The economy is not doing so hot. But the government has been avoiding talking about the real reasons it is suffering. In part one, we discuss the role economic sanctions have played in harming the economy.
Here’s a transcript of our conversation:
Emma: Hi, Brittany.
Brittany: Hi, Emma.
Emma: Today I wanted to talk about something that is going on right now as we record this episode. We tend to record these a little bit in advance, but I have a feeling that what we’re gonna talk about is not going anywhere.
Brittany: Sadly, true.
Emma: Sadly, we will be dealing with this for a while. I think. So we’ve done quite a few episodes on what’s going on right now in Eastern Europe and Ukraine with Russia invading and starting this war. And as we speak right now, it’s still going on. There’s still conflict. It’s, I think we just hit the two-week mark and there’s all sorts of crazy side effects happening around the world. And you know, some of them do come directly from what’s happening with Russia and Ukraine, but not all of them do. And I wanna talk about how our government is blaming a lot of our problems that we have right now on Russia and blaming them on, you know, sort of an easy target with Vladimir Putin. And one big thing that a lot of people are concerned about right now, rightfully so, is the price of gas. And Brittany, I don’t know, I don’t think you drive a car.
Brittany: I don’t drive, thank goodness. Ok. Yes, but I take Ubers and I’m sure that’s about to get bad too.
Emma: Totally. We’ll talk about that also because the price of gas affects the price of basically everything else because a lot of stuff comes on trucks. But I drive a car, and I live in Tennessee where gas typically tends to be on the cheaper side compared to the rest of the country. And it is over. I wanna say the last time I filled up was probably about a week ago, and it was over $4 a gallon, which for this area is really high. And I wanna say it’s climbed even more since then. Fortunately, I drive a car that doesn’t use a ton of gas, so I feel lucky for that. A couple of my friends with trucks are having a very hard time. But it’s pretty crazy seeing how quickly these prices have gone up. And there are a couple of reasons this is happening, and I wanna talk about, you know, why this is actually the case, why gas is getting so expensive, but also the way that our government is talking about it. So, to start off, we have brought sanctions against Russia, which is basically where our country says we are not gonna buy this product from this country. And sanctions are used as a form of punishment most of the time against, you know, a country that’s maybe behaving in a way that our leaders disagree with. And it’s something that, you know, seems like a good idea a lot of the time because it’s, it seems like, well, this is a good way to punish Russia without actually going to war with them. But it’s not actually that simple when you think about it, because if you can imagine, you know, there’s Joe Biden and there’s Vladimir Putin, and they’re at odds and they’re arguing with each other, and they both wanna cause pain to each other. So if Joe Biden just says, Hey, we’re not gonna buy any gas anymore from Russia. You know, we’re only gonna buy from these other countries. And we get a lot of our oil from Russia, I wanna say it’s at least 30% Brittany, Do you have.
Brittany: I actually didn’t even know that until I was started, but I’m not sure the exact amount.
Emma: It’s quite a bit. It’s a lot. And as soon as we said, well, we’re not gonna buy any more gas from you, the gas got really expensive here. And that’s something that I find very strange, that this is how we choose to sort of have our wars. Now. It sort of reminds me of the Cold War where there were all sorts of sanctions between the United States and Russia. Yep. Because here’s the thing, when you think about it, most Russian citizens and most American citizens probably do not have a lot of problems with each other. Right? If we took a thousand Russians and a thousand Americans and put ’em all in a room, I think they would get along pretty well. I don’t think there would be a lot of problems. It wouldn’t be just an immediate war that just breaks out because these people all happen to be in the same room. But America’s government is really in conflict right now with Russia’s government because Russia’s government has chosen to, you know, invade Ukraine as part of this long conflict. So that’s the thing about sanctions is that it seems like a good idea because yeah, you’re causing pain to this other country who is doing something that you don’t approve of. But when you actually think about it, it’s not the other country’s government that’s gonna feel the weight of these sanctions. It’s normal people. And it’s people like me who drive my car around Tennessee. Right. What does, what does that have to do with what’s going on in Russia? And it’s, I hear so many people call for sanctions immediately as soon as anything happens. And it really concerns me because I think people have kind of gotten out of touch with what this actually means to other countries, to us. And it’s fascinating to just think about, you know, all of the effects that this could have on us. And it’s sort of related also to tariffs, which, you know, maybe Brittany, you could explain a little bit what those are and, and how we’ve used those in the past with, you know, as a form of policy. But it’s, it’s really strange to me to think about how the government does these things. And then they, they blame other countries for saying, oh, well that’s why everything is so expensive, is because Russia’s being bad right now. So that’s why it’s so bad. But it’s, you know there’s tariffs, there’s these sanctions. And then also on top of that, we have regulations in our country that make it really difficult for us to produce our own oil. So it’s like the government is doing all of this crazy stuff at once and then they like to just point the finger and say, well, this is just Putin’s fault. So, Brittany, I don’t know if you have any thoughts on any of that. You wanna chime in about tariffs or sanctions or any of this stuff?
Brittany: Yeah, so Connor and I just recently did an episode on our sanctions in Active War. And I think you bring up a good point again cuz it’s like the Cold War, right? It’s like, okay, and I, we both, at the end of the episode, we both kind of gave our answers and I answered that. I did think sanctions are an act of war, but we’re what worse than that even is, you know, that these are wars are governments against governments. It is not people against people. Yeah. But we are hurting the Russian people. And I’ve, and not only in Russia, I’ve seen calls here of like, oh, let’s ban Russian law school students from being able to take part in this. Wow. Or let’s ban it, and you have to think about it. There’s somebody’s banning Russian cats from being like in some like cat issue. I saw that. Yeah. But you have to wonder like, this isn’t, Putin doesn’t care. Putin’s not gonna be like, oh no, we can’t be in the cat show. Oh my goodness, I’m gonna call this whole thing off. He’s not, you know, it doesn’t matter. So it’s sad to me because it’s not Putin or the government that’s hurting or whatever. Something I brought up with Connor last time is like, even with all these economic sanctions, Putin’s gonna get what he needs first before anyone else because he’s the president. Yeah. You know, like he’s gonna get the access to food or stuff like that because they’re gonna prioritize him. So it’s not really him that’s going to suffer. It’s the people. And that’s just appalling because we would hate that if someone did it up to us. Yeah. If somebody put sanctions on us, we would be livid, you know? Yeah. So, and as far as tariffs go, I think they’re similar to sanctions. I think it’s a good point because not so much, but like when we had the trade war a couple of years ago. Which we thought that was the worst thing that could happen. We were wrong. But so with the trade war, you know, Trump really wanted things made in America, restored jobs here in America. And so we were taxing tariff is basically a tax on goods and services. We were taxing, like other countries to export their goods to us. But what happened is now we had to pay more so like companies here. Yeah. Had to pay more to get the products that made the thing so cheap here. So that was really frustrating. But I’m actually reminded of a Bastiat quote that comes to mind, and that’s it that says, if, you know, goods don’t cross borders, soldiers will. And I think this is really important to remember right now, and kind of goes back into our tariffs in act of war. The market keeps us civil to each other. It keeps us peaceful. Yeah. Because we want to get things from other countries, you know, we need oil from Russia. Now, whether or not we should be working on oil here is a whole different conversation. But, you know, do we want to be, you know, trading with China, even though China’s kind of a scary country right now, but we still trade with them? And so there’s these good relationships we keep, not necessarily because we love the governments, but because we all benefit from doing business with them, which is a very powerful thing. You know, that’s why we talk about markets being so important, is that markets keep us civil to each other. But when we’re cutting this off, you’re just making people angry. And so I think that Bastiat’s quote is so important right now because he’s absolutely right. If we’re not trading with each other, if we’re not keeping the market, you know, alive between different nations, then we are gonna end up going to war. And that’s a scary thing right now that we’re very close to facing. Yeah. And so I think that’s just it’s crazy to me. And it is scary. And to go back to what Connor and I talked about, you know, I do think we’re in kind of a cold right now, but I do think sanctions are in and of themselves an act of war because you are aggressing against a country and you are cutting off their livelihood. Yeah. So, you know, Connor and I even talked about the blockades to Iran a couple of years ago where we were blocking medicine and essential medical supplies. And that’s even worse somehow than telling somebody they can’t buy an iPhone. Yeah. But one more thing I wanna add on this is that another thing Connor and I touched on was that there are private sanctions, right? So if Apple decides, cause it wasn’t the government that told Apple, you know, not to do business. You know, apple decided we’re not gonna do business with Russia anymore. And they actually do have the right to do that. You know, that is. Yeah. completely up to them. It’s when the government’s involved that we start getting, you know, too close to war.
Emma: Yeah, exactly. I think that’s a huge distinction to make too, where, you know, historically some people have enacted boycotts of certain products. Now whether or not you think that’s a great idea, I think it’s kind of silly to, you know, pour out Russian vodka just because it’s from Russia. Yes. I think it’s kinda the same idea as what the government’s doing with sanctions, but that’s your individual choice. If you wanna do that, that’s completely fine. It’s very different though when the government, with all of the power that it has and all of the, you know, the arms and the force and all of it decides to do something like that, it’s completely different. Just like with, you know, sometimes businesses do things we disagree with, but it’s very different when it’s the government. And one more thing that I wanna talk about on this note is that Russia also supplies a few other really important things to the rest of the world. Russia and Ukraine actually account for 30% of wheat production in the world. Oh wow. And that is gonna be a huge problem if we are, you know, we have these sanctions against them when the next wheat harvest comes around and, you know, these companies aren’t able to make as much bread and as pasta and products that people really rely on to feed their families, that’s gonna be a huge problem. As well as fertilizer, which is super important to a lot of the world’s, you know, large crops and vegetables and things that we grow to eat in large quantities. Russia actually makes about 13% of the world’s fertilizer. Wow. Which might not seem like a lot, but when you’re thinking about the entire world, that could cause some serious problems. So I would keep your eyes peeled for more news on that as we get further into the year because the spring planting season is basically just about to happen. And if that’s happening without fertilizer, you know, that’s gonna be something that has some really serious effects. And again, like, you know, we talk about how the government is doing this, and we love trade between multiple countries. We love global trade. And the interesting thing is the government right now is blaming Russia for all of these problems, saying, well, we have to pass these sanctions. Russia is why everything is so expensive. But when you actually look at the environment in the United States for business and for, you know, people like farmers or for large companies that are trying to drill oil here, to provide energy within the United States, it’s very, very difficult to do that because of all of the regulation that we have on all of those industries. So, it’s really strange for the government to turn around and blame Russia when it’s almost impossible for these companies to work here with all of the rules that they have set up. So it’s a really wacky system that we have right now where, you know, it’s awesome that we do trade with all these countries around the world, but the fact that our government makes it so difficult to create these products here is I think a huge part of this problem. So it’s, you know, it’s not easy to summarize global trade in 15 minutes. So, we’re doing the best we can here, but, we’re actually gonna do another episode sort of on this topic next, we’ll this will be the next episode that comes out where we’ll talk more about our actual money supply and sort of what’s going on with that right now and with inflation and COVID and a little bit more. So stay tuned for that second episode and we’ll talk to you guys all again soon.
Brittany: Talk to you soon.