Rude Awakenings

Chapter 5 (Part 4 of 4) of the book

The Discovery of First Principles, Volume 3

Edward J. Dodson

Zero Sum versus Win/Win

Far too few economists, policy analysts and political leaders yet understood that independent, national economies no longer existed. Businesses were investing in production facilities all around the globe and were learning how to transfer -- on their books -- revenues and expenses in order to minimize or escape altogether the taxation imposed by individual governments and the fluctuation in currency values. Meanwhile, the landed benefited enormously by the fact that they were not required to compensate society in proportion to the windfall profits they were experiencing as land values escalated.

Only from within the Remnant does the literature of the period contain much that challenges, without extremism, the direction in which interventionist liberalism was pulling societies. Politics did, indeed, dictate economics; and, by the standards of thoughtful cooperative individualists, politics had resulted in a devastating erosion of liberty the end result of which would eventually impose the vices of state socialism on nearly all of the world's diverse peoples. Only a determined effort to educate people of the dangers, translated into political activism, could turn the tide. Raymond Moley, who had worked closely with many of the architects of liberalism, in 1962 offered his own assessment of how to recapture the momentum from the interventionists:

It is absurd simply to believe that all will be well if we rid ourselves of Communism at home and abroad, or that the way to sound government is to abolish the income tax, or that to re-establish the gold standard or to balance the budget alone will suffice. Americans are a long, long way from home. Liberalism has led us far afield. A comprehensive series of steps must be offered and vigorously exploited. ...[138]

First, however, Moley elaborated on the virtues Americans had inherited from those who had founded their republic and forged a government based to a high degree on individualist principles. Fear of a concentration of power caused them to reserve considerable decision-making to the states and local communities. Even the two-party system served the very practical and positive purpose of preserving a high degree of unity against the factionalism so dominant in other parts of the world. So long as Americans -- and those coming to the United States -- believed in the promise of opportunity, individualism remained as a cornerstone around which progress could be built. As adviser to Franklin Roosevelt, during whose Presidency liberalism made its first penetrating leap forward, Moley had a unique opportunity to observe the process of disintegration first hand. "The bureaucracy proliferated," recalled Moley. "Intoxicated by the heady atmosphere, department and bureau heads were busy imposing upon the citizenry their own interpretations of the loose laws rushed through Congress. There was also growing evidence of that excessive tendency for intrigue and rivalry within the bureaucracy which has been a characteristic of government down the ages."[139] As a consequence, by the beginning of the Kennedy Presidency, citizens of the U.S. had relinquished much of their liberty in return for an undefined promise by elected representatives and appointed officials to approve programs and direct spending to solve every manner of societal (and individual) problem and serve every special interest:

The programs of the Kennedy Administration represent a finalized form of liberalism. ...

Is it socialism? No, although it contains traces of socialism. Current liberalism is not intent upon government ownership of industry, with the exception of the business of producing and distributing electric power. Liberalism is content with loading enterprise with repressive regulations and with taking away much of its income through taxation.

Is it the draft for the welfare state? No, although there is a lot of welfare in it. The danger to the individual's liberty is much more complex than either socialism or welfarism.

Is it a return to the planned economy which so many were hopeful of establishing in the 1930's? No, for to call this indiscriminate mass of benefits and projects a plan is to desecrate a good old word. ...

Nobody planned all this. It was not created; it simply accumulated. There is nothing homogeneous about such a collection, no interrelationship among such items as subsidized transportation for city and suburban dwellers, the preservation of life among ducks and bears, school lunches, a National Board for the Promotion of Rifle Practice, rural telephones, subsidies, retraining workers displaced by automation, and aid to speculators in land through urban renewal. ...If we study this budget, the enactments of the liberal Congresses over the past two decades, and the utterances of Democratic Party leaders and their platforms, we find no consistent pattern except one -- to enlarge Federal power.[140]

Fearful of where Roosevelt was taking the nation, Moley took his principles and his faith in the two-party system to the Republican Party. Aligned with the Remnant, and operating within the mainstream of Republican Party conservatism, Moley worked to discredit the faith in central planning that came to dominate Democratic Party policymaking. Schumpeter and Tugwell, he argued, were two key examples of very thoughtful and concerned economists who wholly misunderstood the causes of economic depressions and embraced planning as the most effective means of achieving full employment of labor and capital. Now, in the Kennedy era, economists of Galbraith's mentality were lamenting the emergence of the mass consumption society in which savings and investment in societal infrastructure were being ignored. Moley foresaw that government would claim a larger and larger portion of production, "made through taxation and, if there is a deficit, by inflation ... at the cost of real economic growth."[141] The process had begun with establishment of the Rural Electrification Administration and the subsidization of the cost of supplying electricity to underpopulated parts of the nation and continued with an almost endless list of projects for building dams, bridges, highways and buildings designed to house Federal employees. Under Kennedy, the penetration of Federal control accelerated a process Eisenhower did his best to slow. "In some states," observed Moley, "the number of Federal employees exceeds that of state and local agencies."[142] Whereas in the decades of Progressive reform the emphasis had been on taming monopolies and adoption of regulations to promote public health and safety, the Roosevelt era had ushered in the practice by organized groups of besieging government for special privileges -- in the form of tax exemptions, direct grants and subsidies, protections from competition or the creation of Federal programs benefiting particular constituencies. Moley identified and elaborated on most of these as they stood in 1962. On the Federal involvement in housing, he warned (quite accurately, events were to prove) that the government was "building the slums of twenty-five years hence" and, in the process, both "ousting and scattering well-established communities" and opening the door for "tremendous opportunity for profits to speculators who buy cheaply into slum areas and then sell the unimproved land back to the governments concerned at excessively inflated prices."[143]

Another problem identified by Moley was the growing amount of indebtedness taken on by individuals largely dependent on hourly wages for the income necessary to regularly meet payments for their homes, automobiles, appliances and other goods and services. Heavier taxation and inflation was making it almost impossible for most people to save enough currency within a period of time sufficiently short to purchase needed or desired goods. Inflation, moreover, encouraged the postponement of payment to a time when the purchasing power of currency had become further eroded. A broadly-experienced rise in real wages (i.e., purchasing power) would enable that segment of the population whose basic living costs were reasonably fixed -- homeowners, for example, who owned their homes and underlying land free and clear or whose mortgage debt was set at a fixed rate of interest -- to either reduce their overall indebtedness or channel funds into savings for retirement. Despite a fiscal budget for 1962 that resulted in a $7 billion deficit (raising the nation's debt to $300 billion), Walter Heller and the other administration economists (Galbraith excepted) convinced Kennedy that a tax cut was the only realistic means of stimulating the economy. The business community received investment tax credits and more generous depreciation schedules for plant and equipment.

At the fringe of the socio-political drama the land question remained to be addressed. Liberalism was now firmly established as a set of public policy choices so arranged as to have the least impact on the status quo of wealth ownership as possible. When Moley examined the state of the farmer, for example, he anguished over the extent to which farmers were dependent upon government support and subsidy. The next generation, he thought, might not even be able to afford to acquire land without even greater subsidies and income guarantees:

Farms are growing larger. Farmers are fewer by the year. And large corporate farming operations are taking over the production of food and fiber. An immense inducement for farmers to sell their land to larger units is the inflation in the price of land in the areas in which there have been large subsidies for nonproduction. In short, except as a romantic reminder of the earlier days, the family-sized farm is vanishing with the buffalo, the horse and buggy, and household industry.

The exodus of the individual proprietor is accompanied by no wails of distress. For the small owners are getting much more for their land than they could possibly gain through its cultivation.[144]

An even larger number of farmers were selling not to corporate agribusiness but to developers intent on turning farmland into suburban residential communities, industrial parks and new commercial centers. Not all farmers would be so fortunate as those Moley refers to, either. In periods of declining prices, many would be forced to mortgage their farms in order to acquire seed, fertilizer and equipment. Low prices or poor weather combined to cause thousands of farmers to default on loans and subsequently lose their farms. And, where the cities were concerned, government programs were merely enriching the few at the public's expense:

Removing government from the business of housing would eliminate a great windfall for the very rich who eagerly buy the tax-exempt bonds involved. It would also put a crimp in the speculative profits of slum owners who have done nothing to improve their property, but reap rich unearned profits from the sale of land to the government. ...Finally, with proper assessment practices established by local governments under the compulsion of state legislation, owners of land who are holding it for unearned profits would be forced to sell or improve their land by building.[145]

Moley's book was not extensively reviewed. However, William H. Chamberlin wrote in Saturday Review that the book would "be applauded by those who accept his premises, disapproved of by those who do not."[146] In the political arena, the issue of what principles would govern the policy choices of Republicans was in the balance; and, here, Moley decided that Barry Goldwater presented the best opportunity for the nation to tame liberalism. The risk, to many, was Goldwater's commitment to an arms race and the use of force to defeat Soviet and Chinese communism. To the criticism that Goldwater's approach to foreign policy was far too simplistic and dangerous, Moley suggested they attend or read the transcripts of the Senate debates over foreign policy. Here, Moley argued, Goldwater demonstrated his full grasp of what was happening around the globe.

Fools Rush In, Where Wise Men Fear To Tread

Barry Goldwater had attempted to reach out to his fellow citizens in 1960 with his own philosophical statement, published as, The Conscience of a Conservative. Nearly 200,000 copies were sold during the first year. He had been in the U.S. Senate since 1953, where he had consistently defended laissez-faire interventionism against the inroads of liberalism. He stood firmly in defense of the Constitution (as he and others of like mind interpreted the original intent of the Framers, ignoring their vested interests and the degree to which compromise had operated among even those whose principles governed their decisions). Goldwater's conscience (and, he argued, that of any true conservative) was ostensibly "pricked by anyone who would debase the dignity of the individual human being."[147] Fear of the State and the power of government to orchestrate despotism had -- rather than any desire to protect their positions and privileges -- directed the Framers to construct limited government with strictly defined responsibilities and obligations. What Goldwater could not admit was that the character of the limited government so established permitted the continuation of human rights violations. For what else is the denial of one's right of equal access to nature or one's right to the secure disposition of what one produces? As a socio-political philosopher, the Senator came forth as one more purveyor of flawed reason. In a chapter devoted to taxation and government spending he unquestionably ventures into the realm of property without any appreciation for whether the means of acquisition is natural (i.e., from one's labor or use of capital goods), or unnatural (i.e., the result of the granting by the State of monopolistic licenses):

One of the foremost precepts of the natural law is man's right to the possession and the use of his property. And a man's earnings are his property as much as his land and the house in which he lives.[148]

Not only does Goldwater fail to see the distinction between nature (as the source of wealth) and production (as wealth), he joins the confused in failing to understand the distinction between natural law and natural rights. William J. Newman was quite accurate in his depiction of Goldwater as not in the same league with the true philosophers of conservatism -- William Chamberlin, Felix Morley and James Burnham.[149] Goldwater, however, was operating in a very different type of league, one that was intensely committed to defense of the American System, to the preservation of traditional socio-political arrangements, and to standing firm against the Soviet Union and Communist China on the eve of Vietminh incursions into South Vietnam. The so-called Center -- comprised of most mainstream Democrats and Republicans -- were increasingly more inclined to inject just enough compromise to avoid serious political instability. Racial strife and Vietnam were to test the strength of the Establishment's power and resolve.

Kennedy had dispatched General Maxwell Taylor in 1961 on a fact-finding trip to Vietnam. Walt Rostow accompanied him. Their report (written primarily by Taylor) recommended U.S. military intervention to assist Ngo Dinh Diem with logistics and in building an effective armed force. U.S. State Department advisers urged, conversely, great caution in identifying with Diem's government. In November, Dean Rusk and Robert McNamara urged Kennedy (in writing) to do whatever was necessary -- in a support role -- to prevent the fall of South Vietnam to communism. After reading the Taylor-Rostow report, George Ball (appointed by Kennedy as Under secretary of State for Economic Affairs) was one of the few cabinet officers who opposed expansion of the U.S. involvement. He later recalled the debate within the core group of Kennedy advisers:

I was, I said, appalled at the report's recommendations; we must not commit forces to South Vietnam or we would find ourselves in a protracted conflict far more serious than Korea. The Viet Cong were mean and tough, as the French had learned to their sorrow, and there was always danger of provoking Chinese intervention as we had in Korea. Moreover, I said, unlike Korea, the Vietnam problem was not one of repelling overt invasion but of mixing ourselves up in a revolutionary situation with strong anticolonialist overtones.[150]

Ball told Kennedy that if the United States began an escalation, there would be three hundred thousand U.S. troops fighting in Vietnam within five years. Kennedy did not take his remarks seriously, says, Ball, and left no impression about whether he agreed that sending troops into Vietnam would be a disaster or that he thought providing technical support and weapons to the South Vietnamese would stop the communists.

Days later, McNamara delivered a report to Kennedy championing the Taylor-Rostow recommendations and forecasting that no more than six divisions (some two hundred thousand troops) would be required to push the Vietminh out of South Vietnam. Dean Rusk confirms that Kennedy had no desire to commit U.S. troops to combat (i.e., to Americanize the war). For Rusk, the issue was one of U.S. credibility in honoring its treaty obligations. Yet, Rusk admitted that the growing represssive nature of Diem's regime was causing considerable consternation within the U.S. State Department. By August of 1963, anti-Diem sentiment within the Kennedy foreign policy camp was sufficiently strong to tacitly sanction Diem's overthrow. In November, Diem was assassinated; rather than stability and reform, a succession of governments appeared and disappeared. Three weeks later, John F. Kennedy was dead, also the victim of assassination. The decisions about what the United States ought to do in Southeast Asia were now passed to Lyndon B. Johnson.

Johnson learned from Henry Cabot Lodge, the U.S. Ambassador to South Vietnam, that the Vietcong were in control of much of the rural interior. His predecessor had, in fact, escalated U.S. involvement. Some 17,000 military personnel were in Vietnam awaiting direction. Lyndon Johnson decided that Vietnam would have to wait until other issues -- domestic issues -- were well along and the nation was behind him as leader. The few who dared to challenge the assertions made by McNamara, Rusk and the military hierarchy were eased out of the way and off the administration's foreign policy management team.

Outside of the Johnson administration and the Joint Chiefs, there was little interest in or understanding of what was occurring in Vietnam. There was no debate on campuses or in the chambers of the U.S. government over a course of action. A broad consensus existed that the U.S. had a moral responsibility to prevent wherever possible the spread of communism. Vietnam was simply emerging as the next front line arena in which the monoliths would struggle over power and ideology. Vietnam arrived just as the military-industrial-intelligence-political complex of the United States achieved critical mass. As historian Godfrey Hodgson observes, rapprochement between military and civilian perspectives presented both an opportunity and a threat:

By 1960, few officers were openly advocating either total or preemptive war. The great majority of them had come to accept such concepts as deterrence, civilian control and limited war. ...[T]he corollary [was] the extent to which the civilians had been militarized.[151]

There was, as yet, no organized opposition to military intervention carried on by transnationals. What the average citizen viewed on television, heard on the radio or read in the newspapers was all too often reality minimalized to protect ratings and advertising revenues. In-depth documentaries dealing with societal problems were becoming few and far between. Even Edward R. Murrow had succumbed to the pressures of political expediency. Upon being appointed Director of the United States Information Agency (USIA), Murrow attempted to use his influence to have his own documentary on the conditions of migrant workers in the U.S. ("Harvest of Shame") from being broadcast by the BBC because of pressure from conservatives who did not want this side of the U.S. revealed quite so graphically to those who might use the information in the Cold War. Word of Murrow's politicking was leaked to the media, and his conscience brought him to offer his resignation to President Kennedy. Kennedy pragmatically urged Murrow to ignore the bad press and apply himself to the task of promoting the Alliance for Progress program with the Latin American governments. There was important work to be undertaken, and Kennedy knew Murrow could be a valuable resource if convinced the objectives were something more than mere show. Once solidly set up within the Kennedy camp, even the escalation of involvement in Vietnam did nothing to elicit a reaction from Murrow. "If Murrow had any feelings on the issues ... raised, he wasn't saying, at least not in private," writes A.M. Sperber. "Taciturn by nature, he was even more so now that his position made him part of the national security apparatus."[152] Murrow simply kept at the job of promoting the Kennedy foreign policy program until his health failed.

Late in 1963, Murrow was himself recuperating from having a cancerous lung removed when John Kennedy was assassinated. He left USIA in January and watched from the sidelines as Barry Goldwater set out to challenge Lyndon Johnson for the Presidency. Murrow understood that the Goldwater-type conservatives would have an impossible time making a case for a return to the laissez-faire interventionism of the 1920s. He told his long-time friend and colleague, Sidney Bernstein:

The trouble with the so-called Liberals ... is that they tend to panic whenever they face a real collision. The Goldwater boys will collect a fair number of people who are frustrated, who seek easy and quick solutions, but we have not yet reached the point where the country is prepared to turn over power to such a group.[153]

I.F. Stone, gave "the Goldwater movement" even less credit than did Murrow. Stone saw them not as conservatives in any real sense, but "a merger of the worst Southern racists, the right wing military and the obsessed inveterate anti-Communists, with those elements which have never reconciled themselves to the New Deal."[154] The Remnant, then, had no real place to turn to at all. A vote for Johnson held the promise of at least ushering in greater protections under law for minorities. What too few citizens understood was that voting for Johnson simultaneously strengthened liberalism's bureaucratic intrusions into daily life. A vote for Goldwater, on the other hand, was a vote for great uncertainty in domestic affairs. Neither candidate nor their parties stood for the expansion of democratic socio-political institutions -- particularly if democracy meant people choosing socialists, communists, cooperative individualists or libertarians as elected officials (even over the corrupt, the oppressive or the despotic).

Murrow would live to see Lyndon Johnson elected in his own right as President. He would also watch from his hospital bed, unable to raise his voice in protest (which he now clearly desired to do), as Johnson and his team of advisers began to pour men and materials into the Vietnam conflict. John Kenneth Galbraith, who had initially opposed Murrow's appointment (despite their friendship) -- assuming "after his long years in radio and television, often passing along the Washington word, he would be another voice for the prevailing orthodoxy"[155] -- later wrote of Murrow's courage and intellectual integrity in an atmosphere where acceptance of conventional wisdom was demanded of those holding high government office. Neither was effective in getting anyone in the Johnson administration to revisit the underlying assumptions that pulled them into the Vietnamese conflict.

With the escalation of U.S. involvement in Southeast Asia, television began to bring the war into the homes of people all around the globe. The message was confused, with extensive coverage of combat missions and bombings but very little analysis of Vietnamese politics or the history of French colonialism that preceded the arrival of U.S. advisers and troops. After leaving the task of disengagement to Richard Nixon, Lyndon Johnson admitted that the South Vietnamese regime had only nominal support from the people and was certain to collapse should the communists step up their attacks. Already in early 1964 there were some four thousand North Vietnamese regulars coordinating the activities of more than one hundred twenty thousand guerrilla fighters. McNamara, McGeorge Bundy and Maxwell Taylor were each convinced that South Vietnam would soon fall unless the United States unleashed its raw military power against the North. Worse yet, the Soviets were now taking an increasing interest in providing assistance to Ho Chi Minh. McGeorge Bundy delivered a report to Johnson in which he wrote:

At its very best the struggle in Vietnam will be long. It seems to us important that this fundamental fact be made clear and our understanding of it be made clear to our own people and to the people of Vietnam. Too often in the past we have conveyed the impression that we expect an early solution when those who live with this war know that no early solution is possible.[156]

After a series of stepped up attacks on U.S. and South Vietnamese forces by the North, Johnson decided to approve the first air strikes against the North Vietnamese.

Johnson and most of his advisers were, in some abstract way, well-intentioned where the people of Southeast Asia were concerned. Yet, there was no democratic alternative to the communists offered by the South Vietnamese military and civilian hierarchy. Nothing like what MacArthur accomplished in postwar Japan could have been imposed on the South Vietnamese as a condition for continued U.S. support. Yet, the thinking of U.S. policymakers was that only military victory offered any promise whatsoever of gradual improvement in the living conditions of the general population. They wholly discounted Ho Chi Minh's nationalism. George Ball later observed that McNamara, in particular, was absolutely blind to the "incomparable benefit of superior 'elan', of an intensity of spirit compounded by the elemental revolutionary drives of nationalism and anti-colonialism"[157] that kept the North Vietnamese and Viet Cong fighting. All Johnson could bring himself to see was a continuation of the domino effect, the gradual communist takeover after Vietnam of Laos, Cambodia, Thailand, Indonesia -- and South Korea. As he wrote in his memoirs:

First, from all the evidence available to me it seemed likely that all of Southeast Asia would pass under Communist control, slowly or quickly, but inevitably, at least down to Singapore but almost certainly to Djakarta. I realize that some Americans believe they have, through talking with one another, repealed the domino theory. In 1965 there was no indication in Asia, or from Asians, that this was so. On both sides of the line between Communist and non-Communist Asia the struggle for Vietnam and Laos was regarded as a struggle for the fate of Southeast Asia. The evidence before me as President confirmed the previous assessments of President Eisenhower and of President Kennedy.[158]

A very troubled Lyndon Johnson, out of office in 1971 and reflecting on all of the events and decisions that plagued his Presidency, was understandably making the attempt to explain the context in which he committed the United States to a very costly and divisive military conflict. By 1968 the pressures had become so intense that he decided not to stand for re-election. "I had deliberately taken myself out of political contention in order to devote all my energy to the urgent tasks that remained. I had done this to remove any doubt about political motivation or ambitions regarding any action I felt had to be taken,"[159] he later wrote. Events were moving very fast, and Johnson was not alone in failing to understand the forces at work:

There were so many currents and crosscurrents running that it was hard sometimes to know what was happening and why. If this segment of history had been written in a work of fiction about mythical countries, it would have been a comedy. But it was happening before our eyes, and in real life the stakes were too high, the consequences too important, for laughter. We could only try to put the scattered pieces of the puzzle together again.[160]

Perhaps the most one thing that can be said about this era is that we are here to write about it, that those who possessed the capacity to unleash nuclear war and destroy everything did not do so. In the Fall of 1973, the Center for the Study of Democratic Institutions convened a conference in Washington, D.C. to examine U.S. foreign policy since the end of the Second World War. A transcript of the conference was published not long thereafter; and, the introduction described the need for clear, objective thinking to prevail:

Any re-examination of American foreign policy must begin with recognition that the post-war era in international relations combined the worst of nineteenth century nationalism with the most advanced of twentieth century technology. The United States backed into the great impass known as the Cold War, and for the first time became dependent upon a huge, permanent military establishment, without any real public debate on the central issues. It is only now that we have begun to recognize that the result has been to saddle the nation with a foreign policy clearly out of popular control.[161]

At the end of the conference, Robert M. Hutchins asked: "Are we prepared for the sacrifices, the creative labor, and the reduction in our arrogance that this kind of world requires? …Have we the willingness to try to put together a world in which everybody, everywhere, has a chance to live a human life?"[162] He closed the conference hopeful and encouraged.

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