Governments "Sanction" Their Own Citizens Every Day. The Russia Sanctions Are Just a Natural Evolution.
Russian president Vladimir Putin’s invasion of Ukraine in the last week of February 2022 was the culmination of decades of transnational statist expansion.
The North Atlantic Treaty Organization (NATO), which managers of the postwar Washington-centered imperium set up to counter Communist imperialism coordinated from Moscow, was rendered obsolete when the Soviet Union collapsed at Christmastide in 1991. But instead of rejoicing in the fall of an adversarial empire and scaling back the NATO alliance, the Washington-led transnational statists expanded it. One by one, eastern European and Baltic countries, many of them former members of the Soviet-backed Warsaw Pact bloc, joined the Western ranks.
Vladimir Putin made it clear that he would not tolerate Ukraine’s or Georgia’s membership in NATO, and even invaded parts of both countries as their entanglement with the West deepened. In February 2022, the dam finally broke, and Putin invaded Ukraine on what appears to be a drive to take over the entire country, or at least enough of it to provide a buffer zone between the endlessly expanding NATO field and the Russian Federation. Transnational statism from the West was met with national statism from the east.
In turn, the United States, as almost everyone had been expecting in such an eventuality, hit Russia and many of its leaders with sanctions. Many private companies—banks, credit card companies, and sports teams, for example—and international organizations such as the International Paralympic Committee, too, announced blanket bans on doing business with Russians. In a matter of hours, the sanctions began to bite. There were runs on Russian banks, the exchange rate of the Russian ruble plummeted, and energy prices worldwide shot up as future supplies of Russian oil and gas became uncertain.
It hardly needs to be pointed out to Mises readers that these sanctions are immoral and unjust. In the first place, it is wrong to punish ordinary civilians, including, of course, children and the disabled, for the actions of their government. The application of sanctions, moreover, is arbitrary and even capricious: the United States government invaded the sovereign nations of Afghanistan and Iraq some two decades ago, and before that had been imposing sanctions on the Iraqi people at the cost of great loss of innocent life, but Washington suffered no punishment for these actions.
Furthermore, no government should have control over economic activity among private citizens and firms. Sanctions are a weapon which no state should have at its disposal in the first place. Seeing how easily Washington leveraged the world financial system to wage economic war on a rival (that Washington, by most accounts, needlessly and unilaterally provoked) should give everyone pause. This is something that Washington could do to anyone, anytime, for any reason or none at all.
But the scale of the sanctions that Washington has imposed on Russia (and Russians) should not distract us from a crucial fact. What Washington is doing against Moscow is not rare. It is something that happens every day. And it is something that happens not just to countries and people thousands of miles from the American homeland, but in every inhabited corner of the United States. Washington is not just sanctioning Russia. Washington is sanctioning you and me, all the time.
Consider that when you buy a gallon of gasoline or a pack of cigarettes, Washington sanctions you for doing so with the imposition of excise taxes and other statist constraints on commerce. When you earn money at your job, Washington takes part of that, too. Not just Washington—states and cities also levy sanctions. There are sanctions for owning property, sanctions for renting property (even for one night—hotel taxes), sanctions for earning interest on capital, sanctions for not earning interest on capital, sanctions for employing people, sanctions for passing along whatever remains after all of this to your heirs when you die.
It is not just America, of course. I live in Japan, a very agreeable country that also takes my money at will. All governments do this. All governments help themselves, to varying degrees, to private property. In just a few moments, I will be strolling down to the corner store to buy my lunch. It will cost me 10 percent right off the top to walk out with a sandwich and a drink—for the privilege, I suppose, of walking on the government’s sidewalk and breathing its air.
We are told that governments sanction us for our own good, that we receive sidewalks, and also roads and schools and hospitals, in return for the money that is taken from us. The quality of the goods and services provided is highly disputable, but for the sake of argument, let us assume that taxes produce first-rate amenities. That still leaves us with the problem of government bloat and grift, a surcharge on a surcharge and a rejoinder to anyone who argues that sanctioning citizens is the most efficient way to achieve common goals. The corner store where I will buy my lunch doesn’t have lobbyists and staffers in the back trying to get the owner to jack up the prices on ice cream bars and bottles of sake so the lobbyists and staffers can take a cut. The man who runs the store needs to provide low prices and high quality or he will be out of business—exactly the opposite of the way that government operates.
Then there is the money itself, the medium of the sanctioning. The Japanese government sets budgets with a modicum of attention to reality, but this has not prevented politicians from racking up debt more than two and a half times higher than what the entire nation produces in a year. The central bank in Tokyo creates money ex nihilo as desired, with the effect that everyone is sanctioned twice—once when their economic activity is taxed and again when the inflation that the government causes decreases the value of the money that remains after the first round of sanctions. No business operates in this way. No gang operates in this way, for that matter. Only governments can commit armed robbery with such impunity (prison is the reward for resisting the taxman) and then turn around and commit ongoing larceny via inflation after the armed robbery has been pulled off.
Consider Washington now. Washington, unlike Tokyo, has the advantage of having the privilege of printing fiat currency extended to cover virtually the entire world. The planet’s preferred reserve currency is the US dollar. The postwar Bretton Woods system, which made NATO fiscally feasible in the first place, is the secret to Washington’s economic omnipotence. Washington can sanction virtually anyone, anywhere, anytime. It can pressure the nominally private SWIFT group to cut off financial transactions, and it can do this because Washington controls not just the SWIFT table but the entire casino, all the casinos on the strip, in fact. This is a grave moral travesty. This is plunder on a scale unheard of prior to the modern age. And it goes on without most of us even noticing it.
Vladimir Putin is shelling civilian centers and nuclear power plants in eastern Europe. This is a great crime, but it is still a localized crime. Washington is throttling the entire Russian economy, and by extension the economies of all the other countries in the world. But it is doing more than that. Let us not be distracted by current events, as terrible as they are. NATO expansion is certainly the proximate cause of the current war and retaliatory sanctions, but beneath the round of daily news stories is a much more pernicious structural challenge to freedom everywhere. Washington and all governments are sanctioning all of us, all the time. It is not just that Russians’ money is not safe—it is that everyone’s private property, money included, is at the mercy of the state. To put it another way, if Washington were not now sanctioning Moscow, Moscow would be sanctioning ordinary Russians. It is a lose-lose for everyone except the state.
It is fine to stand with the people of Ukraine and call for Russia to get out of that country’s business. It is even finer to stand with the people of all countries in insisting that all governments stay out of private citizens’ bankbooks. If it is morally wrong to sanction Russians, then it is at least as wrong to sanction the rest of us.