“It is often sadly remarked,” wrote Henry Hazlitt, the distinguished free-market writer, “that the bad economists present their errors to the public better than the good economists present their truths.” This, averred Hazlitt, comes about because the bad economists are presenting half-truths.
These wholesale liars owe their perpetual popularity to the intellectual legitimacy they provide to the plundering class, the politicians. For what politician would not welcome an economist who, with the aid of indecipherable econometrics, legitimizes immoral power and property grabs?
This is why the anti-free-market central planning advocated by the late John Maynard Keynes has been embraced with renewed verve by George Bush. Like any good Keynesian, Bush believes that big government – huge public works – and big deficits are not a bane but a blessing, to be adopted as the key to economic boom.
Hazlitt further hammered home that “the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
Although you won’t find a Keynesian suggesting that in order to create jobs in their own communities, people should set fire to their homes, and so help spur economic activity among local builders, landscapers, plumbers and electricians, the very same “experts” have no qualms touting the economic benefits that accrue from taking a wrecking ball to an entire country. They do, after all stand by the absurdity that war is good for the economy.
The truth is that a war – especially a gratuitous one – always destroys individually owned real assets and capital. In the short term, it will benefit some at the expense of others; in the long run, it benefits none.
According to figures provided by Yale professor William Nordhaus and the Council of Foreign Relations, the eventual costs of the war on Iraq will be roughly $1.2 trillion.
Mr. Bush, however, proudly presides over a budget deficit, the official upbeat estimate of which is $375 billion. Since this figure doesn’t include off-budget spending, and since estimates of the preliminary costs of the war run to $200 billion, the deficit is more likely to be close to $600 billion.
And since there’s no free lunch, who will pay for the debauchery?
The finances for the war, of course, will come from the private economy. For every dollar the government spends, a dollar is suctioned from you and me. For every new smiling military recruit sitting pretty with a home, a porch and a pension, some poor sod will join the army of (9 million) unemployed. Wartime socialism thus involves a massive transfer of private property to state ownership – it’s a confiscation of large portions of the private economy.
Given its debt, the U.S. government is fast becoming a bad risk as a borrower. To finance the war, then, it’ll have to steal over and above the usual call of duty.
Unlike “The Shrub” currently in power, Ronald Reagan understood a thing or two. He said this: “The truth is that inflation is caused by government. It’s caused by government spending more than it takes in, and it will go away just as soon as government stops doing that.”
More precisely, having adopted deficit spending as an article of faith, Bush will call on the Federal Reserve and the printing press to print money in order to pay the costs of the war. Inflation is an increase in the money supply. The endemic price hikes and economic distortions that follow are but a byproduct of this legalized counterfeiting.
The reports of freshly minted dollars making their way from the Federal Reserve Bank to millions of Iraqis, now on the U.S. payroll, suggest that the money market is already being flooded. The first counterfeit downpayment on the war will be making its way shortly into the coffers of the selected war contractors and their employees.
So why is this so bad? Doesn’t more paper money make us all richer?
Hazlitt’s lucidity applies here too. When the initial $1 billion worth of new money is given to corporate cronies like Kellogg Brown & Root, the construction arm of Cheney’s Halliburton, and the Bechtel Corporation, it will immediately spur an artificially created demand, causing their suppliers to raise their prices. It’ll take time, but the new money will generate price hikes throughout the economy.
Rest assured, though, that Bechtel’s George Schultz, the former secretary of state, who is also the chairman of the Committee for the Liberation of Iraq, will get his honey well before you taste any, unless, of course, you work for said company or for the Parsons Corporation, or the Louis Berger Group or any other of the industries involved in war profiteering.
Rest assured too that another Bechtel senior vice president by the name of Jack Sheehan, who, according to the Observer, is also “a retired general who sits on the Defense Policy Board which advises the Pentagon,” will enjoy a fat check well before the general price increases caused by all the new money affect his purchasing power. Jack will get to spend the new wads before counterfeit coinage spreads across the economy, causing prices to rise.
By the time you and I, politically unconnected suckers that we are, experience a meager rise in money income, rising prices will have obliterated the tiny gain.
Bush’s wartime socialism involves diverting massive amounts of privately owned property to inherently unproductive government endeavors. In the process of forcibly creating a demand for certain wartime products and shifting production away from others, the government skews a consumer-driven production pattern. Since there are no freebies, those working for this centrally planned command economy will benefit while others will foot the bill.