In my last post Hard Currency, Soft Currency and Dollar Hegemony I discussed the effects of sanctions and currency restrictions could have to undermine the unique status of USD. In this post I’ll take a look at something that is becoming fashionable to believe in this country: the idea that we should seize assets of Russian oligarchs and send them to Ukraine to help them in the war effort.
The idea has appeal, to be sure; anyone familiar with the Russian system can only shudder at how they accumulated those riches. But we’ve allowed them to invest in our country for a long time now without asking too many questions, while our own industrialists labour under things like the Foreign Corrupt Practices Act.
The problem, however, runs deeper than that. Let’s start by observing that the United States has seized the assets of belligerent powers in the past, and I’ll use as an example the one everybody loves to hate: Nazi Germany. I’ll point out a couple of examples that touched Vulcan in one way or another.
The first is shown above: the Link-Belt diesel. The Germans developed the diesel hammer during the 1920’s and 1930’s, using it themselves during World War II. At the end of the conflict the US seized the rights and information to the technology and it was developed into the first US manufactured diesel hammer by the Syntron concern; later it was manufactured by the Link-Belt crane manufacturer and after that by International Construction Equipment. (Vulcan would have done well to imitate it, as it proved with the IC-65 hammer.)
The second is shown at the right: a page from the well-known mathematics reference book entitled Tables of Functions with Formulas and Curves by Eugene Jahnke and Fritz Emde. This unique book got many an advanced mathematician though some difficult problems. It was seized as war property and published for the benefit of the Allies in their development of weapons and other technology to fight the Germans. An example of plots of Bessel Functions is shown; it’s useful in Vulcan’s business, as was demonstrated in the thesis Closed Form Solution of the Wave Equation for Piles.
There’s one important difference: we had actually declared war against Germany (and Italy and Japan…) Vulcan as a corporation and the Warrington family were an integral part of that response. We seized those and many other assets subsequent to that declaration. We haven’t declared war against any one since: not Vietnam (Korea was a “police action,”) not Afghanistan, not Iraq, and certainly now not against Russia.
In the absence of that, I find the legal basis for this seizure on a broad basis very tenuous. One reason the United States has achieved what it has is that it is a country with a legal system that at least attempts to stick by the rules. Vulcan found the legal system to be complicated and expensive, whether that be the tax code, product liability, employee law, labour law, or whatever part of the legal system it came in contact with. A corporation could not survive for 115 years the way Vulcan did in an environment which did otherwise.
If we jettison in this way the “rule of law” for reasons which may seem to be justified at the time, we’ve thrown away another advantage of our system. People from the outside will be reluctant to invest or own property in our country, and they will take their money elsewhere, to our detriment.
If we really want resources from oligarchs to support this war effort, we need to start with our own–whose wealth dwarfs just about everyone else’s–and have them demonstrate their patriotism rather than just sitting back and expecting ours as an entitlement.