It Is Dangerous to Be Right When the Government Is Wrong (30 page)

Moreover, unnecessary agencies are created during wars. Typically, they grow in size and lengthen the list of regulations under which we live. After war, some disappear, while others magically morph into the “solution” of other government problems. The War Finance Corporation, for example, was founded during World War I “to provide funds for various munitions enterprises.”
²³
After the war, the War Finance Corporation turned into an agricultural cooperative financing tool, which exported agricultural products to Europe. It died in 1925. In 1932 it was brought back to life again to bail out railroads and other bankrupt companies during the Great Depression. It was laid to rest in the 1950s due to scandals, but was yet again revived and combined with the Small Business Administration. Do you see how the government uses war to grow in size and scope surreptitiously?

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And lastly, we come to the ultimate theft and restriction of property: The government's withholding of income taxes. The withholding practice was not implemented until World War II: A seemingly new custom wholly unsupported by our Founding Fathers whatsoever. In an effort to raise funds for the war effort, Congress passed the Revenue Act of 1942 which imposed a “Victory Tax” on income, which was to be withheld by the employer and paid directly to the government. Gradually, this practice increased in scope to constitute the present system of income taxation in America.

There are several evils inherent in this practice. First, by allowing the government to seize property directly and send the taxpayer back any surplus, it portrays the government as a beneficent caretaker. Second, it deprives the taxpayer of the use of his money for a period of time; that is money that could have flowed into investments and generated a return while the government was holding on to it. Finally, it enables the government to increase in size, as it would be infinitely more difficult to wrest tax dollars from the taxpayers themselves than secreting them away from their employer. And it was all made possible because of war.

Constitutionally and philosophically, withholding taxes presumes that we exist to serve the government. In an historic irony, the idea of withholding income taxes was proposed as a short-term war-financing measure by a young Treasury Department clerk named Milton Friedman. That would be the future Nobel Laureate who championed the free market and who would one day condemn the extension to peacetime of his wartime-only proposal with his sharp and witty tongue: “There is nothing more permanent than a temporary government program.” Too late, professor.

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“The Purse Is Now Open”

When the government does not comply with its own laws, it is rewarded with more power. When it overspends its budget, it is rewarded with a bigger budget. Furthermore, “most of the defense budget increase has little to do with winning the war on terrorism,” observed an Independent Institute defense analyst, Ivan Eland. In war, the government's bank account (filled with your tax dollars) flies open to the joy of an interconnected web of governmental and quasi-governmental actors: The president, the Defense Department, defense contractors, and elected officials.

Consider the size of the Defense Department's budget, and more importantly, the government's justification for the size of that budget. When President Bush signed the defense authorization bill for fiscal year 2004, everybody knew the price tag was big, but nobody understood how big. At $401.3 billion, President Bush attempted to legitimize the 42 percent rise in budget by claiming it was for the security of the American people. He vowed the government “will do whatever it takes to keep our nation strong, to keep the peace, and to keep the American people secure.” Perhaps, but in any event, unborn taxpayers are picking up the bill. How about keeping us free—free to make our own choices, free from debt, free from Big Government?

And the $401.3 billion price tag was not even the whole of it. Hidden elsewhere in the nation's budget were allocations to other departments that constituted defense spending. The Department of Energy, the Department of Homeland Security, the Department of Justice, the Department of Transportation, the Department of Veterans Affairs, and the State Department were just some of the places where further defense items were concealed. Professor Robert Higgs of the Independent Institute perused the federal budget to estimate the actual total. Higgs's suggestion: Take the Pentagon's budget total and nearly double it. His estimate came to a whopping $596.1 billion.
²⁴
In the same vein, if the Defense Department was not defending the security of the “homeland” prior to the Homeland Security Department's creation after September 11th, what precisely
was
it defending?

To make the government's theft and deceit even more glaring, the Defense Department's accounting practices are a disaster. The Department of Defense has never been able to fulfill the government's auditing requirements because its records are in such disarray. To date, no major part of the Department of Defense has been able to pass the test of an independent audit.
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In other words, the government consistently breaks its own laws! (As Mark Twain once remarked, Congress truly is “America's only native criminal class.”)
²⁶
Instead of focusing on the flaws of its own system, the federal government chooses to go on a witch hunt against corporate America, demonizing the likes of Enron, WorldCom, Xerox, and Arthur Andersen for their accounting practices in the full view of the public. While these companies grossly misbehaved with billions of dollars, the federal government has grossly misbehaved with trillions of dollars.
²⁷
Only the government can prosecute, with a straight face, entities for engaging in the same behavior as it does.

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Equally important as the amount of waste is the identity of its intended recipients. With war, the government forms a criminal organization with large business to transfer money away from taxpayers fraudulently and place the lives of innocent soldiers at stake. General Smedley Darlington Butler, one of the most lauded marines in U.S. history, wrote and spoke extensively on the nature of this criminal organization in
War Is a Racket
:

In the World War a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. . . . And what is this bill? This bill renders a horrible accounting. Newly placed gravestones. Mangled bodies. Shattered minds. Broken hearts and homes. Economic instability. Depression and all its attendant miseries. Backbreaking taxation for generations and generations.

The military-industrial complex (a term coined by President Eisenhower, another decorated war hero, no less) is the biggest, bloodiest, and most culpable criminal organization in American history. It grows fat off of the blood and gold of everyday Americans, and continually evading justice, has no incentive to cease its piracy during our lifetimes or our children's.

Despite the fiscal irresponsibility and waste which necessarily accompany war, progressive historians and Keynesian economists have argued that war actually creates prosperity (as opposed to simply transferring it to the fortunate few). This argument, however, is flawed. As economist Ludwig von Mises noted, “War prosperity is like the prosperity that an earthquake or plague brings.”

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This argument's strongest case for war prosperity is based on the drop of unemployment rates and rise of gross domestic product during World War II. To be fair, unemployment numbers did in fact plunge, falling from 14.6 percent to 1.2 percent between 1940 and 1944.
²⁸
However, there is a simple answer to this analysis. The unemployed were drafted by the feds to serve in the armed forces; unemployment rates only fell because the government was conscripting its very own unemployed population. Of the sixteen million who served in the armed forces at some time during the war, ten million were drafted. Many of these men volunteered so as to avoid the draft and the likelihood of assignment to the Army infantry.
²⁹
With this line of reasoning, shall we reinstate the draft to alleviate our high unemployment rate today?

The war prosperity argument will also contend the gross domestic product (GDP) soared during World War II. However, upon closer inspection, this calculation consisted entirely of military goods and services; there were planes to build, guns to manufacture, and food items to ship.
³⁰
Real civilian consumption and private investment actually
dropped
after 1941 and did not recover until 1946.
³¹
Professor Robert Higgs asserts “it is high time that we come to appreciate the distinction between the government spending, especially the war spending, that bulks up official GDP figures and the kinds of production that create genuine economic prosperity.”

More fundamental is the fact that, although resources may be redistributed toward those Americans who are manufacturing military supplies, there is no actual wealth being created. When the farmer grows his corn crop, he exerts labor toward creating something that will literally nourish society, thus making us all better off. It is for this wealth creation that he receives money in exchange, and it is for this value that we are willing to give money. Transactions for defense supplies do not, however, share this attribute. War creates no more prosperity than hiring one hundred individuals to dig a hole and fill it back up again. After the defense contractor has received his pay for building nuclear submarines, precisely who is it that is “nourished” by their standing idly at the bottom of the ocean? Unlike a Web site that connects consumers with sellers, neither a submarine in the sea nor bullet in a soldier's gun produces wealth. What benefit is it that we as taxpayers are receiving from this exchange? There is none; it is wealth redistribution by another name.

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Wartime prosperity: We are anything but prosperous during times of war. War is a time of death, grief, and tragedy. The only entity that prospers in war is the state and its close friends. And as General Butler asks, “How many of these war millionaires shouldered a rifle?” No, my readers, war creates no prosperity; it only bankrupts our savings accounts, our cradles, and our sense of human decency.

Perpetual War: The “New Normalcy”

Of all the enemies to public liberty, war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. . . . No nation could preserve its freedom in the midst of continual warfare.

—J
AMES
M
ADISON

Sadly, the need to limit the government's use of war is greater than ever. The War on Terror could go on forever. In fact, shortly after the attacks of September 11th, Vice President Dick Cheney stated that the war on terrorism “may never end. It's the new normalcy.” While this statement may prove to be true, the government is not there to ensure that war goes on; the government is there to ensure that war stops. This, however, is not the reality. War is the health of the state, and the state will do whatever it can to ensure that war continues in some form or another because, in the words of President Bush, “the war on terrorism is a new kind of war.” Once the government knows the power and the control it can hold over its people, it is unlikely ever to give them up.

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Conclusion

President John Quincy Adams stated that this country “goes not abroad in search of monsters to destroy” while President George W. Bush claimed, “We must take the battle to the enemy, disrupt his plans, and confront the worst threats before they emerge.” As long as presidents continue to spout comments that induce fear and anxiety, the government will continue to be “in business.” Our most recent culprit, President Bush, taunted that “intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised” and that “the danger is clear.” There is no doubt danger exists, but as discussed throughout this chapter, the state is merely using alarm and despair as a platform for government expansion in size, scope, and power. As for President Bush's disingenuous, alarmist nonsense about Iraq and weapons of mass destruction, he conveniently omitted the historical fact that Iraq purchased them with the approval of the Reagan administration and their acquisition was negotiated by then Secretary of Defense Donald Rumsfeld. The very same Donald Rumsfeld. Of course, whatever Iraq bought via Rumsfeld under Reagan in the 1980s was consumed—destroyed—by the time Bush via Rumsfeld went looking for them twenty years later.

Fortunately for the state, the world is rampant with brutal regimes and dictators. While the United States cannot be expected to extinguish them all, the government will surely seek to capitalize on trying. Unfortunately for individuals, spreading the gospel of democracy is anything but in the interest of liberty. If the government cannot deliver the mail, how can it be expected to bring democracy to Iraq and Afghanistan?
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Professor Robert Higgs recommends that we “decline the fool's errand of perpetually enforcing our political standards on the entire world.”
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When will the government listen?

The war in Iraq has demonstrated the intense tragedy of war. Through every graphic photograph and newspaper caption, the public has been exposed to its horror and heartbreak. President George W. Bush, nonetheless, told a
Time
magazine reporter that the war in Iraq was a “catastrophic success.”
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That it was a catastrophic success cannot be doubted, nor can for whom it was a catastrophic success be doubted: The federal government.