Calculation on a napkin
In the exact sciences, there is a concept of a calculation written “on a napkin”, or “on the back of an envelope”. It refers to an approximate computation carried out in an informal setting, when some mathematicians argue over a coffee or a beer and want to get a rough estimate of some quantity. In such computations, it is common to round off numbers, use general formulas, etc., with the understanding that the final answer might not be exact, but gives a ballpark estimate, accurate to within an order-of-magnitude.
In this post, we will perform such a calculation on a napkin, albeit of a very special kind. We will estimate the economic cost, in today’s dollars, of the genocide committed by the Soviet Union against Ukraine in the 1930s.
Part I. Holodomor
The central phase of the genocide is referred to in Ukraine as Holodomor, or death-by-starvation. During the fall of 1932-1933, soviet forces confiscated all food stocks from Ukrainian peasants, sealed off the villages with military cordons, and, over the course of the winter, continued to remove any sources of food that remained. This resulted in the near-complete destruction of the rural society in eastern Ukraine over the course of one winter.
Russia has aggressively denied the genocide. In the west, the supreme resource for the history of this period is the recent work of Timothy Snyder. An earlier book about Holodomor is that by Robert Conquest. Last year, David Satter talked and wrote at length about Russia’s denial of its Soviet past. (Satter was expelled from Russia this January.) The U.S. Senate has recognized the artificial famine as a genocide, following the findings of the 1985 commission.
I first heard about “Holodomor” as a child from my grandfather, which however was too abstract to make much of. A few years ago, my great-uncle relayed the experience of his mother; their family was one of the better-to-do ones of those in the country. Since she had money and urban outfits, she was allowed by the soldiers to the train station, so she could go to the city and buy food. Upon return, they would inspect her bags to make sure she had only brought the number of kilograms necessary to feed her family, and no one else.
Holodomor was only one dimension of the greater campaign to extinguish Ukrainian national identity in the USSR. Moscow also worked aggressively to eliminate the culturally successful elements of the Ukrainian society — systematically killing artists, scientists, musicians, writers, university professors, etc. Whereas Holodomor destroyed Ukrainian civilization in the east, mass deportations have hollowed it out in the west. My grandmother recounted how one of the most shocking images from her early childhood was seeing trains of people, with mothers holding babies in their arms, being deported to Siberia. The train cars were completely open — the women and their suckling were just standing in the freezing winds of the Ukrainian winter, with thousands of kilometers laying before the much harsher winters they were being carried to. And this was nearly a decade before the Nazi occupation of Ukraine in the 1940s, which my grandmother also saw firsthand.
These experiences are not in any way unique: most families in Ukraine, with the exception of Russians who were moved by the state into eastern Ukraine in massive numbers after the Holodomor, had one or more members killed by Stalin’s terror machine.
Part II. The Calculation
How could one estimate the impact of these losses on the Ukrainian economy today?
To begin with, we fix the number of killed or deported at one-quarter of the Ukrainian population. This figure is taken from the Senate resolution. The number killed in Holodomor alone is probably less than that, but if we include repressions against cultural figures and mass deportations to the labor camps, it is a reasonable estimate.
Extrapolating to the present day, this implies that Ukraine is short 33% of its current population, which is just over 45 million. That is, there’s a deficit of 15 million in the current Ukrainian population, relative to the pre-Holodomor baseline.
For the measure of the economic contribution of one person, a natural choice is GDP per capita. The Ukraine GDP per capita is currently 7,500 USD. Multiplied by 15 million, this gives $122.5 billion/year.
However, this only counts the dimension of the genocide that is concerned with raw population loss. Since the genocide specifically targeted the most valuable elements of the society, and resulted in the destruction of whole villages, oblasts, and the eastern countryside, the bulk of the economic loss is likely to be due to the second- and higher-order effects. For example, the knowledge of arts and sciences that was cultivated over generations could not be passed from one talent to the next, because the university faculty has been executed. The next generation could not then produce new works that would be competitive abroad and advance development at home. In return, the people as a whole would have fewer resources to start families, and so on.
It is thus more appropriate to scale the economic value of every life to a hypothetical baseline in which the genocide had never occurred in the first place. For this, one possibility is to take the per capita average of the EU countries, which is about $30,000. Multiplying by 15 million, we get $450 billion / year.
The choice of the EU average is motivated by the fact that, on the one hand, it excludes the really “rich” countries which could be said to have unique historical fortunes or advantages (United States: $54.6K, Canada: $43.14K, Norway: $55.4K, Switzerland: $46.0K), and, on the other hand, it includes some of the rapidly developing countries in eastern Europe in which the effects of the Soviet empire on their economy are still visible. In essence, the average represents the completely free countries that were able to develop without foreign interference for a couple of generations. This would be Ukraine without the Soviet empire.
One could also consider adding to the “$112.5 bln” number the amount required to raise the per capita GDP of the entire Ukrainian population, now considered to be at 60 million, to the European level. This would apply the increment to the initial 45 million as well, yielding $1462.5 bln / year. In essence, this number represents the cost of completely removing the effects of Soviet imperialism on Ukraine today.
There is indeed a grey line between ultra-aggressive imperialism and genocide. When a national language is forbidden to be used in schools, in the press, at public events, etc. then the use of language will decline and fewer people will feel connected with the national identity that it carries. The question for us is where to draw this line.
I think it a natural choice to draw it precisely at the point where people were killed. Thus we take the $450 billion figure.
If this quantity is to be obtained from annual interest on a principal, we can calculate the principal once we decide on the interest rate.
Ideally, the interest rate should coincide with the growth rate of the economy. The growth rate is higher among the developing countries, and varies widely from one place to the next. If Ukraine were to receive an additional ($30,000 * 15 million) contribution to its economy, it would add $10,000 per person, placing the GDP rate at $17,500. This development mark was passed by Poland during the past decade.
Poland shares many parallels to Ukraine: it is roughly similar in population and territory, the countries share a common history and have many cultural ties, they were the central territories of the Bloodlands, where Hitler and Stalin have slaughtered millions of civilians with policies that often enabled one another, — and they are both struggling to shake off the lingering effects of the Soviet occupation. If the new government in Kyiv succeeds in establishing a truly liberal democratic system, Ukraine would likely follow Poland’s example in its integration with Europe.
The rate of growth of the Polish economy averaged 4% during the past decade. $440 billion is four percent of $11 trillion. This is the capital that one must invested today, in order to receive $450 billion each year from the 4% interest.
By a curious coincidence, the average growth of the world economy since WW2 has also averaged around 3.5-4%. Thus, the principal that would have generated 11 trillion today would represent the same share of the gross wealth of the world back then.
Part III. Conclusion
To a pragmatic Russian government, the international recognition of a debt of such scale could appear to be a real threat. At a 2008 security summit, in response to a question by an Estonian journalist, who asked why Russia would not say “we are sorry for imperialism”, Putin gave a long-winded reply, at one point exclaiming: “Why should we let the dead pull us by the sleeves?” The gambit to deny the memory of the genocide having taken place would invite the reintroduction of the Soviet identity into the Russian statecraft, which philosophy stresses the possibility to construct reality with propaganda — and (elsewhere) with force.
If the leadership of Russia perceives the potential of ex-soviet states to demand repayments for the soviet atrocities as a serious threat, then the quickest way to remove that perception would be to initiate proceedings at the International Criminal Court, to settle once and for all the lingering legacy of World War 2 and carry out a Nuremberg trials for the Soviet Union.
Of course, the potential Russian war with Ukraine, leading to a great loss of life, would not be stopped by asking Russia to pay 11 trillion. Rather, an important motivation to execute this war would be removed — and the great loss of life be made less likely — if the world pronounced, in one voice, that it remembers Stalin’s crimes against humanity.
Rebirth of a nation 