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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