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How World War I Paved the Way for the Warfare State

March 15, 2014 in Economics

By Mises Updates

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by David Stockman

Remarks To The Committee For The Republic, Washington DC, February 2014 (Part 1 of 6 Parts)

[From David Stockman's Contra Corner.]

Flask in hand, Boris Yelstin famously mounted a tank outside the Soviet Parliament in August 1991. Presently, the fearsome Red Army stood down—an outcome which 45 years of Cold War military mobilization by the West had failed to accomplish.

At the time, the U.S. Warfare State’s budget— counting the pentagon, spy agencies, DOE weapons, foreign aid, homeland security and veterans—-was about $500 billion in today’s dollars.  Now, a quarter century on from the Cold War’s end, that same metric stands at $900 billion.

This near doubling of the Warfare State’s fiscal girth is a tad incongruous.  After all, America’s war machine was designed to thwart a giant, nuclear-armed industrial state, but, alas, we now have no industrial state enemies left on the planet. The much-shrunken Russian successor to the Soviet Union, for example, has become a kleptocracy run by a clever thief who prefers stealing from his own citizens.

Likewise, the Red Chinese threat consists of a re-conditioned aircraft carrier bought second-hand from a former naval power—-otherwise known as the former Ukraine. China’s bubble-ridden domestic economy would collapse within six weeks were it to actually bomb the 4,000 Wal-Mart outlets in America on which its mercantilist export machine utterly depends.

On top of that, we’ve been fired as the world’s policeman, al Qaeda has splintered among warlords who inhabit the armpits of the world from Yemen to Somalia and during last September’s Syria war scare the American people even took away the President’s keys to the Tomahawk missile batteries.  In short, the persistence of America’s trillion dollar Warfare State budget needs some serious “splainin”.

The Great War and Its Aftermath

My purpose tonight is to sketch the long story of how it all happened, starting precisely 100 years ago in 1914. In that year the Fed opened-up for business just as the carnage in northern France closed-down the prior magnificent half-century era of liberal internationalism and honest gold-backed money.

The Great War was self-evidently an epochal calamity, especially for the 20 million combatants and civilians who perished for no reason that is discernible in any fair reading of history, or even unfair one. Yet the far greater calamity is that  Europe’s senseless fratricide of 1914-1918 gave birth to all the great evils of the 20th century— the Great Depression, totalitarian genocides, Keynesian economics,  permanent  warfare states, rampaging central banks …read more

Source: MISES INSTITUTE

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