Decentralize Ukraine

Decentralize Ukraine
by Roman Skaskiw

Solving Ukraine’s two biggest problems — corruption and security — has everything to do with decentralization. Here’s how:

1) Corruption. (A basic lesson in incentives.)

Bribes are a public sector phenomenon. On the rare occasions that bribes exist in the private sector, they are usually a crime by employees against the business owner. The effects of bribes in the private sector are not very destructive because business owners have a strong incentive to police their employees. Those who fail do not remain business owners very long. See my essay, “A Theory of Bribes” on the Mises Institute website ( for a detailed explanation.

Bribes become destructive in sectors where competition is severely restricted, namely, in services provided by the government: security, justice, education, government medicine. Nobody in the bureaucratic hierarchies providing these services suffers negative consequences from abusing the recipients of their services the way private business owners do. Their salaries depend not on voluntary patronage, but on taxes and monies allocated from the national budget. There is no threat of bankruptcy until the entire nation faces bankruptcy.

Exposing as many of Ukraine’s services to the competition of the market place (privatizing the education system, for example) will reduce corruption. This is consistent with the general recommendations of Former Georgian Economic Development Minister Kakha Bendukidze who is now an advisor to President Poroshenko.

Short of outright privatization, solving social problems on the Oblast level instead of the national level would also dramatically reduce corruption.

When taxes, road repair, security, justice, pensions, and education systems are managed on a local level, regional differences emerge in the quality of these services. People more quickly determine which policies and which politicians are effective. People and business gain the ability to vote with their feet and move to better administered regions.

The reason German feudalism was so much more benign than feudalism under the Russian Czar is because Germany consisted of literally thousands of geographically small political entities and peasants fled from unjust lords to better ones. There were consequences for abuse and mismanagement. (See How The West Grew Rich by Rosenberg, Birdzell, or The Rise and Decline of the State by Creveld.)

Regional variation combined with the possibility of migration provides a mechanism that punishes poor administration.

This is a very European idea. The history of Europe is one of decentralization and local autonomy and these norms extending well into Ukraine, where many cities and down adopted the Magdeburg Rights. There is a monument to these self-governance laws in Kyiv, though I suspect few people know its significance.

Decentralization should not be considered federalization or an attempt to fracture the country. It should be considered the necessary exposure of critical services to competition — either the capitalist competition of the market place, or regional competition between governors. It should be a presented as an expression of confidence in the Ukrainian people and a return to Ukraine’s historic role as a freer alternative to Russian oppression.

2) Security. Military bureaucracies are the centralization solution to problem of security. Militias and an armed society are the decentralized solution.

Military bureaucracies retain the advantage of coordinating resources, but at the expense of freedom of action. Militias make decisions and act on them much more quickly.

When facing an enemy like Russia with its sophisticated intelligence network, military bureaucracies have an additional disadvantage of being more easily compromised and corrupted, betrayed by their leadership.

Militias also have the “advantage” of non-accountability. The government enabling them can more easily deny direct accountability for the worst actions of the militia, as Russia has been doing in Eastern Ukraine.

In the long-term, militias also have the advantage of being cost effective. Men will always to be willing to purchase arms and seek basic training at their own expense. Militaries, on the other hand, will always consume enormous budgets and the acquisition of new technology will always be fraught with corruption, especially after the pressure of an enemy has subsided.

Over the course of the last decade, the militia has caught up with the military regarding one of its historic advantages: battlefield awareness, especially where the battlefield is populated by civilians. The communication structures of military bureaucracies are rivaled by readily available modern technology and information sharing.

Today, many Ukrainians seem eager to defend their country. Ukraine’s leadership should do the bold thing and let them. This means allowing a legal channel for their freedom of action. Instead of acting as generals, Ukraine’s leadership needs to adopt the role of cheerleader. They can facilitate the defense of the country with a declaration like this one:

“If you want a rifle and 200 rounds of ammunition, bring your passport and $300 to Maidan. Take a four hour course with a hundred other people. We’ll stamp your passport, and you can have an AK47 from storage. One stamp per person. Period. Training held twice a day until people stop coming. Proceeds from the sales will go toward equipping the Ukrainian military.”

Alternatively, Ukraine can simply legalize the purchase and sale of firearms.

This would deal a fatal blow to the centerpiece of Russia’s foreign policy strategy — intimidation. This strategy was explicitly mention in the instructions of the Russian Main Intelligence Directorate (GRU) to Russian Spetsnaz in Eastern Ukraine which were intercepted in late April (

People with the means to defend themselves are not easily intimidated.

Admittedly, an armed society would be a significant cultural shift that raises understandable concerns. The reason gun ownership has such a negative association is because most gun owners are criminals. The most honest, law abiding members of society are the ones least likely to purchase black market guns, or to risk the legal pitfalls and ambiguities associated with official gun ownership.

Any serious analysis of this course of action must consider the results of many scientific studies of armed societies. Most recently, a comprehensive study published Volume 30, Number 2 of the Harvard Journal of Law & Public Policy compared gun laws and violent crime in European countries. ( The study, like many earlier ones, found a negative correlation. More guns mean less crime.

Interestingly, Russia emerged in this study as the stark example of a country with extremely strict gun laws and a high murder rate: four times higher than the United States and twenty times higher than Norway. Most murders in Russia don’t involve guns.

The proper context for this message is again a return to Ukraine’s historic role as a freer alternative to Russia: Ukrainians are free people who have the right to defend themselves.

This message, perhaps even more than the guns themselves would be the biggest deterrent to Russian aggression. As this historian Shane O’Rourke wrote in his book The Cossacks:

“[Cossack freedom demonstrated] that an alternative and viable social order did indeed exists. This was to prove far more threatening to Poland-Lithuania or Muscovy and the Russian Empire that the cossack swords and muskets on their own could ever be. . . . Cossack insurgency alway had the potential to explode out of its regional and local character into a matter of kingdom wide significance.”