OPINION:

Many world political leaders and even some business leaders who should know better seem to have forgotten the “second step”. When studying economics, students are expected to learn to consider the consequences of any action – second step.

One of the main reasons Ronald Reagan’s presidency was so successful was that Mr. Reagan was the last president to have a degree in economics and a good understanding of the subject and was smart enough to surround himself and populate its administration with world-class economists. They took the mess that former President Jimmy Carter left them in four years and turned the US economy into a wonder of the world.

The Russian rouble, after collapsing with the imposition of sanctions, now appears to have regained much of its value as the market realized that Russian President Vladimir Putin was still selling huge amounts of oil and of gas and demanded that buyers pay for it in rubles or gold. President Biden said that the rise in gasoline prices in the United States was due to Mr. Putin, but if the Russians still sell their oil and gas on the world market, why is the price so high?

Why penalties? The goal for much of the world, including the United States and Europe, is to stop Russia’s war on Ukraine, where thousands of innocent women and children are being slaughtered by the Russian army. . Rather than putting the US and other NATO troops in Ukraine directly into the fight, the idea has been to impose economic sanctions to bring Mr. Putin to heel.

Sanctions often impose real costs on the citizens of the country that is subject to them, but they rarely prevent the sanctioned country from obtaining the goods and services that it really needs, as long as certain countries do not accept the sanctions. Perhaps the best example of truly effective sanctions dates back decades, when virtually the entire world agreed that apartheid in South Africa had to end. South Africa was quickly brought to its knees and the repugnant policy abolished. US sanctions have not overthrown the regime in Cuba, for example, because Cubans can get almost anything they need from Europe, Asian countries and many Latin American countries. Mr. Putin can sell Russian oil and other natural resources – perhaps at a discount – to China, India and other countries that have not agreed to impose the sanctions.

Most internationally traded products are priced and sold in US dollars, but as long as the seller is willing to take another currency or gold – or even bitcoin – they can still sell. The dollar is the world’s reserve currency and is of great benefit to the United States in the sense that the United States, in effect, obtains nearly interest-free loans from the rest of the world, most of which will never be called .

The Chinese, Russians and many others, including even the Swiss, have chafed under what they believe to be the global tyranny of the dollar, from which they have sought to free themselves. Sanctions are forcing Russians to develop alternatives to the dollar much faster, which is not in the long-term interest of the United States

Even Gita Gopinath, the first deputy managing director of the IMF, warned that the sanctions could lead to a more fragmented international monetary system. The share of US foreign exchange reserves has fallen from around 70% ten years ago to around 60%. The trend should continue.

The sanctions impose real costs on the Russian people, making it much more difficult for them to buy from or sell to foreigners since they can no longer use the global dollar-based trading and clearing system. Moreover, they are deprived of desired goods and services like the Big Mac. The problem is that the target of the sanctions is Mr. Putin, not the Russian people. Last week, when Mr. Biden said (correctly) that the goal was to get rid of Mr. Putin, he was telling the truth that the foreign policy establishment did not want him to tell.

The real goal is regime change in Russia to stop the war. Russians are unlikely to vote against or revolt against Mr. Putin at this time. Western policy should assess how to get rid of Mr. Putin faster by effectively exploiting the conflict between Mr. Putin and his generals (over failed war campaign) and putting more pressure on the oligarchs around Mr. Putin . They lose large amounts of wealth and power and cannot be satisfied with their current affairs. Ideally, some would find a way to put Mr. Putin into an involuntary retreat.

Mr Putin is in a box of his own making in that he can no longer walk away as leader of Russia – too many enemies and too much blood on his hands. (How long would he last in a nice condo in Miami Beach as a mere retiree?) Most dictators don’t come to happy endings – because too few can envision and therefore not plan a “step two” where they are no longer in charge. Perhaps London’s political and sports betting markets could open a book on Mr Putin’s life expectancy.

• Richard W. Rahn is President of the Institute for Global Economic Growth and of MCon LLC.