[vondro]

Something that has been bugging me for some time (genuine question, please forgive me lack of geopolitics/economy understanding) is this:

Supposing we want to hurt Russian economy - how are we hurting it by stopping selling them licenses/branding/machines to make and sell burgers and fries? Are we not ripping them off money if we sell to them? As in: we gain, they lose?

I understand we don't want to sell advanced technology, or weapons. And we also want to stop buying oil/gas or other goods produced in Russia. But burgers?

If you understand what's going on, please share it :-)

[boole1854]

Well, McDonalds, Inc. is not necessarily doing this to hurt the Russian economy. They are doing it to save money.

The war and the Western sanctions have limited their ability to operate restaurants in Russia. Because of this, they have shut down their restaurants while continuing to pay staff, leases on their buildings, etc. This means they have a constant outflow of cash to Russia which they want to stop. Shutting down the business stops the bleeding.

Perhaps the question is: why would public policy makers in the West want to impose such broad sanctions? Why not continue to allow Western companies to profit in Russia (i.e., "rip them off")? The answer is primarily that voluntary economic business transactions like this are generally win-win for both sides. Yes, McDonalds earns money selling branding, etc., but the Russians on the other side of the transaction also earn money through the use of the branding and so on. By cutting off Western companies' financial access to the Russian market, it does hurt the Western companies, but it also hurts the Russians because it deprives them of whatever benefits they were obtaining from the Western companies.

[octodog]

The basic premise in market economies is that if a transaction occurs it is beneficial for both the buyer and the seller. This makes intuitive sense if you think about it - nobody forces you to buy McDonald's, you do so because you think a Quarter Pounder is worth the price you pay.

Sanctions work by preventing this transaction from happening, which means both the buyer and the seller are worse off compared to when they are allowed to trade.

The key point here is that although both the buyer and the seller are worse off, one party may be disproportionately impacted. This is the case with the Russian sanctions, as Western companies can usually find other markets (although less lucrative) but Russia is now having serious trouble sourcing certain components.

McDonald's is likely doing this for image reasons or to appease stakeholders rather than doing it to punish Russia directly, but the outcome is that Russians are slightly worse off than before.

[isleyaardvark]

It's also cumulative. It's only one market for each individual seller, but the buyer is deprived of many sellers.

[chongli]

For a globally recognizable brand like McDonald's, the move to leave the country has a symbolic meaning. It sends a message to the Russian people that something is deeply wrong with the direction taken by their government. Of course, some Russians will interpret the move differently, but that cannot be avoided.

[cbozeman]

I don't think this is the reasoning at all.

I think trying to conduct transactions in a heavily sanctioned nation that's also fighting a war of aggression against a neighbor, and incurring heavy losses, is causing a headache for the bean counters, and it has finally become more trouble than it's worth, financially.

These enormous multinational behemoths - as an entity - don't give two shits about the people dying in Ukraine, Russian soldiers dying, or the Russian people enduring hardships. They care about profit.

It's no different than the stance on civil rights, or LGBQT+, or any other issue. If you look historically, these companies only bother to "do the right thing" once it has the potential of threatening profits. It may sound cynical, but the historical record is pretty solid.

[whywhywhywhy]

Always disgusted me how two faced the vocal companies like Disney and Apple were about LGBTQ+ rights in the US yet all too happy to throw the same community under the bus when Russian, Chinese and UAE profits were on the table.

They're only interested in the community as a PR tool, not the actual lives of the people, it's gross.

[adventured]

The parent did not say that was the reason, they said McDonald's leaving has symbolic meaning - which it absolutely does in a huge way.

> These enormous multinational behemoths - as an entity - don't give two shits about the people dying in Ukraine, Russian soldiers dying, or the Russian people enduring hardships. They care about profit.

Of course they do care about the context, very obviously, precisely because it can affect their profits. Which is why so many companies rapidly bandied together and left Russia, even when they legally didn't have to. The stigma of being associated with Russia is brand damaging, which is ultimately profit damaging (and Russia isn't worth enough as a market for most corporate giants to warrant taking that brand hit). That's the clear corporate equation.

[chongli]

Thank you. Far too often people will jump in and cry "all corporations only care about profits!" which is about as interesting a statement as "all programming languages are Turing-equivalent".

[jquery]

All international conglomerates are amoral. Some are more amoral than others.

[m000]

Any big organization is amoral. This includes countries.

[ushakov]

> Of course, some Russians will interpret the move differently

Russian propaganda will say something like: “McDonalds, evil American company, left our people without jobs and betrayed our trust”

most people would believe this

the blame will be shifted from Russian Government to “evil American corporation”

[FpUser]

>“McDonalds, evil American company, left our people without jobs and betrayed our trust”

You got me curious and I decided to check. They actually carried out reasons stated by McDnalds and respected the fact that through the whole process company has behaved responsibly towards employees and seeks their future employment as a condition for perspective buyers. I saw no signs of propaganda in the article.

https://lenta.ru/news/2022/05/16/mcdonalds/

[jquery]

Sure, but not everyone is convinced by the propaganda. Some people are just plain mad they don’t have something they used to have. We’ve tried appeasing a mad expansionist dictator in the past, didn’t go so well.

This is especially keen with apple products.

[ushakov]

Apple products can be brought from overseas

with McDonalds they would just make a clone which uses same formulas and suppliers

[adventured]

It's about removing sanction: denying the Russians - particularly the urban Russians - their veneer of civilization, affluence, westernization. The notion that they had accomplished something material positive in regards to moving forward in the world among nations after the Soviet collapse.

Sure they can clone brands, and sometimes they can clone products and services, you can also go to Walmart and buy Great Value brand products that are 85% as good as the brand goods. Most people still don't want to do that if they can afford not to.

People buy brands primarily (not exclusively) for social reasons of status, not because they're vastly superior to all alternatives (off brands, generics, house brands, etc). They don't need that Chanel or Louis Vuitton bag, or iPhone, they want it to show off.

Removing sanction is about the West no longer pretending Russia is a civilized nation, no longer pretending their culture is a civilized one (rather than a barbarous relic of the conquest-obsessed primitive past of the European great powers conflicts).

[PolygonSheep]

> denying the Russians - particularly the urban Russians - their veneer of civilization, affluence, westernization.

Yeah I feel very civilized, affluent, and Western when I walk into a McDonalds.

[thriftwy]

I think you're taking your words fairly serious, whereas they would cause a lot of good laughs outside of the bubble of "the West".

For starters, why do you think that Russia would care whether you are currently pretending anything about Russia.

[ogurechny]

The scale of these delusions can only match the scale of Putin's delusions. How detached from real life should one be to reason about people as though they were homo economicus, pathetic humanoid consumers?

Linking “brands” to “civilization” is just a widespread publicist cliche that is only observed in various “analysis” in media. When you look at what people actually did, there is no trace of such feeling. Those who were critical of the state politics reacted to the news with “things are looking turbulent, better buy some buckwheat just in case”. Those who were supportive of the state politics reacted to the news with “things are looking turbulent, better buy some buckwheat just in case”. See, no one seriously cared about McDonalds® burgers or Apple® devices, but that didn't affect “economical prognoses” in the slightest. I can make my own: not even in most glorious America there is enough people to start an uprising over McDonalds being unavailable.

What's more important, outside of lucky industries like IT, not many people can even afford to care about brands. Those who make a lot usually work in export or budget spending (or “spending”) sectors, and they are the ones who perfectly understand that their wealth depends first and foremost on supporting any decision that comes from above, not following some capitalist dreams (even though this is a typical corporate manager situation). Those who make a lot more than a lot, and used to buy castles, villas, yachts, and so on in Europe and elsewhere, had zero problems with that for decades, despite the common knowledge that almost none of them had made those kind of money independently, and with hard work. One might even theorise that shooting down Boeing full of Europeans (as opposed to lesser people across the world routinely dying on TV screens) was Putin's particularly devilish plan of forcing his daughter to stop enjoying life abroad and move back home. Such are customs in modern “high society” of “successful people”. Have anyone noticed that when US arrested Abramovich's mansion, he seemed to get irritated, and made some un-business-like comments along the lines of “I'm no different from other people buying those, what's your fucking problem?” Might be the rare occasion of him telling some truth.

There has been a very nice rebuttal back in March. I am grateful to English translators because now I don't have to state all of that myself: https://www.getrevue.co/profile/belkitz/issues/weekly-newsle...

[parshua]

From what I understand, it has nothing to do with morality or hurting Russia. The banking sanctions make it impossible to do financial transactions with the country, which effectively puts an stop on business relations.

[jccalhoun]

There are a few things: it looks bad if McDonalds is still doing business with them. also, for a lot of people having big brands makes you seem more legitimate - 20 years ago or so the small town near me got a McDonalds and it was a huge deal that made people think the town was more legitimate. there is also the fact that doing business in russia right now may be more trouble than it is worth and as far as hurting the economy, even though McDonalds corporate would make money from selling in Russia, they are paying the employees, distributors, utility companies and so on. So not getting that cut will hurt people. Yes, it probably won't hurt the rich or powerful but it may be part of death by a thousand cuts.

[Feriti]

I would not underestimate how critical influence is.

Influence / knowledge how to operate big chains,.how to organize supplier how to do marketing etc.

If you are a smart modern person speaking English also makes it easier for you to stay in your country when you have appropriate job opportunities and a ecosystem which feels adequate.

It's not that I would miss McDonald's if it would disappear were I live bit if a lot more does, I would probably want to migrate away.

I think this is a bad sign for Russia. And IF they are able to recreate what they already had, it will take time and be costly.

[LeifCarrotson]

The transaction can be mutually beneficial: We gain cash worth more to us than the licenses/branding/machines, they gain licenses/branding/machines worth more to them than the cash. For the classic example, see:

https://en.wikipedia.org/wiki/Comparative_advantage#Ricardo'...

Cutting them off from the global economy does damage their economy. No, burgers aren't as important as banking or bullets, but it's something.

[InCityDreams]

And I'll add "What changed here of course is that after Putin...." started getting his arse kicked, several western companies now dont wish to be seen as Russian-friendly (they still are, of course - they just don't wish to be seen as such).

Had the Ruskies taken the ukraine in a few days, as predicted, you can bet there'd be golden arches all-the-fuck over Mariupol right now.

*oh, and finland and sweden could get fucked, too. They didn't give a hoot until for quite several years.

If any western company actually gave a crap, they would have been out on day 1, or 7 or even 30...not 3 months later.

And, as for Renault being called out by Zelensky.....

[mhb]

Is your premise that when two parties trade, the selling party "wins" and the buying party "loses"? Ignoring the specifics of McDonald's, in general, the reason to make a trade is that both parties believe they will be better off. By not trading, it hurts both parties.

[k__]

Probably just the hope of companies to improve their image by not being associated with such countries.

I mean, look how people think about companies doing China's bidding.

[giancarlostoro]

The only argument there is we are providing them jobs and building up local infrastructure by investing in locations, I suppose.

[ushakov]

i think what’s going on is that lots of companies have collectively left on their own (not sanctions) and McDonalds is being “bullied” to leave too, possibly by their shareholders

the case here might be that they don’t want to devalue their brand, which is worth far more than their business in Russia

[asddubs]

we can't let proprietary american advanced protein delivery technology to fall into the wrong hands, allowing them to use it to create an army of super soldiers

[rightbyte]

Closing McDonalds surely is a good for the general health of the populace. I'm against banning fast food but I see no downside. McDonalds is a symbolic offender in the sugar epidemic and the McPutin rippoff surely won't be as popular as the Big Mac.

[EVa5I7bHFq9mnYK]

There is a moral/reputational side to this too.

[raxxorraxor]

Are you suggesting that countries that allowed McDonald's to operate are getting ripped off? Sounds entirely reasonable.

[aynyc]

It's about image. The most powerful weapon the west has isn't nuclear bomb but its culture and image. McDonald's business is a drop in the bucket in the tax revenue for the Putin regime. But if you (Putin) wants to claim that Russia is a powerful country, it needs to project an image of wealth, stability, etc.. McDonald, Starbucks, etc helps with that image.

[Beltiras]

Playing word association the word that doesn't come to mind when you say "McDonalds patrons" is wealthy.

[rswail]

Only a relatively wealthy population can afford fast food. The "convenience" of fast food is something that poor people (actually poor, not Western poverty) can't afford.

So yes, in the US/EU etc, McDonalds is seen as "cheap" food, but in places like Asian countries like Thailand, McDonalds is considered "middle class".

[twoquestions]

It's probably much simpler than that. If Putin's going to keep invading other countries for little or no reason, what's that nutbar going to do to your property? There's a $20 term for this but I forget what it is.

In addition to the reasons others here have said, of course.

[alaricus]

Sanctions don't work. The goal of sanctions is not to hurt Russia. The only thing sanctions accomplish is to give a feeling of self-righteousness.

[rswail]

Sanctions when applied properly can work. They need to actually impact directly on those who are politically powerful, while also imposing difficulties day-to-day on the general population, which encourages unrest and internal disputes.

Russia thought it had protected itself by having low foreign debt and large foreign reserves. What it didn't count on was that the US and EU reserve banks would freeze its foreign reserves, while also getting SWIFT and the MC/Visa payment networks to disconnect from the Russian banking system.

There currently is no alternative for foreign currency exchange and Russia has had to engage in much less efficient and expensive (because they are being made to pay through the nose) foreign exchange through China's nascient payment systems, which means they are exchanging rubles for yuan, instead of USD/EUR.

[alaricus]

India, Turkey, China and others are switching to alternative payments for Russian commodities.

Europe is opening Ruble accounts with Gazprombank to keep the gas flowing.

These sanctions hurt the monopoly of American financial system more than anyone else.