Let's Not Forget the Desperate Russian People Amid the Tragedy In Ukraine
AP Photo/Alexander Zemlianichenko
Let's Not Forget the Desperate Russian People Amid the Tragedy In Ukraine
AP Photo/Alexander Zemlianichenko
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In a piece published last month, Washington Post columnist Dana Milbank lashed out at Koch Industries as a “recidivist corporate offender” that had earned a “worst of the worst” designation for “refusing to reduce activities in Russia.” Milbank reports that more than “450 multi-national companies have withdrawn from Russia,” and Milbank contends that Koch Industries is wrong for not doing as others have done.  

That Milbank would critique Koch is hardly news. Where it becomes interesting is that there’s been so little defense of Koch and others from the Milton Friedman wing of the Right that shares the late Friedman’s view that “the social responsibility of business is to increase its profits.” It’s puzzling because staying in Russia certainly checks the profits box, but there’s more to the decision. Contra Milbank’s criticism, there’s a reasonable case that staying in Russia is arguably more humane than leaving, and that continuing business operations in Russia will most enhance the odds of a peaceful outcome in Ukraine and beyond.  

For now, the exit of multi-national companies from Russia in response to the country’s hateful and primitive invasion of Ukraine has proven costly for those corporations, their shareholders, and therefore – most cruelly – their local employees. These externalities should raise eyebrows. It would be one thing if the economics of being in Russia no longer made sense. Except that the departures are not reported to be economic. They’re instead taking place seemingly in protest of Russian leader Vladimir Putin’s tragic decision to invade Ukraine. Corporations are, according to the Wall Street Journal's Jean Eaglesham and Thomas Gryta, “tallying up tens of billions in losses from their Russian operations as they grapple with the impact of asset sales, shutdowns and sanctions,” and these effects will be felt well beyond the board room.

Conservatives in particular are often critical of “woke capitalism” whereby corporations sacrifice profits in order to take a stand or, more likely, to placate left-wing activists on the matter of the environment, race, sex, and other hot-button issues. As a member of the Right, it’s hard to critique the critics. Corporations would, in an ideal world, stay clear of politics. What's true about politics logically extends to geopolitics, yet the Right's been largely quiet about corporate exits from Russia that will harm more than the proverbial bottom line. 

Indeed, it’s not difficult to make a case that the decision to exit business operations in Russia is less than humane. To be clear, the Ukrainian people are the biggest victims of Putin’s tragic actions. But Putin's villainy is a grim reminder that  politicians and dictators start wars, while regular people rarely - if ever - do. Which is why mass departure from Russia is so sad. How many innocent Russian people will lose their livelihoods (and much more) as a consequence of so many corporations leaving the country? There’s no real way to answer this, but it’s one that Koch Industries thankfully considered regarding its own operations in Russia. In Milbank’s aforementioned column, a spokesman from Koch was quoted as saying that the corporation “will not walk away from our employees” nor will it hand over its facilities to the Russian government; the latter an equivalent way of walking away from its employees. Good for Koch Industries.  

To which Milbank would seemingly reply, as he does in his column, that the corporations remaining in Russia pay taxes, and those taxes help fund “Putin’s war effort.” Milbank is no doubt correct that fighting a war is much more than challenging (and realistically impossible) without an economy. At the same time, a booming or growing economy makes war very expensive. In other words, it’s perhaps not surprising that as global prosperity has increased, so has warring become less evident. People, or countries, with nothing to lose are far more dangerous.

Which China scares you more: the pre-1990s China that was crushingly poor, or the modern one with cities dense with Americana, including McDonald’s everywhere you look? This question in particular should be answered by those conservatives who increasingly want to isolate Americans from China. Ok, but the growing economic ties between the U.S. and China mean that war between the two countries would be incredibly costly. More bluntly, if the U.S. and China ever actually go to war, the stock market correction that will follow will make 1929 (12.5%) and 1987 (22.5%) seem positively mild by comparison. The cost for both countries of warring against one another arguably makes war less likely. Good.  

Which brings us back to Russia. While what Putin is doing to the Ukrainian people is nauseatingly inhumane, it might be wise at this point to avoid cornering him in ways that could make things much worse.

For now, departure of corporations merely adds to the cruelty of Putin’s decision to invade Ukraine; cruelty that will be paid for by the Russian people. From there, we must ask if an economic collapse in Russia will make Putin come to the bargaining table sooner, or if collapse will render a truly rash (perhaps nuclear) step much less costly.

John Tamny is editor of RealClearMarkets, Vice President at FreedomWorks, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His most recent book is When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. 

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