According to a Reuters/Ipsos poll released on March 4, 80% of Americans support a  US government ban on the importation of Russian oil.

Meanwhile, Americans are also complaining about high gas prices, which reached an average of more than $4 per gallon over the weekend following the poll’s release, in large part due to US and European sanctions on Russia.

While Russian oil constitutes only a tiny portion of US petroleum imports, a complete ban certainly wouldn’t help hold US gas prices down.

It also wouldn’t help with much else.

Believe it or not, Vladimir Putin and his oligarch cronies aren’t missing any meals due to the sanctions.

Yes, ordinary Russians are taking a hit to their per capita income of a whopping US $7,000 or so per year. And most of them probably blame the US, not Putin, for that hit.

Just like Iranians mostly blame the US, not their theocratic regime, for the effects of US sanctions.

And just like Cubans mostly blame the US, not their Communist regime, for the effects of US sanctions.

Sometimes it seems like the only victims of US sanctions who DON’T blame the US government are Americans.

Maybe it’s the differential effect. Abroad, US sanctions can produce real poverty, malnutrition, even starvation or death by preventable disease. Here at home, they’re a minor inconvenience.

Maybe you’re canceling that road trip to Vegas and planning a stay-cation instead, but you’re probably not cutting your meat ration with corn meal to make it go further, looking up the symptoms of rickets, or trying to coax a 68th year out of your 1956 De Soto.

As to who sanctions HELP, well,  cross Ukraine off that list.  Putin’s not going to call his troops back over economic sanctions. Europeans whose livelihoods are hit by being on the sanctioners’ side aren’t going to get any more anti-Russian or pro-Ukrainian. They’re just going to get poorer.

The only people helped by US sanctions on Russian oil are American oil producers. Those sanctions bring them just a little bit closer to monopoly status, allowing them to jack up prices and knock down windfall profits at your expense.

If you want to give up vodka for Lent, or switch from Russian salad dressing to a vinaigrette, in the silly belief that doing so will make a difference for Ukraine, knock yourself out. But don’t demand an increase in the cost of gas and then whine about it.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION HISTORY

Jacobin‘s Seth Ackerman tells us that “Higher Inflation Doesn’t Reduce Real Wages” (February 22) since it “can only be sustained over time if the demand for labor is strong enough, relative to the supply, to force employers to continually bid up wages.” In those cases, “wages tend to rise faster than profits,” so their purchasing power more than compensates for higher prices.

The socialist magazine editor views worries about inflation as stoked by “central bankers, financial journalists, Wall Street analysts, and the like” to provide cover for the Federal Reserve to enrich them under the pretext of fighting it.  Yet the assumption that inflation is driven primarily by labor bargaining power has been eagerly encouraged by Ackerman’s capitalist enemies.

“Why Play Leap Frog?” asked the title of one of a series of animated shorts made for corporate America by John Sutherland Productions in the late 1940s and early 1950s to mollify postwar workers into compliance with management.  Only a smooth  “production of more and better goods at lower costs” would garner “a real raise” rather than one eaten up by a commensurate bump in prices.  The role of bosses and bankers is downplayed in the propaganda they paid for.

Even more ironically, free-market libertarians have exposed the role of inflationary policies in benefiting capitalist elites who are willing to agree with socialists on its causes.  At the height of Richard Nixon’s “timid and fitful battle against inflation,” the November 1, 1970 issue of Libertarian Forum noted that “Austrian [economic] theory shows that in the later stages of a boom wages tend to catch up with prices, squeezing profits, and it is then that businessmen are tempted to turn to the totalitarian (and ineffective) coercion of price-wage controls” (Jacobin dubs them “revenue caps”).

In the Winter 1993-94 issue of Free Nation Foundation’s Formulations, Roderick T. Long noted that “an increase in the money supply results in an increase in prices and wages — but not immediately. There’s some lag time as the effects of the expansion radiate outward through the economy. The rich — i.e., banks, and those to whom banks lend — get the new money first, before prices have risen.”  This distortion also inevitably causes malinvestment, and “the unemployment caused by this misdirection hurts the poor most of all.”

Thus, inflation need not reach Weimar Republic levels to cause harm far beyond its apparent effects.  Ralph Borsodi observed that “it is a lie to say that a little inflation, say two or three per cent, is not stealing but that a lot of inflation, say ten or twenty or thirty percent, is all wrong” since “it is a lie to say you are against stealing, when you are in fact saying that a little stealing is all right.”  Instead of prescribing one enlightened policy for the Federal Reserve to manage the economy, Borsodi wanted the Fed to allow competition from private alternatives like his Constant currency.

A free market for labor backed by reliable money would be a real leap forward past inflated political profiteering.

New Yorker Joel Schlosberg is a senior news analyst at The William Lloyd Garrison Center for Libertarian Advocacy Journalism.

PUBLICATION/CITATION HISTORY

1. “Inflation Whips Labor” by Joel Schlosberg, OpEdNews, March 3, 2022
2. “Inflation Whips Labor” by Joel Schlosberg, Ventura County, California Citizens Journal, March 4, 2022
3. “Inflation Whips Labor” by Joel Schlosberg, Miles City, Montana Star, March 4, 2022
4. “Inflation whips labor” by Joel Schlosberg, Lake Havasu City, Arizona News, March 5, 2022

As part of the western  response to Vladimir Putin’s invasion of Ukraine, several regimes acted on February 26 to exclude certain Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT)  network. As of March 1, Reuters reports, SWIFT says it’s awaiting a list of the sanctioned banks so that it can cut them off.

SWIFT is a messaging service that connects banks worldwide. It’s not a bank itself. It’s not even, strictly speaking, a payment network. It carries instructions for transfers, but the transfers take place via other networks. It’s just one moving part in the world’s complex finance and trade system.

As with most such measures, giving Russian banks the boot from SWIFT  is certain to hurt the sanctioners along with the sanctioned. In this case, the potential victims with the most to lose are  the issuers and holders of US dollars.

Dollars aren’t the only currency that gets moved using SWIFT, but the dollar is the de facto “global reserve currency” and thus the most affected by such moves. Nearly everyone accepts the dollar. Nearly everyone wants to have a fat stack of dollars on hand. In particular, global trade in oil has been powered by the “petrodollar” for nearly 50 years.

If you want to buy a barrel of Brent crude from most sellers, you need to be able to plunk down (as I write this) 105.46 US dollars. Not 395.72 Saudi riyals. Not 7,983.35 Indian rupees. Not 665.78 Chinese yuan. $105.46 or no sale.

What happens when one of the world’s largest oil producers is 1) cut off from SWIFT; 2) doesn’t want US dollars as much as it used to because other sanctions make those dollars  difficult to spend; and 3) has trading partners who are watching these sanctions and fear they could be the next victims? Well, this:

A “rupee-rouble trade arrangement may get a push now that Russia is out of SWIFT,” reports The Times of India.  China will presumably likewise increase its yuan-ruble trade with Russia.

The Times of India article reveals that this isn’t a sudden development: “India had entered into a rupee-rouble trade arrangement with Russia earlier to shield the two nations from unilateral sanctions from the United States.”

What makes the dollar valuable? The same thing that makes anything valuable: People wanting it. Between China and India, more than a quarter of the world’s population are in the process of wanting the dollar less than they used to. That, in turn, makes every dollar in your pocket worth less than it once was.

In the short term, the SWIFT kick and other sanctions may hurt Russia more than they hurt you. But the uncontested reign of the US dollar among global currencies seems to be nearing its end, in part because the US government is driving the world away from it with the constant threat of sanctions.

The smart move for Americans? Hold as few dollars as you can get by on. Trade your dollars for gold, silver, and cryptocurrency while they’re still worth something, to someone, somewhere.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION HISTORY