The cost of living and the cost of principles

The Ukraine War has meant sanctions that have affected taxpayers worldwide. CPX Associate, Max Jeganathan poses whether the increase in the cost of living is a result of the cost of our principles.

McDonald’s is the secret to world peace — or so the economist and New York Times columnist Thomas Friedman famously wrote back in 1999. Friedman’s theory of peace was based on the observation — correct at the time — that no two nations with McDonald’s have ever been at war with one another (that is, not since each got their first McDonald’s). He was largely correct. It seemed that buying and selling things was humankind’s surest path to peace.

At least we all thought it was, until 8:59am on 24 February, 2022, when Russian forces began a full scale invasion of Ukraine. What has followed — apart from the war itself — has been the most globally significant and wide-ranging set of political and economic sanctions ever  carried out against a nation.

The founding textbook of economics, Adam Smith’s 18th-century work The Wealth of Nations, heralded the march of free markets as modern society’s most powerful invisible force. Money became the metric of success. As Madonna told us in the 80s, somewhat more pithily, we are living in a material world. But Russia’s invasion of Ukraine and the Western response to it has revealed something else: there is more to human motivation than we sometimes give ourselves credit for.

Despite a post-pandemic bull-run, both the national and international economy are now stalling. Interest rates are going up. Markets are going down. Inflation seems unstoppable. While many factors are to blame for the rising cost of living, a catalysing force continues to be our response to the war in Ukraine.

‘Our cost of living is (at least partly) an outworking of the cost of our principles.’

Sanctions have sought (effectively) to punish Russia, but they have also hit global trade-flows, supply chains, business confidence, and the prices on a shopping-list of consumer staples including petrol, wheat, metals, energy, and of course that new luxury item, the iceberg lettuce. As people and as ‘a people’, Australia’s stand (along with other nations) against Russia’s invasion has not been free of charge. Our cost of living is (at least partly) an outworking of the cost of our principles.

When Adam Smith wrote The Wealth of Nations, he also wrote a largely forgotten essay called ‘The Theory of Moral Sentiments’. In it he makes the point that free markets — though  beneficial — require moral frameworks to ensure human flourishing.

A couple of centuries of capitalism and multiple industrial revolutions later, it’s still true to say that the human heart can be more compassionate than it is greedy. Apparently, we are prepared to pay for the cost of principles with the cost of living.

Maybe Madonna’s and Friedman’s insights require caveats. 2000 years before Friedman put to paper his McDonald’s theory of peace, Jesus Christ warned people not to store up treasures here on earth, where moth and rust consume and thieves break in and steal. What good is it, he said, to gain the whole world yet forfeit your soul? Whatever economic theory of humans we’re working with, it seems like, deep down, we agree with him.

Australians have been told for years by our commentators and our politicians that we are driven by our hip pockets. Yet these past months have shown another side of ourselves.

Public sentiment, polling, and election results reveal that it is not just about the economy, stupid. Australians are ready for greater action on climate change. Australians are supportive of both the former and incoming governments’ decision to stand up to the Chinese government in the name of human rights and international rules-based fairness. Australians stand with the people of Ukraine and back the sanctions against the Russian government.

All of these are principled positions. They are also principles that drive up the cost of living. To a degree insufficiently acknowledged, we have not compromised what we believe to be right, for the sake of our wallets.

The last McDonald’s is now closed in Russia and like the difficult teacher ‘life’ is, it continues to give us the test first and then the lessons. We’re not really surprised that it takes more than a few Big Macs to achieve world peace. We’re not surprised that it takes more than a healthy bank account to explain human behaviour and motivations.

Commenting on the selfishness reflected in much of modern society, the author Marilynne Robinson observed that ‘the citizen’ has been reduced to ‘the taxpayer’. However, in a world allegedly driven by individualism, there are times when we behave more like ‘citizens’ and less like ‘taxpayers’. In our best moments, principles stand more robustly than bank accounts and economies, and perhaps that is how it always should be.

Max Jeganathan served as a political and social policy adviser in the Rudd and Gillard Labor governments. He is an Associate of the Centre for Public Christianity and is undertaking a PhD on the ethics of human dignity. 

This article first appeared in Eureka Street