Saturday, December 7, 2024

Foreign Affairs, Geopolitics & Diplomacy

Home Policy Spotlight Foreign Affairs, Geopolitics & Diplomacy

Liberty and National Borders

Libertarianism is all about the freedom of individuals from coercion. Libertarians believe the proper role of government is defined by JS Mill’s harm principle: ‘The only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others.’

Within a country this is relatively straightforward – reductions in tax and increases in liberty are supported, increases in tax and reductions in liberty are opposed.

But things can get complicated when it involves matters outside the country. How is libertarianism affected by national borders? Can it apply to relationships between sovereign states?

To what extent should Australian libertarians seek to oppose coercion in other countries?

In his 1801 inaugural address, US President Thomas Jefferson declared that the US should consider its external military alliances to be temporary arrangements of convenience to be abandoned or reversed according to the national interest. Citing the Farewell Address of George Washington as his inspiration, Jefferson described the doctrine as “peace, commerce, and honest friendship with all nations—entangling alliances with none.”

Thomas Jefferson. 2nd President of the United States. Author of the Washington Doctrine of Unstable Alliances.

Known as the Washington Doctrine of Unstable Alliances, this thinking dominated US foreign policy right up to the Second World War. And although America now has longstanding alliances with many countries, including Australia, the doctrine remains influential in some political circles.

In particular, many libertarians support it. In their view, a country should not invest blood and treasure in squabbles beyond the country’s borders unless there is a clear threat to the country and its ability to engage in trade and commerce. It should certainly not maintain military capabilities in excess of what is needed to defend the country.

This is rationalised in terms of libertarian values. History has repeatedly shown that a standing army is a threat to liberty. Moreover, maintaining a military force capable of more than simply defending the country is expensive, necessitating higher taxes than if the Washington Doctrine applied.

They point to wars such as Vietnam, Iraq and Afghanistan, where it is difficult to show any enduring benefits from military involvement by America or Australia. They also criticise current support for Ukraine’s fight against Russia’s invasion.

Ukraine’s ambassador to Australia, Vasyl Myroshnychenko, inspects an Australian Bushmaster armoured vehicle

There is a problem with this thinking though: nationalism and national sovereignty are actually collectivist concepts. They are not libertarian and, Jefferson’s other qualities notwithstanding, neither is the Washington doctrine.

What that means is there is no libertarian justification for doing nothing about coercion merely because it is occurring in another country.

Coercion should always be our concern, wherever it occurs.

That does not necessarily mean rushing military aid to those subject to coercion in other countries. There are many reasons why that might not be possible, practical or advisable. But it is perfectly legitimate for libertarians to consider whether there is anything they can do, militarily or otherwise.

Some interventions have made a major difference. But for America’s entry into the Second World War, for example, Germany and Japan would have imposed their dreadful dictatorships on most of the world. But for America’s intervention in Korea, the people in the south would now be suffering the same miserable fate as those in the north. And but for Australia’s intervention in East Timor, the country would be suffering under Indonesia’s heavy-handed military rule, now obvious in West Papua.

Australian Peacekeeping Handover of East Timor

There are also some current examples to consider. One of the consequences of the climate change panic, for example, is that around 40,000 children in the Democratic Republic of Congo work in appallingly inhumane, slave-like conditions in cobalt mines. The cobalt is used in lithium-ion batteries required by electric vehicles.

In China, the government has imprisoned more than a million Uyghurs since 2017 and subjected those not detained to intense surveillance, religious restrictions, forced labour, and forced sterilisations. Forced labour is used to produce solar products.

It is estimated that China has 98 percent of the world’s manufacturing capacity for photovoltaic ingots; 97 percent for photovoltaic wafers; 81 percent for solar cells; and 77 percent for solar modules. Many of the largest global producers of photovoltaic ingots and wafers, solar cells, and solar modules directly source polysilicon from entities believed to use forced labour in its production.

Even a boycott of products associated with such coercion would be more consistent with libertarian values than doing nothing based on the “no entangling alliances” idea.  

JS Mill was also an advocate of utilitarianism in addition to classical liberalism. This philosophy, generally attributed to Jeremy Bentham, is often summarised as seeking the greatest good for the greatest number.  For libertarians, it should mean the greatest liberty for the greatest number.

BRICS+ of Gold

Gold

Jim Rickards, an esteemed American investment banker and author with expertise in finance and precious metals, recently brought to light an intriguing prediction regarding the BRICS+ countries:

“I recently revealed that the so-called “BRICS+” countries will announce the creation of a new currency at its annual leaders’ summit conference on August 22–24. This will be the biggest upheaval in international finance since 1971 … the world is unprepared for this geopolitical shock wave. It appears likely that the new BRICS+ currency will be linked to a weight of gold. This plays to the strengths of BRICS+ members Russia and China. These countries are the two largest gold producers in the world, and are ranked sixth and seventh respectively among the 100 nations with gold reserves.”

Understanding BRICS+

BRICS+ is a group of states consisting of Brazil, Russia, India, China, and South Africa. “BRIC” was coined in 2001 for fast-growing, potentially dominant forces in the global economy by 2050. South Africa’s later inclusion expanded it to BRICS+.

Over 17 years, BRICS+ has endeavoured to become a counterbalance to western hegemony. Its institutions like the New Development Bank (NDB) and Contingent Reserve Arrangement are alternatives to the World Bank and the IMF.

This alliance boasts:

  • Combined economic influence and abundant resources
  • Seven countries in the membership queue, with 13-14 awaiting consideration

Come August, Saudi Arabia’s inclusion will mark:

  • 50% of the global population within BRICS+
  • 30% of global landmass
  • 54% of global GDP
  • Two top oil producers: Russia and Saudi Arabia
  • 15%-20% of global gold reserves.

Moreover, an amalgamation involving the Eurasian Economic Union and Shanghai Cooperation Organisation seems on the horizon.

After their first formal meeting in 2009, BRICS+ asserted the necessity for “a stable, predictable, and diversified international monetary system.” Rickards postulates that BRICS+ is gearing up to unveil its currency.

BRICS+ Currency

Recently, Rickards gave a fascinating interview on the YouTube channel Wealthion. In this interview, he was adamant that the BRICS+ currency, (which he termed a BRIC, for convenience), “is not a gold standard”. 

“The value of the BRIC is not determined with reference to any other currency. It is determined with reference to gold, by weight of gold”.

The implication of the BRICS+ currency being tied to a weight of gold means that, regardless of anything else going on financially and economically in the world:

1 unit of BRICS+ currency = specified weight in gold

Trade between 50% of the world’s population will transition to BRICS+ currency, which will be defined in gold, so half the world’s trade will be transacted in BRICS+ currency.

Gold’s Unwavering Stature

Warren Buffet, an investment giant, once opined on gold: “Gold…has two significant shortcomings, being neither of much use nor procreative.”

Despite Buffet’s scepticism, gold’s reputation as a store of value has persisted for 5,000 years. He is missing the point of gold. Gold is not an investment, it is real money, unlike the 600 odd fiat currencies in the history of the world that have gone to zero.

Gold fulfills money’s 6 characteristics:

  • Durability
  • Portability
  • Divisibility
  • Uniformity
  • Limited Supply
  • Acceptability.

BRICS+’ gold linkage suggests, in the medium to long term, a potential for spikes in gold demand and the nominal currency price of gold.

A Waning USD?

Let’s take a look at the world’s current world currency, the U.S. dollar. The USD does not fulfill the attributes of money.

The U.S. dollar’s decline is palpable. In 1913, when the US Federal Reserve was established, the fixed price of gold was US$20.67. President Nixon infamously broke the gold peg that was US$35 in 1971. Today, gold hovers around $1,914 per ounce. The dollar’s worth is now 1.8% of what it was in 1971, a staggering 98% fall over 52 years.

Rickards’ analysis paints a bleak dollar future, in contrast to the BRICS+: “This is a bet that the dollar is going to collapse against you over time. I think that’s a very good bet … this is not a three-month forecast … you want to launch this new currency and you say hey long term the dollar is going to collapse in terms of gold. I’ll hook my horse to this wagon called gold by weight, and I’ll just reap the benefits.”

Libertarian Lens

The essential question for libertarians is “What can we do, so that we and our families survive and thrive?”

As Murray Rothbard insightfully shared, “I see a great future for gold and silver coins as the currency people may increasingly turn to when paper currencies begin to disintegrate.”

Allowing for one year’s living costs in cash, keep spare gold in hand (not as ETFs or in banks, which carry counterparty risks).  Then, you have a store of value that has well and truly proven itself over millennia. 

Gold never takes its promises lightly.

FLASH POLL: Do You Support The United States-Australian Military Alliance?

fav americans

There’s been a lot of talk about the US-Australian alliance, especially with AUKUS nuclear submarines attracting bi-partisan support in Australia.

Libertarians typically split on the issue of foreign affairs, geopolitics and military action.

(L to R) Australian PM Albanese, US President Biden, UK PM Sunak

Group one says we should maintain a self-reliant, self-defensive military and not engage in foreign entanglements. Adopting a non-interventionist policy in matters foreign, this school of thought argues alliances can put a target on our back so seeks to defend Australia if and only if directly attacked. For want of a better term, we’ll call them the “Neutrality” group.

Group two says free countries are rare, face authoritarian foes and Australia, a free nation, is vulnerable with its large coastline and sparsely-populated continent. Arguing for a robust military but knowing Australia can’t by itself defend such a land mass with few people, this school seeks foreign alliances, which include international obligations, to fully protect our freedoms. We’ll call them the “Alliances” group.

So, here’s the flash poll.

Do you support the United States-Australian military alliance?

Yes or no.

Once you’ve voted, I’ll share some thoughts on this.