The economics of deserved consequences
On interest-rate manipulation, Maimonides, and the scoreboard that political figures can't ignore forever
Russia’s economy gets a little of what it deserves as the central bank forecasts no economic growth this year and holds the benchmark interest rate at an eye-watering 14% with inflation projected to be between 6% and 7%.
■ Political figures can do lots of things to try to manipulate an economy in the short term, but it’s basically impossible to run from real-world consequences over the long term. The central bank may try to placate the Kremlin by making nominal cuts to interest rates, but the real consequences of the war can’t be painted over with wiggles in an interest rate.
■ The unjust and bloodthirsty war Russia launched against Ukraine is now almost halfway into its fifth year. It may be possible to suppress reporting on public opinion and even to smother public resentment with distractions, but it’s impossible to hide indefinitely from the laws of economics. A pointless, costly war is bound to weigh down an economy, as casualties mount well beyond a million, military production demands crowd out other sectors of the economy, and petroleum refineries become targets of retaliation.
■ And so that aggressor economy deserves to be weighed down. “[J]ust as we have done wrong by our choice, so too it is up to us to repent and to turn away from our evil actions” wrote the philosopher Maimonides. The choice to conclude the war doesn’t depend upon forcing Ukraine to negotiate; it depends upon Russia making the choice to stop.