Decentralize Ukraine

Decentralize Ukraine
by Roman Skaskiw

Solving Ukraine’s two biggest problems — corruption and security — has everything to do with decentralization. Here’s how:

1) Corruption. (A basic lesson in incentives.)

Bribes are a public sector phenomenon. On the rare occasions that bribes exist in the private sector, they are usually a crime by employees against the business owner. The effects of bribes in the private sector are not very destructive because business owners have a strong incentive to police their employees. Those who fail do not remain business owners very long. See my essay, “A Theory of Bribes” on the Mises Institute website ( for a detailed explanation.

Bribes become destructive in sectors where competition is severely restricted, namely, in services provided by the government: security, justice, education, government medicine. Nobody in the bureaucratic hierarchies providing these services suffers negative consequences from abusing the recipients of their services the way private business owners do. Their salaries depend not on voluntary patronage, but on taxes and monies allocated from the national budget. There is no threat of bankruptcy until the entire nation faces bankruptcy.

Exposing as many of Ukraine’s services to the competition of the market place (privatizing the education system, for example) will reduce corruption. This is consistent with the general recommendations of Former Georgian Economic Development Minister Kakha Bendukidze who is now an advisor to President Poroshenko.

Short of outright privatization, solving social problems on the Oblast level instead of the national level would also dramatically reduce corruption.

When taxes, road repair, security, justice, pensions, and education systems are managed on a local level, regional differences emerge in the quality of these services. People more quickly determine which policies and which politicians are effective. People and business gain the ability to vote with their feet and move to better administered regions.

The reason German feudalism was so much more benign than feudalism under the Russian Czar is because Germany consisted of literally thousands of geographically small political entities and peasants fled from unjust lords to better ones. There were consequences for abuse and mismanagement. (See How The West Grew Rich by Rosenberg, Birdzell, or The Rise and Decline of the State by Creveld.)

Regional variation combined with the possibility of migration provides a mechanism that punishes poor administration.

This is a very European idea. The history of Europe is one of decentralization and local autonomy and these norms extending well into Ukraine, where many cities and down adopted the Magdeburg Rights. There is a monument to these self-governance laws in Kyiv, though I suspect few people know its significance.

Decentralization should not be considered federalization or an attempt to fracture the country. It should be considered the necessary exposure of critical services to competition — either the capitalist competition of the market place, or regional competition between governors. It should be a presented as an expression of confidence in the Ukrainian people and a return to Ukraine’s historic role as a freer alternative to Russian oppression.

2) Security. Military bureaucracies are the centralization solution to problem of security. Militias and an armed society are the decentralized solution.

Military bureaucracies retain the advantage of coordinating resources, but at the expense of freedom of action. Militias make decisions and act on them much more quickly.

When facing an enemy like Russia with its sophisticated intelligence network, military bureaucracies have an additional disadvantage of being more easily compromised and corrupted, betrayed by their leadership.

Militias also have the “advantage” of non-accountability. The government enabling them can more easily deny direct accountability for the worst actions of the militia, as Russia has been doing in Eastern Ukraine.

In the long-term, militias also have the advantage of being cost effective. Men will always to be willing to purchase arms and seek basic training at their own expense. Militaries, on the other hand, will always consume enormous budgets and the acquisition of new technology will always be fraught with corruption, especially after the pressure of an enemy has subsided.

Over the course of the last decade, the militia has caught up with the military regarding one of its historic advantages: battlefield awareness, especially where the battlefield is populated by civilians. The communication structures of military bureaucracies are rivaled by readily available modern technology and information sharing.

Today, many Ukrainians seem eager to defend their country. Ukraine’s leadership should do the bold thing and let them. This means allowing a legal channel for their freedom of action. Instead of acting as generals, Ukraine’s leadership needs to adopt the role of cheerleader. They can facilitate the defense of the country with a declaration like this one:

“If you want a rifle and 200 rounds of ammunition, bring your passport and $300 to Maidan. Take a four hour course with a hundred other people. We’ll stamp your passport, and you can have an AK47 from storage. One stamp per person. Period. Training held twice a day until people stop coming. Proceeds from the sales will go toward equipping the Ukrainian military.”

Alternatively, Ukraine can simply legalize the purchase and sale of firearms.

This would deal a fatal blow to the centerpiece of Russia’s foreign policy strategy — intimidation. This strategy was explicitly mention in the instructions of the Russian Main Intelligence Directorate (GRU) to Russian Spetsnaz in Eastern Ukraine which were intercepted in late April (

People with the means to defend themselves are not easily intimidated.

Admittedly, an armed society would be a significant cultural shift that raises understandable concerns. The reason gun ownership has such a negative association is because most gun owners are criminals. The most honest, law abiding members of society are the ones least likely to purchase black market guns, or to risk the legal pitfalls and ambiguities associated with official gun ownership.

Any serious analysis of this course of action must consider the results of many scientific studies of armed societies. Most recently, a comprehensive study published Volume 30, Number 2 of the Harvard Journal of Law & Public Policy compared gun laws and violent crime in European countries. ( The study, like many earlier ones, found a negative correlation. More guns mean less crime.

Interestingly, Russia emerged in this study as the stark example of a country with extremely strict gun laws and a high murder rate: four times higher than the United States and twenty times higher than Norway. Most murders in Russia don’t involve guns.

The proper context for this message is again a return to Ukraine’s historic role as a freer alternative to Russia: Ukrainians are free people who have the right to defend themselves.

This message, perhaps even more than the guns themselves would be the biggest deterrent to Russian aggression. As this historian Shane O’Rourke wrote in his book The Cossacks:

“[Cossack freedom demonstrated] that an alternative and viable social order did indeed exists. This was to prove far more threatening to Poland-Lithuania or Muscovy and the Russian Empire that the cossack swords and muskets on their own could ever be. . . . Cossack insurgency alway had the potential to explode out of its regional and local character into a matter of kingdom wide significance.”

The Conflicting Nat’l Myths of Ukraine – Russia & the strange union w/ Putin – Europe’s Right

(previously unpublished essay)

The national myths of Ukraine and Russia are not just different, they are mutually exclusive, and while Ukraine’s can exist without Russia, the Russian idea plunges into an identity crisis without Ukraine.

Both claim the legacy of Kievan Rus, the mythologized and idealized kingdom is considered a well-spring of Slavic culture and Orthodox Christianity. It was obliterated by the Mongols in 1241. Here, the narratives diverge.

Russian ideologues consider themselves the great uniters and political champions of Slavic peoples. Kiev was the wellspring of their culture and religion, and Moscow has been and remains their natural political center ever since the principality of Muscovy “affirmed itself as a regional hegemon.” A unification, which, in the word of Putin adviser Alexander Dugin, occurred “not by the conquest, but by the genesis of Russian Statehood.” See Alexander Dugin’s “Open Letter to the American People.”

Ukrainian ideologues, whom Dugin refers to as “Western Russians,” consider themselves the unfortunate but otherwise noble descendants of Kyivan Rus whose greatest political expression for the previous several centuries were Kozak uprisings against slavery and feudal structures imposed by foreign monarchs, the Muscovites, an ethnically mixed Finno-Ugric people and latecomers to slavic culture, having been the most aggressive and successful of the oppressors.

The conflict is obvious, and the battle-space includes Wikipedia.

Ukrainian poetry often engages the idea of a hi-jacked identity: “What are these Muscovites searching for in our torn open graves? An ancient parent? Oh, if only they could find that, our children wouldn’t be crying.”

Dugin is correct when he claims “such a State [as Ukraine] . . . never existed in history.” I would describe Ukraine as a culture attempting to defend itself through statehood. It is a remarkably resilient culture having survived centuries of imposed feudalism, Russification, Polinization, merciless Soviet purges of writers, musicians, artists and other cultural figures, Holodomor, and many dozens of laws over the course 400 years forbidding or limiting the use of the Ukrainian language. Its attempts at statehood have been miserable failures, most recently combining all the bureaucratic excess of the over-protective West with the corruption and glacial work ethic of the post-Soviet East. The recent overthrow of the Yanukovych government was a huge accomplishment and had the potential to be Ukraine’s Magna Carta moment. It still might, though the Russian invasion throws everything into question.

Russia, by contrast, is a state looking for a culture. Ever since the Grand Duchy of Muscovy’s conquest (yes, conquest) of the Kingdom of Novgorod, the idea of a Greater Muscovy people, or later, a greater Russian people, has been inseparable from forced cultural assimilation, reaching its barbaric apogee in Soviet times. The joke was that if you beat a Polish man long enough, he becomes a Russian.

The expansionist idea is evident again in the symbol of Dugin’s “Russian Spring” — golden spear points radiating in all directions.

While Dugin invokes a Russian people to describe even 9th century Kievan-Rus, the idea of a Russian people is actually only slightly older than the idea of an American people.

It was in the 18th century that Czar Peter I, formerly of the Grand Duchy of Muscovy told his diplomats to start referring to the Grand Duchy and its conquests as “Russia” — a name taken from the contested legacy of Kievan-Rus.

Though many states can be described as military unifications of more tribal kingdoms, the Russian state was particularly audacious in expanding its myth to encompass Finno-Ugrics, Slavs, Caucasians, Asians, Tartars, and other Turkik peoples.

Once Russia extended its national myth beyond the boundaries of their core population, their problem has been the unification of disparate and unwilling cultures. So it remains.

Long before Peter Sutherland’s infamous statement about “undermin[ing] national homogeneity” through mass immigration, the cultures of the steppe were being undermined by population transfers, mass deportation, language restrictions, and purges of writers, artists, musicians and other cultural figures.

What the Europeanists and globalists only now pursue with a velvet glove (or at least a leather one) has long since been pursued with an iron fist in the steppe.

Thus it is a bit peculiar to witness the alliance between the Kremlin and much of Europe’s far right. As detailed by Anton Shekhovtsov:

International ‘observers’ at the illegal and illegitimate ‘referendum’ held in the Autonomous Republic of Crimea occupied by the Russian ‘little green men.’ The overwhelming majority of the ‘observers’ are representatives of a broad spectrum of European extreme-right parties and organisations: Austria’s Freiheitliche Partei (FPÖ) and Bündnis Zukunft, Belgian Vlaams Belang and Parti Communautaire National-Européen, Bulgarian Ataka, French Front National, Hungarian Jobbik, Italian Lega Nord and Fiamma Tricolore, Polish Samoobrona, Serbian ‘Dveri’ movement, Spanish Plataforma per Catalunya. They were invited to legitimise the ‘referendum’ by the Eurasian Observatory for Democracy & Elections (EODE) . . . Presented by Michel as ‘a non-aligned NGO’, the EODE does not conceal its anti-Westernism and loyalty to Putin, and is always there to put a stamp of ‘legitimacy’ on all illegitimate political developments, whether in Crimea, Transnistria, South Ossetia or Abkhazia. Moscow’s money talks. . . .

Front National’s Marine Le Pen now visits Moscow on a seemingly regular basis. . . .

Jobbik’s leader Gábor Vona gave a lecture at Moscow State University at the invitation of Russian right-wing extremist Aleksandr Dugin; according to Vona, it would be better for Hungary to leave the EU and join the Russia-dominated Eurasian Union. Dugin himself gave a talk in the United Kingdom at the invitation of the far-right Traditional Britain Group and wrote a letter of support to Nikolaos Michaloliakos, the now jailed leader of the Greek neo-Nazi Golden Dawn, whose political programme urges Greek society to turn away from “American Zionists” and ‘Western usury’ towards Russia. . . .

Putin’s far-right government is eager to co-operate with any European ultranationalist party unless it is critical of Russia for historical or other reasons. . . .

On April 9th, Jobbik’s MP Tamás Gaudi Nagy made a 3-minute speech against European democracy wearing a T-shirt saying “Crimea legally belongs to Russia! Transcarpathia legally belongs to Hungary!”

Of course, politics have always made strange bedfellows.

By endearing themselves to the Kremlin, they get financial support. This matters. The risk is a compromised message, and the loss of nationalist movements in in Eastern Europe where the terrifying memory of Kremlin hegemony outweighs any fear of encroaching cultural Marxism.

As observed by Steve Sailor, Ukraine’s revolution had a very nationalist and conservative character, but now that it’s accomplishment is threatened by Moscow, Ukrainians are increasingly willing to embrace whatever it can get from the West in exchange for closer ties and protection, if only economic. Since the government was toppled in February, support for joining the EU has risen from 41 to 53%. (See page 38 of this report.)

With a weakened west and a collapsing empire overseas, Russia has tremendous potential to rise as the military and resource wing of European people. They would need to refocus on their core population and fight corruption whose size, scope and callousness is unique among Europeans.

Rather than seizing this potential, they’ve returned to their failed historic role of dragging surrounding nations and people into this morass of corruption and brutality. Instead of building a foundation for commerce and trade (including trade of military protection), they’ve decided to expand the rubric of a “greater Russian people” by several hundred kilometers.

They will continue to be the Europeans distinguished by their failure at modern civilization.

Bitcoin Magazine – Conflict in Ukraine

It was a challenge for me to write something a bit more journalistic. I’m more accustomed to writing analysis.

krainian society has a low amount of trust, and high technical expertise. So, perhaps predictably, Ukraine’s Bitcoin scene is defined by isolated pockets of talented developers and miners (see did Ukrainians almost take over Bitcoin article by Bloomberg1). But it is absent of any substantial community of users or merchants. The public remains unaware of Bitcoin. A handful of people (myself included) are trying to change that by organizing clubs, Satoshi Squares, and educational resources.

The founder of Kyiv’s Kuna Bitcoin Agency2, a retail Bitcoin shop, explains on the agency’s website: “After the revolution we now have no fear nor anything to lose. Sounds like a perfect place for Bitcoin.”

Despite the violence and uncertainty, the mood in Ukraine is largely optimistic, more so the further you travel from the territories disputed by Russia where a low-intensity war is underway and where a substantial minority remains deeply skeptical of the West. For many others, the conflict in Ukraine is a long over-due divorce with the corruption and brutality of the Russian government — what Wikileaks dispatches revealed3 was considered a “mafia-government” by many diplomats.

Of course, there is concern too. Everyone is waiting to see how far Putin will push the covert invasion / uprising. He recently surprised many observers by stating Ukraine’s planned election for May 25th is “a step in right direction.” That means he’ll either be backing off, or launching a full scale invasion, or something in between.

Last month, the self-declared separatist mayor of Sloviansk, the Eastern Ukrainian city at the center of the covert invasion / uprising, said “We will take all necessary measures so that elections in the southeast do not take place.” Asked how he would accomplish this, he responded, “We’ll take somebody as hostage and hang him by the balls.” He also promised to destroy dissent, calling it “a harsh truth of life4.”

November seems like a life-time ago, and a world apart from today’s situation in Ukraine. The unrest began on November 21st. Victor Yanukovych was still Ukraine’s president. He was Moscow’s preferred candidate in the 2010 election (which he won), and earlier in the fraudulent 2004 election which was overturned by Ukraine’s Orange Revolution.

On November 21st, he announced the postponement of a planned accession agreement with the EU, a long, difficult process at the end of which, Ukraine might theoretically have joined the EU. Success was doubtful, but the process itself would have strengthened Ukraine’s ties with Europe. Even more importantly in the opinion of many Ukrainians, it would have symbolized a movement away from the corruption and criminality that replaced the Soviet Union. A minority of Ukrainians viewed the EU with skepticism and wanted closer ties with Russia, especially in Crimea and the two easternmost provinces known collectively as “Donbas,” the home of then-President Yanukovych.