 The Murray N. Rothbard Medal of Freedom is awarded in recognition of significant and wide-raging libertarian leadership as a scholar or a public intellectual, and was established to the generosity of the late George W. Connell, who was a Rothbardian mining engineer in Parachute, Colorado. Great. Never been to Parachute, but it sounds like a great town. So I could talk this afternoon about the many important books that our 2015 recipient has written, The Influential Journal that he edited and founded, Procedures, Colleges, and Universities that have been associated with not to mention the institutes. Instead, let me just say this. Professor Higgs is not only a great economist and economic historian and a teacher of the first rank. He has a brilliant voice for peace, and against the most characteristic of government crimes, the mass murder called war. No wonder Murray Rothbard thought the world of this extraordinary scholar. Indeed, I can't help but think that Murray might be looking down on us right now and saying, Add a Boy Bob. Anyone with the honor to know, Dr. Higgs must say the same. Dr. Higgs, come and let me present this to you. It's the Rothbard Medal. Thank you very much, Lude. It's a tremendous honor for me to receive this particular award. Murray Rothbard was a dear friend of mine. I knew him well for the final 10 years or so of his life, and I mourn him still. So I think that Murray would actually not disapprove of my receiving the Rothbard Medal entirely. In fact, I think he would in part approve, and I know the part. It would be one part out of 13. And the reason I know that is that before I ever knew Murray in person, Murray was asked to review a manuscript I had written, which would later become a book called Crisis and Leviathan. And Murray prepared this review, which is something many scholars do for institutes and publishers who have unpublished work. They're trying to put in good shape before they publish it. Murray had reviewed this manuscript for the Pacific Research Institute, was sponsoring my work at the time. And most of these reviews are one or two pages, three pages, not a lot of detail and just some general statements about, you know, this is terrible or this is okay. That sort of thing. But Murray, being Murray, wrote instead a type script of 26 pages written as he wrote everything on his typewriter with crossouts to correct his typos and things written in in pen. I have a copy of it right here. And the way it proceeds is the first two pages are full of praise for my manuscript. And then the next 24 pages are detailed criticisms. So that means one out of 13. From Murray, that wasn't bad. But for those who love Murray and love the anecdotes about his life, this little report has become, I think, famous in a small circle. So I brought a copy to leave it with Lou this time, not knowing whether I'll ever be back here again. And this will be a kind of legacy of mine to the Mises Institute. By the way, the Mises Institute has been wonderful to me over the years. It's been a privilege for me to work with the Institute in various ways, not only in the Mises University, which is always a joy, but in a variety of other ways, in other conferences, and helping out in ways that I could over the years. So this has been a wonderful association for me. And it's terrific to see how the Institute's programs have developed. They've become bigger. They've become better. The level of scholarship of the scholars teaching the programs has become even better. And it was always good, but it's even better now. And as Joe Salerno was saying, there are whole new generations of young Austrian economists who've come along since I started almost 30 years ago, my association with the Mises Institute. And some of these people, I look at them and I'm thinking that, as I call them, my boys, but they're 45 years old now, and that doesn't seem quite right. So they've matured, they've done wonderful things, and some of them are actually my heroes. So I can't do any better than that as a teacher. Speaking of teaching, I want to try to do a little bit in the rest of the session here today. And what I want to talk to you about is the subject of war and the growth of government, which clearly I've been working on for a long time. I'm still learning because wars keep happening. And so there's new empirical material to integrate, new things to think about, new hypotheses to test about my own ideas about this subject. And I suppose anybody who's been deeply invested in a particular interpretation of anything is hard to talk out of it. I must confess that I don't often encounter something that looks like debunking of my views in this subject, but that's not to say they aren't out there somewhere or that I've simply been blind to them when I've looked at them with my own eyes. But at all events, it seemed to me over the years that some of the early ideas I developed on this subject have held up pretty well, including in recent years since the 9-11 attacks and the full-fledged so-called war on terror of the United States government. So I want to walk you through some basics of this topic. I'm sure you've all heard the statement by Randolph Bourne from an unpublished manuscript in 1918, which says war is the health of the state. For many libertarians, this is a kind of chivaleth or mantra. Just as if you were a Randian, you might go around talking to strangers and approach them by asking where is John Galt to find out whether they were comrades or not. If you were my kind of libertarian, you might approach a stranger and say war is the health of the state. Then you would wait to see whether they punched you in the nose or said, yeah, that's for a damn sure. So that's not to say every libertarian in the world is an outstanding anti-war person. Some of them are not. But even though I have not been very active in fighting with my fellow libertarians through the years, this is one issue on which I've had to take a stand. This is key. War is what I call the master key of the state. It's the key that opens every other door to take away your liberties. And if you support opening that door, you have let out a monster and you will rue the day you supported war. It is the health of the state in every conceivable way. I'd like to recommend right now at this point something Danny Sanchez wrote a few weeks ago on that idea of war as the health of the state because he developed it with a depth and in a direction that hadn't seen before done so well. To look up Danny's essay, it'll be easy to find on the web or his website. So another reason for being interested in the relationship between war and the state is that war has been the major source directly and indirectly of the growth of government. And you can see this in a variety of data series. When we talk about the size of the government we can measure it in a variety of ways or any number of indexes of the size of government, how much it spends, how much it spends relative to national income, how many people it employs, how much revenue it collects, how many dollars it borrows. There are many, many respectable measures of the size of the government. But this measure outlays as a percent of gross domestic product is probably the most common one among economists, although not the best one. And I've recently written myself in the independent review about some of the problems associated not just with this measure of the size of government but with gross domestic product period as a whole set of concepts that we get from the national income and product accounts seldom questioned by economists, you know, be part of the basic data that all macroeconomists and many other economists use every day and yet highly problematic. But however that may be, if we use this measure we see some interesting things from this long series going back to the late 18th century. We can see, for example, that the federal government was very small by this measure. In fact, except during the war between the states and if we were able to push it back a little further to the American Revolution we'd see a little blip there as well. But except during that time it was not until World War I that the federal government spending relative to GDP ever rose above 3-4%. So it's a tiny factor in social life. And we can see that if we just read the history of the United States and ask what did the federal government do? How many people did it employ? What laws did it enforce? And the answer is, in any case, not very many. And even of those it did try to enforce, the laws it tried to enforce it was often not able to do so very effectively of the taxes it tried to collect, it was often not very good at collecting them and so forth. So the government was small and it was weak. That is, if you must have a government, it was ideal. So that's how the government of this country was at the federal level and the state and local governments were somewhat bigger in the 19th century but they were not huge things either. So throwing them all together and working up to the early 20th century we would find that only about 7% or 8% of GDP was the total of all government spending at that time and at any previous time it tended to be even less. So the government remained small by this measure. Now let me repeat, this is only one measure and there are other ways of looking at the size of the government which tell a somewhat different story. So you should always bear in mind when you talk about this topic the caveat that goes with any particular measure and another reason for bearing that in mind is that some mainstream economists like to debunk ideas such as mine by taking a data series and doing some kind of econometrics on it and saying, wow, look, it doesn't work the way Higgs says. Well, Higgs didn't say just one thing about the growth of government and that's where some of my ideas, particularly the ones I'll discuss today differ from those that may go under the same name in mainstream economics and political science. I take a broader view of the government and a broader view of how we understand its size, scope and power and I think it's necessary to take that broader view otherwise we tend to be misled by any given measure. By this measure, though, we do see some very interesting things and that is that first of all, this government is very small up until World War I except during the war between the states when there's a spike that drives it up several fold but it comes back down and in fact by the time we get up to World War I it's almost back to the level it was before that war so there's been quite a lot of retrenchment by this measure and then when World War I there's an even bigger spike and that comes down but not all the way if you look carefully it doesn't come back to the same percentage it was before World War I in fact it's probably twice what it was before that war afterwards in the 1920s then there's a leap during the onset of the Great Depression and then a much, much bigger leap during World War II and this was the war of all wars in U.S. history in terms of its draw on resources and manpower and money and practically everything else you can think of including the people's liberties but the other thing you can see is that starting from around 1930 or so even if you ignore the spikes during World War II and Korea and the recent war on terror and ignore those there's a steady upward trend in the data that wasn't there in the 19th century all the way up to World War I so something has happened and the question is is this just because some long run forces changed the behavior of the trend was there something going on in society or something going on in the wide world of politics that changed what had been a small government not growing to a bigger and bigger government for a century now that was independent of these wars which we see represented or advanced in these spikes and the usual way that econometricians think about this is to almost block out the spikes sometimes economists have been so audacious as to leave war periods out of their data set where they're trying to understand the long run growth of government they say oh we're not interested in these abnormal events they're atypical, they're special they're not representing the forces that are driving the long run tendency of the government to get bigger and bigger that's a fundamental mistake it's a mistake that any good historian would not make and an expression of why it's a mistake was pronounced long ago in the late 19th century by William Graham Sumner who was at the time a well-known social scientist at Yale University and Sumner said you cannot experiment with a society and just drop the experiment whenever you choose the experiment enters into the life of the society and never can be got out again as we're talking about human beings we're talking about people who didn't just look at statistical data they lived through these events they were participants they were put upon or they were putting upon their neighbors in any event they were engaged and when these big events ended they didn't just forget what had just happened it became part of their thinking in some cases it had altered their thinking in important ways so when we talk about history we're not talking about something that can be represented as a statistician represents a time series the statistician looks at this and he thinks every year is something drawn from a distribution by a random sample that's not how history works no given year is a random sample of the possible things that could happen that year there are built into what people do in any given time background features background features that have shaped their understanding their desires their values and it's those things that they act upon those are the bases from which they launch their behavior at any given time we're not talking about atoms here that bounce around in a Brownian motion we're talking about people each one of which has a biography has memories has outlooks has in many cases an ideology that allows him to assess what is going on in the world how he feels about it how he thinks people should deal with it so if we look at this historically and we think well there's this upward trend maybe it's not independent of these big spikes such as World War I and indeed when we do the history we'll find that that is precisely the case there's anything but independence there now when I started investigating the subject I was still a cleat matrician as they're called they used to be called new economic historians but now all of us new economic historians are old men and women so that doesn't seem like a good name anymore but we were the young people that came roaring into the economics profession and said economic history is old fashioned it needs to be brought up to date and the way to do this is by bringing economic theory which for us was mainstream economic theory neoclassical theory bringing economic theory and statistics econometrics to bear in the analysis of these historical questions and so a bunch of us actually pulled off this little palace coup in the economic history profession of the United States we actually took over the teaching of economic history at least in economics departments now some departments cut us off at the pass by just dropping all their economic history courses so that defeated us but in so far as economic history continued to be taught in economics departments the cleat matricians became the teachers and so part of being a good cleat matrician is looking at all the data before you get started say what is the evidence show the evidence meaning quantitative evidence evidence that you can bring to bear econometric methods on because I looked at a lot of series and like this but by different measures for different times from different sources and so forth and from the whole collection of them I found that there was a pattern that I observed again and again and again not always identical in one series to its manifestation in another series but very much the same I call this pattern the ratchet effect and here I've got a schematic representation of it which I use just to discuss it in a general way what I have on the vertical axis here which I realize you can't read this that's why I'm going to tell you the vertical axis measures the logarithm but that's not important so much of an index of the true size of government and what I meant by that code term the true size was an idealized index that would take into account the government size scope and power all at once somehow I didn't do it I didn't try to create such an index but I can imagine one and if I wanted to do it I could but the point is you don't want to select just size or just scope or just power you want to consider that the growth of government involves all these dimensions and others so you've got a measure a good general measure true measure of the size of government you're tracking it over time and in this case we see a government that's tending to grow in the left hand part of the drawing but something happens here at point B a national emergency and it can be of different kinds it might be an economic emergency like the economic collapse that started in mid-1929 it might be a war emergency like the onset of the world wars it might be a labor emergency like some national strike or potential national strike the kind that faced the country back in 1916 for example and led to the passage of something called the Adamson Act but regardless of the nature of the national emergency the national emergency creates a response from government that shows up in our index it causes government to grow abruptly much quicker than it was growing before during the pre-crisis normality it becomes bigger and in my stylized version it stays at a high level for a while it doesn't exactly do that in any real emergency it fluctuates even during the crisis but at all events it rises to a high level stays there for a while and then the crisis ends the war comes to an end the labor disturbance is settled the depression is over whatever the nature of the emergency it ends and the government retrenches but when it retrenches it does not return to its size before the onset of the emergency nor does it fall enough to get back on the trend line that it would have been on had it continued to grow at the same rate as during the pre-crisis period that line I have here in the middle, this sloping line that's an extension of the pre-crisis trend we would have been at E prime if we'd continued growing at point T3 but we're not at E prime we're up here at E that's the actual point we reached we didn't have full retrenchment from that point then we returned to something like the growth that was going on before the crisis and that again is not essential it could be faster after the crisis or slower but all that's important is that for some time the post-crisis growth remains at a higher level the trajectory is above the old trajectory and it's worth reminding ourselves also because it's true that the assumption that it would have grown this way along the same growth path had this emergency never taken place may well be false it may be that had that emergency not occurred the growth of the government would have tended to slow or stop and that it was indeed the emergency and the way the government responded to it that allowed it to keep growing as fast as it was before the crisis that is to say the government's growth process may need refreshment from the springs of national emergency and if so then matters are even worse in terms of the ratchet than I generally portray them now we could say as some statisticians have well it's just a correlation yeah war and the growth of the government have tended to go together but it's just a correlation so what maybe it's an accident maybe it's a coincidence where's your statistical test well what I want to do today mainly is show you the logic of why it's not just a coincidence it's not just an accident there's a logic built in to the way the government responds to national emergency and I'm going to focus today particularly on the most important national emergency which is war when the government undertakes to prosecute a large-scale war and that's important if it's just going to attack some tropical island this kind of analysis is beside the point or if it already has a gigantic military apparatus in place and it decides to attack Serbia you're looking at a different case there it'll just conduct that war out of inventory as it were but if we're looking at a war that requires substantial diversion of resources as the world wars did for all their belligerent powers and certainly did for the United States because it had hardly any military to speak of when these wars began then the government needs to divert many resources away from their current uses especially civilian uses into uses that will assist the government in prosecuting the war effectively so how can the government engineer that reallocation of resources well the first thing the government could do was explain to the people we've got a situation here ladies and gentlemen we're at war we're at war for good reason the wolf is at the door we must ward him off and so in order to do that we have to have your assistance so we need you to donate resources sufficient to allow us to defend the country in the way that we've decided is best defended so the treasury's door is open please leave your donations now that's not what it does because even the densest politician knows that nobody will come and drop off money at the treasury but there is one way in which the government gets a little bit of response to this sort of appeal and that is it always appeals to men and nowadays to women as well join the armed forces it always says we need to recruit a much larger number of people for the army and the navy so come down and sign up become a soldier or sailor and sometimes adventurous and ignorant young men will respond to those appeals and they'll go down thinking they're going to prove their manhood or do something else to satisfy their friends and relatives and they'll go down and enlist and that happened during all the wars to some extent but it was never nearly enough to provide the government with the size army it needed to be effective in the war it wanted to prosecute just a trickle of men came down after the United States declared war in World War I in World War II the government actually started drafting men long before the Japanese attack on Pearl Harbor so it didn't even wait to see that opening the door to the the forts would elicit enough men to come in and volunteer their services this whole idea of people's unwillingness to donate their resources to the government's prosecution of the war is completely typical now I want you to pause here right now this seems like such an obvious point that you're probably saying why is this guy going on belaboring this obvious point and I'm doing it because there's a deeper point at play here suppose you lived in a town or a village that came under attack from some enemy your family members are being killed your friends shells were exploding here and there would you go to the defense of the community well some people might not but many people would many people would you don't have to tell people to defend themselves against marauders you don't need to concoct a big story about the threat to national security when people are under attack they defend themselves as best they can and sometimes they do a pretty damn good job there are historians who argue for example that in the Revolutionary War the only effective military action the North American colonists mounted was basically guerrilla action Washington's pathetic army which was always in retreat did practically nothing except run away and run away again but some of these guerrilla forces were pretty good they would run out and attack the British and then they'd just disappear into the forest but the point was you didn't have to draft these guys they were militiamen people who belonged to their communities and defending their communities was what ordinary people expected to do and did when the government has to undertake a lot of coercive measures to prosecute a war what you're seeing is evidence that it's not just going to war against the alleged enemy it's going to war against the people themselves the people the government purports to be protecting because the very first thing it's doing to provide this alleged protection is violating their rights drafting them as military slaves taking their money in new taxes taking land away from the military facilities these are attacks on the people's rights if the people wanted to provide these resources to the government for war it would hand them over you wouldn't have to coerce them so the point is governments go to war both on the military front and on the home front they go together and it's the government's attack on the home front that creates such a hazard because that's where the people lose their liberties when the war and because the ratchet effects never get all of them back when the war is over that's why war over time is the health of the state it keeps providing the state with more and more power and the people with less and less liberty donations aren't working so how's the government going to fight the war well it's going to have to pay for resources where does it get the money it raises taxes puts taxes up to higher rates it imposes new kinds of taxes it taxes people who weren't being taxed before goods that weren't being taxed before and when it does that people don't just roll over and say oh well got to pay more taxes that's life they try to evade these taxes they try to avoid them they try to rearrange their affairs so they won't be subject to such great takings and so the government's now got a problem this by the way is an example of the Misesian theory of intervention that's a theory that says when the government undertakes to do something by intervening in the private society or economy it creates feedback effects which as it were are problems that the government must then solve in a second stage and the same thing happens at the second stage so then there's a third stage and this was something James Madison actually wrote about in the Federalists when he said that each legislative interference is but the cause of succeeding ones proceeding from the one that came before it so this is not an Isaac Newton style observation you don't have to have keen intelligence to see this the Misesian theory of intervention is sort of obvious to anyone who sort of followed the news or learned some history that's how government operates it intervenes, creates a problem deals with the problem so here it intervenes by taxing people more it encounters tax avoidance and evasion so it's got to deal with the avoidance and evasion it's got to hire more tax collectors more agents at the IRS more FBI agents to go investigate people for criminal acts connected with tax evasion and avoidance and so on and on and when it does that it creates effects that it has to deal with and so forth so it can't just simply raise taxes at any level it wants and get the resources it wants in fact in all the major wars the government covered the bulk of its expenses by borrowing money now borrowing is easier because you're not really threatening the lenders you're trying to induce the lenders you're saying give us your money and we'll pay you interest on the year-long and at some dates in the future which we stipulate will repay your principal amount so you know you'll get something out of this just like any lender gets something out of lending money so the government resorts to a lot of borrowing to pay for wars and when it does that it's flooding the bond market with a lot of new bonds driving their prices down and therefore driving the effective yield on those securities up you see if there's a bond with a face value of $100 and it promises every year to pay $5 interest okay that's a 5% yield but if there's so many bonds floating around out there seeking buyers these bonds will only fetch $50 then $5 a year in interest is a 10% yield okay so the effective yield gets higher and higher as the government tries to borrow more and more and the higher it gets the greater discouragement it is to the government's borrowing it makes the borrowing more expensive less effective in serving the government's purposes so there's that kind of reaction how can it deal with that reaction well in the world wars the government used the new central bank the Federal Reserve System and the Fed came right into the rescue by using monetary policies of lending or buying securities in the open market which created very easy credit conditions especially for commercial banks and they in turn were able to make easier loans to their borrowers and so the whole economy was getting pumped up thanks to the Fed with effusions of credit spreading out throughout the system but one place it spread to was increasing the demand for government securities which is the whole idea the whole idea not just some pleasant side effect for the government that's why this was done to finance the government's war so the Fed rides to the rescue and besides pumping up credit right and left it imposes interest rate controls and in some cases capital market controls because there are still other effects when you start intervening in the financial market in the financial markets on a large scale so we've got more intervention triggered by intervention so the government gets money by taxing or borrowing it goes out and makes purchases but if this is a big war it's making purchases of certain items on a large scale and when it does that the effect of increasing demand is to increase the prices of these items and as they get more and more expensive it puts the government in a bigger and bigger bind how is it going to pay for all the stuff it wants when each unit is getting more expensive so it's got to deal with that so it deals with that by killing the messenger the messenger is the rising prices it's telling the government these items you want are getting dearer their opportunity cost is rising and you can't have them voluntarily from sellers unless you pay a higher price to get them but when the government imposes price controls as it did on a selective scale in World War I and on a comprehensive scale in World War II it kills the messenger it says things aren't really dearer they're not more expensive because we've got a law that says you can't make them more expensive well if you think through what really goes on in the economy that doesn't really change anything real that's like saying if I rigged the thermometer I'd change how hot it is in here it wouldn't it doesn't change the fact that the government is trying to snatch higher and higher value goods away from people who aren't willing to sell them except at higher prices but they can't sell at higher prices because the government has made that unlawful and in many cases in the World Wars the government simply didn't even fool with price controls it simply passed laws giving itself the power to take resources or to set priorities or make allocations of materials in such a way that it would be able to get what it wanted for the war mobilization either for itself or for its private contractors now when you do that there's still compliance problems every time the government puts it into effect a new regulation, a new control, a new allocation there are people who find it in their interest to violate that regulation to cheat on those controls and so forth and the government then has to deal with that with enforcement efforts now notice every time it deals with one of these negative feedback effects it's sending out coercive agents it's trying to squash people who are reacting negatively to what it's doing the final form of transferring resources is to just take them to, for example, draft men into the armed forces by conscription and send them a letter that says Greetings that's what they used to say, they said greetings your old Uncle Sam is sending you a greeting greetings, you are to report and they'd tell you where to report on a certain date they might even give you a week or two to get there and if you didn't report as ordered you became what was popularly known as a draft dodger and that meant that you had the option the other option the government gave you if you didn't want to report you could actually go to prison so since that was not a good option for most people the great majority of people just showed up as ordered rather than go to prison but not all of them in World War I the evasion rate was actually pretty high it was about 11% of all the people ordered to submit to the draft they just melted away somewhere and of course some of them were eventually tracked down but in 1918 it was harder to track down people than it is now there was no national security agency but in World War II there was much less draft evasion and avoidance any of that and the people who chose to go to prison instead of submitting to the draft mostly members of the Jehovah's Witnesses whose religion told them don't put man ahead of God all Christians, all Muslims believe that right we should put God above man but when you have to walk the walk it's different and very few Christians chose to walk the walk of peace when the government sent them the notice that said report for a war so we've got a lot of attempts to transfer resources to war uses and we've got a lot of negative feedbacks for the government and so the government's got to suppress resistance and the most important way in which it's got to suppress resistance is resistance to enlarging the armed forces themselves because if you can't build them up everything else is worthless they're the whole purpose and when people go out and try to discourage young men from enlisting or try to discourage them from reporting for the draft the government gets very upset about that especially especially so the penalties provided by law for interfering with the draft or with the enlistment of soldiers are very severe in World War I that could get you 20 years in a federal prison for interfering with the government's enlistment or draft efforts and your interference might amount to nothing more than standing on a street corner and saying to somebody these guys shouldn't report for the draft it's wicked that's worth 20 years right there a lot of people went to prison during World War I for resisting the draft or for speaking out against the war in one way or another Eugene Dabbs, who was a famous labor leader and politician of those days was one who gave a speech about the draft and was convicted of violating the Sedition Act which was a draconian law the government passed in 1918 which was a law that basically said any form of criticism of the armed forces their symbols, their uniform, the flag, their leaders or anything else having to do with the war is guilty of felony and would be punished by imprisonment in terms indicated in the law some of which ran up to 20 years so a lot of people went to prison during the war for nothing more than just exercising their first amendment of speech because your first amendment rights basically didn't exist during war time they existed totally at the sufferance of the warring state and sometimes it just didn't have any patience with little things like first amendment rights which, by the way, it was purporting to defend by its war actions get your mind wrapped around all the inconsistencies that are part and parcel of a government at war especially one that purports to be defending a free society it's the classic case of destroying the village in order to save it if that's how you have to do it, you've already lost and you might as well save everybody a lot of trouble so the government restricted rights of assembly, speech, press, petition redress of grievances it shut down practically all the foreign language newspapers in the country at that time in World War I there were thousands of such newspapers because about 15% of the population was foreign born and a similar proportion was first generation Americans so the foreign language press was very big and the government put such onerous controls on those newspapers and magazines and all of them stopped publication some of them forbade the use of the mails which meant they couldn't be sent to their subscribers anymore because that's how they reached the subscribers in those days so they were suppressing free speech especially among suspect people none more than people who wrote or spoke in German and there were millions and millions of such people in the United States at that time the Germans had been the largest of all immigrant groups that had come to the United States in the preceding century and so there are many many Germans or people of German descent in the country and you kind of wonder sometimes how the government got away with stuff like not allowing Beethoven's symphonies to be played at concerts really how stupid can you get? that's how stupid a nation at war gets that's stupid and of course the whole country in both World Wars was barraged with propaganda people were signed up as government spokesmen in World War I they got all these people they called three-minute men actors, celebrities, socially prominent people and they would go out in some public place you know like Times Square in New York City and they'd give a speech for three minutes exhorting everybody to support the war and lend money to the government buy government bonds and so forth in World War II to an even greater extent Hollywood which was a big deal by that time was basically made an arm of the government to propagandize people especially to pay their taxes and to buy government bonds of course everywhere you went during those wars you encountered this propaganda to buy bonds, buy bonds, buy bonds and to take other actions many of them symbolic but some of them substantive it wasn't just exhorting people it was also a huge enlargement of the police apparatus the FBI increased the number of agents in World War II several fold in World War I the agency that later became the FBI was created and that's where this fellow named J. Edgar Hoover got his start ultimately becoming arguably the most powerful man in America over a period of about 50 years because even presidents knew that Hoover had information on them he kept it in his personal file which was available only to him and if he didn't go his way he might put out the word on you in short Hoover was a guy blackmailing the government of the United States for 40 or 50 years and he was spawned by World War I informants are always encouraged at times like this people are called out to report on their relatives their friends their neighbors if you see something say something and of course there are some nosy busy bodies that see something very easily and so they if they've got any grievance against their neighbor say something look at my neighbor I think he's a Taliban and in on top of this while the government is trying to learn everything about the people it's trying to prevent the people from learning anything about it so the level of government secrecy rises more and more information is classified kept secret not revealed to the public often not revealed to members of Congress even so this is the way wars get fought because this is the war on the home front people aren't making donations coercion has to be brought to bear against them and when they react to that the government has to suppress those reactions and in that course of suppression people's liberties are squashed sometimes forever now crises end both the world wars ended the Great Depression ended when they end there's some retrenchment the government can no longer persuade people to put up with everything they were putting up with during the crisis and so there is some fallback but not a complete one and we see that in different aspects of the government one of them is fiscal even in the 1920s after World War I the taxes that had been raised so much during the war were never put back to pre-war levels or even close to those levels they were lowered somewhat during the Coolidge administration but still by 1928 the top tax rate was 24% I believe 24 or 25 before the war the top tax rate was 7% so taxes had a big ratchet effect in them government spending had a big ratchet effect in it and it wasn't simply because now there are a lot of veterans who are getting money spent on them for their care or for their pensions there's a variety of other things the government was now spending more for as well because during wartime opportunities always come forth to pretend they're making some contribution to the war even though it's very far-fetched that what they're doing adds anything significant to the success of the war effort but people like to come forth and say they're doing something that makes them deserving of government largest so other people get to ride along with the great train of war-making there are institutional ratchets that are even more important than the fiscal ones the government's budget can go up and down it's very easy to write new numbers in the budget each year but if you create a new law it's a big deal to get rid of that law to repeal it okay? if you create new organizations it's a big deal to stop their operation to shut them down and if you create precedence such as the precedence of supreme court rulings during world war one that said the government has every right to suppress people's first amendment speech rights that's going to be a precedent forever that precedent may be dragged down in any number of briefs later some of them having nothing to do with the war to justify the government's suppression of speech probably the most important ratchet effects of all in the United States history were ideological ratchets during the war the government did a lot of unusual things and propagandized people and after the war it continued to propagandize them with interpretations by important actors in the war program that the government had been a big success that these actions it had taken across the board were part and parcel of winning the war so they were great, they were good so great and good in fact that there were the kinds of things that we might well consider doing even in peacetime that argument was made again and again and again even by people like Herbert Hoover who are not exactly rabid status but Hoover made that argument more than once and certainly the people that were leaders in the Roosevelt administration during the New Deal made it repeatedly look we did this thing during World War I we can do it now during the Great Depression which Roosevelt himself described or not Roosevelt but Justice Brandeis described as an emergency more serious than war so if we did something in war certainly we can do it during the Depression and a whole host of wartime measures were revived and put into place by the Roosevelt administration and to some extent even earlier by the Hoover administration and then of course when World War II came everything was done again except on a bigger scale to more people for more time and the victory was greater more decisive look we defeated the Nazi war machine we defeated the whole of Japanese imperial aggression in East Asia look at these wonderful accomplishments if the government can do that surely it can give everybody a decent house to live in and a job at high pay surely well if it were just a matter of dropping atomic bombs on them maybe but there's no real analogy here this is one of those easy analogies you hear in politics all the time that if you think about it just collapses there's no substance there's no analogy between what was done in World War I and what would have been a sensible policy in 1933 there are two totally different situations you may call each one of them an emergency that doesn't get you anywhere that doesn't tell you how to deal with it but nonetheless these ideological ratchets have taken place and as a result after repeated crises in a short period of US history the reigning ideology of the United States was changed to a very high degree classical liberalism or anything like it was driven into the corner collectivism democratic socialism emergency fascism all these things came to the fore and stayed at the fore ever since then so beware going to war ladies and gentlemen you will almost certainly live to regret it thank you very much