The Lighthouse® is the weekly email newsletter of the Independent Institute.
Subscribe now, or browse Back Issues.
Volume 11, Issue 20: May 18, 2009
- Depression, War, and Cold War—Robert Higgs’s Book Now in Paperback!
- Good Money and Twilight War Win Book Awards
- Antitrust Harms Consumers by Undermining Rivalrous Competition
- Admitting Ukraine into NATO Would Weaken U.S. Security, Eland Argues
- This Week in The Beacon
American history is a subject often distorted by intellectual laziness and partisan propaganda. In Depression, War, and Cold War: Challenging the Myths of Conflict and Prosperity—now available in paperback—Independent Institute Senior Fellow Robert Higgs clears away many misconceptions surrounding a turbulent era that continues to shape today’s headlines. At a time when many politicians are calling for a new New Deal and pundits are debating the full costs of U.S. military commitments, Higgs shows how government intervention in the economy—including runaway defense spending—has created unintended consequences with enormous hidden costs.
Far from ending the Great Depression, Higgs explains, New Deal–era laws, regulations, and court decisions prolonged it by shaking investors’ confidence in the security of their property rights. During World War II, the civilian economy did not experience “wartime prosperity” as many historians claim: the draft eliminated unemployment, but almost no durable consumer goods (e.g., houses, cars) were created during the war years. Price controls created pervasive shortages, and non-price rationing created other problems. After the war ended, however, the controls were lifted, the shortages vanished, and the civilian economy rapidly re-employed workers and resources, avoiding the deep recession that Keynesian economic theory would have predicted. Higgs’s revelations about the Cold War are similarly enlightening.
Military spending remained high during the Cold War due partly to the periodic eruption of “crises” about U.S. weapons systems falling behind their Soviet counterparts. Although many of those panics were later proven to have been false alarms, defense contractors profited handsomely. (An investor who held a stock portfolio of top defense firms from 1949 to 1989 would have earned about 2.4 times as much as one who invested an equal initial amount in a diversified portfolio.) Members of Congress bear much of the blame for the misallocation of defense spending, but the single best predictor of military spending was public opinion. The public (and most politicians) could not hold well-informed opinions about military spending, however, because the National Security Act of 1947 greatly expanded the kinds of government documents that could be classified as top secret!
“Students are routinely taught that Big Government rescued the United States from the Great Depression and then won World War II while simultaneously producing prosperity at home. Higgs presents the most thoughtful and detailed criticism of this view yet undertaken.” –Hugh T. Rockoff, Rutgers University
“Those interested in the interaction between the domestic economy, war, and heavily armed peace will find Depression, War, and Cold War essential reading.” –Paul Johnson, author, Modern Times and A History of the American People
Depression, War, and Cold War: Challenging the Myths of Conflict and Prosperity, by Robert Higgs
Robert Higgs on C-Span2’s Book TV
Last Friday, Independent Publisher (“the voice of the independent book publishing industry”) announced the winners of the 2009 “IPPY” Awards, honoring the year’s best independently published books. Competing against more than 3,000 entries in 85 categories, two Independent Institute publications received top awards.
Released in August 2008, Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775–1821, by Research Fellow and economist George Selgin, tied for the Bronze Medal in the category of Finance/Investment/Economics. Especially timely during the current global financial crisis, Good Money was reviewed in Choice magazine, and Selgin appeared in the Wall Street Journal. The late Nobel Laureate Milton Friedman called the book “splendid,” and Richard Doty, Numismatics Curator at the Smithsonian Institution, wrote, “Selgin’s understanding of eighteenth-century economic theory and practice is absolute, allowing him to write with verve and clarity.”
In the category of Science, Twilight War: The Folly of U.S. Space Dominance, by Research Fellow Mike Moore, was awarded the Silver Medal. Formerly the editor of The Bulletin of the Atomic Scientists, Moore has written articles on nuclear proliferation for the San Francisco Chronicle and other major newspapers. Twilight War was reviewed by International Affairs, Political Science Quarterly, Issues in Science and Technology, Futurist, Space Times, Journal of Economic Literature, and Nonproliferation Review. Published in January 2008, the book has been featured several times on C-SPAN’s Book TV.
Congratulations to George Selgin and Mike Moore!
Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775–1821, by George Selgin
Twilight War: The Folly of U.S. Space Dominance, by Mike Moore
Assistant Attorney General Christine Varney last week announced that the Obama Justice Department plans to conduct “vigorous antitrust enforcement” actions against market leaders engaged in what it called “improper business practices.” Yet in the 119 years since they have been on the books, federal antitrust statutes have not been empirically proven to have promoted consumers’ interests, according to Independent Institute Research Fellow Dominick Armentano, author of Antitrust and Monopoly: Anatomy of a Policy Failure.
“Indeed, antitrust history is riddled with silly theories and absurd cases that themselves have restricted and restrained free-market competition and hampered an efficient allocation of resources,” writes Armentano in a new op-ed.
Armentano recaps the antitrust cases against Standard Oil of New Jersey, American Tobacco, Alcoa, United Shoe Machinery, and Microsoft. Nothing about those prosecutions indicates that antitrust regulators can improve competitive markets for the sake of consumers, he argues. Competitive markets, he continues, “are legally open markets where all firms, including dominant firms, are rivalrous on their merits and where consumers—and not government or judges—decide winners and losers. Free markets may need protection from fraud (think Bernard Madoff), but they don’t need antitrust intervention.”
“The Problem with Obama’s Antitrust Plan,” by Dominick Armentano (Christian Science Monitor, 5/18/09)
Antitrust and Monopoly: Anatomy of a Policy Failure, by Dominick Armentano
Ukrainians seem to grasp that joining the North Atlantic Treaty Organization would provide a false sense of security—only 20 to 30 percent of Ukrainians polled want their country to join the alliance. Many U.S. foreign policy elites, however, favor admitting Ukraine into NATO. But formally extending the security umbrella to Ukraine would harm American interests, according to Independent Institute Senior Fellow Ivan Eland.
By worsening Russia’s feelings of encirclement and by jeopardizing Obama’s prospects for negotiating a reduction of Russia’s nuclear arsenals, admitting Ukraine into NATO would exacerbate one of the worst security risks facing the American public, Eland argues in his latest op-ed. “For the United States, any showdown with Russia over the NATO-inducted Ukraine ultimately could go nuclear, thus endangering the American homeland,” Eland writes.
Efforts to bring Ukraine into NATO are only the latest in a series of defense policies that undermine American interests. “In the case of the European Union, the United States is actually subsidizing economic competitors by providing for their ultimate security,” Eland continues. “Already, the EU has a greater population and GDP than the United States, but spends only half of what the U.S. does on defense. Also, the EU has 12 times the GDP and 8 times the defense spending of Russia, the only potential threat in the area. The United States should withdraw from NATO and let its rich allies defend themselves.”
“Don’t Admit the Ukraine into NATO,” by Ivan Eland (5/18/09)
The Empire Has No Clothes: U.S. Foreign Policy Exposed, by Ivan Eland
Ivan Eland on C-SPAN2. Interview by Rep. Ron Paul
Partitioning for Peace: An Exit Strategy for Iraq, by Ivan Eland
Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland
If you haven’t done so yet, please be sure to check out the past week’s offerings from the Independent Institute’s blog, The Beacon.
- “Stop Bailing Out Government Schools,” by Mary Theroux (5/18/09)
- “‘Uncle Jay’ on Government Deficits,” by David Theroux (5/18/09)
- “Stephen Halbrook on Second Amendment Rights,” by David Theroux (5/13/09)
- “Obama's FDA: Cheerios Are a ‘Drug’ and Can't Make Health Claims,” by David Theroux (5/12/09)
- “Tit for Tat in the Torture Investigations,” by Anthony Gregory (5/12/09)
- “Judge Napolitano on Fox: Bush Is a Felon, Prosecute Him,” by Anthony Gregory (5/11/09)
