02/08/08 – David R. Henderson – The Scott Horton Show

Yet sometimes you have to support the better of two evils, hasn't that been our policy to try to maintain some stability in this country with 60 nuclear warheads?
I think that's the problem, always trying to support the lesser of two evils, and we don't have the jurisdiction to do it.
And I'm not sure you can sort out which one is the most evil or the least evil.
Here we are, right now we've supported Turkey all these years, and Turkey now is using our weapons and our money to bomb North Iraq.
This has to quit.
I mean, how long can we continue to do this?
It just doesn't serve our interests at all.
As on most issues, here we are.
Welcome back to Antiwar Radio, Chaos 95.9 in Austin, Texas.
And on that point, how difficult it is to decide which would be the best dictator of Pakistan is our guest, David R. Henderson.
He's a research fellow at the Hoover Institution, an Associate Professor of Economics in the Graduate School of Business and Public Policy at the Naval Postgraduate School.
He's author of The Joy of Freedom, An Economist's Odyssey, and editor of the Concise Encyclopedia of Economics.
His website is davidrhenderson.com, and you can find his column, The Wartime Economist, at antiwar.com slash Henderson.
Welcome back to the show, David.
Thanks, Scott.
Very good to talk to you.
And I guess let's start with Pakistan.
We've got that great clip of Ron Paul saying, Well, you know, the real trouble is picking who would be the best dictator over there.
Right.
And this goes along the lines of a column that you wrote just a couple of weeks back, The Fatal Conceit in Foreign Policy, which brings up the question of, well, basically from the point of view of Austrian economics, the question of whether American world rulers can have enough knowledge or precise enough knowledge about other areas of the world that they're attempting to dominate in order to even do a good job at that.
Right.
And what I point out in that article, the term fatal conceit comes from Friedrich Hayek, an economist who wrote a series of articles in the 1930s and 40s showing why central planning couldn't work, that even if you granted that central planners of an economy had all the right incentives, which they don't, and even if you granted that they're brilliant, which they aren't, the problem is they don't have the information because you can't centralize the information.
No one can centralize the information that's needed to plan a complex economy.
And the only way you get information is the market aggregates all this decentralized information.
And the example he gave, one of the memorable examples was tin.
He says, let's say you're using tin in some use and the price of tin goes up.
You don't need to know whether it went up because the supply fell or because the demand increased.
All you need to do is look at that price signal and you can make a good decision.
A central planner has to somehow figure out where should we cut the amount of tin and how much and what use in thousands and thousands of uses of tin.
Segue from that to foreign policy.
Hayek didn't, but I think he probably would have approved of this reasoning.
Just as central government officials can't plan an economy, they can't plan other countries well either.
They can't have the information you would need to make those choices.
So, for example, whom should we support or whom should our government support in Pakistan?
Well, I point out in my article, that's like asking, have you stopped beating your wife?
If you don't beat your wife, it's a setup.
And here, we don't have to support someone in Pakistan.
All we need to do, we again meaning our government, is just pull out and quit supporting anyone and let those chips fall where they may.
Let people in Pakistan figure it out.
Now, to say that is not to say that people in Pakistan are going to make good decisions, whether decisions that John McCain would approve of, Hillary Clinton would approve of, or you or I would approve of.
It just means that the government should be much more humble than it is and just know that it's unlikely to make good choices.
So quit wasting our money and quit putting us at risk with what are likely to be bad choices.
In fact, you quote Hillary Clinton in the article.
In fact, the quote that you don't have, I don't think, is the one where she talked, I think the New York Times quoted her as saying, well, you know, these events are going to make it very hard for America to control what goes on in Pakistan.
It's very frank language like that.
But the quotes that you have of her is where she's talking about what's going on in Pakistan and she has no idea what's going on in Pakistan.
That's right.
She made a mistake, and by the way, I'm not the first person who pointed this out.
In fact, the way I found out about this was reading another article on antiwar.com.
But she made a mistake in a December 28th interview with Wolf Blitzer of CNN.
She said, quote, if President, and this is just a day or two after Benazir Bhutto was assassinated, she said, quote, if President Musharraf wishes to stand for election, then he should abide by the same rules that every other candidate will have to follow.
But he wasn't standing for election.
There are these elections that were supposed to happen on January 8th.
They've now been postponed until I think a week or two from now.
But they weren't for President.
And she says, like, here's this woman who presumes to be able to control, as you said, and tell people in Pakistan how to win their lives, and she doesn't even know what's happening.
And as I said, this isn't some fringe candidate.
You know, this isn't that guy on the Democratic side who got knocked out early.
What was his name?
Gravel?
Yeah.
This isn't Mike Gravel, you know, with no serious staff behind her making a mistake.
In fact, I wouldn't be surprised if Gravel knew it better than she did.
This is the best-funded candidate at the time in the primaries, in the election process, who didn't have a staff that even told her that.
And the mistake sat uncorrected for two days.
And then in an interview with George Stephanopoulos on ABC, she repeated the mistake.
And if I remember the timeline right, David, not only has she not been called out by her staff, corrected by her staff, but she had been called out publicly in the intervening two days.
Really?
I would have put that in the article.
Now, I don't have my footnote with me, but if I remember it right, she had been called out publicly for it, and they still didn't correct her.
Yeah, and I think there's an even worse one, which I used in a speech I gave at the World Affairs Council earlier this week.
And that is having to do with her debate in Los Angeles with Barack Obama when she said that Saddam Hussein had kicked out the inspectors back in 1998.
Well, it's public record that he hadn't kicked them out.
And yet she got away with that.
And Wolf Blitzer didn't correct her.
Barack Obama didn't correct her.
And it's possible that they don't even know either.
And so these people are presuming to say that they can run the world, and they don't know these basic facts.
The charitable interpretation, of course, is that they don't know these basic facts.
The other one, which is at least as disturbing, if not more so, is that they lie.
Right.
And it's one of the two.
I'm not one of these people who's quick to call people a liar, but I am quick to point out you made a mistake, and so you admit your mistake.
Because if you don't, you're kind of a liar.
Yeah.
Well, and, you know, here's one that I completely chalk up to ignorance just going by the expression on the man's face, was one of these earlier debates where Barack Obama said nobody questions whether Iran is right now actively pursuing nuclear weapons.
And Denis Kucinich said, what, are you kidding me?
Every indication in the whole world is that they're not.
And, of course, it was just a month or two months later that the Central Intelligence Agency's NIE came out and completely took Kucinich's position against Obama's.
But Obama looked at Kucinich like deer in headlights.
What do you mean anyone on earth disputes the fact that Iran is right now pursuing nuclear weapons?
Never heard of Mohamed ElBaradei, I guess, in his whole life, this guy.
Yeah, right.
Now, I want to say, by the way, I'm still not convinced they're not pursuing nuclear weapons.
I read the NIE, at least the summary report in December, and it does have a major footnote there saying that they're pursuing other things that easily could transition over to nuclear weapons.
So I don't have that confidence.
But I agree with you that whenever anyone says, I do want to hear what you have to say about this, but whenever anyone says, no one questions, my antennae go up.
It's one of those standard kind of put-down ways of trying to make you feel like some fringe person.
And what he should say if he wants to be honest and a little humble is to say, I don't question.
Right, yeah.
And then Dennis Kucinich can say what he's going to say.
But it's just this really kind of shaming approach that Obama, and virtually all of them, I think, take to the issues.
Yeah.
Well, you know, the thing is about the NIE, and this is sort of off the point, but just to say I would like to hear your thoughts.
Yeah.
What the NIE said was we have no evidence that they're pursuing anything in secret, that they have any secret nuclear weapons.
Right.
What they talk about in that footnote is the declared, safeguarded, IAEA regularly inspected enrichment facility, which in theory if they withdrew from the NPT and if they kicked out the IAEA and then they began to try to use that equipment to enrich to a high enough grade to make bombs out of it, then that would take them at least quite a few years if they even did that.
But they would have to kick the IAEA out to do so.
We're talking about safeguarded facilities here.
That's correct.
Bush's line is that if you can enrich to 3.5 percent, then you can enrich to 94 percent, and it's the knowledge necessary to make weapons, et cetera.
But that's a real stretch according to Dr. Gordon Prather and others.
Okay.
Well, I'm informed by that.
Thank you.
And when you said 3.4 or 95, I mean, if I had a student who got 3.4 percent in the exam, I wouldn't say, oh, if you can get to 3.4, you can get to 3.5.
Right.
There you go.
And, you know, I'm no nuclear scientist by a long shot, but I read Dr. Prather every week, and so I try to keep up with his story.
But anyway, on the Hayekian principles here about imperfect knowledge and so forth, this is kind of the whole theory of why the market works, right, is because you have billions of people making individual decisions based on who knows what.
Man acts, and you don't know exactly why.
A guy might close down his factory because his aunt got sick and he had to go move and take care of her, not for any particular economic reason.
You never really know.
You just have to let people do what they do in sort of a live-and-let-live way, and people find their own niche.
That's right.
That's right.
And, you know, one of the neatest things is to just look at how these economies do when either the U.S. government or the governments in those countries just get their hands off people, throw a little, and let certain things happen.
I was talking to a reporter at NPR about a year ago who told me that when the U.S. invaded Iraq, there were a lot of businessmen in Iraq who started to get kind of optimistic because Saddam Hussein had his hands around the throat of that economy.
Saddam Hussein was a socialist.
And this one guy, you know, started this cell phone business just on his own and just put these towers up, and then the Americans came along and blew up the towers because he hadn't got permission to do it.
And so there are just all these ways that a central government can really mess up an economy by interfering with people and interfering with their decisions, and it applies also just even in foreign policy.
It's just very hard to choose whom you support.
And that's true whether we're talking about Iraq, Iran, Africa.
I mean, there are all these people who say, you know, let's invade Africa to protect the people in Darfur.
Well, who do you support there?
And what are the unintended consequences of that?
Well, I actually just spent the last hour talking with Isabel McDonald from Fairness and Accuracy and Reporting.
We're running a spotlight article from them today on Antiwar.com, the humanitarian temptation, calling for war to bring peace to Darfur.
And as far as I know, she wasn't an economist from the Austrian school, and yet her arguments basically are just like yours.
It's all about the myths and disinformation about who's who in Darfur, who these people are, and frankly the absolute and total inability of anyone in the West to have enough specified knowledge about Sudan to do the right thing there for anybody.
Yeah, yeah.
And then you add in the fact, which Hayek doesn't have to add in to make his case, but we can add it in, and that is the fact that the incentives are all wrong.
You know, the incentives for the government officials making these decisions, and you're even more likely to have a mess.
I mean, think about President Bush deciding whether to invade Iraq.
What if he'd had to bear 1% of the cost of that decision?
He'd wipe out all the Bush family money that he raised financing the Nazis.
Yeah, and in fact, what did he really have to bear?
He had to bear his prorated share.
I mean, so if you look at, he'll probably get some good speaking gigs when he leaves, and so if you look at, you know, what he'll pay over his lifetime, it's probably under half a million for a man who has a net worth, I think, well in excess of $10 million, I believe.
And so, you know, he has, okay, think of his what we call decision matrix in economics, you know.
Make war, it succeeds, my name lives on in history.
Make war, it fails, I do badly.
But then think of his more personal kind of rewards, you know, money rewards, and he just doesn't bear much of the cost for that decision.
Right, absolutely not.
And in fact, we've actually had a little bit of fun over the years, haven't we, seeing the quotes of George Bush talking about how much this has personally cost him, you know.
I have to deal with crying mothers, and it's terrible, it's terrible.
Yeah, and I think it was his wife, wasn't it, who pushed that line somewhere?
I'm trying to, I just recall that her in some interviews saying he just is, you know, it's almost like a Clinton moment, like I feel your pain kind of thing, I think.
Yeah, yeah.
Yeah, and he doesn't.
In a literal physiological sense, I cannot feel your pain.
I mean, that's just well established.
I can feel bad for you, but that's not feeling your pain.
Yeah, maybe if we were identical twin brothers or something.
But we have to be connected, I think.
So, you know, another principle of economics applied to foreign interventionism is something you brought up in one of your first articles, the Economist's Case Against Interventionism, and that is that just like with the perfect knowledge thing, you take the basic principles of Austrian economics and apply them to interventionism, government intervention, just as in the domestic economy, no matter really what it's in the name of, always sets up unintended consequences or intended ones that justify the next intervention and the next intervention, and it's the same thing when we're talking about foreign wars.
By the way, I just want to point out that, yes, it was an Austrian economist, Ludwig von Mises, who actually taught Hayek, who really pushed this view that one intervention leads to problems.
You could repeal the intervention and then get rid of the problems, or you could just have another intervention to handle those problems and so on.
He is an Austrian, but I'm not an Austrian.
I'm someone who's learned a lot from Austrian economists, and they just have so much to offer.
But I don't want to restrict myself to them, and in fact, a lot of economists have learned from that.
Probably a lot of economists have never even heard of Ludwig von Mises, but that insight is understood, I'm not going to say by a majority of economists, but by a very substantial minority.
I just want to point that out.
So it's much more general now than just Austrian.
In this talk I gave at the World Affairs Council on Tuesday, someone in the question-and-answer period said, well, maybe what we can have the U.S. government do is play off the various factions.
Ivan Eland had spoken before me, and he talked about the three major factions, the Sunnis, the Shiites, and the Kurds.
He said, play off the factions against each other, and I said, okay, let's look at how well that's worked in the 20th century when the United States government has tried to do it, and think back to the late 1930s.
Japan invades China.
The United States government, Roosevelt, doesn't like Japan, doesn't like a government being really nasty to citizens of another country, so he imposes all kinds of embargoes, including an oil embargo on Japan, unless they get out of China.
Japan, for some strange reason, doesn't like to have its oil supply cut off, so it attacks Pearl Harbor.
That brings the United States into war.
The United States then plays off one faction against another.
It allies with one of the most bloodthirsty dictatorships in history, which is Stalin's government, against another bloodthirsty dictatorship, Hitler's government.
The war ends.
The United States wins.
Now, suddenly, the West Germans are our friends against the Soviets, and they're really now the bad guys.
Over in Asia, Japan loses, and now Mao takes over and enforces the same kind of bloodthirsty dictatorship on his people that the United States wanted Japan not to have, and now Japan is the U.S. ally against China.
This playing each other off really works well.
Meanwhile, we're losing hundreds of thousands of U.S. lives, tens of billions of U.S. dollars, and tens of millions of lives if you look at all the people involved.
Now, granted, a lot of those deaths would have happened, but the point is that this is just not some game where you've just got all this great information and you're going to do this really well.
Governments do it really badly.
I mean, look at the fact that the United States actually helped the Turks recently attack Iraq.
It's just unbelievable.
Yeah, our friends the Kurds.
Yeah, that's good the way you put that.
You know, I actually tried to tell the story about how all this is Woodrow Wilson's fault, and usually it's hard for me to figure out how to work in the China-Japan angle while I'm talking about how American intervention helped create the Soviet Union and Nazi Germany and got the Middle East over to the Ottomans that created Iraq in the first place, and all that kind of thing.
So that's good.
I'm going to plagiarize you a little bit and work in because that is very important how we forced Japan out of China and they were replaced by Mao Zedong of all people.
And then we had to fight all the wars in Korea and Vietnam in order to contain the domino effect in Asia.
Yeah, yeah.
And on it goes.
Here we are fighting while the remnants of the Hussein regime, although I guess now we call them the concerned local citizens and they're our friends, the former Sunni insurgency, but just a minute ago they were our enemies, Saddam's henchmen in Iraq.
He used to be our friend, and we're fighting Osama bin Laden's guys in Iraq as well.
He used to be our friend in fighting the Russians that we had saved from the Nazis.
Yeah.
And back to the imperfect information thing, how bad information the government really has, I don't know if you've done, my guess is you've seen the McNamara movie, The Fog of War.
Yeah, yeah.
To me, the most striking part of that is where he talks about his meeting a former high North Vietnamese official years later who told him, look, you guys never understood us.
It wasn't about the spread of communism.
It was about our independence, period.
And if you read some history, you would have known that.
And McNamara said this, and I was waiting for him to say, well, of course that's not true, because he seemed to be implicitly saying that is true.
And I thought, wait a minute, McNamara can't read it?
I mean, these books were out there.
And you might say, well, people who are Secretary of Defense don't have time to read, and that's absolutely correct.
Well, they've got staffers.
You can't find a staffer whom you trust to read 10 books and give you a two, three-paragraph summary on each.
Again, they're making decisions involving billions of dollars based on very tiny bits of information when they could get better information.
So this is, I'm saying they don't have enough information, but even when they do, they don't use it.
It's right there, and they don't use it.
Yeah, they have piles of data but no wisdom.
I read something about Vietnam the other day where they talked about it was basically two main rival families for power in South Vietnam, and that if only the Americans had used their whole names, they would have figured out that these are two different families vying for power here.
And here were the Americans playing coup d'etat and propping up this group and propping up that group or this individual and that individual, and didn't even realize that they were in the middle of an inter-family kind of battle going on.
Was this the DMs?
Yeah, I don't know who the other guys were, but yeah, the DM faction versus the other one.
And it was basically a family thing, and that literally the Americans would just call everybody by their first name or whatever for short and never really even figured out what they were dealing with at all, to the cost of millions of lives, of course.
Yeah, yeah.
Oh, now see, here's another thing, the difference between the cost in lives and the cost in dollars.
You, in your articles, differentiate deliberately between making a moral argument and making a practical argument.
It's pretty clear that you're already won over by the moral argument against American empire.
But when it comes to the practical argument, you talk, for example, about all of America's interventions throughout the years, containing the problems from the last interventions.
Isn't this really what made America great?
Isn't that why last was the American century and this is our brave new American century and all this, is because of all this wonderful intervention?
And are we really wasting all our treasure on this, or are we making a lot of money off of it?
I mean, we're wasting treasure.
You know, this is a very expensive proposition.
Bob Higgs did a study that I boned up on just before this interview, so I was up on the numbers.
And he puts in all the other costs of defense, you know, with the veterans who have to be treated and with the Department of Energy and all this weapons stuff and so on.
And he gets to a number close to three-quarters of a trillion dollars a year as the annual defense budget.
And I think that's true.
Where I part with him is he also puts in a number for debt, and we can talk about why I think that's not legitimate.
So three-quarters of a trillion is a very high number.
I mean, to put it in perspective, it's about 6% of U.S. GDP.
And that's a lot.
I mean, think about having your income be 6% higher.
You could do a lot with that.
And I should say 5% higher, because I think you need about a percent of GDP for real defense.
So, yeah, it's very expensive.
It's not what made us great.
The Second World War essentially extended the Depression because, you know, that stuff was destroyed.
The stuff that pumped up GDP is weapons and bullets and, you know, tanks and trucks and jeeps that were pretty much all destroyed.
Yeah, but everybody knows that World War II saved us from the Great Depression.
The New Deal tried and almost succeeded, but the World War finally put an end to it.
Well, okay, first of all, the New Deal extended the Great Depression.
We can talk about that some other time, but, okay, to get on point.
No, because here's the thing.
It is true that if you looked at the standard measures of depression and expansion, which are GDP and GDP growth and unemployment rate, you would say that the Second World War pulled us out of the Great Depression.
To put it in perspective, I've forgotten the GDP numbers, but they went way up, and unemployment fell from about 10% in 1941 to 2% by 1944.
But here's the thing.
The unemployment, a huge part of that was simply that the government started conscripting people.
The government conscripted over 10 million people, which is about a seventh of the labor force at the time, which is huge.
Right there, that accounts for the reduction in unemployment.
On the GDP front, that's stuff that's being produced, but then we have to look behind GDP, gross domestic product, and say, okay, what's in there?
And it's not stuff that people are able to use.
It's not sugar.
It's not gasoline.
It's not rubber.
Those things are all being rationed to people in the United States, and then the government's getting a whole lot of it for the war effort.
And so the average person was substantially worse off in his standard of living in 1944, the peak of military spending, than he was in 1941 before the United States got into the war.
Well, what about 1945 and 1946?
I'm taking 1944 because that was the peak.
1945, they were starting to wind down a little.
1946, they wound down a lot.
And notice that then we had this major real boom where people were, in 1946, they're buying houses, they're buying cars because they're starting to actually produce cars again.
Detroit essentially stopped producing cars sometime in 1942.
So it was the end of the Second World War that ended the Great Depression, not the war itself.
That's right.
And by the way, there were a lot of Keynesians out there who thought, okay, when the war ends, we're going to have a major recession.
And we didn't.
I mean, it was an amazing transition when you think about it.
At the peak, 12 million people were in uniform.
Within two years, it was down to 1.5 million.
1.5 million people demobilized in a labor force of 70 to 80 million.
And we never had the unemployment rate reach double digits.
And there was this incredible transition to a civilian economy where people just started buying all these things that they couldn't buy before.
And now in terms of the last 50 years of foreign policy since the end of World War II, we've basically inherited the empires of all our allies and enemies, less the Russians, I guess.
But again, back to whether, I don't know if this is simple broken window fallacy stuff or what, but is it not the case that inheriting all these empires, and even with all the money that we've spent on dominating so much of the world since World War II, this hasn't at all been a net benefit?
Is it even close?
No, it's not close.
It's not close.
Think about what's the benefit you get.
Let's say you have troops in Germany, which we still do, or troops in Korea.
Now, I can tell you what the best argument is the other side would make for that, and that is, oh, we're going to prevent this big war that gets out of hand and then hurts us.
But I think it's getting harder and harder to make that case.
It's harder and harder to make the case that the Russians are going to invade Germany.
It's harder and harder to make the case that the North Koreans are going to invade South Korea.
I was talking to a colleague yesterday who's from Taiwan, and she puts a zero probability, essentially, on mainland China invading Taiwan.
And so it's costing us a lot, and the gain is virtually zero for the United States.
Now, you mentioned the broken window, and I think what you're getting at is this.
If a window's broken, most of us would say that's bad, and then a sophisticated person comes along and says, no, that's good, because now we'll have people used to produce more windows.
Well, what they ignore is what economists call opportunity cost.
The people who would produce those windows could have produced something else.
And it's the same with the U.S. military and spending on military equipment.
All that money would have been used in the private sector if the government hadn't taken it, for people to have more stuff, more trips to Hawaii, more R&D in civilian things, more other things.
And so all of those resources that go to the military would have been used somewhere else.
What portion of our economy is now just centered around the manufacture of weapons and weapons technologies for our government?
We can certainly put an upper limit on it and then subtract from that.
Okay.
As I mentioned, about 6% of the economy is somehow military, defense, or offense related.
So it's going to be a number under 6%, because right there, you've got weapons in the Department of Energy, you've got lots of military spending by the Department of Defense, but you've also got a huge amount of spending on manpower.
We've got the best paid 1.5 million per person force in the world, and so that's not being spent on physical equipment.
So right away, we're probably well under 4%, probably under 3% being spent on manufacturing and so on for the military.
And again, I'm not advocating that.
I'm just saying it's not this huge number, the way one of your guests, Chalmers Johnson, seemed to talk about it.
And I think that facts are stubborn things, and you just start looking at these numbers, and you just get a different view.
He lives in San Diego, and maybe that biases him because that's such a military-oriented city, but it just isn't this huge percent.
And by the way, one of the standard signs of a declining industry is mergers.
And if you look, there have been a huge number of mergers of defense companies in the last 20 years as military spending has declined as a percent of GDP.
It fell from about 6% at its peak in around 1985 to about 3%, and that was planned basically by George Bush Sr. and Clinton, and now it's up to 4.5% in the standard sense, and then 6% if you add in all these other things.
Well, but it just seems like if it's near a trillion dollars a year, that's got to be bad.
That's almost a third of the national budget every year.
Ron Paul says we're going bankrupt.
We're going bankrupt.
We don't have this money to spend.
We have to stop immediately.
Okay, to put it in perspective, it isn't close to a trillion.
It's more like three-quarters of a trillion, so it's a quarter of the budget, not a third.
It is expensive.
It is causing us to go into debt.
But, I mean, I just think we should get the numbers right.
To put it in perspective, if you look at the Congressional Budget Office's predictions for Medicare, Medicaid, and Social Security, they're going to make a percent of GDP extra spent on military look like rounding error.
In other words, in 40 years, if they're right, federal government spending will be, instead of being about 22% of GDP, which it is now, it will be close to 40%, and 20 percentage points of that.
In other words, almost the whole of what they're spending now will just be in those three programs.
So that will end the empire, if nothing else will, I guess, on welfare payments for everybody.
Yeah, and it'll just be really interesting to see how this plays out.
And, you know, the old Chinese curse, may you live in interesting times.
Well, we do, and I think that we're going to start seeing some of these tough tradeoffs sometime in the 2010s where they're going to start saying let's raise the age for Medicare or do we really need to have those troops in Korea or, you know, all these kinds of things where they're going to have to make tough tradeoffs.
But one thing to understand about the political system is that they all think short run.
I mean, it's funny, one of the big knocks that a lot of people have had against capitalism and economic freedom and free markets is how short run oriented that people are.
But, in fact, it's not true, and there's not much evidence for that.
But where you really see the short run orientation is in the political system where someone says, hey, I don't have to worry about what happens to Social Security in 2017.
I'm not going to be here or I'm not going to be in power.
And so you get this.
They don't deal with these big crises until they come up almost to the edge of the cliff.
Now, you teach at the Naval Postgraduate School.
Right.
And I wonder how your Naval Postgraduate students take your free market anti-imperialist message.
Okay.
The free market part of the message when I'm talking about domestic economics is treated, is taken very well.
I mean, they, like most of us, came through undergraduate academia, which is dominated by the left.
And so I think one reason I went teaching, I think I am a good teacher, but I think beyond that, I think one reason I went teaching awards is they've never heard this stuff before.
People come out of curricula all over the country and all they've been taught is capitalism sucks, freedom, what's that?
And so I'd say 70 percent of them love that message.
I'm careful about how quickly I get into the foreign policy area because I think I need to build up a certain amount of trust that they have of me before I start getting into that.
When I get into it, it just seems to depend.
Some days it seems I'll get a big backlash if I start, say, challenging the war in Iraq.
Other days, not so much.
Here's what I have noticed, I think.
This is small sample size, but I think the people who have been to Iraq, either with the Army or the Marines, are much more sympathetic to my message than the people who haven't been there at all or the people who are in the Navy, but they've been there, but they've been in a ship off in the area.
And so I think the closer people get to this war, the more they understand this just incredibly chaotic situation that's developed.
But we hear the way you explain this is all in terms of economics.
How could the Department of Housing and Urban Development plan the economy of Iraq?
They couldn't.
Well, then how could anybody else?
Yeah, that's right.
So that seems like probably the best way to get the message across.
Yeah.
I had one of my star students who, I don't know if you've heard of IA, Individual Augmentation?
Well, okay, usually you'll have whole units go to Iraq or whatever, but they're getting so desperate that they say to someone, okay, we're going to take you out of your current use, and by the way, you're going next Saturday, and you're going to Iraq to fill in for someone.
So one of my students went there, and he said he might have something to do with Individual Augmentation, and he might have something to do with the economy.
He might have some input on that.
What could I tell him?
What advice could I give him?
And I said, tell them to get rid of those price controls on gasoline.
I mean, you will do a huge amount for goodwill if you don't have Iraqis having to line up every day and fight in line the way the Americans did in 1973 and 1979 when we had price controls on gasoline.
And it's funny, because this is one of my star students, but he emailed back, and he said, well, once he got there, he emailed back and said, well, you know, it's kind of hard to fight the political forces and stuff like that, and so, you know, it's a mess.
Well, wage and price controls and such, I guess it must be Republicans in charge there, huh?
Well, it is true that Nixon was the one who imposed wage and price controls in August of 71, and it's funny how you'll see a lot of revisionism there, because I became an energy economist in the late 70s because of Jimmy Carter, really.
Carter had all these horrible ideas about energy, and I just felt like I needed to speak out against them, and I started writing about it, reading about it, et cetera.
And it's funny how now he not only gets tagged with that, he gets tagged with shortages in 1973, three years before he was president.
Yeah.
It's funny how memories run together sometimes.
All right, everybody, it's David R. Henderson.
He's the wartime economist for antiwar.com, research fellow at the Hoover Institution, associate professor of economics in the Graduate School of Business and Public Policy at the Naval Postgraduate School, the author of The Joy of Freedom, An Economist's Odyssey, and editor of the Concise Encyclopedia of Economics.
His website, davidrhenderson.com, and his antiwar.com articles are at antiwar.com slash Henderson.
Thanks very much for your time today, David.
Thanks, Scott.