Sabtu, 05 November 2005
Jumat, 04 November 2005
Beltway Intellectuals Are Useless by Leon Hadar
Beltway Intellectuals Are Useless by Leon Hadar: "Beltway Intellectuals Are Useless" Beltway Intellectuals Are Useless
Washington intellectuals seem to have little idea
of how to fix US foreign policy
by Leon Hadar
by Leon Hadar
Save a link to this article and return to it at www.savethis.comSave a link to this article and return to it at www.savethis.com Email a link to this articleEmail a link to this article Printer-friendly version of this articlePrinter-friendly version of this article View a list of the most popular articles on our siteView a list of the most popular articles on our site
When he was once asked to define what exactly an "intellectual" was, British writer Aldous Huxley proposed that it was "a person who's found something in life that's more interesting than sex."
Based on Huxley's definition, I'm here to report to you that I had a very, very interesting weekend which I spent with a group of some of Washington's leading policy intellectuals, AKA policy "wonks" in a Big-Ideas retreat outside of the US capital, where one of those wealthy foundations wined and dined us for three days, in what could be described as a mini-Davos.
In return, we were expected to come up with new ideas on how to fix the universe or, more precisely, draw up the outline of a strategy that would permit the Master of the Universe, the United States, to stabilize Iraq, bring peace to the Middle East, re-energize the Western alliance and accommodate the Chinese, among many other things.
I have to admit that most of these wonks are clearly more intelligent, more knowledgeable and more experienced than your humble scribe here. Some of them have Ph.D.s from the most prestigious universities in the land, are fluent in many foreign languages, including Chinese, Persian and Urdu, and have served in top positions in the White House, Pentagon, State Department and Congress, where they provided advice to US officials, lawmakers and generals as they attempted to manage American foreign policy and resolve international crises.
No Big Ideas
Hence the expectation among the conference's organizers that some of these Washington's Best of the Brightest – I'm not including myself in that category – would have one of those eureka! moments and 72 hours of food consumption, beer drinking and long debates into the early morning hours would produce – Boom, Gee Whiz – the Big Idea in the form of, say, an exit strategy from Iraq or a new approach to deal with Iran.
Well, don't hold your breath. The long weekend failed to generate either Big Ideas or even tiny ones. While I'm prohibited by the off-the-record ground rules from revealing the names of the conference's attendees or what exactly was said during that retreat in Virginia, I can convey to you my main and very depressing impression: American foreign policy in Iraq, the Middle East and elsewhere is in a mess, and no one really knows how to get out of it.
Most of the participants suggested that Americans have to "stay the course in Iraq," expressed hope (wishful thinking?) that we will soon "turn the corner" there and things will get better in Mesopotamia, that perhaps the Sunnis will join the political process and that the elections in December will be "successful" (whatever that means).
In short, just continue muddling through and pray for a miracle.
There are some signs of the emergence of a foreign policy debate in Washington – clearly reflected in the discussions at the conference – which pits Kissinger-style Realpolitik types against Wilsonian idealists.
But taking into consideration some of the comments and predictions I heard during the weekend, the idealists – that is, the neoconservative ideologues who had hijacked US foreign policy after 9/11 – have not lost their momentum.
The notion that the US has the right and the obligation to promote American-style freedom and democracy not only in the Middle East but worldwide seems to be a dominant view among many of Washington's policy wonks. In fact, one of the panels during the conference was devoted to a discussion of how America could use its power to "democratize" Southeast Asia, including Singapore.
Even those Democrats participating in the event who have been critical of the neocons have not expressed opposition to the Global Democracy project itself. They just seemed to suggest that unlike the neocons, they would be able to achieve it at less cost especially in military terms, for the US. Call it Neocon Lite.
Interestingly enough, the harshest denunciation of the conduct of the Bushies' foreign policy and the neoconservative Global Democracy agenda that one can hear these days doesn't come from the direction of the Democratic Party but from Republican establishment figures who had served in the administration of President George the First.
Democracy by force
Hence Brent Scowcroft, national security adviser under Bush I, in an interview he gave to New Yorker magazine, criticized Vice-President Dick Cheney for siding with the militant neocons who wanted to reform the Middle East by force.
Scowcroft said in the interview that he believed that Paul Wolfowitz and other neocons "got a Utopia out there." Democracy cannot be imposed by force, and not everyone values freedom above all, Scowcroft argued.
As a realist, Scowcroft expressed in the interview the necessity of considering the consequences of action, or "outcomes." For Scowcroft, "the second Gulf War is a reminder of the unwelcome consequences of radical intervention, especially when it is attempted without sufficient understanding of America's limitations or of the history of the region," concluded the New Yorker article.
But it's important to remember that one of the main reasons that Scowcroft feels comfortable expressing such views that run contrary to the policy paradigm dominating in Washington is that this elder statesman is not looking for a job in the administration, Congress or the other centers of power in Washington.
Most of the policy intellectuals I met over the weekend are still relatively young and are marketing their ideas as part of a strategy to win professional benefits, and challenging the conventional wisdom on Iraq ("stay the course") and other issues wouldn't help advance that goal.
They might have found something more interesting in life than sex – but it's not an exit strategy from Iraq.
November 4, 2005
Washington intellectuals seem to have little idea
of how to fix US foreign policy
by Leon Hadar
by Leon Hadar
Save a link to this article and return to it at www.savethis.comSave a link to this article and return to it at www.savethis.com Email a link to this articleEmail a link to this article Printer-friendly version of this articlePrinter-friendly version of this article View a list of the most popular articles on our siteView a list of the most popular articles on our site
When he was once asked to define what exactly an "intellectual" was, British writer Aldous Huxley proposed that it was "a person who's found something in life that's more interesting than sex."
Based on Huxley's definition, I'm here to report to you that I had a very, very interesting weekend which I spent with a group of some of Washington's leading policy intellectuals, AKA policy "wonks" in a Big-Ideas retreat outside of the US capital, where one of those wealthy foundations wined and dined us for three days, in what could be described as a mini-Davos.
In return, we were expected to come up with new ideas on how to fix the universe or, more precisely, draw up the outline of a strategy that would permit the Master of the Universe, the United States, to stabilize Iraq, bring peace to the Middle East, re-energize the Western alliance and accommodate the Chinese, among many other things.
I have to admit that most of these wonks are clearly more intelligent, more knowledgeable and more experienced than your humble scribe here. Some of them have Ph.D.s from the most prestigious universities in the land, are fluent in many foreign languages, including Chinese, Persian and Urdu, and have served in top positions in the White House, Pentagon, State Department and Congress, where they provided advice to US officials, lawmakers and generals as they attempted to manage American foreign policy and resolve international crises.
No Big Ideas
Hence the expectation among the conference's organizers that some of these Washington's Best of the Brightest – I'm not including myself in that category – would have one of those eureka! moments and 72 hours of food consumption, beer drinking and long debates into the early morning hours would produce – Boom, Gee Whiz – the Big Idea in the form of, say, an exit strategy from Iraq or a new approach to deal with Iran.
Well, don't hold your breath. The long weekend failed to generate either Big Ideas or even tiny ones. While I'm prohibited by the off-the-record ground rules from revealing the names of the conference's attendees or what exactly was said during that retreat in Virginia, I can convey to you my main and very depressing impression: American foreign policy in Iraq, the Middle East and elsewhere is in a mess, and no one really knows how to get out of it.
Most of the participants suggested that Americans have to "stay the course in Iraq," expressed hope (wishful thinking?) that we will soon "turn the corner" there and things will get better in Mesopotamia, that perhaps the Sunnis will join the political process and that the elections in December will be "successful" (whatever that means).
In short, just continue muddling through and pray for a miracle.
There are some signs of the emergence of a foreign policy debate in Washington – clearly reflected in the discussions at the conference – which pits Kissinger-style Realpolitik types against Wilsonian idealists.
But taking into consideration some of the comments and predictions I heard during the weekend, the idealists – that is, the neoconservative ideologues who had hijacked US foreign policy after 9/11 – have not lost their momentum.
The notion that the US has the right and the obligation to promote American-style freedom and democracy not only in the Middle East but worldwide seems to be a dominant view among many of Washington's policy wonks. In fact, one of the panels during the conference was devoted to a discussion of how America could use its power to "democratize" Southeast Asia, including Singapore.
Even those Democrats participating in the event who have been critical of the neocons have not expressed opposition to the Global Democracy project itself. They just seemed to suggest that unlike the neocons, they would be able to achieve it at less cost especially in military terms, for the US. Call it Neocon Lite.
Interestingly enough, the harshest denunciation of the conduct of the Bushies' foreign policy and the neoconservative Global Democracy agenda that one can hear these days doesn't come from the direction of the Democratic Party but from Republican establishment figures who had served in the administration of President George the First.
Democracy by force
Hence Brent Scowcroft, national security adviser under Bush I, in an interview he gave to New Yorker magazine, criticized Vice-President Dick Cheney for siding with the militant neocons who wanted to reform the Middle East by force.
Scowcroft said in the interview that he believed that Paul Wolfowitz and other neocons "got a Utopia out there." Democracy cannot be imposed by force, and not everyone values freedom above all, Scowcroft argued.
As a realist, Scowcroft expressed in the interview the necessity of considering the consequences of action, or "outcomes." For Scowcroft, "the second Gulf War is a reminder of the unwelcome consequences of radical intervention, especially when it is attempted without sufficient understanding of America's limitations or of the history of the region," concluded the New Yorker article.
But it's important to remember that one of the main reasons that Scowcroft feels comfortable expressing such views that run contrary to the policy paradigm dominating in Washington is that this elder statesman is not looking for a job in the administration, Congress or the other centers of power in Washington.
Most of the policy intellectuals I met over the weekend are still relatively young and are marketing their ideas as part of a strategy to win professional benefits, and challenging the conventional wisdom on Iraq ("stay the course") and other issues wouldn't help advance that goal.
They might have found something more interesting in life than sex – but it's not an exit strategy from Iraq.
November 4, 2005
When Will America’s Housing Bubble Burst? by Eric Englund
When Will America’s Housing Bubble Burst? by Eric Englund
When Will America�s Housing Bubble Burst?
by Eric Englund
by Eric Englund
Throughout 2005, my clients � contractors of all trades, fabricators, and suppliers � have watched housing continue on its tear. Housing demand seems insatiable. Residential, commercial, and public works contractors are busy all across the U.S. When housing subdivisions and condominium complexes are built out, commercial and public works projects often follow. Strip malls, supermarkets, restaurants, and department stores are constructed to serve these new population centers � much to the delight of the commercial construction trades. With these new population centers comes the "need" for new public schools and other public infrastructure. Public works contractors get a piece of the action as well. Most of my clients are quite busy and turning nice profits. However, during a recent business trip, a common theme emerged in meeting after meeting. My customers are seeing severe shortages in building materials and quality labor. Many are outright stating that the heady pace of construction is simply unsustainable. In turn, some of the more seasoned contractors are predicting a bust � but they just don�t know when; yet I will hazard a guess.
In my meeting notes, I found that contractors were running into shortages of the following (pre and post-Hurricane Katrina):
* Certain dimensional lumbers
* Concrete
* Labor
* Oriented strand board
* Plumbing supplies
* Plywood
* PVC pipe
* Quality architectural designs and plans (indicating a strained architectural labor pool)
* Roofing materials
* Steel
Of these shortages, the one causing the most frustration pertains to a dearth of quality labor. Contractors, frequently, have little choice but to load their construction budgets with ample overtime pay in order to keep quality (and often shorthanded) crews together for the duration of a project. One client quipped: "This constant battle for labor and materials can�t go on forever. Things have to cool down sooner or later. But when?"
As to precisely when the bust will occur, this is not knowable. As to why boom turns into bust, only the Austrian Theory of the Trade Cycle provides the intellectual framework allowing one to understand the boom-bust cycle. What we will find, as explained by Roger Garrison, is that central banking is at the epicenter of the business cycle. Dr. Garrison provides the following explanation in the Mises Institute�s fabulous book The Austrian Theory of the Trade Cycle:
The Austrian theory of the business cycle emerges straightforwardly from a simple comparison of savings-induced growth, which is sustainable, with a credit-induced boom, which is not. An increase in saving by individuals and a credit expansion orchestrated by the central bank set into motion market processes whose initial allocational effects on the economy's capital structure are similar. But the ultimate consequences of the two processes stand in stark contrast: Saving gets us genuine growth; credit expansion gets us boom and bust.
Undoubtedly, the current American housing boom has not been built upon a foundation of savings � keeping in mind that, presently, America has a negative savings rate. This boom has been fueled by the Federal Reserve�s aggressive creation of money and credit. Correspondingly, the federal funds rate hit a low of 1% in June of 2003 � about the same time the housing boom began to accelerate.
Since money and credit can be created out of thin air, yet building materials and other resources cannot, does it not stand to reason that relentless credit creation would lead to resource shortages? Of course, the answer is "yes" � and Austrian economists know this. Accordingly, Roger Garrison covers this issue in his excellent book Time and Money: The Macroeconomics of Capital Structure:
In sum, credit expansion sets into motion a process of capital restructuring that is at odds with the unchanged preferences and hence is ill-fated. The relative changes within the capital structure were appropriately termed malinvestment by Mises�The boom is unsustainable; the changes in the intertemporal structure of production are self-defeating. Resource scarcities and a continuing high demand for current consumption eventually turn boom into bust.
It is not often one finds an economic theory that describes reality � and Austrian theory does so magnificently. In fact, from the labor and materials shortages my clients have described, it would seem the bust phase of the business cycle is nearly upon us.
Tom Barrack, widely considered to be among the world�s greatest real estate investors, wittingly or not, has an Austrian perspective as to why the United States� real estate/housing boom will soon come to an end. He stated the following, about real estate, in a recent Fortune article: "There�s too much money chasing too few good deals, with too much debt and too few brains�. That�s why I�m getting out." Tom Barrack certainly understands the dangers of high-octane credit expansion. Yet, what about the inevitable resource scarcities caused by the Federal Reserve�s accommodative credit policy and how will this affect the housing bubble? In the following excerpt, from this article, Mr. Barrack hits the ball out of the park:
�he sees the bubble deflating soon. Barrack thinks the catalyst will be a trend that few others are talking about, a steep rise in the price of building materials and labor. "Construction costs have spiked 30% in the past nine months," he says. The reasons: shortages of labor and materials like lumber because of the building boom, and increases in the price of oil, needed to produce everything from plastic piping to insulation to shingles.
The slump will show up first in speculative hot spots like Miami and Las Vegas, he says, where condo developers are preselling their projects for what look like big profits. When they actually build the units over the next year or two, he predicts, they will end up spending more than the units are now selling for. At that point, says Barrack, the developers will try to raise prices. "But most of these buyers are speculators," he says. "They will either sue the developers to get the original prices or get their deposits back and walk away." The developers will then put the units back on the market, and the glut of vacant condos will drive prices down. "It's the busted deals caused by construction costs that will cause a turn in the market," he predicts.
To be sure, the severe construction labor and materials shortages, seen throughout the U.S., signify the housing boom is nearing its end. Not surprisingly, Austrian economic theory predicted such shortages would emerge before boom turns to bust.
For good measure, let�s throw in the following housing affordability and financial-stress factors into the fray � which also point to the impending demise of the housing bubble:
* The average American household has $10,000 of credit card debt and, due to pressures brought to bear by the Office of the Comptroller of the Currency, minimum payments are now doubling.
* Soaring energy prices are going to make for financially punishing heating bills this winter � McMansions are energy hogs.
* The Federal Reserve just raised the fed funds rate to 4%. Hence, there should be no surprise that mortgage interest rates are at 15-month highs.
* Price inflation is much higher than Uncle Sam�s Consumer Price Index suggests � just go to the gas station and to the grocery store.
* The ratio of house prices to rental values is at an all-time high.
* The ratio of house prices to disposable income is highly elevated.
But what about my promise to hazard a guess as to the timing of the bust? After all, Tom Barrack indicated that he sees enough busted deals materializing, over the next year or two, to bring about a downturn in the real estate market.
In order to make a reasonable prediction, I am going to bring into the mix a September 2005 Federal Reserve discussion paper titled House Prices and Monetary Policy: A Cross-Country Study. Per this discussion paper�s abstract: "This paper examines periods of pronounced rises and falls of real house prices since 1970 in eighteen major industrial countries, with particular focus on the lessons for monetary policy." Here is what I found to be most interesting: "House price booms are typically preceded by a period of easing monetary policy, with policy rates bottoming out about the same time that house prices take off, about three years before house prices peak." Considering the fed funds rate did not bottom out, at 1%, until June of 2003 (and remained at 1%, until June of 2004, before being ratcheted upwards) one could reasonably surmise house prices will peak somewhere between June of 2006 and June of 2007 � and then, of course, will break downwards (for the reasons mentioned above).
With a plausible timeframe in hand, I am predicting the housing bubble will begin to burst within the next 14 months � perhaps by around December of 2006. Ultimately, we have a housing boom built on credit (and not savings) which has lead to labor and materials shortages and has lead to overleveraged consumers. This is why I see a bust � as indicated by accelerating mortgage defaults and a general decline in housing prices � commencing well before June of 2007. To close, always remember Austrian theory allows us to know there will be a central bank-induced bust. As to timing, I am only providing an educated guess.
November 4, 2005
When Will America�s Housing Bubble Burst?
by Eric Englund
by Eric Englund
Throughout 2005, my clients � contractors of all trades, fabricators, and suppliers � have watched housing continue on its tear. Housing demand seems insatiable. Residential, commercial, and public works contractors are busy all across the U.S. When housing subdivisions and condominium complexes are built out, commercial and public works projects often follow. Strip malls, supermarkets, restaurants, and department stores are constructed to serve these new population centers � much to the delight of the commercial construction trades. With these new population centers comes the "need" for new public schools and other public infrastructure. Public works contractors get a piece of the action as well. Most of my clients are quite busy and turning nice profits. However, during a recent business trip, a common theme emerged in meeting after meeting. My customers are seeing severe shortages in building materials and quality labor. Many are outright stating that the heady pace of construction is simply unsustainable. In turn, some of the more seasoned contractors are predicting a bust � but they just don�t know when; yet I will hazard a guess.
In my meeting notes, I found that contractors were running into shortages of the following (pre and post-Hurricane Katrina):
* Certain dimensional lumbers
* Concrete
* Labor
* Oriented strand board
* Plumbing supplies
* Plywood
* PVC pipe
* Quality architectural designs and plans (indicating a strained architectural labor pool)
* Roofing materials
* Steel
Of these shortages, the one causing the most frustration pertains to a dearth of quality labor. Contractors, frequently, have little choice but to load their construction budgets with ample overtime pay in order to keep quality (and often shorthanded) crews together for the duration of a project. One client quipped: "This constant battle for labor and materials can�t go on forever. Things have to cool down sooner or later. But when?"
As to precisely when the bust will occur, this is not knowable. As to why boom turns into bust, only the Austrian Theory of the Trade Cycle provides the intellectual framework allowing one to understand the boom-bust cycle. What we will find, as explained by Roger Garrison, is that central banking is at the epicenter of the business cycle. Dr. Garrison provides the following explanation in the Mises Institute�s fabulous book The Austrian Theory of the Trade Cycle:
The Austrian theory of the business cycle emerges straightforwardly from a simple comparison of savings-induced growth, which is sustainable, with a credit-induced boom, which is not. An increase in saving by individuals and a credit expansion orchestrated by the central bank set into motion market processes whose initial allocational effects on the economy's capital structure are similar. But the ultimate consequences of the two processes stand in stark contrast: Saving gets us genuine growth; credit expansion gets us boom and bust.
Undoubtedly, the current American housing boom has not been built upon a foundation of savings � keeping in mind that, presently, America has a negative savings rate. This boom has been fueled by the Federal Reserve�s aggressive creation of money and credit. Correspondingly, the federal funds rate hit a low of 1% in June of 2003 � about the same time the housing boom began to accelerate.
Since money and credit can be created out of thin air, yet building materials and other resources cannot, does it not stand to reason that relentless credit creation would lead to resource shortages? Of course, the answer is "yes" � and Austrian economists know this. Accordingly, Roger Garrison covers this issue in his excellent book Time and Money: The Macroeconomics of Capital Structure:
In sum, credit expansion sets into motion a process of capital restructuring that is at odds with the unchanged preferences and hence is ill-fated. The relative changes within the capital structure were appropriately termed malinvestment by Mises�The boom is unsustainable; the changes in the intertemporal structure of production are self-defeating. Resource scarcities and a continuing high demand for current consumption eventually turn boom into bust.
It is not often one finds an economic theory that describes reality � and Austrian theory does so magnificently. In fact, from the labor and materials shortages my clients have described, it would seem the bust phase of the business cycle is nearly upon us.
Tom Barrack, widely considered to be among the world�s greatest real estate investors, wittingly or not, has an Austrian perspective as to why the United States� real estate/housing boom will soon come to an end. He stated the following, about real estate, in a recent Fortune article: "There�s too much money chasing too few good deals, with too much debt and too few brains�. That�s why I�m getting out." Tom Barrack certainly understands the dangers of high-octane credit expansion. Yet, what about the inevitable resource scarcities caused by the Federal Reserve�s accommodative credit policy and how will this affect the housing bubble? In the following excerpt, from this article, Mr. Barrack hits the ball out of the park:
�he sees the bubble deflating soon. Barrack thinks the catalyst will be a trend that few others are talking about, a steep rise in the price of building materials and labor. "Construction costs have spiked 30% in the past nine months," he says. The reasons: shortages of labor and materials like lumber because of the building boom, and increases in the price of oil, needed to produce everything from plastic piping to insulation to shingles.
The slump will show up first in speculative hot spots like Miami and Las Vegas, he says, where condo developers are preselling their projects for what look like big profits. When they actually build the units over the next year or two, he predicts, they will end up spending more than the units are now selling for. At that point, says Barrack, the developers will try to raise prices. "But most of these buyers are speculators," he says. "They will either sue the developers to get the original prices or get their deposits back and walk away." The developers will then put the units back on the market, and the glut of vacant condos will drive prices down. "It's the busted deals caused by construction costs that will cause a turn in the market," he predicts.
To be sure, the severe construction labor and materials shortages, seen throughout the U.S., signify the housing boom is nearing its end. Not surprisingly, Austrian economic theory predicted such shortages would emerge before boom turns to bust.
For good measure, let�s throw in the following housing affordability and financial-stress factors into the fray � which also point to the impending demise of the housing bubble:
* The average American household has $10,000 of credit card debt and, due to pressures brought to bear by the Office of the Comptroller of the Currency, minimum payments are now doubling.
* Soaring energy prices are going to make for financially punishing heating bills this winter � McMansions are energy hogs.
* The Federal Reserve just raised the fed funds rate to 4%. Hence, there should be no surprise that mortgage interest rates are at 15-month highs.
* Price inflation is much higher than Uncle Sam�s Consumer Price Index suggests � just go to the gas station and to the grocery store.
* The ratio of house prices to rental values is at an all-time high.
* The ratio of house prices to disposable income is highly elevated.
But what about my promise to hazard a guess as to the timing of the bust? After all, Tom Barrack indicated that he sees enough busted deals materializing, over the next year or two, to bring about a downturn in the real estate market.
In order to make a reasonable prediction, I am going to bring into the mix a September 2005 Federal Reserve discussion paper titled House Prices and Monetary Policy: A Cross-Country Study. Per this discussion paper�s abstract: "This paper examines periods of pronounced rises and falls of real house prices since 1970 in eighteen major industrial countries, with particular focus on the lessons for monetary policy." Here is what I found to be most interesting: "House price booms are typically preceded by a period of easing monetary policy, with policy rates bottoming out about the same time that house prices take off, about three years before house prices peak." Considering the fed funds rate did not bottom out, at 1%, until June of 2003 (and remained at 1%, until June of 2004, before being ratcheted upwards) one could reasonably surmise house prices will peak somewhere between June of 2006 and June of 2007 � and then, of course, will break downwards (for the reasons mentioned above).
With a plausible timeframe in hand, I am predicting the housing bubble will begin to burst within the next 14 months � perhaps by around December of 2006. Ultimately, we have a housing boom built on credit (and not savings) which has lead to labor and materials shortages and has lead to overleveraged consumers. This is why I see a bust � as indicated by accelerating mortgage defaults and a general decline in housing prices � commencing well before June of 2007. To close, always remember Austrian theory allows us to know there will be a central bank-induced bust. As to timing, I am only providing an educated guess.
November 4, 2005
The Politically Incorrect Guide to American History
http://www.lewrockwell.com/gordon/americanhistory.html
The Politically Incorrect Guide to American History
Thomas E. Woods, Jr.
Regnery Publishing, 2004
xv + 270 pgs.
Thomas Woods’s superb new book delivers much more than it promises. Woods offers his book as a guide to "those who find the standard narrative or the typical textbook unpersuasive or ideologically biased" (p. xiv). This suggests that Woods has principally students in mind as his audience; but many others will benefit from reading the book. Woods displays a remarkably broad knowledge of the latest specialized research on various episodes of American history. This permits him, again and again, to raise illuminating points that will instruct even knowledgeable readers.
The book is no mere compilation of surprising facts. Woods has rather organized his account around a central theme. Americans have, from the colonial period to the present, flourished so long as they lived in a free economy, accompanied by a government strictly limited in powers. But throughout much of our history, the efforts of Americans to live freely have confronted a formidable enemy: the Leviathan state. Woods shows that the federal government, far from being the protector of the rights of minorities, has been the main obstacle on the path to liberty.
But, one might object to this account, was not the American settlement conceived in sin? How can one say that Americans always sought to live freely when the earliest Puritan settlers began their "free" society by theft of Indian lands?
Woods meets this initial challenge head on. The Puritans did not steal from the Indians: they bought land from various tribes, in willing and beneficial exchange. "[W]hile the king had issued colonial land grants, the Puritan consensus . . . was that the king’s charter conferred political and not property rights to the land, which Puritan settlers sought by means of voluntary cession from the Indians. The colonial government actually punished individuals who made unauthorized acquisitions of Indian lands" (p. 8, emphasis in original).
The American colonists, as they developed a free society, realized that a strong central government threatened their achievements. Once they gained independence, they were not about to surrender the freedom that they had won from the British to a new despotism. Woods ably brings out that although the supporters of the Constitution were the centralizing party, as opposed to the more prescient Antifederalists who warned of the possible dangers of the new regime, even they sought to restrain national authority.
In this connection, Woods emphasizes the Tenth Amendment, which "guaranteed the states’ rights to self-government. . . . Since the states existed prior to the federal government, they were the source of whatever power the federal government had" (p. 26).
All well and good in theory: but how could the federal government be kept within strict limits? To rely on "checks and balances," Woods insightfully comments, does not suffice: to think otherwise is to rely on the federal government to police itself. Jefferson and his followers argued that the states had the right to nullify laws they deemed unconstitutional. If a state resisted in this way, the operation of the disputed law would be suspended in the state, pending a resolution of the matter by a conference of the states. By no means was this theory an invention of Southern firebrands, anxious at all costs to cement slavery in place. Though the nullifications of 1798 did not find favor with the Northern states at the time, "they used the unmistakable language of the Virginia and Kentucky Resolutions of 1798 when nullifying the fugitive slave laws" (p. 39).
The politically correct historians who are the objects of Woods’s assault would here interpose an objection. Were not states’ rights the key to the defense of slavery? How without a strong central government could slavery have been ended?
Woods easily turns aside this counterargument. The Civil War—as he points out, not a genuine civil war since the South did not wish to replace the national government—was not fought to end slavery: Lincoln rather aimed to consolidate national power. In opposing Lincoln’s dictatorship, the South defended the cause of liberty, a fact that was not lost on the great classical liberal Lord Acton. In a letter of 1866 to Robert E. Lee, Acton said that he "saw in States’ rights the only availing check upon the absolutism of the sovereign will, and secession filled me with hope, not as the destruction but as the redemption of Democracy" (p. 74).
In the pursuit of their centralizing mission, the Northern armies shocked European historians by their assaults on civilians. Woods, illustrating his excellent command of the historical literature, cites in this connection the seldom-mentioned classic of F.J.P. Veale, Advance to Barbarism. He argued that the Northern forces "broke deliberately and dramatically from the European code of warfare that had developed since the seventeenth century and that had forbidden targeting the civilian population" (p. 71).
Given what has already been said, it will come as no surprise that Woods does not view Reconstruction with favor. He maintains, here following Forrest McDonald, that the Fourteenth Amendment, a key element both in the plans of the Radical Republicans and the machinations of their centralizing successors down to the present, was never legally ratified. His argument is straightforward: the Southern states were required to ratify the Amendment before their governments were legally recognized. If so, their acts of ratification had no legal force, since they were made by legislatures not part of the union.
Despite the horrendous destruction of the Civil War, America recovered and prospered, owing to a largely free economy. But the centralizers and proponents of government never learn the lesson that freedom works better than coercion. When the Great Depression struck in 1929, Herbert Hoover responded with the supreme inanity of trying to keep wages up. In doing so, he ensured massive unemployment. (For the causes of the depression, Woods refers readers to Murray Rothbard’s America’s Great Depression.)
Franklin Roosevelt of course continued and greatly extended Hoover’s interventionist policies. In doing so, he prolonged the depression throughout the 1930s, and prosperity did not return until after World War II. Woods is careful to note, here following Robert Higgs, that the war itself, with its vast conscription of men and resources, was not a period of economic good times.
With much of this economic story, readers of the Mises Review will be familiar. But once more showing his ability to find the little known but significant fact, Woods comes up with something remarkable. The New Deal made constant efforts to increase the power of labor unions, and "progressives" often cite the Wagner Act and similar measures as among Roosevelt’s greatest triumphs. Woods remarks: "The ways in which labor unions impoverish the economy are legion, from distortions in the labor market to work rules that discourage efficiency. In a study published . . . in late 2002 . . . economists Richard Vedder and Lowell Gallaway of Ohio University calculated that labor unions have cost the American economy a whopping $50 trillion over the past fifty years alone" (p. 150, emphasis in original).
Despite the manifold failures of interventionism, some of the self-styled intellectual elite thought that interference with the market had not gone far enough. Until the onset of the Cold War, sympathy with the Soviet "experiment" was widespread among academics, journalists, and government employees. Some of the sympathizers went beyond intellectual flirtation; Alger Hiss, among many others, aided Soviet Russia through espionage. Woods suggests that the much-maligned Senator Joseph McCarthy was in substance correct in his claims about Communist penetration of the U.S. government.
Much of this is relatively well known, but Woods has once again highlighted a surprising fact. Thanks in large measure to the assiduous efforts of his disciple Sidney Hook, John Dewey has acquired a reputation as a leading anti-Communist. Woods reminds us that Dewey once held entirely different views. "Progressive educator John Dewey, in a series of articles for The New Republic in 1928, could hardly contain his enthusiasm for Soviet Russia. ‘I have never seen anywhere in the world such a large proportion of intelligent, happy and intelligently occupied children,’ he recalled" (pp. 159–60).
Dewey had earlier supported American entry into World War I; and, as Woods makes clear, support for intervention at home goes hand-in-hand with an aggressive foreign policy. Woodrow Wilson, the economic interventionist, influenced by partiality toward England and by his desire to reshape the world, abandoned America’s traditional policy of noninvolvement in European power politics. Woods stresses Wilson’s blatantly unfair prewar diplomacy. Wilson insisted that Americans had the right to travel on armed belligerent ships, holding the Germans to "strict accountability" for American lives lost in submarine attacks. At the same time, he accepted the British hunger blockade of Germany, though this cost many times more lives than the German policy.
Franklin Roosevelt proved an apt pupil of Wilson in the events leading to America’s entry into World War II. Roosevelt’s "destroyers for bases" agreement with the British in September 1940 might have provoked a German declaration of war: nevertheless, Roosevelt saw no need to secure the approval of Congress. Woods as always has found a telling quotation. Edward Corwin, one of the foremost Constitutional scholars of the time and by no means an opponent of the New Deal, commented: "Why not any and all of Congress’s specifically delegated powers be set aside by the President’s ‘executive power’ and the country be put on a totalitarian basis without further ado?" (p. 176). Roosevelt’s efforts to provoke a German declaration of war failed, but he succeeded in getting America into the war through the "back door." His aggressive policy toward Japan provoked the Japanese attack: as Secretary of War Stimson noted in his diary on November 25, 1941, the question was how "to maneuver them [the Japanese] into the position of firing the first shot" (p. 181).
I shall conclude with one more surprising fact that Woods has brought to light. He calls attention to the vital work of Julius Epstein, a longtime researcher at the Hoover Institution, on Operation Keelhaul. In this nefarious program, at least one million Russian prisoners of war were forcibly returned to Russia. In one incident, "About 200 Soviet nationals were among the prisoners of war in Fort Dix, New Jersey. . . . They were taken prisoner with the solemn promise that under no circumstances would they be repatriated to the Soviet Union, where they faced certain death. That promise was betrayed so that the American president might be faithful to Uncle Joe [Stalin]" (p. 188).
I have been able to offer only a sample of the many topics that Woods discusses. His account of civil rights legislation and his discussion of the fallacy that Marshall Plan aid brought about European recovery after World War II should not be missed. His stimulating book helps to correct the many myths that today pass for American history. n MR
The Politically Incorrect Guide to American History
Thomas E. Woods, Jr.
Regnery Publishing, 2004
xv + 270 pgs.
Thomas Woods’s superb new book delivers much more than it promises. Woods offers his book as a guide to "those who find the standard narrative or the typical textbook unpersuasive or ideologically biased" (p. xiv). This suggests that Woods has principally students in mind as his audience; but many others will benefit from reading the book. Woods displays a remarkably broad knowledge of the latest specialized research on various episodes of American history. This permits him, again and again, to raise illuminating points that will instruct even knowledgeable readers.
The book is no mere compilation of surprising facts. Woods has rather organized his account around a central theme. Americans have, from the colonial period to the present, flourished so long as they lived in a free economy, accompanied by a government strictly limited in powers. But throughout much of our history, the efforts of Americans to live freely have confronted a formidable enemy: the Leviathan state. Woods shows that the federal government, far from being the protector of the rights of minorities, has been the main obstacle on the path to liberty.
But, one might object to this account, was not the American settlement conceived in sin? How can one say that Americans always sought to live freely when the earliest Puritan settlers began their "free" society by theft of Indian lands?
Woods meets this initial challenge head on. The Puritans did not steal from the Indians: they bought land from various tribes, in willing and beneficial exchange. "[W]hile the king had issued colonial land grants, the Puritan consensus . . . was that the king’s charter conferred political and not property rights to the land, which Puritan settlers sought by means of voluntary cession from the Indians. The colonial government actually punished individuals who made unauthorized acquisitions of Indian lands" (p. 8, emphasis in original).
The American colonists, as they developed a free society, realized that a strong central government threatened their achievements. Once they gained independence, they were not about to surrender the freedom that they had won from the British to a new despotism. Woods ably brings out that although the supporters of the Constitution were the centralizing party, as opposed to the more prescient Antifederalists who warned of the possible dangers of the new regime, even they sought to restrain national authority.
In this connection, Woods emphasizes the Tenth Amendment, which "guaranteed the states’ rights to self-government. . . . Since the states existed prior to the federal government, they were the source of whatever power the federal government had" (p. 26).
All well and good in theory: but how could the federal government be kept within strict limits? To rely on "checks and balances," Woods insightfully comments, does not suffice: to think otherwise is to rely on the federal government to police itself. Jefferson and his followers argued that the states had the right to nullify laws they deemed unconstitutional. If a state resisted in this way, the operation of the disputed law would be suspended in the state, pending a resolution of the matter by a conference of the states. By no means was this theory an invention of Southern firebrands, anxious at all costs to cement slavery in place. Though the nullifications of 1798 did not find favor with the Northern states at the time, "they used the unmistakable language of the Virginia and Kentucky Resolutions of 1798 when nullifying the fugitive slave laws" (p. 39).
The politically correct historians who are the objects of Woods’s assault would here interpose an objection. Were not states’ rights the key to the defense of slavery? How without a strong central government could slavery have been ended?
Woods easily turns aside this counterargument. The Civil War—as he points out, not a genuine civil war since the South did not wish to replace the national government—was not fought to end slavery: Lincoln rather aimed to consolidate national power. In opposing Lincoln’s dictatorship, the South defended the cause of liberty, a fact that was not lost on the great classical liberal Lord Acton. In a letter of 1866 to Robert E. Lee, Acton said that he "saw in States’ rights the only availing check upon the absolutism of the sovereign will, and secession filled me with hope, not as the destruction but as the redemption of Democracy" (p. 74).
In the pursuit of their centralizing mission, the Northern armies shocked European historians by their assaults on civilians. Woods, illustrating his excellent command of the historical literature, cites in this connection the seldom-mentioned classic of F.J.P. Veale, Advance to Barbarism. He argued that the Northern forces "broke deliberately and dramatically from the European code of warfare that had developed since the seventeenth century and that had forbidden targeting the civilian population" (p. 71).
Given what has already been said, it will come as no surprise that Woods does not view Reconstruction with favor. He maintains, here following Forrest McDonald, that the Fourteenth Amendment, a key element both in the plans of the Radical Republicans and the machinations of their centralizing successors down to the present, was never legally ratified. His argument is straightforward: the Southern states were required to ratify the Amendment before their governments were legally recognized. If so, their acts of ratification had no legal force, since they were made by legislatures not part of the union.
Despite the horrendous destruction of the Civil War, America recovered and prospered, owing to a largely free economy. But the centralizers and proponents of government never learn the lesson that freedom works better than coercion. When the Great Depression struck in 1929, Herbert Hoover responded with the supreme inanity of trying to keep wages up. In doing so, he ensured massive unemployment. (For the causes of the depression, Woods refers readers to Murray Rothbard’s America’s Great Depression.)
Franklin Roosevelt of course continued and greatly extended Hoover’s interventionist policies. In doing so, he prolonged the depression throughout the 1930s, and prosperity did not return until after World War II. Woods is careful to note, here following Robert Higgs, that the war itself, with its vast conscription of men and resources, was not a period of economic good times.
With much of this economic story, readers of the Mises Review will be familiar. But once more showing his ability to find the little known but significant fact, Woods comes up with something remarkable. The New Deal made constant efforts to increase the power of labor unions, and "progressives" often cite the Wagner Act and similar measures as among Roosevelt’s greatest triumphs. Woods remarks: "The ways in which labor unions impoverish the economy are legion, from distortions in the labor market to work rules that discourage efficiency. In a study published . . . in late 2002 . . . economists Richard Vedder and Lowell Gallaway of Ohio University calculated that labor unions have cost the American economy a whopping $50 trillion over the past fifty years alone" (p. 150, emphasis in original).
Despite the manifold failures of interventionism, some of the self-styled intellectual elite thought that interference with the market had not gone far enough. Until the onset of the Cold War, sympathy with the Soviet "experiment" was widespread among academics, journalists, and government employees. Some of the sympathizers went beyond intellectual flirtation; Alger Hiss, among many others, aided Soviet Russia through espionage. Woods suggests that the much-maligned Senator Joseph McCarthy was in substance correct in his claims about Communist penetration of the U.S. government.
Much of this is relatively well known, but Woods has once again highlighted a surprising fact. Thanks in large measure to the assiduous efforts of his disciple Sidney Hook, John Dewey has acquired a reputation as a leading anti-Communist. Woods reminds us that Dewey once held entirely different views. "Progressive educator John Dewey, in a series of articles for The New Republic in 1928, could hardly contain his enthusiasm for Soviet Russia. ‘I have never seen anywhere in the world such a large proportion of intelligent, happy and intelligently occupied children,’ he recalled" (pp. 159–60).
Dewey had earlier supported American entry into World War I; and, as Woods makes clear, support for intervention at home goes hand-in-hand with an aggressive foreign policy. Woodrow Wilson, the economic interventionist, influenced by partiality toward England and by his desire to reshape the world, abandoned America’s traditional policy of noninvolvement in European power politics. Woods stresses Wilson’s blatantly unfair prewar diplomacy. Wilson insisted that Americans had the right to travel on armed belligerent ships, holding the Germans to "strict accountability" for American lives lost in submarine attacks. At the same time, he accepted the British hunger blockade of Germany, though this cost many times more lives than the German policy.
Franklin Roosevelt proved an apt pupil of Wilson in the events leading to America’s entry into World War II. Roosevelt’s "destroyers for bases" agreement with the British in September 1940 might have provoked a German declaration of war: nevertheless, Roosevelt saw no need to secure the approval of Congress. Woods as always has found a telling quotation. Edward Corwin, one of the foremost Constitutional scholars of the time and by no means an opponent of the New Deal, commented: "Why not any and all of Congress’s specifically delegated powers be set aside by the President’s ‘executive power’ and the country be put on a totalitarian basis without further ado?" (p. 176). Roosevelt’s efforts to provoke a German declaration of war failed, but he succeeded in getting America into the war through the "back door." His aggressive policy toward Japan provoked the Japanese attack: as Secretary of War Stimson noted in his diary on November 25, 1941, the question was how "to maneuver them [the Japanese] into the position of firing the first shot" (p. 181).
I shall conclude with one more surprising fact that Woods has brought to light. He calls attention to the vital work of Julius Epstein, a longtime researcher at the Hoover Institution, on Operation Keelhaul. In this nefarious program, at least one million Russian prisoners of war were forcibly returned to Russia. In one incident, "About 200 Soviet nationals were among the prisoners of war in Fort Dix, New Jersey. . . . They were taken prisoner with the solemn promise that under no circumstances would they be repatriated to the Soviet Union, where they faced certain death. That promise was betrayed so that the American president might be faithful to Uncle Joe [Stalin]" (p. 188).
I have been able to offer only a sample of the many topics that Woods discusses. His account of civil rights legislation and his discussion of the fallacy that Marshall Plan aid brought about European recovery after World War II should not be missed. His stimulating book helps to correct the many myths that today pass for American history. n MR
Rabu, 02 November 2005
Selasa, 01 November 2005
One Hand Clapping � Blog Archive � Senate goes to closed session
One Hand Clapping � Blog Archive � Senate goes to closed session: "Senate goes to closed session
by Donald Sensing
CBS News reports, �Dems Force Closed Senate Session.�"
by Donald Sensing
CBS News reports, �Dems Force Closed Senate Session.�"
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