Is Money the New Morality?
It is – And That’s Good!
By Shlomo Maital
Really bad things are happening in the world today – and good people seem powerless to do anything about it. Syria’s Assad bombs civilians. Russia’s Putin grabs Crimea. Unspeakable crimes occur in Central African Republic. And that’s just a start. The United Nations? Deadlocked. Obama? Words, no deeds. European Union? Russia’s gas and Russian oligarchs’ money parked in London dominate.
But guess what. Where good people fail, money succeeds. Here is how. When countries like Russia do bad things, money flees. When money flees, the currency declines, inflation rises and economic growth plummets. This is happening to Russia, according to the World Bank. Putin is paying the price — not because of Obama sanctions, but because of market economics. Here are the figures:
“… the (World) bank said Russia’s gross domestic product (GDP) might shrink by 1.8 percent in 2014. …. The Economy Ministry estimates net capital outflow (out of Russia) at up to $70 billion in the first quarter alone, compared with $63 billion in the whole of last year. … the World Bank envisages capital outflow at $150 billion this year and $80 billion in 2015. This year’s forecast exceeds the $120 billion in capital flight that Russia saw in 2008 during the global financial crisis. … The outflow of money will put further pressure on the rouble, which despite its recent firming is still 7 percent down against the dollar this year. The weakening of the currency is likely to put upward pressure on inflation, which the World Bank sees at 5.5 percent in 2014, higher than the upper end of the central bank’s targeted range of 4.0-5.0 percent.”
So, it’s very simple. When countries’ leaders do bad things, money flees. Flight of capital trashes the economy. People suffer. They protest. And eventually, the bad leader leaves, is removed, flees, or is forced to adopt repressive measures, which ultimately fail. Russia cannot afford to lose $150 b.
This is the new morality. Money and capital keep leaders in line, not ethics, values or Obama. It’s the new ethics of globalization.
Is it so bad? The message is: Run your country properly, treat your people well, or, the money will leave and go elsewhere, where leaders are smarter and more ethical. And every country needs to keep its capital at home, rather than flee abroad.
The morality of the new global system is money. Let’s watch Russia closely to see if it really works.