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Source link: http://archive.mises.org/8432/the-economics-of-war-georgia-edition/

The Economics of War, Georgia Edition

August 26, 2008 by

Americans should consider how the US government would react if (say) Texas declared its independence and received massive amounts of military aid and advice from the Russians, all while the Texas president feted his Russian counterpart at state dinners in Austin and promoted Texan membership in a post-Cold War Warsaw Pact that had already expanded greatly in the previous 15 years. To me, the economic lessons dominate. FULL ARTICLE

{ 22 comments }

lukas August 26, 2008 at 9:52 am

Well written, but there are some details about Russia that the author ought to correct. First of all, Minsk is not in Russia, but in Belarus, as of now an independent state. And most Russian youth are more worried about how to escape the army with its horrible drill, its abysmal pay and its whimsical conscription practices (they have drafted young men right off the moscow subway via a training camp into chechnya…). Serving in the Russian armed forces is definitely not a gateway to a better life.

Paul Marks August 26, 2008 at 10:32 am

“militeristic Georgia” rather than militeristic Putin.

Have a look at the relative size of the military forces of Russia and Georgia sometime.

As for Georgian independence – that was recognised by Russia before Putin even came to power.

Russia has no more right to Georgia than it has to Lativia, Lithuania, Estonia or the Ukraine (and so on).

One can talk about whether Texas has the right to leave the Union (actually, under the treaty of 1845, it would seem to have such a right), but the United States government could hardly recognise the independence of Texas for years and then invade and seek to undermine its constitutional government (that was not the position in 1861 – the United States did not recognise indepedence and then seek to undermine it years later).

A just comparison would be if Putin decided to invade Alaska – on the grounds that it was once under Russian rule.

To defend Georgia may not be practical, but there is no need to insult the Georgian people (whilst pretending concern for the “Georgian taxpayer) with articles such as this.

As so often Ludwig Von Mises would be ashamed and disgusted by such an alliance with a man like Putin.

One can at least say “Putin’s actions are despicable”, and not just in Georgia.

Instead we get sneering at the Vice President of the United States (I suppose because it is considered that overthrow of Saddam Hussain is somehow similar to efforts to undermine the constitutional government of Georgia).

And then there is an attack on Israel. As if “the party of God” in Lebanon (which seeks the conquest of all infidel lands – not just Israel) was somehow similar to the constitutional government of Georgia.

One can certainly oppose Israeli tactics (the idea that “the party of God” forces could be defeated from the air alone was simply wrong), but you seem to oppose the whole idea of resisting the Islamic radicals who seek the extermination of Israel – and the West (including the United States).

For the sake of argument let us say that the government of Georgia is as bad as you claim.

What would be your reaction if Putin invaded the Ukraine (rather “just” having the man who is now President of the Ukraine poisoned – in a botched attack that taught Putin to rely on radiological poisons rather than chemical ones).

Would you then write an article in defence of the Ukraine and denouncing the action of Putin?

Of course you would not.

There would be more sneering at an American ally and a claim that it was all, somehow, the fault of Washington D.C.

In reality President Bush has not provoked Putin – on the contrary he has bent over backwards to try and be friends with Putin.

This policy has been shown (again and again) to be utterly absurd.

But reality is ignored by you (and by too many of the people at the Institute that carries the great name of Ludwig Von Mises).

In your version of events it is not Putin that is at fault – it is the wicked United States.

But then everything is always the fault of the United States – even World War II.

Ludwig Von Mises would not approve of this position.

There is a vast difference between saying “Putin is despicaple, but miltary reality dictates that there is very little we can do to help” and saying “Georgia is militeristic and is in the wrong – and the whole thing is the fault of the wicked United States”.

Or are we back to claiming that Communist aggression in IndoChina was really “A National Liberation Struggle Against Western Imperialism” – with Uncle Ho being the good guy and the Uncle Sam (as ever) being the Devil.

Tell that to the remains of the millions of people the Communists murdered in IndoChina.

It may be that to save these people was not possible (military historians will long argue over that), but there is no need to urinate on the memory of the victims (and on the United States) or to side with Marxists.

In fact a policy of nonintervention (however wise or unwise such a policy may be in certain circumstances), is discredted by constantly sneering at and attacking the United States (and the friends of the United States).

There is clear divide between a “loyal opposition” (that opposes a line of policy on practical grounds). And people who blame the problems of the world (even World War II) on the United States, and side with the enemies of the West.

Nat August 26, 2008 at 11:03 am

I agree with Mr. Marks.

Mises must be spinning in his grave at 10000 rpm. Perhaps the Ludwig von Mises Institute should be renamed the Pat Buchanan Institute.

michael August 26, 2008 at 11:04 am

The whole thing looks to me like a provocation engineered by the Russian FSB. Sure, the pugnacious Saakashvili has been wined, dined, cajoled and bribed by American and Israeli weaponry, and led to believe we would back him all the way if trouble ever started. But did he start the fight?

It’s hard to tell, but I don’t think so. The best reports of pre-invasion activities show a military buildup along the Georgia-South Ossetian border, but the proximal cause seems to be the shelling of four ethnic Georgian villages by Ossetian separatists inside Tskhinvali. Georgia responded immediately, coming in with guns blazing. This upset the status quo ante, of course, and resulted in numerous civilian deaths– although hardly the “genocide” the Russians claimed.

It has the look of a classic provocation– an appraisal reinforced by the fact that the Russian army just happened to be standing by, ready to occupy positions in the heart of Georgia. The operation served Russian (and South Ossetian) purposes, and will probably be the cause of the downfall of the Saakashvili government. If S. actually did have a hand in starting it, it was a dumb move.

Israel, at least, has had the good sense to distance themselves from the situation, announcing they will be suspending all further arms deliveries to the Georgian government.

I hate unintended consequences. August 26, 2008 at 11:23 am

Well we see the unintended consequences of long and not so long term US foreign and economic policy at play here. The economic effects of US policy of inflation are clear, there are oil pipelines going through the area and the Ruskies want to control the pipelines. So they have a customer made excuse to invade Georgia after the attack on South Ossetia where many folks are semi-citizens of Russia.

The foreign policy unintended consequences are worse. The US seems to have let the cat out of the independence bag with the approval of the independence of Kosovo. The Ruskies feel that the same should hold for South Ossetia and several other places. Then it gave Georgia psuedo support to invade South Ossetia with the backing for NATO membership, Keep in mind that Georgia is far away from NORTH ATLANTIC!!!!

The to make matters worse the two parties in the US are making hay out of the fact that the Cold War is not over and their friends in the Defense business start seeing big $ signs.

The most optimal policy for the US at this point is to do two things it won’t do:
1. Disband NATO. It is useless and only serves to drag the US into regional conflicts costing lives and money. And what is worse is that the War on Terror is bad but the wack jobs there are nothing of the foe a WEALTHY and pissed off Russia can be.
2. Stop creating money. This inflation is killing the US economy and looks to have started a recession in the major trading partners of the US.

GTT August 26, 2008 at 1:01 pm

A couple of problems with the Texas/Georgia comparison:

1. Texas joined the US voluntarily; Russia conquered Georgia and made it part of the Soviet Union by force.

2. Russia is a tyranny, trying to impose despotism on Georgia; the US is a free country, assisting Georgia in its efforts to remain free.

The Texas/Georgia analogy only works if there is no difference between tyranny and liberty. I think the first principle of any discussion like this is that liberty is good and tyranny is evil.

filbert August 26, 2008 at 1:22 pm

Please, please, PLEASE go read Michael Totten’s review of how we got where we are in Georgia before posting again on the subject.

http://www.michaeltotten.com/archives/2008/08/the-truth-about-1.php

Not everything that happens in the world happens because of the U.S. There are other players, too, and not all of them are the Good Guys.

michael August 26, 2008 at 1:43 pm

GT– I can see a couple of complicating issues with those couple of problems you see with the Texas-Georgia analogy:

1. “Texas joined the US voluntarily; Russia conquered Georgia and made it part of the Soviet Union by force.”

A more apt analogy would be that South Ossetia is to Georgia as Chechnya is to Russia. Or as Kosovo (thanks, “unintended”) is to Serbia. In all three cases, incorporated small subnational states are trying to break away from colonial oppressors.

As far as the wishes of the locals are concerned, virtually all the South Ossetians (and the Abkhazians) would today prefer to be a part of Russia. They hate the Georgian government.

2. “Russia is a tyranny, trying to impose despotism on Georgia; the US is a free country, assisting Georgia in its efforts to remain free.”

No. Stalin didn’t want an independent Alania. So when he drew up the map of the Caucasus he split the place in half, giving part to Russia and part to Georgia. When the USSR collapsed, South Ossetia became part of an independent Georgia, and looked to Russia to free them from oppression. At the same time North Ossetia became part of Russia, and for a time looked to Georgia to help free them from oppression. But what they’d really like would be to be the Free Republic of Alania.

It’s a little confusing. The independent Chechens, for instance, call their free republic Ichkeria. Not Chechnya. But at the moment, 2008, all the South Ossetians want Russian protection– at the price of becoming a part of Russia.

Plus, the Russians don’t want to incorporate Georgia. Georgia is a huge management headache. What they want to do is to neutralize it so it doesn’t become an American military base. So the plan is to destabilize it until the government topples. The next Georgian government, whether fairly elected or unfairly seized, is likely to be ideologically neutral… keeping an equal distance from both Russia and the US.

3. “The Texas/Georgia analogy only works if there is no difference between tyranny and liberty. I think the first principle of any discussion like this is that liberty is good and tyranny is evil.”

I think this kind of thinking will seriously hamper anyone trying to make sense out of politics in this part of the world. All the nations, the slivers of stranded nationalities, the so-called freedom fighters, the so-called terrorist groups, the Sir Galahads rushing to the defense of the little guys– everybody– they’re all completely despicable in their activities, and without moral principle.

Russia comes to the defense of brave little South Kazootnicksplotz, while at the same time they have brought total ruin to their own breakaway republic, Chechnya. The United States comes to the defense of embattled Georgia (in words only, though), while in Kosovo they championed a breakaway republic of thieves, white slavers and drug and gun runners, headed up currently by the top echelon of the Albanian mafia.

That’s what this war is all about. It’s dirty. And the lies abound on all sides. There are no white hats in the Caucasus. Or anyplace else.

Lukas August 26, 2008 at 1:47 pm

@GTT:

1. Well, just replace Texas by Hawaii, Puerto Rico or any native American tribe that has ever been incorporated into the US. Sound better already, doesn’t it?

2. Russia is a tyranny, trying to impose despotism on Georgia? While the US merely acts in the interests of freedom? It all depends on whose side you stand on… Get real, each party wants their guy to be in charge (and they have good reasons for that). Without Soros’ money and the US, the “Rose Revolution” would never have happened.

Domestically, the US are freer than Russia and I don’t think anyone would dispute that fact. But their foreign policies are very similar in both objectives and instruments.

Sigitas Jakucionis August 26, 2008 at 6:52 pm

“Within a militarist community there is no freedom”?

What ground this stereotype has? Georgia is militarized but also very open and laissez-faire country with very low import taxes, low corruption, virtually no entry restrictions, and economically booming.

Brian Macker August 26, 2008 at 10:24 pm

Based on news reports I at first thought this conflict was caused by the Georgians but this article by Michael Totten titled “The Truth About Russia in Georgia” changed my mind. Even before reading Totten’s article I would have thought this article was ridiculous. The second commenter, Paul Marks, nailed why.

I too am a great fan of Mises but have been driven away from this site by articles like this. The one the really got my goat compared the insurance our servicemen have with the rewards the Saudis were paying out to suicide bombers families. Ridiculous comparison for so many reasons.

Peter August 27, 2008 at 7:11 am

Well, no, Paul Marks has not “nailed why”, but rather, as usual, is considerably wide of the mark, making unwarranted assumptions about the motivations of everyone concerned. (And why does everything always come down to Hezbollah?)
As Michael correctly points are, there are no good guys here. But surely we should support the independence of anyone and everyone who wants it, no matter who else is for or against them?!

Stalker August 27, 2008 at 8:37 am

I am curious whether the author knows where Minsk is located. Since he has not heard about Ossetia (nothing to be proud of) I suppose he thinks Minsk is a Russian town. Actually, it is not.

Brian Macker August 27, 2008 at 8:48 am

Peter,

This article was a childish and naive interpretation of events and that’s all that needed to be exposed for Paul to “nail it.” I don’t care what Paul has or hasn’t written about in the past or any nit-picking of minor details on your part. You didn’t even begin to make a case.

GVP August 27, 2008 at 11:13 am

Brian Macker

You are not the only one who is turned off by the anarchist rhetoric on this web-site. However, when it comes to economics it is the finest forum I have found on the internet. It is regretable that the Mises name has fallen into the hands of what can best be described as a group of Rothbardians whose political philosophy doesn’t quite line up with Mises. In fact this anarchist view has been a huge wedge between libertarians and conservatives for the better part of the twentieth century. It was the same sort of thinking that drove the isolationist thinking before WWII and in fact so weakened the Old Right that it gave New Dealers carte blanche to establish socialism in the US.

Alex V August 27, 2008 at 12:34 pm

Paul Marks,

to understand the events in Ossetia, one needs at least some knowledge of the history of the region.

Ossetia was annexed by Russian Empire in 1770s. Its division onto North and South Ossetia was the result of the civil war of 1917-1920 in Russia. But, communists came into power in the region in 1921, and by 1922 so called Transcaucacian Republic (the entire region south of Caucasus mountains)entered the newly formed USSR.

So, the division of the Ossetia onto the Nothern and Southern parts is an artifact of administrative division of the USSR, which was heavily influenced by Stalin (Dzhugashvilly) who was born in Gori just a few miles from Tshinval). In 1991-1992, Ossetia essentially won a civil war for independence from Georgia and their right to self-determination should be respected. Georgia has no right to Ossetia whatsoever, otherwise Russia has a right to Georgia. I would prefer to see the entire Ossetia as a separate state (outside Russian Federation). BTW Abhazia asked Soviet government three times to let them separate from Georia and join RSSFR, but the USSR government refused.

How the was is a fault of the gang of criminals also known as the neocon US government? Very simple. US pumped nearly a billion into the government and army of a country with practically no economy to push this criminal regime into a war. Gerogian unemployment is 20% officially, and unemployed status is not applicable to rural population and even to people who have “dacha” – a summerhouse with a very small piece of land. In reality, it may easily be 60%. Many Georgian families survive on money sent by family members who work in Russia. But developing the economy as not an easy thing to do. Instead, Saakashvilly was running on a nationalistic agenda promising to regain Abhasia and Ossetia with the help from the US.

To Russia, any territory in Caucasus is a problem rather than a gain. The entire affair is a victory for the neocons (it’s a permanent conflict now in which Russia is dragged deeply, a potential great war), loss to everybody else.

**To defend Georgia may not be practical**
Defending Georgia as you understand is very dangerous and no good to anyone. People kill people, US taxpayers pay for that.

Brian Macker August 27, 2008 at 7:42 pm

GVP,

“However, when it comes to economics it is the finest forum I have found on the internet”

I agree. I was only complaining about these isolationist and anti-US type posts.

JLuc August 29, 2008 at 3:33 pm

@ OP: if you didn’t know what South Ossetia was, why are you lecturing us now?

The US needs to figure out the correct balance between supporting the Russian “near-abroad” states and infringing on what Russia perceives to be its legitimate sphere of interest.

How would the US feel if Mexico (not Texas, that’s just clueless) suddenly was being armed by China? Not good. Now, what if Mexico decided to do something that brought it into conflict with US troops? Not smart behavior, by Mexico, even if the US was in the wrong.

If the US wanted to confront Putin’s Russia for its generally obnoxious and militaristic behavior, why not do so, before, on Chechnya? Russians have been violating human rights there for a decade. Doing so could even earn the US some brownie points from the Muslims.

Russia is not currently a democracy. But picking a fight with them over their overreaction, and perhaps even provocation of, Georgia’s clumsy behavior is in no one’s best interest. There are no vital US interests at stake, besides the 2000 or so Georgian troops lately in Iraq, so the likely result is just a bit of posturing, happily fed to Kremlin propaganda. A smarter US position would have been to clearly tell Georgia that it would not support any military adventures, regardless of the merits of their cause. Same lackluster US diplomacy that got us Gulf War I.

Ball September 3, 2008 at 11:44 am

I have to chuckle at the sheer pomposity of these comments.

This isn’t about good vs evil. Since when have we (the USA) been the bastions of good, defending the world from evil? Have you all drank the kool-aid? Are all Americans Manichean?

The question of wether we should stand by while Russia invades another country is an absurd question to begin with. Russia didn’t attack the USA and never did. What, are we going back to the domino theory?

War is never about good vs evil. It’s about money and power. NATO expansion equals money for US military contractors. Wake the hell up.

Ball September 3, 2008 at 12:01 pm

As for Mises, he understood perhaps better than anyone the driving forces behind Nazism and WW2. It wasn’t the ability to wage war and conquer europe that gave rise to Nazism, and it wasn’t the bombing of Germany which ended it. Hell, the plutocrats who pushed us into war with Germany (both times) did it because of war loans they made and the lucrative spoils of rebuilding contracts after the war. Churchhill himself got kick-backs.

Mises was not a Manichean, and his name shouldn’t be sullied by suggestions that he would take EITHER side of this ridiculous discussion. The questions we should ask is not which side is morally wrong, but why individuals have made certain decisions.

Economics is a science, not a religion. Praxeology can be applied to explain why and how special interests are whipping up anti-Russian jingoistic fever so they can profit at everyone else’s expense. Unfortunately, I don’t think it can explain why people who don’t have a real horse in this race are helping them. I think that lies in the realm of psychology and the reptilian brain (if any brain at all).

Not to say Mises didn’t have anything to add on the topic of evil. Said Mises: “Power is evil.” Amen.

Ball September 3, 2008 at 12:42 pm

I’m going to pick apart one of the more moderate posts on this thread to add some perspective. Nothing personal, JLuc, but our national psychosis needs to be identified:

>The US needs to figure out the correct balance between supporting the Russian “near-abroad” states and infringing on what Russia perceives to be its legitimate sphere of interest.

Why on earth does the U.S. need to support anyone militarily? Sphere of interest? What the hell is that? Interests are private, and the only common interest the individuals within this geographical boundary have is keeping the barbarians out. This isn’t a wrecking ball wielded by God, to be swung at the ungodly. This is a recipe for constant war and misery.

If Stalin was correct in saying “Everyone imposes his own system as far as his army can reach.” then we’re properly fucked.

>If the US wanted to confront Putin’s Russia for its generally obnoxious and militaristic behavior, why not do so, before, on Chechnya? Russians have been violating human rights there for a decade. Doing so could even earn the US some brownie points from the Muslims.

If Russia wanted to confront America for its generally obnoxious and militaristic behavior, why not do so, before, on Iraq? Americans have been violating human rights there for a decade. Doing so could even earn the Ruskies some brownie points from the Muslims.

>Russia is not currently a democracy.

So?! Good for them! Hell, we’re not supposed to be a democracy, either! We only started invading other countries after we became one!

> There are no vital US interests at stake, besides the 2000 or so Georgian troops lately in Iraq, so the likely result is just a bit of posturing, happily fed to Kremlin propaganda.

Unless, at the very least, there are ships enforcing an embargo on us, how could our interest in any conflict be ‘vital’? Look up the word, you may be surprised of its meaning outside cable TV demagoguery.

>A smarter US position would have been to clearly tell Georgia that it would not support any military adventures, regardless of the merits of their cause. Same lackluster US diplomacy that got us Gulf War I.

A smarter position by the average US resident would be to appraise the relative risks to THEIR liberty. Is a resurgent, belligerent Putin a greater risk than a belligerent US President?

You don’t seem to understand our special relationship with Georgia and other former USSR satellite states like Kazakhstan. We support local thugs, some put in power by cold war stay-behinds (Gladio), who are given military ‘support’ paid for by western taxpayers so plutocrats can get wealthier. This isn’t about chimerical “national” interests, but special private interests by people who deem themselves more important than the hoi polloi.

Think about this: Our military support of Georgia didn’t just magically happen. We didn’t all just wake up one day to find out that an elf waved a magic wand and thus we were the bulwark power against a 3rd world economy, Russia, and Putin with his cold, evil stare. The real interests at play which led to this confrontation aren’t in the public field. Politicians don’t make policy, they pass it. Hell, these days even lobbyists are bypassed and instead the think tanks influence the DOD policy makers directly. It has become as politicially efficient as the KGB-run Duma or even the Red Army-run National People’s Congress. In other words, very small cliques in revolving doors unconsciously searching for ways to increase their money, power, and influence by monopolizing all three.

Do you know what’s easy to monopolize? Mines and gas-pipes. This isn’t about non-existent ‘national’ interests which you seem to think you’re somehow involved in forming. This is about money and power, and the powerful who formulate policy without your consent, or even notice.

John December 23, 2008 at 5:56 am

Oh Mine God! Just Have a look!

http://www.russia.ru/video/war080808en/

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