An economist's case for a noninterventionist foreign policy.

Author:Henderson, David R.
Position:Column
 
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It takes great leadership and ability to settle differences through peaceful means. Any idiot can start a war.

--Charles Adams, For Good and Evil

War is the health of the state.

--Randolph Bourne, The State

Now you can't pick up a paper without reading where the Marines have landed to keep some nations from shooting each other, and if necessary we shoot them to keep them from shooting each other.... Seven thousand miles is a long way to go to shoot somebody, especially if you are not right sure they need shooting and you are not sure whether you are shooting the right side or not.

--Will Rogers, in "Will Rogers Explains It All"

The twentieth century was truly the century of total war. As many as 17 million soldiers and civilians were killed in World War I ("World War I Casualties" n.d.). (1) My great aunt Ruby, who was born in the 1890s, called it the "Great War," the name given to it before people knew there would be a World War II. I come from Canada, which lost many people, especially young ones, during that first war, and in virtually every little town in English-speaking Canada, even the towns I grew up in, which had populations of less than two thousand, you can find a monument, usually near the town hall, honoring the Canadian dead of that war. That war also led to the famous poem "In Flanders' Fields," written on a battlefield in Belgium by a Canadian named John McCrae, who died later in the war. It is recited all over Canada every November 11, which in Canada is Remembrance Day. I will never forget the haunting and powerful ending, which I first heard in second grade when my fellow student Nancy Kelly read it to the class:

To you from failing hands we throw The torch; be yours to hold it high. If ye break faith with us who die We shall not sleep, though poppies grow In Flanders' Fields. One of the main things I want to address is how not to break faith with those who died. I think it is by not purposely creating more deaths.

World War I was trumped by World War II, in which at least 60 million people but probably more than 70 million people died as a direct result of the war ("World War II Casualties" n.d.). The world population in 1939 just before World War II broke out was less than 2.3 billion: this means that more than 2.6 percent of the people in the world died. If the same percentage of the world's population were to die in a war today, we would lose more than 190 million people.

World War II always seemed more real to me than World War I because I was born in 1950 and grew up hearing relatively fresh stories from the adults in my community, especially from my father. My father joined Canada's army in 1942 at age thirty-two but was discharged days after winning his stripe because he had only about 20 percent hearing in each ear--a disability he had experienced from age seventeen. He had told the recruiter this fact upon voluntarily joining, but it took a few months for the army to "hear" him. My uncle Fred and aunt Jamie were civilians early in the war, making their way to the Belgian Congo to be medical missionaries. Unfortunately, the ship they were on, the Zamzam, was sunk by the German navy. (2) Almost miraculously, given that by the German captain's count the Germans had lobbed fifty-five shells at the Zamzam, six of which had hit, only one of the passengers died as a result. My aunt was held prisoner in Berlin until June 1942, (3) and my uncle was a prisoner in what is now Poland and later in occupied France before he escaped to Switzerland. Plus, one of my favorite kinds of movies when I was growing up was war movies--although, truth be told, my favorite type was about escapes from prisoner-of-war camps.

So World War II was always in my consciousness, and I was always aware of its tremendous cost in lives. What I wasn't aware of was its full cost in liberties, some of which was permanent.

The Government Ratchet

When I was a senior economist with President Ronald Reagan's Council of Economic Advisers, my office was in an old, exotic-looking building called the Old Executive Office Building (now the Eisenhower Building). Located right next to the White House, from which it is separated by a narrow driveway, it is the place most people actually work when they say they work in the White House. A curious type, I looked into the history of the building and found that in its first years in the late nineteenth century, it housed the War Department, the Navy Department, and the State Department. That means that this building, together with the Treasury, which occupied its own identical-shaped building on the other side of the White House, housed almost the whole executive branch of the federal government, not including the Postal Service and the Departments of Interior and Agriculture. What happened in between that led to such a massive growth of the federal government in a country that was justly celebrated as the land of the free?

A large part of what happened was war. A huge amount of the new power that the government took on in the twentieth century was power that it acquired during and due to war. When the wars ended, the power diminished but never returned even close to its prewar level. Economic historian Robert Higgs (1987) was one of the first to point out this "ratchet effect."

We generally think of Prohibition, for example, as beginning with the Volstead Act of 1920. Wrong. It began with the Lever Act soon after America entered World War I. The federal government had imposed price controls on agricultural products, including wheat, and gave itself preferential access to those products for the war effort. The predictable effect of these price controls was a shortage of wheat. With the antialcohol movement growing strong, the government rationed the wheat by refusing to allow any of it to be used in the production of alcohol. Imposing Prohibition a few years later was that much easier because people had gotten used to partial prohibition during World War I.

Other federal powers also grew during World War I. The federal government nationalized the railroads, and, although it denationalized them after the war ended, it retained stricter controls on the railroads than had ever existed before the war. The military draft was introduced during the war, and when it was legally challenged during the war, the Supreme Court did not seriously consider its opponents' claim that the draft contradicted the Thirteenth Amendment's stricture against involuntary servitude. The Court stated, "We are constrained to the conclusion that the contention to that effect [that conscription violates the prohibitions of the Thirteenth Amendment] is refuted by its mere statement" (Selective Draft Law Cases, 245 U.S. 366 [1918]). After World War I ended, the draft ended, but the precedent had been established, and a peacetime draft was again imposed during the late 1930s. After World War II, the draft was retained, with a hiatus of only one year, until 1973. And then there's the income tax. It had started in 1913 as a small tax on only the superrich of the time. The top rate of 7 percent, which kicked in at $500,000 (more than $11 million in 2016 dollars), was raised to a whopping 77 percent in 1918 at the height of U.S. involvement in World War I. Even the bottom rate, which had been only 1 percent on incomes higher than $4,000 for a married couple (more than $95,000 in 2016 dollars), was in 1918 raised to 6 percent on incomes higher than $2,000 (more than $47,000 in 2016 dollars) (all data from Pechman 1987, 313). Although Congress, spurred by Treasury Secretary Andrew Mellon, pushed through major cuts in tax rates at all levels throughout the 1920s, the tax rates never again came close to their prewar level. What started as a small tax on only extremely high-income people was, even by the end of the 1920s, a substantial tax on the high-income people who were the next level down.

Something similar happened in World War II. The federal government took on new powers to regulate wages and prices, and it was these powers that President Jimmy Carter used in the late 1970s to impose wage-and-price guidelines. Also, Franklin Roosevelt increased tax rates during World War II, raising the bottom rate from 4.4 percent on income higher than $2,000 to 23 percent on income higher than $1,000 and the top rate to 94 percent on income higher than $200,000. To extract such large amounts of wealth from the American people, the government initiated an "installment plan," requiring employers to withhold taxes from employees' paychecks all through the year. The end of the war brought a very small tax cut, with the top tax rate falling to 82.13 percent in 1948 and the bottom falling to a still hefty 16.6 percent that same year. Withholding never ended; it was far too tempting for the government to keep this source of perpetual funds. Federal government spending, which, even with all Franklin Roosevelt's New Deal spending, had not gone higher than 10 percent of gross domestic product (GDP), hit a peak of 40.7 percent during 1944, and by 1949, the last full year before the Korean War, it was still at 14.2 percent of GDP ("Federal Net Outlays" n.d.). Of course, a large part of this postwar spending was for interest on the national debt, most of which was due to expenditures for fighting the war. But that's the point. Because Americans got used to paying higher taxes to pay interest on World War II debt, the government found it easier to extract more tax revenue from them even when the federal debt held by the public had fallen from a high of 106.2 percent of gross national product (GNP) in 1946 to a postwar low of 22.2 percent of GNP in 1974 ("Gross Federal Debt Held by the Public" n.d.). By 1974, the same year that the debt-to-GDP ratio hit a low, federal spending as a percentage of GDP was 17.4 percent, almost twice the 9.2 percent that it had reached by 1940, the last full peacetime year before America's official entry...

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