prior evening often produced a relentless itching sensation on the bottom of his feet and he treated those symptoms with the rigorous employment of a rather rough cloth-brush.

    These episodes signify the fact that risk taking can produce a great deal of stress and is quite an unpleasant experience for an individual. However, the question we have to ask ourselves is whether such experiences prove to have a positive longterm effect on the individual person as well as on society at large or whether we should try to prevent such occurrence (e.g. by issuing a government program that guarantees the purchase of all cattle reaching the market). Although the individual detests stress, different studies prove that stress changes the individual’s behaviour in as far as the individual strives to reduce risk which will enhance the values of sustainability, responsibility and accountability. In addition, it is a rather questionable theory that when we redistribute risk to the public domain that the individual person will experience less stress as his attention will shift to other areas of potential sources of stress. In actuality, it is human nature that requires and is looking for challenges as we otherwise will suffer a slow death. This aspect is best demonstrated by the fact that people exposed to a life-changing experiences, e.g. end of one’s career or the death of one’s partner, often fall into a sluggish, dull and depressive state as the stimulating effects of challenges and stress are lacking. In other words, the anguish experienced due to a risky and challenging situation produces in itself a positive outcome for the individual person.

    The next question, we should ask ourselves, considers the effect on society when the insecurities are reduced from the individual and therefore the costs of such measures redistributed to society at large and how this will effect the individual’s behaviour in such a society. It is hardly refutable that the above listed qualities of risk-averse behaviour (sustainability, responsibility, accountability) will be effected in the opposite direction. The knowledge of such reflexivity is much better developed in scientists than in today’s economists as they are much better equipped to evaluate the impact of manipulative action on a living organism as compared to a mainly mathematical approach taken by economists that emphasises mechanical and physical attributes. To further the comprehension for the word “reflexivity”, let me use an example that fits well into our time period.

    I seldom am sick, however, whenever an non-life-threatening illness befalls me, I will investigate the potential sources of the symptoms in the internet on my own. In my own capacity, I evaluate the most probable cause of my discomfort and consult people close to me for further advice. Thereafter, I make my own decision on how to treat the sickness, which often means that I simply do nothing and let the body do its job while it is trained to increase its capacity of resistance at the same time. At other times I will visit a trusted pharmacist, discuss the best and most cost-effective medication for the purpose, administer it and the matter has been brought to its conclusion. Of course, unforeseen difficulties may arise, but this is possible as well, when I use the advice of a trained medical doctor. However, the the important aspect of this example lays in the fact that I take full responsibility, assuming the full risk, instead of delegating it. Unfortunately, this procedure of dealing with one’s minor illnesses is not possible in most Western countries, as the health insurance will reject any costs occurred from such behaviour and/or the medication will not be available without a prescription by a approved practitioner of the medical profession. Under the circumstances that the individual would be forced to cover medical expenses from his own pocket (no health insurance), the number of visits to the physicians office may drop by 50% and result in a major reduction in this increasing share of economic activity as well as increase sustainability and personal responsibility. I, therefore, can conclude that the present system produces the wrong incentives by delegating self-reliance and risk to the grey area of the general public and the rules therefore undermine the sustainability of the system as a whole, a fact that produces negative consequences for society. The example is not chosen to criticise present health policies but simply to show the longterm effects on the individual’s behaviour and to demonstrate the meaning of reflexivity. Just as an aside, I did not even mention the enormous administrative costs that arise from a managed system.

    “He never cashed in his cheque” were my father’s words. I was unable to recognise whether he considered this to be a delightful or dissatisfying fact as the sound of those spoken words projected a sense of apprehensiveness. Shortly prior to this day, my father was involved in a court case in which the seller of some pigs filed a lawsuit. After having sold those pigs to my father concluding the deal with a handshake and after the completion delivery, the seller felt the agreed price too low and felt cheated, resulting in him taking legal action. In the cattle trade it was/is a common feature to seal a deal with a handshake without the use of any documentation. The seller lost his case in the court and had to pay for the costs of the court proceedings of both parties. The original payment in the form of a cheque, however, never took place as the seller did not present the cheque to the bank. After some deliberation I concluded that the seller’s lack of claiming his dues must have been the result of one of the following reasonings. Perhaps, during a burst of temper, he tore the cheque into pieces and was now too proud to ask for a newly issued cheque. Maybe, the seller believed that he did not have the right to claim payment as part of the court’s decision in that this represented part of the punishment in his eyes. Perhaps, he wanted to demonstrate his disdain by refusing any payment from a contemptible person as my father must have appeared to him by that time. Whatever the reason might have been, all of them show a deeply rooted sense of personal responsibility and concomitant respectability. The court must have arrived at the conclusion that my father did not deceive the seller and the deal, therefore, was valid. In consequence, the seller was forced to scrutinise his own honesty and probably felt embarrassed and accused of dishonourable conduct. When comparing this behavioural pattern with today’s commonly applied conduct we certainly are able to recognise a change in the behavioural model. Honour, respectability, tradition and honesty have lost in weight in today’s world where often nothing but the figure on the bottom line counts. The ease of commerce, that depended on mutual trust, has been replaced by countless clauses and provisions based on an extensive regulatory frame work. Within this context, we now should ask ourselves whether, under the present development of increasing regulation, we arrived at a more just, honest and rule of law observing environment in our society or whether the feeling of real justice (not formal law observance) and legal certainty has been undermined. I do not want to rate the changes but simply state that, under the influence of the numerous regulatory measures, personal responsibility and values like honour and respectability have declined. Respectable and responsible behaviour cannot be decreed by laws but are human values that define us as humans. As more and more aspects of social interaction are regulated, the more the human’s inherent need of respectability and personal responsibility is reduced as those aspects of ensuring a coherent social order have been delegated to the rule makers. This represents another example of reflexivity.

    In the attempt to reduce the risk of the individual member of society, we have created many systems and regulations. The management and enforcement of these rules take a huge administrative effort and we created or expanded corresponding institutions. Like society, an institution is better regarded as a living organism and one should avoid to view them simply in terms of their function. From nature we know that an organism tries to grow and, when under attack, will defend itself. It is rather easy to comprehend this aspect as it is obvious that each employee within such an organisation will act to enhance his job security by expanding his/her sphere of influence. It is a normal human behaviour and should be considered a positive trait in itself. However, this behaviour of an institution’s members may entail negative implications for society at large in its interaction with the increasing size of the regulatory frame work. It acts like a booster to the above development and more and more rules become institutionalised resulting in reduced flexibility and sustainability of the overall system in the long term. The idea to eliminate every risk by centrally planned measures produces increasingly difficulties with sustainability and vitality for the whole system. With the reduction of personal liberty, qualities like self reliance, personal responsibility, accountability, community spirit, empathy, respectability and many other important values for a well functioning society are weakened. Those human qualities are replaced by the struggle to influence the rules themselves and to find ways to profit from existing rules and this simply due to the fact that we have delegated the responsibility for a smoothly functioning social order away from the individual. Honourable and respectable behaviour has lost its importance and simply the rules decide. Those who feel disadvantaged by the rules, try to change them in their favour (generally an option reserved for the elite) or, like probably the most of us, fall into a state of resignation. For economic reasons rules and laws are increasingly irrelevant (bending or disregard of constitutional law and reinterpretation of laws that violate the spirit they were written in) to the decision makers as they project the seemingly overwhelming important task of saving the system, while ignoring the fact that the system is damaged by exactly those actions of increased arbitrariness and insecurity that may inflict much larger wounds to the fabric of society than a temporary set-back in economic growth.

    “This is a real man” my father exclaimed when the buyer of my, due to an motorcycle accident, recently deceased brother’s apartment in Zürich paid with a bundle of bills in cash. I was no more a child but still the sound and dynamics of those spoken words were filled with conviction and produced an lasting imprint on me. It was not simply the fact that my father admired the buyers ability to pay in cash but an air of respectability was transferred to the buyer. There are numerous sayings that glorify the meaning of cash money. My father’s perspective, as well as the viewpoint of many others of his generation, was probably formed in the difficult years after 1929 and he stuck to his conviction even in view of empirical evidence that proved the incorrectness of that notion since the middle of the last century at the very least since money in whatever form including cash lost purchasing power, no matter what currency one looks at. It represents a behavioural pattern that has been etched on his mind for good.

    Most people of that generation are probably not alive anymore today or have hardly any direct influence on today’s events. When discussing the matter of money with young people, I often get an unambiguous reply that I do not have a clue about the meaning of money in today’s world and that a currency’s function is simply a means for payment. Numerous economists have developed abstruse ideas and theories as well and sneer at the idea of sound money. It was in 2001, when I purchased a new vehicle in Singapore (due to high taxes a rather expensive endeavour) and when, after completion of negotiations, I explained that I plan to pay in cash and therefore an additional cash-payment discount should apply, the salesman was close to cancelling the agreed transaction. The reason for this notion was the fact that the salesman was counting on earning an additional commission when getting a credit agreement signed which in my case did obviously cease to apply. At that time already, I was wondering what type of implication this kind of incentive system will take on social values and which kind of values will be promoted as well as which ones weakened as a consequence. The value system of a society can never be contemplated in isolation because when one type of value increases some other value must lose in degree of relative importance. It can never be a moot objective to investigate the origins of changes in society’s value scale.

    The power of suggestion plays an important role in the field of psychology for the purpose of changing the subject’s self-image. This insight is applied in the area of education as well as when raising a child in order to promote a desired mode of conduct. The behaviour of society at large as well as the individual’s behaviour within society can be modified over time in applying the same principle. Each law or regulation exerts an influence on at least two levels. In one way, the desired improvement in terms of quality of life is achieved for a part of the population and in another way, due to the adaptive capabilities of organisms, a minor change in one’s behavioural mode can be registered. The changed pattern of behaviour can itself be divided into two areas, namely into the area of the rules affecting the individual’s action directly and into the area where the new rules have an implied impact on the individual’s self-image as member of said society. As higher the regulatory density the lower will be the level of personal responsibility and accountability, self-reliance, honourable and respectful attitudes, individual freedom and other factors essential for a successful society.

    The effectiveness of a taken measure on the behavioural pattern of the individuals within a society is strongest when all members are subjected to the measure on a continuous basis to produce a maximum impact on the self-image. There hardly is any other system created by humans that outweighs its influence on people’s self-image and the social order to a greater degree than money. Money is omnipresent, used daily by everyone and everywhere, measures economical success and contributes decisive to the self-image of an individual. The influence of this medium on a currency area’s people is not limited to monetary and economic aspects only but, on the basis of its overwhelming relevance, affects the intangible values within the concerned society. The attributes of a currency that rests mainly on the monetary policies of the respective Central Bank, therefore are of enormous societal significance.

    Without exception, Central Banks the world over pursue a policy of currency devaluation. It actually is surprising that not even one exception to the rule exists and all of the currencies presently in use are devalued, especially when viewed from a longterm perspective. Some devalue faster others slower but all of them are subjected to debasement. Is this a natural phenomena and an inherent trait of a currency or is it man-made? Upon closer inspection we, of course, can detect that a deliberate manipulation takes place by sacrificing the currencies value for arriving at short term economically favourable outcomes. In other words, the property rights of the currency owner is violated in order to achieve a statistically measurable and therefore quantitative improvement of economic performance. Growth, however, is measurable in quantitative terms only unable to assess the quality of that growth (e.g. by evaluating factors of sustainability). It is not difficult to conclude that economic growth arrived at by manipulative monetary policy will produce negative results for society that are not directly measurable but, over time, will influence society in a negative way. Hereinafter I like to explain some of those negative consequences which should be evaluated in context with the above explanations of reflexivity to arrive at a comprehensive picture of the jigsaw puzzle.

    We just explained that the manipulation of currencies (persistent longterm devaluation) violates the property rights of the holders of currency. When the currency is devalued, the corresponding loss of purchasing power of the currency holder of let us say 20% in 10 years does not evaporate but someone else within the currency area has benefited correspondingly. In general, those net in-debted in currency terms reaped those benefits. It simply is a wealth transfer and society has been conditioned to consider this aspect in their behaviour as normal. The real result is an environment that enhances the volume of credit creation and benefits the financial sector as the net currency debtor benefits without corresponding effort and is able to register a profit, even after the deduction of the costs of the financial transaction. In spirit this situation does violate the property rights stated in most constitutions and consequently undermines the spirit of the rule of law.

    The partial expropriation of the currency holder’s purchasing power produces some additional side effects in that money turns to adopting more of the attributes attached to possessions than property. E.g. we can possess a car without being the owner of that car. This is best demonstrated when comparing a rented car to a car owned by the driver. Do we behave in exactly the same manner when the car is owned or rented? Some drivers may have those qualities and not act differently at all. Nevertheless, the sentiment of care and sustainable maintenance for a rented item are limited. Ownership does not simply has benefits but entails the obligation to take care of the item in question on a sustainable basis. When property rights are weakened, people are being conditioned over time to think in a short term and unsustainable way. When this way of thinking is practiced by a small number of the population only, the effect on society will probably be negligible. However, when on the basis of conditioning over many decades an ever increasing percentage of the population is changing their behaviour in the described direction, there will be damaging consequences for society in that short term thinking and unsustainable behaviour will be entrenched in the system.

    Another effect is the culture of immediate gratification that is expressed by the wish to possess an item today and now without saving first for it. One prefers to in-debt oneself than to exercise patience and forbearance and to budget responsibly. This development leads to a behaviour that undermines the value of sustainability. The concept that one has to first work hard to arrive at a certain level of living standard is weakened. However, living on credit, to use a popular expression, is promoted. Today and now is more important than the uncertain future that is no more calculable. The consumer and throw-away society is born.

    The behaviour toward risk changes also in that the risk increasingly is transferred away from the risk taker to society at large. This development did not start with the bail-outs in 2008 but reached its temporary climax in that eventful year. Such a constellation increases the preparedness to run high risks and undermines the virtue of diligence, a necessary requirement for sustainable development. The relief from negative consequences of risk taking undermines the virtuous values indispensable to a successful and free society like diligence, responsibility, accountability and honesty.

    As money will be worthless in the long run, people focus more on tangibles to escape the value deterioration of the currency. The idea to save your nest egg or for some future emergency in the form of a simple savings account is frowned upon and is being replaced by investments in tangible assets. This enhances a materialistic ideology in which ethical principles and other values important for a smoothly running society lose their significance. It feeds the notion of mistrust towards decision makers (no one likes to be manipulated) and produces tendencies of individualism with a reduction of empathy towards other members of society.

    The economic well-being of the population depends increasingly on growth that is based on the devaluation of the currency and the high power concentration with the monetary authorities is elevated to a degree that they must feel like pontiffs. Incrementally it becomes unavoidable to disguise the non-existent sustainability and the game of perception management starts. As the population clings to the status quo, the proclamations of the decision makers are desperately received and accepted with enthusiasm, although those claims are contradicting logical thoughts. Respectability, honesty, responsibility, accountability and sustainability are replaced by a culture of lies and deception.

    Another aspect of the reduction in property rights is the fact that actually theft is being legalised. The consequential undermining of the rule of law reduces the protection of personal freedom. Of course, some aspects of personal freedom must be limited, but outside the spectrum of those aspects, the rules of the state should mainly aim at protecting the personal freedom and consequently the associated personal responsibility and similar positive traits that enhance a smoothly functioning social order. I do place central banks to the functions of government despite the fact that they do enjoy formal independence. Each intervention, regulation and manipulation must be evaluated on its longterm effect on the value scale of society. These are not measurable aspects but qualitative values. As economists are trained in measurable changes, this kind of analysis that includes psychological effects is alien to them.

    In order to conclude my short essay, I would like to give you, dear reader, a way to remind yourself of the above contents: When you manipulate people like lab rats, do not wonder, when increasingly they will adopt the attributes of a rat (conditioning). Or in other words, who devalues money, devalues humaneness.

    Comment by Linus Huber — February 23, 2013 @ 6:55 pm

RSS feed for comments on this post. TrackBack URI

Leave a comment

Powered by WordPress