 All right all the poor souls who didn't make it into Judge Napolitano's course are here to hear me if that's fine That's just fine. Okay. I Had a little issue we had some problems with printer connectivity and so there's a page that with a quotation that I want to read to you That didn't quite get printed out, but it is on my phone Which is charging now, so it'll be just about where this phone takes five years to charge It'll be just about ready for me to have ten seconds to read you that quotation at the very end All right. I'm gonna use this This thing to write down the names of some people. I bet a lot of you will never have heard of Because they've done they've done really good work on the kinds of topics. I'm gonna raise today, but they're not they're not Austrians and It's easy for us to overlook them But they've done really good stuff and and if you're interested in some of the topics that I'm interested in you'll find this valuable There's something a little odd about the title of this session It's just one word now that could I could talk about anything with that one word the reason it's just one word is The people who put this program together wrote to me and said we'd like you to do the opening talk And we'd like you to do the contra Krugman thing and the panels and the office hours and everything And then we'd like you to do a talk on some aspect of war So just get back to us with your title for that talk. I never did I just blew them off I just because we were moving and I frankly I just couldn't I couldn't keep up with everything so they they showed me they just Titled at war and they left it at that so That's why it's so broad what I thought I would do given how broad the topic is is Not talk about You know, obviously the moral aspects of war that I might normally talk about or Libertarian ethics and war that I might also normally talk about I should confine myself to Arguments that have something to do with economics given the nature of this week So I want to raise a series of points that have to do with war from an economic point of view and These are points that are often missed in assessing the costs of war So I want to make sure that when we think about war we are taking into account the full cost involved Toward the end, I will say a little bit also about the old War makes us richer argument. I mean, I'm I suppose a lot of people are tired of hearing that one answered I have a whole paid resource page that answers that but I'll say I'll take a few minutes I've written a little bit about that myself, but I'll refer you to the best material on that subject But boy that just never goes away I honestly thought that after Robert Higgs smashed that definitively in the literature I was naive enough when I was younger to think because he started writing on that subject in the early 90s I was naive enough around age 20 to think oh, that's good No one will ever raise that dumb argument again that war war makes us prosperous. I really thought that was dead and buried and Bob Higgs years later told me no to Tom that just ain't how it works. It just is not how it works. Okay the first Point I want to raise involves The idea of costs of war in terms of opportunity costs and in particular. I want to talk about the preparation for war The military state And let's let's take a country More or less at random the united states. Let's let's pick that And talk about the costs involved In having a state that is so devoted to military action and Basically developing an ideology around the military and in all in in effect almost defining the culture By the military. I mean you see in football games whether college or professional Or in just in every aspect of culture you land on an airplane And there's somebody from the military on the plane and everybody applauds It's it's you know, or you go to get ice cream and if you're in the military you get 10 off It's everywhere everywhere everywhere What are the costs related to To this type of investment So the first person I want to introduce you to it is my great pleasure to introduce you to And that is You'll see more melmont All right Now this i'm just going to ask you to be honest Okay, I want just one moment of honesty the rest of the week You can you can bluster about your knowledge, but right now I just want honesty Other than the faculty is there anybody who's ever heard of this guy Awesome All right, good. I mean it's awesome that you have and it's awesome that no one else has because otherwise I really have nothing else to say so That's good. All right. See more melmont who died in 90 in i beg your pardon 2004 Was a professor at columbia university He was a professor of industrial engineering and operations research and I don't even know what that is but He focused a lot of his professional work on looking at the way The pentagon distorts the u.s economy, but he came at this really as a as a leftist There's no question. He's on the left, but you can see that Rothbard seems to have been rather fond of him He thought that he had certainly some insights and what's nice about the mesis institute by the way One of the many things is that the shelves just as you walk in There are particular shelves that are marked as being the rothbard collection This means they were the actual volumes rothbard himself owned So for many of these you can pick the book up flip through and read rothbard's marginalia Well, good luck because his his writing is absolutely indecipherable But he but he'll it'll be indecipherable indecipherable indecipherable exclamation mark four times I wish I knew what he was so excited about But with melvin, he'll you know, he'll underline the points that he likes and then occasionally melvin will say something Not being an economist melvin will make an error rothbard is a big ol x through it like this one's wrong So it helped me with my reading. Okay. Yeah, I guess melvin's wrong here But what's interesting about melvin is that he really did appreciate The idea of opportunity cost and the bosteot insight, you know, what is seen and what is not seen And in fact, I ended up writing a paper about seeing more melvin And I sent it out to a couple of his colleagues who were on the left They had never heard of bosteot, but they loved the what is seen and what is not seen inside an essay And I thought it was great that a libertarian was talking about melvin that he that he wasn't forgotten So before I get into any details about about him, I would just refer you In the journal in the journal of libertarian studies, you can google this or it would be at the mesis website I have an article And I I don't remember the immediate title But the subtitle is an austrian tribute to see more melvin. So if you just type in woods see more melvin How many links could possibly come up? That must be it. So I would urge you to check that out Here's a here's a statement That melvin made and give you a sense of the kinds of insights we're talking about and how interesting it is that he He did come from the left. He says Industrial productivity the foundation of every nation's economic growth Is eroded by the relentlessly predatory effects of the military economy Traditional economic competence of every sort is being eroded by the state capitalist directorate That elevates inefficiency into a national purpose That disables the market system That destroys the value of the currency and that diminishes the decision power of all institutions other than its own Well, I can make common cause with someone like that So melvin believe that there there were effects That the pentagon had on the economy they they were many But these were effects That were negative in terms of the american standard of living So melvin was at pains for example to point out That when you're looking at gdp figures you are not necessarily getting A good picture of the overall health of the economy Again very good. That's a very good insight because he says that gdp is of course A quantitative measure. It's a number But it's not a qualitative measure So if the government blows a whole lot of money On nothingness on handing out spoons to people so they can dig holes with it That gets added. That's a number it gets added to the number But we know that qualitatively That is not a helpful amount of output for the government to produce a lot of spoons or buy a lot of but this is not helpful For us. It doesn't contribute to our welfare, but gdp is just a dumb number It's just a dumb number. It can't tell you that So melvin wanted to distinguish between what he called productive growth or he might have said productive spending And parasitic growth So productive growth would be growth that actually So the growth of productive spending is spending That contributes to our well-being to the well-being of consumers or to the future well-being of consumers By investing in capital goods today We can have a greater abundance of consumer goods and better quality consumer goods in the future That's productive growth So again, what possible objection could we have to that way of thinking? Likewise, he says we need to think about the idea of parasitic growth when we look at the military state Because this is merely expenditure of resources that just depletes manpower Or it depletes existing stocks of goods But does not contribute to our welfare Either in the present or in the future now you may say by the way That hold on woods in to some degree like even even in a stateless society. We would devote some resources to some kind of military equipment And and that's certainly true. There's no doubt about it to some degree. You would have to defend yourself But in a way even though he's by no means an anarchist melvin has anticipated that objection as well Because he introduces the concept of overkill. Yes, we would probably need to defend ourselves against bad people but He had this profound insight that you cannot destroy a city more than once Once it's destroyed That's it. It was destroyed now Maybe they'll rebuild it in 20 years and you might destroy it again But in the immediate term once it's destroyed it's destroyed So the excess the ability to destroy a city 500 times well 499 of those at least Would be what he would call overkill And that would be parasitic that would be parasitic spending So let's consider by the 1960s the united states government Just looking at its strategic aircraft and missiles Could unleash in explosive power the equivalent for every person on earth Six tons of tnt for every single human being in the world the u.s. Government could unleash six tons of tnt worth of explosive power So what melvin would ask was Are you telling me That i'm safer now that we can detonate six tons of tnt for each person that i would be if we had I don't know only four tons of tnt per person Wouldn't we still be sort of okay with just the four tons or even one ton? How about if we really tighten our belts just a ton of tnt per person Wouldn't the five extra Be parasitic This is clearly wasteful So what he's trying to do Is i mean and i love the i love the fact that he uses the word parasitic That's a very roth bardian term All right So again, he says gdp can't distinguish between these sorts of things that can't Can't make a determination of overkill obviously and it can't deter make distinguish between what's productive and what's parasitic All right, so now let's look at some specific examples to help understand what we're What we're dealing with when we look at the the military state and We're looking at costs here. We're looking at opportunity costs every single Tank or as as melman would say every excess tank every tank that's obviously over the top unnecessary Comes at the expense of something else And that is at the root of all economics not just austrian, but all economics is cost And of course you see it at the very beginning of of the praxeological chain of reasoning That human beings act and they're using scarce means to achieve their ends and I am limited in in the ends I can achieve because I have the there's a finitude here I have only one body. I have limited resources. So I implicitly rank my ends And when I achieve one end It's very nice But my achievement of that end comes at the expense of the second most valued end that I might have otherwise achieved There's always so there's cost at the very heart of the austrian analysis that when I pursue end a It's at the expense of end b. So cost is right there at the very beginning of that praxeological chain And the costs Are really quite stunning. So for example, if you want to train a single combat pilot You're looking at expenditure between five and seven million dollars one combat pilot Or think about this Think of all the fuel you consume as a motorist over the course of two years It's a lot of fuel That's about how how much fuel a single f16 training jet Consumes in under an hour So it's helpful to think about these comparisons Or how about one of my favorite examples the old abram's tank Now, you know how you sometimes you talk about miles per gallon A car gets x miles per gallon. Maybe a hybrid car, you know gets 48 50 miles a gallon I don't know. I don't have one of those sort of cars, but maybe you know, but maybe that is what the mileage is Maybe it's something like that The abram's tank you can't even do miles to the gallon. It's It's gallons to the mile It's 3.8 gallons to the one mile Or how about this between two and 11 percent of the world's use of 14 important minerals all the way from copper to aluminum to zinc Is consumed by the military And indeed six percent of the world's petroleum consumption is consumed Uh by the military The pentagon's energy use in one year Could power all us mass transit systems for nearly 14 years Hmm Here's some more outreach to your left-wing friends, right? That's why i'm here to build bridges That's why i'm here. Okay How about this for thinking in terms of opportunity costs? Between 1947 and 1987 the department of defense Used 7.62 trillion dollars in capital resources In 1985 the u.s department of commerce Estimated the value of the nation's capital stock At just over 7.29 trillion dollars. So that means That with that expenditure of resources by the department of defense You could have either Completely replaced the u.s capital stock Or at the very least modernized it in some way So it's a very it's a staggering Investment of resources that we're talking about and if anything That's an understatement Because any portion of that money that had gone to the pentagon That was that instead we might have diverted to civilian use that civilian use in in in capital expenditure would have gone to the purchase of capital goods That yield you an ever increasing output Over time it would have increased the country's productive capacity Which means greater production in perpetuity But we didn't have that because of all the at the very least we can say the parasitic Growth or spending so this gives us something of a taste of the costs that we're talking about They're not trivial in other words All right, let's consider another cost of the military state think of geniuses Now it's it's there's a finite number of geniuses So it's not the case that if 10 percent of the geniuses gets siphoned off into some project That somehow Replacement geniuses will sprout up It's this is a zero-sum game geniuses doing project a are not available to undertake project b Well, it so happens that since world war two Somewhere between one third and two third of all technical researchers in the united states Have been working for the military at any given time So think in terms of The costs involved there the opportunity costs involved there The opportunity cost there is civilian research That isn't being done Because those people have all been sucked into the You know military industrial complex And here's what melman said again. This is a guy on the left When research and development is not properly done On behalf of civilian industry Results like poor product design Or poor production methods can have disastrous effects on the economic position of the industry When as little as one and a half percent of us national product is diverted to military research It seems little enough But that accounts for more than half of the national research and development effort And has left many u.s. civilian products industries at a competitive disadvantage Due to faltering product designs and insufficient improvement in industrial production efficiency Now that is a very interesting insight that it's very Very easy to overlook and I know that because I overlooked it for years. It never occurred to me That's yet another cost That we have to bear Now of course government was able to siphon off These brilliant minds and these talented people because it could offer them tax funded salaries At the private sector at that time could not keep up with In fact, the wall street journal in the early 1960s reported that people in industry had begun to argue as follows Frantic bidding by space and military contractors For scientists and engineers is creating a big shortage for industry This scarcity along with the skyrocketing salaries It is provoking is bringing almost to a halt the hitherto rapid growth of company supported research This development hampers efforts to develop new products and processes For the civilian economy Now you may say Well, that's the wall street journal. Of course, they're going to say that of course, they're going to defend the You know private business or whatever But the american economic review, which i'm sorry to say does not always seem to defend the private sector said this Did a study there's a study published in the american economic review saying that the growth of military and space research and development And now i'm quoting has significantly retarded the growth of civilian research and development So the this is research development that was never done And and that's that opportunity has gone forever Then continuing from the the study the growth of research I beg your pardon the growth of defense r&d r&d research and development, of course By bidding up salaries and taking the cream of the new science and engineering graduates has tended to reduce Significantly the quantity and quality of r&d undertaken in civilian created laboratory Now there is some argument to the effect That after all I ought not to be complaining to this this degree because there is what some specialists call crossover That is to say, I mean you've heard this a lot that well, you wouldn't have GPS technology, but weren't for the government blowing all this money on the military all these years You know, so that's called crossover technology where government is doing research to figure out how to you know Develop new weapons systems and in the course of doing that it invents Tang or whatever it comes up with it It invents all these other things and these things turn out to have civilian uses. So it's not all a waste And I've written a little bit about I believe there is a section In that jls article that I refer you to I go through and look at at some of that because there are a variety of estimates as to to what extent The pentagon spending over the years has redoubted the benefit of the public And again, it reminds me of what I've said about Norway A lot of times you'll hear in about the Scandinavian countries that well the Scandinavian governments You give you a lot of great things if you live in those countries you get free education for example, you know free university education And so I've on my podcast I've had people from from sweden and norway and denmark come on and talk about those countries And I had a person from norway come on and say Basically the tax rate you're faced with in norway is 70 percent So my response to this has been well If I were paying 70 percent in taxes, I would expect to get something Of course, I would expect to get free education. There's something better come to me from 70 percent tax rate Well, likewise after all this military spending if a few inventions come out of it. Well, that's the least I could expect but the melmon was of the belief That the lower end estimate may be five percent It's anywhere between five and 33 percent of of these Some of these technologies really are due to to defense research He said it was very it was very very low and extremely inefficient And by and large, these are things as a lot of other scholars have said that we're going to be invented anyway You know, when you look at some of the things they claim credit for They were probably going to be it was impossible to imagine them not being invented But they would have been they would have been developed according to society's timetable Yes, it's we could maybe have invented the ipod in the year 1900 if we had used all the resources of society All the brain power and siphoned it off to inventing an ipod And we had taken all the resources that we might have used to build infrastructure and capital goods and we'd sucked them all away Yeah, and we would all be dirt poor. Nobody could buy one of these things We would want to kill anybody who mentioned an ipod. It wouldn't have been the right time I mean, yeah, there are always a million things to that you could possibly think of You know, I mean it's easy to To to to take reservations at the car place anyone can take them The thing is holding the car. Well, likewise, it's easy to come to dream up all different products That's the easy part But the the question is on what timetable do we develop them? To what extent do we deprive ourselves of other goods while we're siphoning resources into research and development? Well, that's what the market is for It rations these projects in a way that is consistent with consumer preferences But there's a lot more that can be said about that crossover thing Peter Klein has written about it And as I said, I have a little bit in that article that that deals with it But that's their attempt to try to desperately claim that these these trillions of dollars haven't haven't really been a waste The other effect another effect of pentagon dominance over some firms is that as a firm gets more and more involved in contracting with the pentagon And as the pentagon becomes let's say the chief buyer of its products The firm's business sense begins to dissipate Because the pentagon as you may have heard does not make cost consciousness its top priority So if you're a business firm catering to the pentagon, you don't have to worry about controlling costs as much as you would with any other client Because the pentagon will come. I mean, yeah, obviously there is some limit But by and large the pentagon will come up with the money one way or another What it really wants to know is can you deliver on time? Can you deal with the fact that they're going to be making a whole lot of changes and demands As you're working on the project and can you roll with the punches? They're suddenly going to make you pivot and change it a little bit. Can you deal with that? Can you speak the language? of the military community These are the our higher priorities And so what firms become as melmins said Are not profit maximizing cost minimizing firms But rather cost maximizing and subsidy maximizing firms I say one way or another the money will Will be produced Let's take an example starting in the 1960s the pentagon began to use something called historical costing It would use past prices of you know, let's say they're developing a new war plane They'd look at an older war plane and they'd use that as a baseline to estimate future costs Well, if this one costs so and so we'll take that cost and maybe we'll add in 10 percent or something And that's what we want to shoot for in our cost estimate for the next plane project Now that seems sensible I mean, you know if you have that type of system if you have a pentagon you have tax fund You know that seems like a sensible way of trying to estimate costs as any other The problem with it is it bakes into that particular cake pardon me gary johnson It It oh that was a low low I wasn't I wasn't expecting to make that make a cake joke, but it it bakes into there the A bias toward ever higher prices because if you're going to say well, this is the baseline Then firms, you know, there's no scrutinizing of those past prices There's no scrutinizing of the the costs that were incurred to yield you a project that costs that much You just say well, that's our baseline. So we start from there So instead of thinking well, let's let's try and cut costs cut costs cut costs Well, why bother because this the baselines here Why say well, but if we cut we could get below the base you don't have to Because of historical costing and also if a plane or whatever it is winds up winds up at the end of the project costing way way more than the estimate Then that way way more than the estimate cost becomes the baseline for the next plane project So there's this upward ratcheting of of cost There's a good specific example of how Being so enthralled of the pentagon having the pentagon be your chief Again customer. There's a good example of that and that's the american machine tool industry and here. I want to refer you to another person Anthony D. Filippo was a uh, basically a student of seymour melmond And he he wrote a book on um, I again, I had this in my we had trouble finding printers that would connect him Oh, here it is. Yep. I did put this in the later version. He wrote a book called military spending And industrial decline now. I remember the title, but I don't remember the subtitle a study of the american machine tool industry And what he did was he showed what happened in the american machine tool industry and he Pointed the finger for what happened to it at the pentagon. Well, what what did happen to it? The american machine tool industry had been a real success story in the american economy And it it was highly competitive All over the world was very cost conscious And then in the 1970s after by the 60s again, the pentagon had become one of its biggest customers It was overtaken by japan and germany. It became not cost conscious and and a good example of this is Eventually they're developed a kind of machine tool technology Called numerical control machine tool technology and this was the technology of the future And the japanese were developing it and the germans were developing it And they developed it in such a way that it was conceivable that the private sector in those countries could use it because it was Not very costly But then when you turn to the american case and defilipo goes into detail about this The american firms were so used to catering to the pentagon that yeah, they developed numerical control machine tool technology But it was so hopelessly expensive That nobody in the private sector could conceivably even imagine using it And he says that the the whole structure of the american machine tool industry became deformed and Relentlessly uncompetitive As a result of its experience catering to the pentagon the private sector could not afford what it was putting out All right, another person. I want you to know about Is I wish I had a a lav mic here. That's okay. He's he's he was a pentagon analyst named chuck spinney And he he was around a long time and in fact his his friend Um, you should also know about his friend winslow wheeler who retired a couple years ago Wheeler was on the hill for decades Um, I I wonder actually I'm kind of wondering if If shana, did you ever know winslow wheeler? Yeah, did you? He was a republican who um wanted to cut the defense budget So I thought he might stick out like a sore thumb in washington dc all right, well Okay, because because we I used to have I had him on my show once scott horton used to have him on all the time Because he was a republican and he thought that pentagon spending was totally out of control. Well, anyway Wheeler's the only one of these people that I know for sure was right of sent well This guy was not on the left, but but in terms of these other people This guy I know was at least nominally a republican Chuck spinney More or less developed these two ways of thinking of what the pentagon is up to And the first one you may have heard me talk about this before the first one is the term front loading And the second one is the term political engineering It was really chuck spinney who came up with these ideas who gave the name to these ideas these phenomena that he was observing Front loading would be When you you take some military project and you vastly over promise what it will deliver All the things it'll be able to do and it's going to be just like a whiz kid project And you won't be able to believe how amazing it'll be You oversell it And you likewise understate the cost because that's another way of overselling something. It's going to be cheap you say Now eventually you think That strategy can't work forever because eventually people will realize the project stinks It doesn't do what they said it would do and it costs 10 times more than they promised So you think well that project that that strategy can't go on forever That's where political engineering comes in political engineering Is the process whereby You take these projects And you spread the project out all over the country You spread the jobs and the profits Particularly in districts that have committee chairman as the congressman So that that project will never be discontinued or it'll be really hard Because there'll be a lot of vested interests who want to keep it going So even when people realize that it was over promised and they realize that it's over budget You can't stop it Once you turn on that taxpayer spigot You can't turn it off again So it's it's that dual strategy of front loading and political engineering that led to all these problems problems That every dozen years or so Would yield you maybe every 15 years would yield calls for a blue ribbon commission to investigate The ongoing cost explosions in The military the military industry and every you know 1955 1970 over and over and over they have the blue ribbon commissions And they point out exactly what's wrong Some of these blue ribbon commissions were fine. They they did point out what was wrong and then nothing happened It just kept on going kept on going so spit the the f-22 and the f-35 if you're interested in researching Examples of this I would start there. Look those up Okay, let's move into does war make us richer. I know you know it doesn't But I also know you have friends who thinks who think it does so Let's address that at least briefly firstly I want to refer you to the path breaking article on this It's not like no one ever realized before That war doesn't make you richer But the the one that really that actually did make some people sit up and take notice was an article in the journal of economic history I think in 1992 And it's by a guy you I I think many of you will have heard of Of course, of course. What's the last name? Right I don't have room to For the time to write out the name of the article the name of the article is All you need to know is the the the main title wartime prosperity question mark wartime prosperity And then the subtitle is reassess a reassessment of the u.s. Economy In the 1940s. So that's published in the journal of economic history. It's a big time journal that matters And he later took this material and expanded on it added other articles and published a book Which was probably easier to get your hand. Oh, actually, you know what this article even though It's in an academic journal you can find it online and read the whole thing But he has a whole book called depression war and cold war That will give you a ton of stuff on this and there are a lot of arguments you can make about In in particular world war two because that's the the case you always get People will say they point to world war two because of course it came on the heels of or during depending on your perspective the great depression And they'll say if you're saying to me that war does not make us prosperous How do you explain the fact that world war two got us out of the great depression? So world war two Is raised as the clear as the as the overwhelming example Now you can theorize about the effects of war on society without looking at the specific example of world war two You can understand on a gut level that Blowing things up doesn't make you richer than before like anyone can kind of see that And if we were to take All like we take the the the naval fleet of the us and the naval fleet of russia out into the atlantic ocean and sink them And then go home and say oh my goodness That was great. We're richer than ever You would think there's something screwy there something screwy about that that can't be right now Okay, there are some canesians who have a Somewhat more sophisticated version of this but not much. It's not much more sophisticated than that And they'll say look look woods. Look at the numbers Yeah, yeah, yeah, you get your whole theory, but doggone it look at the employment numbers Look at the output numbers for the 1940s. They're amazing And what Higgs will say well look the employment numbers well When you siphon 11 million people out of the labor force and send them to be shot at The labor market that remains suddenly looks pretty good Well duh, right? I don't need any diagram drawn for me to understand what's going on there But then the numbers they'll say but look at these GDP figures And in that article Higgs corrects all this I mean you can talk about the rationing that consumers suffered and that's important too Consumers did not benefit from this. That's true. But basically what Higgs is What he's basically saying is if the numbers are telling you something preposterous There's something wrong with them The there's got to be something screwed up about those numbers So then he spends the article saying what's screwed up about these numbers Well, here's why we initially think the numbers must be screwy Just listen to this. This is from the Higgs article He says that consider that between 1940 and 1944 Real GDP increased at an average annual rate of 13 percent There's something screwy about that, right? He says this is a growth spurt wholly out of line with any experienced before or since and then Moreover that extraordinary growth took place notwithstanding the movement of some 16 million men Equivalent to 28.6 of the total labor force of 1940 into the armed forces at some time during the war And the replacement of those prime workers mainly by teenagers Women with little or no previous experience in the labor market and elderly men So what he's going to say to us is I'm going to read it, but I want to prepare for this He's going to say all right, so you're telling me we had the greatest spurt of growth in history At a time when we took the labor force and made it much much much less experienced than before So I guess we would get the best growth of all time if we Replaced all our workers with people who've had lobotomies then we would really have the best growth ever Don't you see there's something there must be something wrong with those numbers? So in other words, it was here's what Higgs says Is it plausible that an economy subject to such severe and abruptly imposed human resource constraints Could generate a growth spurt far greater than any other in its entire history And these are the numbers that people are thrown in your face They should be embarrassed to use these now. You see they should be embarrassed to use these numbers further, is it plausible That when the great majority of the service men return to the civilian labor force Some nine million of them in the year following vj day while millions of their relatively unproductive wartime replacements left the labor force That the economy's real output would fall by 22 percent So there's something wrong with those figures too something's wrong with these figures And what's wrong with these figures Is that you can't have meaningful if you can have meaningful national product accounting at all You certainly can't have it without real market prices and what Higgs will show you Is exactly how we should understand the prices such as they were That were set during world war two And just how much of the u.s economy was in one way or another part of what was essentially a command economy And so the numbers you're looking at are nonsense numbers and when you add them all up and you get a gigantic Nonsense number you shouldn't be dancing a jig You should be looking at these numbers critically Which is exactly what that that article does and it's of course, it's worth noting And I have a talk somewhere on the mesas media youtube channel called Keynesian predictions versus american history And the Keynesians predicted by the way that at the end of the war when when demobilization occurred and the factories stopped churning out Tanks and whatever that there would of course be a terrible Depression there would be millions and millions nine million unemployed There were numerous people. I've quoted them who warned that this would happen In fact, we have one. I think it might have been alvin hansen even who said Well, look, we can't just stop producing war material just like that So in other words, we don't need it anymore But we got to still keep churning it out was the attitude and they did demobilize And 1946 turned out to be the single most productive year for the private economy in the us of all time You disaggregate the numbers you look at the private economy that tells you the story Because the private economy is the economy. It is the I mean after all we have to get back to first principles What is the economy for? What do we look to it for it's for us. It's for consumers consumers are the key to the whole thing And producing a whole lot of things that consumers don't use and then blowing them up does not improve our standard of living I will say one other quick quick thing sound money Is destroyed by war in case after case because it places constraints on governments and there are people who laugh at that They say oh come on What are you talking about? You're always looking for excuses to praise the gold standard but look If the gold standard weren't a constraint on governments They wouldn't have all had to abandon it during world war one So that proves that it was a constraint on them and now that I think my phone will have just enough power I want to shift to that one last thing. I want to tell you From your old friend elehu burrat And by the way, I hate that the the the auto correct on this phone is the worst on any phone. I've ever had It it continued to change elehu burrat to burrito and that is not his name He's a 19th century writer I had never heard of him until I co-edited a book down in the bookstore I I'll I'll never earn another dime from that book by the way It's called we who dared to say no to war where I did I worked with a guy on the left And we put together what we thought were the best anti-war writings for each of the major u.s Wars from 1812 to the war on terror And it's just a wonderful and it's not just war stinks. We hate war people die. Yeah, that's good But it's all it's facts and this is why the war was was was terrible and a lie and And elehu burrat's a 19th century american writer you never heard of And what I want to read to you is just to remind us that of course in the numbers We can't capture obviously the true tragedy of war and that was his point because what burrat said was You know the human race Extends a lot of sympathy to people who have been the victims of misfortunes whether famine or shipwreck or railway accidents Or whatever and then he said but and these are his words Compare the feeling with which the community hears of the loss or peril of a few human lives by these accidents With which the news of the death or mutilation of thousands of men Equally precious on the field of battle is received. How different is the valuation? How different in universal sympathy war seems to reverse our best and boasted civilization To carry back human society to the dark ages of barbarism To cheapen the public appreciation of human life almost to the standard of brute beasts And the and this demoralization of sentiment is not confined to the two or three nations engaged in war It extends to the most distant and neutral nations And they read of thousands slain or mangled in a single battle With but a little more human sensibility than they would read the loss of so many pawns by a move on a chess board With what deep sympathy the american nation even to the very slaves heard of the suffering in ireland by the potato famine What shiploads of corn and provisions they sent over to relieve that suffering But how little of that benevolent sympathy and of that generous aid Would they have given to the same amount of suffering inflicted by war Upon the people of a foreign country This is one of the very worst works of war It is not only the demoralization but almost the transformation of human nature We can generally ascertain How many lives have been lost in war and he's basically going to say that that but the numbers cannot Cannot articulate this effect the tax gatherer lets us know how much money it costs But no registry kept on earth can tell us how much is lost to the world by this insensibility to human suffering Which a war produces in the whole family circle of nations Thank you very much