The Enemy of Your Enemy is Not Your Friend

My dear friend Peter Brimelow, a former Forbes editor, invited me share my analysis of Ukraine and the coverage it has received in the libertarian media. Peter is perhaps best known for being called a racist.

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The Enemy Of Ukraine’s Protesters Is Not Necessarily The American Right’s Friend

I am a Ukrainian-descended American software developer, based for the last two years here in Lviv, in western Ukraine, about 300 miles from the capital, Kyiv, where the worst of the recent civil unrest has taken place.

My lead developer travels to Kyiv every time violence flares up. He, like many Ukrainians, considered it his duty. Two days ago, when the latest and most intense fighting flared up, I texted him: “Should I wish you a safe journey?” He texted me back: “You’re late. I’m already on Maidan.”

I pay him well, though he could probably earn even more elsewhere. His enthusiasm for Bitcoin keeps him with me. (I’m particularly interested in Bitcoin—see here and here).

He’s part of Ukraine’s miniscule middle class. He owns an SUV and a three-story home where he lives with his wife and two children. We go skiing together. He is not the type of person who’d be motivate by the thirty Euros a day which Paul Craig Roberts (alas!) claims was sustaining the protests. [US and EU Are Paying Ukrainian Rioters and Protesters, February 17, 2014]

Nor was Yuriy Verbytsky, a seismologist from the Geophysical Institute in Lviv and mountain climber who, after being injured in the protests and hospitalized, was kidnapped from the hospital, severely beaten, and left in the woods where he froze to death. Nor was Bohdan Solchanyk, a university lecturer killed on February 20th.

Today (Friday February 21) reports have been circulating of a deal negotiated between the Ukrainian president Viktor Yanukovych and the Ukrainian opposition parties. The deal would include immediate presidential elections, plus a roll back of presidential powers. (Fluctuating presidential powers are a sign of the volatility of Ukrainian democracy: In 2004, when the Orange Revolution brought Victor Yushchenko to power, the Rada [congress)] limited presidential powers, but in 2010, when Victor Yanukovych, the Russian-backed villain of the Orange Revolution, returned to office, they were restored.)

Chances are that the protesters in the streets will allow the opposition politicians to speak for them, though they’ve scorned them in the past. (But there are also reports that the protestors are resisting, and even a rumor that Yanukovych has fled to his power base in the Eastern and proclaimed a separate state).

Personally, I believe the best thing for Ukrainians would be a dismantling of the hyper-centralized, corrupt, ineffective government bureaucracies and the development of local or private solutions. (I am skeptical of the European Union, which I don’t think Ukraine needs, and regret so many Ukrainian nationalists have persuaded themselves that it offers protection against Russia). But both sets of politicians contending for influence want the bureaucracy to remain intact so that they can simply affect the leader.

In this regard, the peace deal could be a lost opportunity. But, on the positive side, the people have shown their strength. The fact that they were able to overthrow a corrupt government will be a restraint on all future regimes and, because of Ukraine’s vertical power structures, there’s going to be a lot of change.

There seems to be unusual awareness in the US Main Stream Media that Ukraine has deep demographic divisions and that the Russian-speaking Donbas in the East, and possibly the Crimea, could secede. (Unusual because the American Establishment and MSM has a bias against secession at home and abroad—remember George Bush’s notorious 1991 “Chicken Kiev” speech urging Ukraine not to leave the Soviet Union).

This map is from Is It Time for Ukraine to Split Up?, by Brian Whitmore, theatlantic.com, February 20, 2014 It’s an interview with Rutgers University’s Professor Alexander Motyl, concluding that, while Ukraine probably won’t split up, Western Ukraine—overwhelmingly Ukrainian-speaking—would be better off if it did. I agree—it’s a good and insightful analysis.

Note that this map includes Ukrainian- and Russian-speakers—and also ethnic Ukrainians who speak Russian. This may be a hard concept to grasp. It was strange for me. As the child of Western Ukrainian exiles—my mother’s family fled when the area was seized by the Soviet Union after World War II and a Jewish neighbor warned them of an imminent Communist purge—I had the typical Western Ukrainian prejudice that Russian speakers are the enemy, and everything east of Borispol Airport had been lost to the Muscovites. But after all, many Irish nationalists speak only English.

It’s another reason I would steer readers away from one common misconception—this hasn’t been a simple struggle between “Ukrainians” and “Russians”. It’s a struggle between Ukrainians and their corrupt government with a mixture of sympathy, apathy and skepticism from the Russian parts of Ukraine.

(In one recent amusing incident, Russian television abruptly cut off an interview with a Russian-speaking Crimean politician when he downplayed the protests but started to say Yanukovych’s Party of Regions government had stolen prime real estate in the Black Sea resort province and were afraid of retribution.)

I consider myself a libertarian. (Click here to see me speaking at Hans-Herman Hoppe’s Property And Freedom Society conference on June 3, 2011). But in the last two months, I have become painfully aware of the gap between reality and the perception of American libertarian and conservative writers, no doubt reacting out of years spent attempting to limit the power of their own US government. The embarrassing fact is that some MSM reporting has been better.

The enemy of your enemy is not (necessarily) your friend. Ayn Rand’s very reasonable hatred of the Soviet Union led her to make ridiculous claims, like the United States being the “only moral country in the history of the world.” I feel a similar bias has afflicted much of the Alternative media for whom I felt so grateful until just recently.

After Snowden and Syria, Vladimir Putin’s credibility reached a high water mark (which perhaps receded only slightly when Russia become the only country in the world to outlaw Bitcoin). I think many conservatives remain inspired by the Russian President’s embracing Christian identity and declarations of family values. From the comfort of the West, they assume Russia to be a place with Western-style property rights and rule of law—plus a leader championing neglected conservative causes.

But Russia as a symbol in the West is very different from Russia up close and personal. What these commentators, like Pat Buchanan who authored Is Putin One Of Us?, fail to realize is that, in Russia and its satellites, people have a leader who offers conservative rhetoric in exchange for property rights and rule of law.

No, Pat. He’s not one of us.

Paul Craig Roberts describes the protesters as “pawns” who would “place their country in the hands of the IMF so that it can be looted like Latvia.” [Is Ukraine Drifting Toward Civil War And Great Power Confrontation? February 20, 2014.]

Does Roberts not realize how dramatically higher the standard of living is in Latvia than in Ukraine? Compare any post-Soviet EU nation (Estonia, Latvia, Lithuania), to any post-Soviet non-EU nation (Ukraine, Belarus) and the story is the same. (Remember, I speak here as a critic of Ukraine’s joining the EU).

I have no illusions that some protesters weren’t getting paid and that Western intelligence agencies aren’t trying to affect the outcome of this civil unrest. (In fact, late Friday there were reports that Israelis had been among the protestors. Arguably, weakening Russia, which has discouraged the US from war in Syria, is an Israeli foreign policy objective.)

(While we’re on the subject, I hated the suspiciously slick “I Am A Ukrainian” viral video, because I think Ukrainians should finding their own solutions rather than appealing for outside help, and I wonder what its creator, the American filmmaker Ben Moses, was doing in Kyiv.

http://vdare.com/articles/the-enemy-of-ukraine-s-protesters-is-not-necessarily-the-american-right-s-friend

A Conversation With Genghis Khan

I wrote this allegory to demonstrate flaws and limitations in popular libertarian thinking. It’s directed very much at a libertarian / Rothbardian audience, though everyone is of course welcome to have a read:

“Genghis Khan: I am Genghis Khan. Not the actual one, but the author’s imperfect allegorical reflection. I like to rape, pillage, loot, and in general, be the flail of God.

Libertarian Villager: You shouldn’t do that stuff.

GK: Hahahahaha.

LV: Seriously.

GK: Why shouldn’t I?

LV: It violates self-ownership. Every person owns themselves.”

Read more: http://dailyanarchist.com/2014/02/16/a-conversation-with-genghis-khan/

My Account & Analysis of Ukraine’s Civil Unrest

On January 22 three Ukrainian protesters were killed by riot police, two by gunshot. It happened, strangely enough, on Unity Day. The holiday marks a proclamation of unity made in 1919 between the short-lived Western Ukrainian government, who was then battling Polish forces for control of Eastern Galicia, and the similarly short-lived government in Kyiv, which was soon overrun by Bolshevik forces. Tragedy has been the hallmark of Ukrainian history since the Mongols sacked Kyiv in 1240.

So we now have the blood of good people, but what exactly has it baptized? This remains up for grabs.

More: http://dailyanarchist.com/2014/01/23/civil-unrest-in-ukraine/

The End of Surface Warfare

. . . . Perhaps American fleets are intended as targets — lambs sacrificed for the sake of the next glorious war in the spirit of the USS Maine, Lusitania, Gulf of Tonkin or (arguably) the USS Liberty. But the demagogues aspiring toward the next war should be careful about the punch they invite. The world may be one missile strike away from another paradigm shift in military affairs — the end of surface warfare.

Consider which you would rather be: a soldier trying to hit ships with missiles or a sailor trying to hit missiles with bullets. For the former, a five percent success rate can mean victory. For the latter, a ninety five percent success rate can mean defeat.

During the Falklands War, two British ships were sunk and a third damaged by Exocet missiles.

Missile technology has surely improved since 1982, and so have countermeasures. Which would you bet on? More importantly, which would be easier to finance: missiles or aircraft carrier fleets?

http://dailyanarchist.com/2013/11/27/the-end-of-surface-warfare/

Why I’m against Ukraine joining the EU and you should be too

Cross post from romaninukraine.com:

Ukraine-EU-Protests-EU-flag To me, the story of Ukraine is the story of vanquished aristocracy. Twice in Ukraine’s history, first by the Mongols then by the Bolsheviks, the most capable Ukrainians, the successful, the talented, the leadership were obliterated — vanquished, killed or deported — a potentially ruinous blow for any society and testimony to the resilience of Ukrainians. Between these catastrophes, we have tremendous assimilation pressure from Russian- or Polish-imposed feudalism and its violent resistance by our kozaks.

These warriors kept the Ukrainian idea alive and for this we owe them a debt of gratitude, but for all their legendary self-reliance and ferocity, the kozaks failed to create a society prosperous enough to endure among hostile neighbors. An agrarian morality is insufficient for prosperity.

And the Ukrainian soul, if judged by the poets, is an agrarian soul — a peasant soul, if you’ll forgive the term — longing for the return of its ancient kings and glory.

Tonight, Ukrainians are in the streets. They say they want to join the European Union. I don’t believe them. I don’t want to believe them. I prefer to believe that they want three things: property rights, economic opportunity, the ability to travel.

I prefer to believe this because when I consider the other possibility, I see serfs begging for better masters. I see people who want all the benefits of a free society and none of its responsibilities.

No one has ever begged their way to freedom. Property rights which are true and lasting cannot be given, they must be earned. In the words of Lord Byron, “He who would be free must strike the first blow.”

http://romaninukraine.com/why-im-against-ukraine-joining-the-eu-and-you-should-be-too/

Clearing Up The Bitcoin Versus Gold Debate

A lot of otherwise useful analysis of Bitcoin versus gold misses an important point. This analysis only considers physical gold, and points out its obvious disadvantages. Mainly, physical gold can’t be transported almost effortlessly, and almost instantly to anyone with an internet connection. Gold is also more difficult to divide and to verify. This analysis is accurate, but through the ingenuity of entrepreneurs, gold can behave like Bitcoin. In fact, it used to.

(Read more)

Comparing Monetary Supplies, Crypto Currencies and Trust

INTRODUCTION

I was surprised to discover no readily available list of worldwide monetary supplies denominated in a common unit like dollars or ounces of gold but such a list is easily calculable from publically available data. Here, I use M2 data from the World Bank and the United Nations’ list of exchange rates. I repeated the calculation using M1 data from the Trading Economics data service.

A spreadsheet containing this analysis is available here.

So what do the numbers reveal and how do crypto currencies compare?

MOST VALUABLE M2 MONETARY SUPPLIES (in trillions of dollars)

1. All Euros $21.69 Trillion
2. China 15.89
3. United States 14.10
4. Japan 11.68
5. Germany 6.13
6. France 4.25
7. United Kingdom 3.87
8. Italy 3.43
9. Spain 2.65
10. Canada (2008 data) 1.97
11. Netherlands 1.90
12. Korea, Rep. 1.65
13. Brazil 1.56
14. Australia 1.38
15. India 1.26
16. Switzerland 1.20
17. Russian Fed. 0.98
18. Hong Kong SAR 0.88
19. Austria 0.72
20. Belgium 0.68

 
 

MOST VALUABLE M1 MONETARY SUPPLES

1. Euro Total $7.03 Trillion
2. Japan 5.73
3. China 5.07
4. United States 2.55
5. United Kingdom 1.86
6. Germany 1.84
7. France 1.07
8. Italy 1.04
9. Spain 0.70
10. Canada 0.68
11. Switzerland 0.59
12. Netherlands 0.46
13. Korea, Rep. 0.44
14. Russian Fed. 0.42
15. India 0.32
16. Saudi Arabia 0.26
17. Australia 0.25
18. Luxembourg 0.21
19. Austria 0.19
20. Hong Kong SAR 0.18

 
 
One surprise (for my American mentality) is that dollars are not the biggest, nor second biggest monetary supply in terms of value. They are third or fourth biggest depending on whether one considers M2 or M1.

Please note, the data is imperfect: the M1 data is newer than the M2 data, but the difference in M2 versus M1 ranking also speaks to great differences in banking structure and practices in various countries.

The main difference between M2 and M1 is that M2 includes savings and money market accounts. The proportion of M2 to M1 varies widely between countries. Though the ratios may be off because some data is older than other data, in the United States, M2 is more than five times bigger than M1. In Luxembourg, it’s only 1.3 times bigger. In Saudi Arabia, it’s 1.5 times bigger.

COMPARING M2 WITH CYPTO CURRENCIES

As of the time of this writing (September 7th, 2013), all the Bitcoins in the world are worth about $1.39 Billion. That makes their supply slightly less valuable than the M2 monetary supplies of Chad, Guyana, Montenegro, but slightly more valuable than the M2 monetary supplies of Mauritania, the Maldives, Belize, El Salvador, Malawi and Tajikistan. Bitcoins are on the map!

All the Litecoins in the world are worth about $59 million dollars, which is a little better than half the value of the smallest M2 monetary supply reported by the World Bank, that of Sao Tome and Principe.

MEASURING VALUE PER NOTE

The methodology behind this last analysis is speculative, but interesting nonetheless. What if we measured the value-per-note of all mediums of exchange? What if we counted all the notes in the world (Dollars, Euros, Litecoins, Vietnamese Dongs, Yen, Rubles, Lira, etc), and then counted the value of all the notes. For any currency, we could then compare their percentage of world-wide notes to their percentage of value of all the monies.

For example, imagine a world in which only two mediums of exchange were used: Roman’s Rubles and Mises’s Marks. Imagine that a million of each circulated, but Mises’s Marks were three times as valuable as the Rubles.

It’s easy to quantify the difference. Mises’s Marks represent three quarters of the value and only half of the notes. This can be described by a factor of 1.5. Roman’s Rubles also represent half the notes, but only one quarter of the value. They can be given a factor of 0.5.

A real-world example would be comparing Vietnam’s money, the Dong to the Euro. Taken note for note, the Dong represents a quarter of all the money in circulation, but only 0.15% of the value (when considering M2). The Euro is almost the exact converse. Euros represent 0.15% of the notes, but a quarter of value of all mediums of exchange in this analysis.

What conclusions be gleaned from this data? Most interestingly, is this factor (percent of value divided by percent of notes) in any way measure trust?

Several methodological concerns come to mind:

1) Aggregating all mediums of exchange, including Tide, gold and pig tusks (used as a medium of exchange on Pentecost Island in Vanuatu) seems like the best approach. In this analysis, only M2 data and the two most valuable crypto currencies, Bitcoin and Litecoin, are considered.

2) How would gold be incorporated into this analysis, since there is no single obvious unit to represent a note? People trade in grams, ounces, bars, tonnes.

3) Should crypto currencies be compared with M2, M1, or not at all? The ranking of trust factors was similar for M2 data and M1 data.

4) Can value per note be a meaningful measure of trust or anything else? Perhaps monetary discipline? What correlations can be found with this ratio?

With these concerns in mind, here is a list of the most and least trust monies using M2 data:

MOST TRUSTED

1. Bitcoin 15,589
2. Kuwaiti Dinar 456
3. Litecoin 370
4. Bahraini Dinar 345
5. Oman Rial 337
6. Latvian Lats 245
7. U.K. Pound 198
8. Jordanian Dinar 183
9. Euro 172
10. Azerbaijan Manat 166
11. Swiss Franc 140
12. US Dollar/Bahamian Dollar/Panama Balboa 130
13. Australian Dollar 118
14. New Zealand Dollar 104
15. Singapore/Brunei Dollar/Libyan Dinar 102

 
China’s Renminbi: 21.2
Japanese Yen: 1.3

CLOSEST TO PROPORTIONAL TRUST

(% money supply = % value of money supply)

Sri Lankan Rupee 0.987
Icelandic Krona 1.090

LEAST TRUSTED

1. Iran 0.0052
2. Vietnam 0.0061
3. Sao Tome Principe 0.0070
4. Indonesia 0.013
5. Belarus 0.015
6. Laos 0.017
7. Paraguay 0.029
8. Sierra Leone 0.030
9. Cambodia 0.032
10. Uganda 0.050

 

CONCLUSION

Though the Bitcoin economy may still be small, the fact of it being larger than many national monetary supplies — after only five years, no less — makes its dismissal by lingering critics downright silly. (Not that the “honey badger of money” cares much about its critics.) The value-per-note analysis is even more surprising. If indeed the relative trust of various currencies can be measured by comparing value-per-note, then Bitcoin is already the champion (precious metals not considered), and Litecoin is threatening to take second place.