Recessions are Dangerous

The problem FDR faced in 1938 was not all that different from that faced by President Obama and the Congress today. The bad economic times stretch on and on, and there is open talk of high unemployment as far as the eye can see. After years of claiming to see “green shoots,” officials are downplaying the chance of substantial economic recovery.

And it’s not just in the U.S.; the problem exist in Europe too, where there is a widespread belief that the European Union, as symbolized by Euro, cannot last. The OECD just predicted a double dip recession pending in the UK.

At the midpoint of Roosevelt’s second term in office, a profound fear gripped the White House that there was no real answer to the depression that seemed to continue on and on. Every respite was followed by yet another plunge in productivity, and clearly unemployment would not improve. Unemployment was 18%, which was higher than two years earlier. (Note that the broadest measure of U.S. employment today is 17+%.)

It is a documented fact that his advisers were the first to draw his attention to the possibility of stoking international problems involving the far East. Japan was the target and a series of embargoes, demands, sanctions, and diplomatic moves reinforced that the point of inspiring a massive movement in the U.S. to push for peace.

Responsible writers at the time drew attention to the plot and speculated about what was really going on. The history of the journalism of this entire period came to be buried in the ash heap of history following the Second World War. But it remains a fact that historians cannot and do not deny: FDR saw advantages in war and dearly wanted the U.S. involved – and that is true regardless of whether you believe that Pearl Harbor constituted his “back door to the war.”

It was hardly the first or last time that the U.S. government pursued war as the ultimate stimulus package. Of course, as Robert Higgs has demonstrated, the war didn’t stimulate anything. It sent the unemployed off to foreign lands to kill and be killed. It gave a pretext to demand massive material sacrifices on the home front. It distracted the public from the obvious failures of the New Deal. The recovery didn’t begin until government spending and regulation were slashed following the war.

Wars have long worked as a salve for serious political problems. Clinton used war in Bosnia, Somalia, and Yugoslavia to bolster a faltering presidency, and Bush followed suit with massive wars on Afghanistan and Iraq that provided a temporary boost. Obama inherited these ongoing conflicts and even increased U.S. involved but both are out of the news and provide no real opportunities for executive heroics.

And so one worries. The U.S. is setting up de facto military bases in Australia while offering a variety of diplomatic warnings against China’s policies with its neighbors. This prompted the head of People’s Liberation Army, Major General Luo Yuan, to proclaim that the U.S. is trying to “encircle” China. He said that “the intent is very clear — this is aimed at China, to contain China.”

This move was followed within days by a ghastly and presumably errant attack on Pakistan that killed 24 Pakistani soldiers. The U.S. apologized and swore it would investigate fully, but everyone knows what that means: what’s past is past. What’s more, this attack occurred only hours after a meeting between Pakistan’s army chief and the head of U.S. operations in Afghanistan at which both sides agreed to more cooperation.

China reacted extremely strongly to this news from Pakistan, with sharp rhetoric and unleashed moral condemnation. “The soil nurturing terrorism will become even more fertile,” said the China state newspaper, and reasonably so, “and the space for terrorism to spread even broader.”

It is a striking observations that most Americans are not willing to contemplate. How do you fight terror when you are daily engaged in bloody activities that can only inspire the creation of more terrorism? Another fundamental question is why this sudden belligerence against China at a time when the U.S. foreign policy priorities are presumed to be focused on the dangers of violent Islamic extremism?

These events together constitute, in the old phrase, “a cloud no bigger than a man’s hand.” Following the end of the Cold War, many Washington warmongers began the search for a new enemy to sustain the imperial overreach of the U.S. government. China was first on the list, but robust trading relationships and amazing growth rates made a military strategy unviable. The U.S. eventually found its enemy and tensions with China abated.

But that was ten years ago, and the terrorist excuse for continuing the American empire indefinitely is wearing thin. The tables have turned to the point that the American people are more scared of TSA agents and custom officials than Islamic radicals. How long will people put up with giving up their rights and liberties under the anti-terrorism pretext?

Most profoundly, how much longer will people stand by and watch the systematic strangling of the American dream – their children unable to find jobs, the college degree ever more expensive and worthless, the political and central banking classes looting private wealth to prop up failed enterprises – all in the name of a “stimulus” that has not and cannot work?

If you were a member of the power elite – hated, protested, and questioned at every turn – war might look increasingly attractive.

There is a gross tragedy with all these events. We could have had peace. We could have had prosperity. It was all within our reach at the end of the Cold War. Instead, our leaders chose intervention and empire building. Chalmers Johnson is right: if there is hope for America, it is with dismantling the empire, not building it, much less trying to provoke another friendly nation into a bloody conflict.