Organized Greed vs. Disorganized Democracy

Uncle Volodya says, ““At the banquet table of nature, there are no reserved seats. You get what you can take, and you keep what you can hold.”

“In a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.”

Matt Taibbi, from Griftopia

“Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.”

Milton Friedman

It’s maybe a little unfortunate that cynicism has shoved its way to the fore in social consciousness; if you smell flowers, look around for a funeral. The world wasn’t always that way, and once the American Dream which is really the dream of everyone everywhere – the fond hope that all that will make us happy in life; love, family, the kind of paycheck that will let one enjoy both, will somehow find us if only we are loyal and determined – was relatively humble, and sort of sweet. Enough was just enough, and not just a little bit more, if you feel me.

Somewhere along the storied path, greed became a virtue, as enshrined by Milton Friedman and others like him. Greed is nothing to be ashamed of – it’s nothing less than the pistons in the great engine of human development. Greed is the puppet-master, pulling the strings of democracy.

So when Uncle Sam starts talking up democracy, look around for something you have that he might want.

Enter Daniel Witt, with a sad but hopeful piece on how Ukraine is pooching its big chance to be a real democracy. Because the road to democracy is paved with… privatization.

Pardon a brief interjection here; Daniel Witt seems like a pretty straightforward guy. If this is the same Daniel Witt, his motivation genuinely seems to be the straightest road to profitability. His most-requested speech, according to his bio, is “U.S. Protectionism Begs World Retaliation”. He shows every sign of being a guy who believes in free trade going both ways, the freer the better, and not a shill for an end-run by the US government.

So what makes me so suspicious, suspicion being the natural companion of cynicism? I’m glad you asked. In a word, titanium.

What’s the only state-owned asset he singles out by name as a sign that the Ukrainian government is backsliding on its reform road, just when real partnership beckons? The Zaporizhia Titanium and Magnesium Combine. Hmmm. Which just happens to be 49% owned by Dmytro Firtash, the sole Ukrainian oligarch to whom the USA seems to have taken a deep and abiding dislike. He remains under house arrest in Vienna at the request of the US government, for ‘alleged corrupt practices using U.S. banks’, and it seems pretty clear that same US government would have no problems with the Zaporizhia Titanium and Magnesium Combine being sold to a private investor with or without his consent. Which is kind of an odd position for the US government to take, considering its decidedly negative assessment of Crimea’s nationalization of businesses located in Crimea which were formerly the property of Ukrainian oligarchs.

Two basic facts will guide us as we proceed; one, the United States uses a lot of titanium, and it is absolutely vital to its aerospace and aircraft industry. Titanium is stronger than steel but much lighter, and if America had to substitute steel for titanium in its passenger aircraft, they would be much heavier, and able to carry only reduced loads of passengers and cargo. Not to mention fuel, so they couldn’t fly as far. The Boeing Dreamliner is somewhere between 12% and 15% titanium, and Boeing was losing $23 million on every Dreamliner that left the factory in 2015.

Two, the United States is not on the list of major titanium producers. In fact, only one lone ally is – Japan. Doubtless further adding to American chagrin, the runaway leader in titanium production is China, with whom the United States is currently engaged in a loud and messy trade war which relies heavily, from the American perspective, on acting the tough guy and employing a quickly-escalating sequence of threats and tariffs. Not a country you want to have your balls in a vise over supplies of a commodity you have to have in order to remain dominant in a major global industry.

Who’s next? Russia. Ditto. The United States has expended considerable energy and no end of media manipulation to make an enemy of Russia. It hardly seems sensible on Russia’s part to go on helping America with its aerospace industry, since much of it is devoted to weapons and military systems production. The others, in order, are Japan (which produces less than half China’s total), Kazakhstan, Ukraine and India.

Hmmmm….Ukraine. Ukraine produces about 10,000 metric tons a year, but if a private investor took over and modernized production, it might be much more. Of course the business could not sell at a loss, but perhaps it might arrive at a Wal-Mart solution; I know a customer who will buy 100% of your output – here’s how much he’s willing to pay. Perhaps not as much as you hoped, but you can be assured of selling as much as you can produce. Free trade in action, baby; dig it.

That’s roughly what The Diplomatic Courier thinks, too. In its article, we learn that the United States sold off its entire National Defense stockpile of titanium, beginning in the late 90’s. Perhaps not the brightest decision, considering the USA now imports 79% of its titanium, and relies on it more than ever.

“United States-Russia relations have been perplexing in the last two years, and tensions between the two increased in April when newly imposed sanctions were placed on Russia. Because of these sanctions, Russia has threatened to halt titanium exports to the United States. With a growing dependency on titanium, the result of this would be ruinous for the United States defense industry and for aircraft manufacturers such as Boeing.”

Ruinous – you don’t say. I hope you’ll understand, then, why the cynic in me is suspicious as the United States turns on the indignation and sorrow when Ukraine’s titanium industry doesn’t appear on the list of state assets to be privatized, and simultaneously claims that such privatization is vital to modernizing the Ukrainian economy. Which is all Uncle Sam really cares about. Honest.

Going back to the original reference, Daniel Witt waves the carrot under Ukraine’s nose by citing the UK and New Zealand as examples of successful privatization. Ukraine is hesitating, he says, but it must go down the same path.

Curiously enough, a search using the term “privatization a disaster for UK” yields contentions that privatization of state rail, bus and water services have all yielded terrible results. Significantly, though, they have not been a uniform failure – they have been great for business; in fact, the article describes privatization as ‘a bonanza’. Where they have been a disaster, using water services as an example, is for users, the environment and those employed in the industry.

Transpose that situation to the titanium industry in Ukraine. Ask yourself how much the USA would care if the environment in Ukraine suffered because of an ambitious new private producer and his investors. How about if the workers got dicked over, and the ‘bonanza’ passed them by? What about Friedman’s implication that Einstein’s Theory of Relativity was inspired by his loyalty to capitalist principles, or that Henry Ford achieved such success because he was an early advocate for free trade? If anything, his description of individuals pursuing their own interests making the world go ’round in a manner which is pleasing to the gods of private enterprise ought to serve as a warning.

You know, I think we’re on the same page here. At least I hope so.