04/03/13 – Ivan Eland – The Scott Horton Show

Man, you need some Liberty Stickers for the back of your truck.
At LibertyStickers.com, they've got great state hate, like Pearl Harbor was an inside job.
The Democrats want your guns.
U.S. Army, die for Israel.
Police brutality, not just for black people anymore.
And government school, why you and your kids are so stupid.
Check out these and a thousand other great ones at LibertyStickers.com.
And of course, they'll take care of all your custom printing for your band or your business at TheBumperSticker.com.
That's LibertyStickers.com.
Everyone else's stickers suck.
All right, y'all.
Welcome back to the show.
I'm Scott Horton.
And our first guest today is Ivan Eland from the Independent Institute.
That's Independent.org.
And he's got this great new piece at AntiWar.com.
Today, it's called Irresponsibility in the Department of Defense.
Welcome back to the show, Ivan.
How are you?
Thanks for having me on again.
Well, you're welcome.
Very happy to have you here.
Hey, listen, before we get into all the Pentagon spending, and it's such a great article.
I love the way you explain the economics of being a general and having a budget.
It's great.
But I was hoping, actually, if it's OK with you, if we could rewind to this article from approximately a month ago that was written for the American Conservative magazine, From War to Welfare, How Taxes and Entitlements Begin with Militarism.
Because this kind of really cuts right to the heart of that whole left-right spectrum divide kind of pseudo sort of a thing that seems to distract everybody.
But the libertarian critique that it's all just one state, the warfare welfare state, and that both sides accentuate and supplement and complement each other at the expense of all us regular people just trying to be free out here.
It's such an important point.
And you do such a good job illustrating it for people.
Yeah, well, I think a lot of people, particularly on the conservative side, they don't realize that they like defense spending.
And I think the government should be providing for our defense.
But they don't equate it with all the big tax programs and social programs that have arisen because of warfare over time.
They don't associate the two.
But if you look back in history, really, the trouble began probably with the Civil War, but then went away for a while and then came back World War I when the government took over the entire economy.
And the precedent was set for that.
And so you had all sorts of groups that were regulated during the war.
And they say, hey, we can fence out competition and get subsidization and everything, just like we did during wartime.
We can do that during peacetime.
And so the precedent was set.
And really, the New Deal under FDR sprang from Woodrow Wilson's takeover of the economy in World War I.
And that's not the only case of this.
We have income tax, of course, originated in the Civil War, became the dominant form of taxation during World War I, and then, of course, became the mass tax.
It went from a class tax on the rich to a mass tax in World War II.
And also, we developed withholding, where you never miss the money because you never see it.
You never get the money, so you know they're taking it away.
So it's a classic Orwellian type of situation.
So that's just another example.
Social Security really originated in Civil War pensions, where they gradually expanded the Civil War pensions to include other family members, parents, widows, orphans, etc.
And so this later came back as the Social Security system.
So we have all these things.
The estate tax was born in the Spanish-American War.
The list goes on and on.
And a lot of conservatives, I don't think, focus on that.
We've gone, since the mid-'50s and William F. Buckley, we've gone to a more neoconservative model, where William F. Buckley realized that if you were going to fight the Soviets or counter the Soviets, government was going to get bigger.
So he—but that was his first priority.
And he said, well, you know, if we can reduce the government while doing that, then that's fine.
And that's really the base of the neocon model, only now it's the war on terror.
So I think this idea—we should probably go back to the Harding and Coolidge type of conservatism, which really advocated peace and realized that wars cause big government.
Back then, the Republicans realized that the Democrats are the party that was likely to take us to war, and they wanted to stay away from war so they could keep the size of government in check.
But, of course, in the post-World War II period, that kind of evaporated.
All right.
So now, Bob Higgs was on the show yesterday, and he talked about 1913.
That would be the first year that Woodrow Wilson was at Bauer, right, as really the watershed in so many ways.
Obviously, the Federal Reserve Act was signed that December, and income taxation got pseudo legalized anyway by the 16th Amendment, that kind of thing.
But could you explain for us in other ways just how much of a revolution it was?
You talked about—I think the way you put it—Wilson just nationalized the economy during World War I.
But what does that really mean?
What kind of revolution was it from before him and then during?
I mean, it wasn't outright—he outright nationalized the railroads and some things, but there were other models as well.
He had indirect price controls, which, of course, became direct price controls during World War II.
Every time there's a war, World War II was even more socialist than World War I, because they just went beyond what they had done in World War I.
But it was a regulation of what they regarded as the most critical industries, and also price controls, wage controls, and then some outright nationalizations, and a lot of agricultural monkeying around in the agricultural markets.
And, of course, all these industries, they really decided that regulation was really good, because, of course, if you're a big company, you have the lawyers.
Smaller companies and businesses don't have as many lawyers, and also big business has political clout.
So, of course, you can sort of get the government to fence out competitors by regulating the market.
That's what regulation really is.
I mean, you don't need a lot of the regulation, because a market will bring probably the best social outcomes normally, but the regulations are just to help certain companies within the market or whatever.
And they found that during the war, they could use the external enemy as a reason to do that.
But why not do it in peacetime?
They made a killing during the war doing this, and so why not continue it over this regulation?
And the precedent is set during wartime.
And, of course, if the war is a success, that legitimates all this regulation even more.
And, of course, we tipped the balance during World War I and won the war for the Allies.
So a lot of this regulation that happened during that period was draped in patriotic glory, which made it seem even more like the thing to do to the average person, of course, but it didn't really help the average person.
It helped certain interests who wanted the regulations.
Well, now, one thing about World War I was it was so horrible.
And then with the big fight over the League of Nations part of the treaty and all of this at the end, basically everybody hated Wilson by the time he was gone.
And then you had this return to normalcy under Harding, who you mentioned there.
But then after the New Deal and World War II, it really wasn't like that.
Everybody had their big ticker tape parade and all the media was agreed that it was the greatest thing that ever happened.
So it was really kind of no problem on that front as far as public relations and all that.
And then when Truman, the successor, left and Ike Eisenhower came in, he didn't repeal any of it, right?
Like Taft said he would.
He just went with the really validated the New Deal.
He didn't want to fight that battle.
So he sort of bought into it.
So that kind of makes a stamp of permanence and legitimacy, just like you say, hey, it all happened during the war against Hitler.
How could any of it be wrong?
Right, right.
Exactly.
Exactly.
And of course, he was an integral part of the war against Hitler being one of the chief generals of the whole thing.
So that also added legitimacy to whatever he wanted to do, of course.
And he wanted to he didn't want to fight the battle trying to repeal the New Deal.
So he and he even went beyond that because he created the interstate highway system and that sort of thing.
I mean, relatively speaking after him, compared to the people after him, he was recently he looks reasonably good.
But compared to Harding and Coolidge, I would argue that he probably doesn't look quite as good, you know, from an earlier time when I mean, Harding reduced the size of government after a war, which is the only time that's ever happened in US history.
And then Calvin Coolidge cut the government in half from what what he inherited from Harding.
So that's amazing by today's standards.
And I think Eisenhower is sort of a little bit lukewarm.
I guess you have to take presidents from, you know, the time period that they served.
But clearly, Eisenhower could have done more to repeal the New Deal.
And of course, Nixon came in after the Kennedy and Johnson administration.
Nixon was probably as liberal as they were.
He's probably our last liberal president creating OSHA, EPA, all types of things like that.
So you see a lot of bad behavior from Republicans.
And I think one of the reasons that that we see unrelated, seemingly unrelated domestic spending increases during wars is that you have those two factors as the precedent.
Set during a war that we've been discussing that transfers over to peacetime.
But there's also the case of which is illustrated by the Reagan administration.
If you want to increase in defense spending, you have to give House Speaker Tip O'Neill increases in domestic spending.
So there's log rolling, you know, whatever party is sponsoring a war has to get the other party to agree to it.
So there's always a price to that.
And so that's why you see.
And then George Bush is, of course, George Bush spent the most of any president domestically since Lyndon Johnson at his, you know, when he was president.
So he was a big spender as well.
So you a lot of times the Republican label doesn't really mean much as far as reducing government.
Yeah, well, they always were the big government party, right?
Right.
Well, the only time I argue that probably the only time in their history that they were a small government party was during the Harding and Coolidge years, because they started off as a big government party.
And the Democrats were the small government party in the 1800s or last half of the 1800s.
And then you went to the the Democrats flipped and became a big government party.
And then you had the Harding and Coolidge era.
And then the Republicans went back to being a big government party.
So now we have two big government parties.
There's just small government rhetoric coming out of the Republicans.
But if you look at when their presidents have actually increased government more than the Democrats have, if you look at the actual figures.
Right.
Yeah, well, and of course, there's never a return to normalcy of any kind.
It's always just permanent crisis for the last 70 years.
Right.
Right.
I would definitely agree with that.
Right.
And of course, all these well, both Obama and Bush, they found that they could take advantage of some crisis.
Bush 9-11 to invade an unrelated country, Iraq.
And of course, Obama saying, well, you know, we have this bad economic collapse.
So, gee, we need health care, which was unrelated to the and if anything made the economy worse.
But, you know, you got to take advantage of a crisis, as Obama's chief of staff, Rahm Emanuel said.
And I think, you know, that's the mentality in Washington for both parties.
Here's a crisis.
Oh, let's ride this and make use of it and get what we want, which is usually big government in both parties.
Yeah, well, you know, Rahm Paul likes to talk about how a compromise in the Congress is both sides agree that they'll help each other do the wrong thing.
You never see them sacrifice and say, OK, well, we're going to have to cut a little bit of money from our welfare and you guys are going to have to cut a little bit of money from your warfare.
It's always, oh, no big deal as long as everybody gets paid.
I guess the worst example of this was in the spring of 2007, when in the 06 elections, the Democrats swept to power in both houses on the one thing was the Americans were sick and tired of the war in Iraq and they wanted Congress to defund the thing.
And they just simply made a deal that said we get money to bribe all our constituents into reelecting us and you guys can have as much war as you want.
And they just went right on.
Right.
That's usually what happens is that, you know, they reach a deal and it usually they usually increase spending for everything.
And that's that's the way to do it.
Right.
But then the Republicans come along, go, well, taxes are too high.
We'll cut taxes.
But tax cuts are really fake if you don't cut spending, because you you have to you'll have to increase spending in the future and you'll have a whole lot of interest to pay on the debt or you have to if you don't do that, you have to print money, which is even worse.
So there's always a cost to lowering taxes without lowering spending.
Lowering spending is really the litmus test for a good politician.
If they really want to lower spending, then vote for him.
But of course, we don't have many of those around.
Ron Paul, probably one of the few that really wanted to do that.
Yeah.
All right.
And now it's funny, you know, the best picture that I have of the way the Pentagon works to this day, and I've read Andrew Coburn's book, Rumsfeld and a couple others.
But the best picture I have in my head, I don't remember the name of it, but it was an HBO movie in the 1990s with Kelsey Grammer and the guy from Robin Hood Men in Tights.
And it was all about the Bradley fighting vehicle and how it was the world's worst death trap of a fighting vehicle that you could possibly imagine.
But it was about all the ridiculous, perverse incentives, mostly the stroking of Kelsey Grammer's character's ego in the thing that got it past 75 hurdles or whatever before someone finally insisted they made it out of steel instead of aluminum.
And they're even selling good ones, well-made ones to the Israelis while turning out complete death trap Bradleys for the Americans.
And whether or not it was a death trap had nothing to do with the decision making process until Robin Hood Men in Tights comes in and straightens everything out.
I don't know if you've ever seen that one, but it just goes to show it was it wasn't Kelsey Grammer's money.
Right.
And he wasn't really going to be held responsible if anything bad happened, but he he would get credit if something good happened.
And so, you know, there's the plot of the movie right there.
Yeah, I think that you're you're touching on the real problem with the Defense Department or really any public agency.
I think it's worse than the Defense Department because of the secrecy they can get away with more.
But the incentives of government bureaucrats is not really to do the right thing or to be efficient and lower the public's costs or even increase performance of weapons systems.
It's a perverse incentive structure that they really are sort of shills for these companies who their constituents, their constituent groups of the Department of Defense, and they hand out these contracts.
There's very little effective competition among for these contracts because of excessive military specifications that only these contractors can fulfill.
And of course, the government could could increase the competition if they allowed more commercial use of commercial subcomponents and products in the in the weapons and other things.
But they don't because they have these companies that are sort of wards of the state.
They're private companies, but really almost all of their business comes from government contracts.
So they're not really commercial companies.
They may be privately.
The people making money are private citizens, but they're but they're not like a commercial company like Apple or Microsoft or something like that, that has actual customers in a commercial market.
So there's really no market for weapons in the strictest sense of it.
And so you get some really perverse things going on.
Yeah.
Well, and as you said, it's so secret and it's so big that it's really if we knew the truth of it, we probably wouldn't believe it.
Right.
Where this money's really going.
You talk about your article, how they can't account for trillions of dollars.
Well, they don't even know where the money is going, really, because their accounting system is broken and has been broken for years.
But now, of course, the logical thing to do is say we're not giving you any more money, not one dime until you fix this accounting system.
But of course, they didn't do that since the early 2000s.
After 9-11, the defense budget in real terms has increased over 50 percent.
So, you know, they're just slathering more money at a broken system.
The Defense Department is the only federal agency that can't pass an audit.
So it's probably worse than most of the other departments.
And we know that places like the Transportation Department are pretty bad with their pork projects and that sort of thing.
But I think we don't think of weapons as pork projects.
But in fact, most of them are.
They it's a political industry.
They don't these big weapons contractors like Lockheed Boeing or whatever.
They don't choose their subcontractors on the basis of what they're getting for the cost, the money, you know, a good product for the money.
Who's the best subcontractor?
They do it by geography.
So they get it in a bunch of states.
And, you know, like you see these charts and the most important chart in the congressional briefing that the that the contractor gives is on always on the last page.
And that is where the subcontractors are.
And, of course, they're usually in like 48 states or whatever.
And, you know, how many hundreds of congressional districts?
So they spread the contracts around.
So it becomes politically impossible to kill the weapons program, even if it's out of date or unneeded or whatever, or just, you know, poorly performing.
And many of the weapons systems are behind schedule, grossly over cost with cost growth, or they just they keep scaling down their performance parameters, what they're going to actually provide.
And I had a laugh.
There's a recent congressional report out saying, well, they have improved in the last six months, but, you know, from the previous or I guess from the previous year of last year compared to this year.
But still, it's really, you know, they were delighting in that.
But it's still an incremental improvement on a disastrous system.
All these big weapons systems are have have increased in cost since they were originally planned.
And they're way behind schedule and they're underperforming almost all of them.
And so incremental improvement from last year is, you know, it's not saying much.
Yeah.
Oh, by the way, a Facebook friend just dropped my footnote for me.
It's called the Pentagon Wars, 1998, with Kelsey Grammer and Cary Ells, the guy from Robin Hood Mennonites.
Anyway, it's a great movie.
If you've never seen it, you'd like it, Ivan.
It's right up your alley, man.
I haven't seen it, so I'll have to see it.
Yeah, yeah, you will.
You'll like it.
I don't want to.
I was about to say something about it, but I don't want to ruin it.
But I don't run the ending when the Defense Department is reformed, right?
Right.
Yeah, yeah.
Everything works out great at the end.
And well, you know, this is the thing, too.
Even congressmen that I sort of kind of want to like, I just can't because I hear him saying stuff like, oh, yeah, you know, maybe we need to trim down some of the waste, fraud and abuse at the Pentagon.
And I'm going, man, Al Gore can cut waste, fraud and abuse.
How about we cut some of our bomber programs?
How about, you know, we scrap nine tenths of our submarine force that we don't need holding the whole world hostage at the point of hydrogen bombs?
How about that save some money?
Yeah, I think we really have to.
You can only get so much in fraud, waste and abuse.
I think you make an excellent point.
I think what we really need to do also is to scale back on what we're doing.
We're not just defending our country.
We're really an empire.
And if you haven't noticed what's going on in the Korean Peninsula, we have just really tightened our alliance with South Korea so that now we're helping them.
Now we're pledged to help them.
If North Korea does a minor provocation before, we were just going to come and help them out of North Korea invaded South Korea.
But now we have to help them.
You know, if there's a ship sunk or artillery shell lands on a South Korean island, we have to go help them bomb the north.
And I think that's really making things worse to a paranoid country and, you know, making more escalation.
But that's an example of should we really be defending a country that has 30 to 40 times the GDP of its very poor and pathetic opponent.
South Korea is no longer a poor country, and neither is Israel.
Both of these countries and, of course, the European countries, we're still defending them.
They're all rich.
And so we have this empire and we're holding our own cities hostage to nuclear war to defend these countries ultimately.
And that's a really dumb thing to do.
It was even done during the Cold War against the Soviets.
But it's even dumber now when we don't have a major enemy like the Soviet Union.
So we really need to rethink our entire defense posture overseas and whether we're really going to do as the Constitution says, protect the common defense or provide for the common defense or whether we're going to provide for the common empire.
And a lot of our defense spending is power projection overseas instead of defending our own country.
And so we really need to cut the defense budget, not only broad waste and abuse of which there's much, but also we need to cut weapons, cut personnel, which are very expensive, that sort of thing.
Well, now I can see how someone would argue.
I disagree with them.
I'm sure you would, too, that, well, you know, America's presence over there in Korea is really helping to keep the peace.
If we weren't there, the North Koreans would try it.
And so we're we're holding them at bay, that kind of thing.
I'm sure you agree, but but what you just described, this new thing where, hey, if anybody shoots a mortar at anybody, it's all of a sudden a tripwire for war.
What's the incentive behind that?
That's not keeping the peace at all.
That's laying down tripwires for war, obviously.
Right, right.
Exactly.
And also, I think, you know, certainly the North Koreans are unpredictable and they do make big threats.
Most of them are anti threats, because if the war started, of course, that they have a million man army, but it's not worth very much because they haven't replaced their technology and that sort of thing.
But what we really need to do, we don't have to pull the rug out from under South Korea right away.
But what you do is you say, listen, in five years, we're going to abrogate this defense treaty.
So you need to start building up your forces.
We're going to help you and we're going to gradually taper down our defense.
And we want you to fill the void and you're rich enough to do it.
And of course, now they have no incentive to spend money on defense because we're doing it for them and they're never going to do that if we if we keep doing that.
So what you do is you have you can put them on a glide path.
You don't have to just abandon it.
So that's secure.
There's a security vacuum in North Korea decides it can invade.
I mean, South Korea has enough money to build a very robust defense force, as does Japan.
And so but Japan spends less than one percent of their budget on defense or I mean, their GDP on defense.
South Korea, it's a bit more, but still they need to do much more than they're doing.
They're relying on our shield.
So both of these countries and really all our allies around the world should do more for their defense and call on us as a last resort rather than having us down in the weeds, responding to artillery shell, a stray artillery shell or something like that.
So just because the U.S. isn't there doesn't mean there can't be security.
These countries need to step up and we need to gradually wean them off this idea that we're going to be the ultimate protector.
And they need to they need to on our day to day basis, they really need to do more for their defense.
Well, it seems like we could cut the Europeans off instantaneously.
They don't have any enemies.
Right.
That Russia is not much of a threat anymore.
Exactly.
So you could cut them off probably directly.
We're unwilling to do that.
But in the case of South Korea, where they do have an active threat or even Israel, although you could probably cut Israel off, too, because the Palestinians and other Arab states are in disarray and Israel has enough power without us right now that they can adequately defend themselves, including 200 to 400 nuclear weapons that they have.
So you could probably also cut Israel, the Israelis off the South Koreans.
You probably need to put them down a little bit of a glide path down.
All right.
We'll have to leave it there.
But thank you very much for your time.
I really appreciate it.
And good to talk to you.
Thanks, Scott.
All right.
That's a great Ivan.
He is senior fellow at the Independent Institute.
That's independent.org.
And he's the author of the books, The Empire Wears No Clothes and Recarving Rushmore, ranking the presidents on peace, prosperity and liberty.
Hey, y'all.
Scott here.
Like I told you before, the Future Freedom Foundation at FFF.org represents the best of the libertarian movement, led by the fearless Jacob Hornberger, FFF writers James Bovard, Sheldon Richman, Wendy McElroy, Anthony Gregory and many more.
Write the op eds and the books, host the events and give the speeches that are changing our world for the better.
Help support the Future Freedom Foundation.
Subscribe to their magazine, The Future of Freedom.
Or to contribute, just look for the big red donate button at the top of FFF.org.
Peace and freedom.
Thank you.
Hey, all.
Scott Horton here, inviting you to check out wallstreetwindow.com.
It's a financial blog written by former hedge fund manager Mike Swanson, who's investing in commodities, mining stocks and European markets.
Wall Street Window is unique in that Mike shows people what he's really investing in and updates you when he buys or sells in his main account.
Mike thinks his positions are going to go up because of all the money the Federal Reserve is printing to finance the deficit.
See what happens at wallstreetwindow.com.
And Mike's got a great new book coming out.
Also, keep your eye on writermichelswanson.com for more details.
The history and economics they didn't teach you.
Hey, all.
Scott Horton here for the Council for the National Interest at councilforthenationalinterest.org.
CNI stands against America's negative role in the ongoing Israeli-Palestinian conflict, the war party's relentless push to bomb Iran, and the roles played by twisted Christian Zionism and neocon-engineered Islamophobia in justifying it all.
The Council for the National Interest works tirelessly to expose and oppose our government's most destructive policies, but they can't do it without you.
Support CNI's push to straighten out America's crooked course.
Check out the Council for the National Interest at councilforthenationalinterest.org.
And click donate under about us at the top of the page.
That's councilforthenationalinterest.org.