Delusions of Power Copyright © 2012 by The Independent Institute All Rights Reserved No part of this book may be reproduced or transmitted in any form by electronic or mechanical means now known or to be invented, including photocopying, recording, or information storage and retrieval systems, without permission in writing from the publisher, except by a reviewer who may quote brief passages in a review Nothing herein should be construed as necessarily reflecting the views of the Institute or as an attempt to aid or hinder the passage of any bill before Congress The Independent Institute 100 Swan Way, Oakland, CA 94621-1428 Telephone: 510-632-1366 Fax: 510-568-6040 Email: info@independent.org Website: www.independent.org Cover Design: Christopher Buenaventura Cover Image: © Frederic Cirou / Getty Interior Design and Composition by Leigh McLellan Design Library of Congress Cataloging-in-Publication Data Higgs, Robert Delusions of power : new explorations of the state, war, and economy / Robert Higgs p cm ISBN 978-1-59813-045-4 (pbk.) ISBN 978-1-59813-052-2 (hardcover) Power (Social sciences) United States United States Military policy United States Economic policy 20th century United States History, Military 20th century United States Politics and government 20th century Politics and war United States-History 20th century War Economic aspects United States History 20th century I Title JK271.H57 2012 355'.033573 dc23 2011027480 16 15 14 13 12 54321 For David and Mary Theroux amicus certus in re incerta cernitur Acknowledgments The following articles were first published on LewRockwell.com and are Reprinted with Permission by LewRockwell.com: “War Is Horrible, but … ,” (September 16, 2006); “Blame the People Who Elected Them?” (November 26, 2007); “Truncating the Antecedents: How Americans Have Been Misled about World War II,” (March 18, 2008) The following articles were first published by The Freeman and are Reprinted with Permission: “How U.S Economic Warfare Provoked Japan’s Attack on Pearl Harbor,” (May 2006); “What Did FDR Know? Robert Higgs replies [to a letter from Bettina Bien Greaves],” (July/August 2006); “Wartime Origins of Modern Income-Tax Withholding,” (November 2007); “Nixon’s New Economic Plan,” (January/February 2009); Review of The Pearl Harbor Myth: Rethinking the Unthinkable, by George Victor, (May 2008); Review of Churchill, Hitler, and the Unnecessary War: How Britain Lost Its Empire and the West Lost the World , by Patrick J Buchanan, (July/August, 2009); Review of New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged Americ a, by Burton Folsom, Jr., (September 2009) The following articles were first published by The Independent Institute in The Independent Review, The Newsroom, or The Beacon and are Reprinted with Permission: “Who Was Edward M House?,” (Winter 2009); “ Benefits and Costs of the U.S Government’s War Making,” (Spring 2005); “Military-Economic Fascism: How Business Corrupts Government and Vice Versa,” (Fall 2007); “Caging the Dogs of War: How Major U.S Neo-imperialistic Wars End,” (Fall 2008); “Recession and Recovery: Six Fundamental Errors of the Current Orthodoxy,” (March 5, 2009); “To Fight or Not to Fight? War’s Payoffs to U.S Leaders and to the American People,” (Summer 2011); “Derek Leebaert’s Magic and Mayhem,” [a review essay on] Magic and Mayhem: The Delusions of American Foreign Policy from Korea to Afghanistan, by Derek Leebaert,” (March 6, 2011) The following articles were first published by the Ludwig von Mises Institute and are Reprinted with Permission under a Creative Commons license: “Democracy and Faits Accomplis,” in Property, Freedom, and Society: Essays in Honor of Hans-Hermann Hoppe, (2009); “A Revealing Window on the U.S Economy in Depression and War: Hours Worked, 1929–1950,” Libertarian Papers (2009); “If Men Were Angels: The Basic Analytics of the State versus Self-Government,” Journal of Libertarian Studies 21 (Winter 2007) Reprinted with Permission of the Mercatus Center at George Mason University: “A Dozen Dangerous Presumptions of Crisis Policy Making,” Mercatus on Policy, (April 2009); “The Political Economy of Crisis Opportunism,” Mercatus Policy Series (October 2009) Reprinted with Permission: “Cumulating Policy Consequences, Frightened Overreactions, and the Current Surge of Government’s Size, Scope, and Power,” Harvard Journal of Law and Public Policy 33, no (Spring 2010) Reprinted with Permission: Review of Is War Necessary for Economic Growth? Military Procurement and Technology Development, by Vernon W Ruttan, Economic History Services, Copyright © 2006 by EH.NET Reprinted with Permission of Springer Science Publishers: “An Economic Analysis of National Reconstruction at Gunpoint: Review essay on After War: The Political Economy of Exporting Democracy, by Christopher J Coyne,” Review of Austrian Economics 21, no (2008) Copyright © Springer Science Reprinted with Permission: “Sheldon Pollacks’s Interpretation of War, Taxation, and the U.S State,” Review essay on War, Revenue, and State Building: Financing the Development of the American State, by Sheldon D Pollack,” Journal of Policy History 23 (2011) Copyright © Cambridge University Press Review of Unwarranted Influence: Dwight D Eisenhower and the Military-Industrial Complex, by James Ledbetter, Journal of Cold War Studies © 2012 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology, Journal of Cold War Studies Vol 14, No 2, Spring 2012 Reprinted with Permission, unpublished speeches and papers by Robert Higgs: “The Song that Is Irresistible: How the State Leads People to Their Own Destruction,” (2007); “The Economics of the Great Society: Theory, Policies, and Consequences,” (2011); “Do Arguments for Slavery and Arguments for Government (as We Know It) Appeal to the Same Rationalizations?” Contents Acknowledgments Introduction PART I The Nature of the State, Democracy, and Crisis Policymaking If Men Were Angels: The Basic Analytics of the State versus Self-Government Do Slavery and Government Rest on the Same Rationalizations? Democracy and Faits Accomplis Blame the People Who Elected Them? The Song That Is Irresistible: How the State Leads People to Their Own Destruction A Dozen Dangerous Presumptions of Crisis Policymaking The Political Economy of Crisis Opportunism War Is Horrible, but … PART II Closer Looks at Key Actors and Critical Events Who Was Edward M House? 10 How U.S Economic Warfare Provoked Japan’s Attack on Pearl Harbor 11 Truncating the Antecedents: How Americans Have Been Misled About World War II 12 Wartime Origins of Modern Income-Tax Withholding 13 A Revealing Window on the U.S Economy in Depression and War: Hours Worked, 1929–1950 14 The Economics of the Great Society: Theory, Policies, and Consequences 15 Nixon’s New Economic Plan PART III Economic Analysis, War, and Politicoeconomic Interactions 16 Recession and Recovery: Six Fundamental Errors of the Current Orthodoxy 17 Benefits and Costs of the U.S Government’s War Making 18 To Fight or Not to Fight? War’s Payoffs to U.S Leaders and to the American People 19 Military-Economic Fascism: How Business Corrupts Government and Vice Versa 20 Caging the Dogs of War: How Major U.S Neoimperialist Wars End 21 Cumulating Policy Consequences, Frightened Overreactions, and the Current Surge of Government’s Size, Scope, and Power PART IV Review of the Troops 22 Review of War, Revenue, and State Building: Financing the Development of the American State by Sheldon D Pollack 23 Review of New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America by Burton Folsom Jr 24 Review of Churchill, Hitler, and “the Unnecessary War”: How Britain Lost Its Empire and the West Lost the World by Patrick J Buchanan 25 Review of The Pearl Harbor Myth: Rethinking the Unthinkable by George Victor 26 Review of Unwarranted Influence: Dwight D Eisenhower and the Military-Industrial Complex by James Ledbetter 27 Review of Is War Necessary for Economic Growth? Military Procurement and Technology Development by Vernon W Ruttan 28 Review of After War: The Political Economy of Exporting Democracy by Christopher J Coyne 29 Review of Magic and Mayhem: The Delusions of American Foreign Policy from Korea to Afghanistan by Derek Leebaert Index About the Author Introduction in The Federalist No.51, expresses one of the most memorable opinions in political philosophy in general and in the constitutional history of the United States in particular: “[W]hat is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary If angels were to govern men, neither external nor internal controls on government would be necessary In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.”1 Readers have generally understood this passage as a rationale for Madison’s argument in favor of building checks and balances into the government’s constitutional structure so that ambition would counteract ambition, and thus government abuses would be curbed In a more profound sense, however, Madison’s famous passage constitutes an enormously seductive instance of question begging In The Federalist, Madison, Alexander Hamilton, and John Jay were arguing in favor of the new constitution drafted in Philadelphia in the summer of 1787 by delegates who had set in motion a coup against the national government under the Articles of Confederation Sent to Philadelphia to amend the Articles, the delegates instead had tossed out the Articles and written an entirely new overarching constitution for the thirteen newly independent states, giving the central government immensely greater powers, most significantly the powers to lay and collect taxes and to maintain a standing national army and navy In these critical regards, the proposed form of government resembled that of other strong states, such as the British Empire, from which the colonists had recently seceded In the exercise of its stipulated powers, the proposed state would claim a monopoly of coercive force over everyone in the national territory, even if some of the individuals residing there objected to its operation The new government was not offering to provide services, such as protection of civil and property rights, in exchange for a mutually agreeable fee It was going to operate as its officers might decide from time to time, and it was going to force everybody subject to the taxes it levied either to pay as ordered or to suffer the violent consequences The new government’s operation in this manner is part and parcel of what Madison means when he refers to “government”: a coercive organization that supports its activities at the expense of all those living in its territory, including those—perhaps a multitude—who have not given explicit, individual, voluntary consent to the government’s activities or even to its existence and may well object to the new state and everything it undertakes to (Subsequent developments, such as the formation of the ephemeral Free Republic of Franklin and the vigorously suppressed Whiskey Rebellion, among many others, demonstrated that such objections to the new government were scarcely imaginary.) In the key sentence, Madison states: “If men were angels, no government would be necessary.” Because no reasonable person will maintain that men are angels, the implication embedded in Madison’s construction is that therefore “government”—which is to say, a government in precisely this coercively imposed form—is desirable and, indeed, indispensable Without firing a shot, Madison thus dispatches every alternative conception of how people might govern themselves, perhaps by forms requiring the explicit, individual, voluntary consent of every JAMES MADISON, responsible adult subject to the government’s authority Hence, he begs the greatest question in political philosophy: Under what conditions may some persons legitimately exert or threaten to exert violent force against others who have not violated anyone’s just rights? Madison’s artful construction shoves this question off the table by implicitly assuming that so long as men are not angels, government as we know it constitutes our only effective means for the protection of our rights to life, liberty, and property Although he seems sincerely concerned about the abuse of government power by those who will exercise it, at no point does he consider the possibility that by constructing a government as we know it, one has created, however inadvertently, a Frankenstein’s monster that awaits only a sufficiently powerful bolt of lightning to send it lumbering forth to wreak mayhem on the very citizens for whose protection it was supposedly created Madison and almost all of the respectable commentators and scholars who have followed his powerful and influential reasoning in political science have—to use the fashionable, if ungrammatical language—privileged the state The extent to which their resulting implicit premises about the state’s establishment, functions, and actions have transformed these analysts into de facto apologists for despotism is too vast to comprehend Suffice it to say that if this Madisonian foundation stone were removed, a great many edifices of political argument would collapse One of my purposes in this book is to challenge the habitual use of this foundation stone—to call into question the intellectual and moral acceptability of privileging the state as we know it My efforts in this regard therefore qualify as radical, a characterization that I have no desire to deny When I was young, I accepted as natural and right the ruling institutions of the world into which I was born It did not occur to me to ask, for example: Should the U.S government in its present form exist? Should the government fight all of the wars it was fighting, one after another in quick succession? Should people have to hand over their money to the Internal Revenue Service (IRS) as instructed or go to prison? Should Congress enact statutes empowering the Department of Agriculture to make rules for how much cotton a farmer may plant or how many lemons he may send to market? These and countless similar questions did not arise in my mind until I had progressed far enough in my learning to see beyond the familiar, taken-for-granted institutions and powers and to hone my ability to distinguish the government’s ostensible purposes from its actual purposes So my radicalism did not take root in the thin soil of youth, but only in the greater knowledge and intellectual independence I gained over the years The essays and reviews gathered (in revised form) in this book, all of which were written in the past few years, reflect the radical position at which I arrived Several of them question the very existence of the state as we know it I am accustomed to having my arguments in this regard dismissed as utopian My reply is that the true utopians are those who continue to look to government as we know it for the protection of people’s just rights to life, liberty, and property The experiment in avowedly “limited” government, it now seems to me, was destined to fail and has indubitably done so One need only open one’s eyes to the clear historical trend The United States verges ever closer to totalitarianism, yet at every moment the bulk of America’s people and most of its intellectuals insist that we live in a free country; some even insist that it is becoming steadily freer! Although one may point to events such as the abolition of slavery, the overthrow of the Jim Crow system, and the abandonment of the military draft as evidence for such an argument, these undeniably important pieces of counterevidence stand out as clear exceptions to the dominant trends With every passing day, the ... Interior Design and Composition by Leigh McLellan Design Library of Congress Cataloging-in-Publication Data Higgs, Robert Delusions of power : new explorations of the state, war, and economy / Robert... which shows the degree of disorder and the scope for liberties with and without the state over time The notation in the table indexes the degree of social disorder (D) and the scope of liberties... Size, Scope, and Power PART IV Review of the Troops 22 Review of War, Revenue, and State Building: Financing the Development of the American State by Sheldon D Pollack 23 Review of New Deal or