The growth of government power in American history has been by creating emergencies that then necessitate a ratcheting up of centralized power and war. Crisis & Leviathan by Higgs is a prime resource for this topic.What do we mean by the size of government? There’s no one way to measure it. Economists make the strange and wrong assumption that government must grow when the economy grows. Government is too multidimensional to measure. In the US government is also on different levels, making rules and imposing taxes. Eighty thousand such entities have this power to tax.The more complex social life becomes, the less possible it is that government officials could have the knowledge required to coordinate human action. That is hubris. It is the fatal conceit. Government growth is not taking place because of market externalities or inefficiencies. The dominant ideology does prop up whatever the government does, but it’s not the whole story. The connection of government growth to crisis is realistic and observable.Lecture 1 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

Crisis and Liberty: The Expansion of Government Power in American History

1. Crisis and Liberty

The role of ideology in the growth of government is required as intellectual cover for what is done regardless of the government form (e.g. monarchy or socialism). For example, Arthur Schlesinger, Jr. played such an intellectual role.People want to promote what they believe their interests are. Collective action has added to the growth of government. The benefits of participating in collective action are not always clear.What is ideology? Ideology is a more or less comprehensive belief system about social relations. It is not religion, nor political philosophy, nor just social theory. Ideology has at least four dimensions: Cognitive, Affective, Programmatic, and Solidarity.Ideological opponents in the last two hundred years have come from the Federalists political party favoring more centralization versus Jeffersonians and a later Republican party favoring decentralization, and laissez-faire economics. These interest groups have continued.Today, it is progressivism that spawns government central planning – statism. Both major parties are statist parties now engaged in plundering citizens.Lecture 2 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

2. Crisis and Liberty

State and local levels of government were more burdensome to people in the early stages of our country than federal levels. The national government mainly received revenue through tariffs and land sales.The Constitution forbade individuals states from issuing paper money (Bills of Credit). Paper money is a vehicle of taxation. But many states went into the banking business, anyway. It was early crony capitalism. Plus, several states got into infrastructure business, like the Erie Canal and railroads, at public expense. Corruption is always part of government. Americans have always been land speculators. Taxpayers were saddled with debt. These boondoggles were an important way that government distorted the markets. Government was bigger than mere tax records made them look.Land grants were used as money. Land was a big deal in the nineteenth century. The country developed differently because of subsidies than it would have by markets alone. The Civil War made a deep difference in the expansion of government and the development of big business. No state could secede. The states saw that they were mere administrative parts of the central government. Federalism was dead, but each state used its own regulatory power to burden companies. States sought central control and regulations to simplify business law. Anti-Trust Law and the Interstate Commerce Clause created some of the first federal agencies.Lecture 3 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

3. Crisis and Liberty

Government was different in the 19th Century, but not as starkly different as some people believe. The 20th Century was the Progressive Era. Foreign policy went from staying out of European quarrels to policing the world whether the world desired policing or not. Unchecked government intervention became the rule.Teddy Roosevelt and Woodrow Wilson were the mothers of all pernicious 20th Century policy. Roosevelt was a psychopathic proto-fascist. Wilson was more a humorless Lenin-like person. Wilson plunged the nation into unnecessary WWI, busting up four empires, and guaranteeing that more war would happen.  FDR was a full-fledged Wilsonian who prolonged the depression and WWII. The pygmy Truman had a domestically corrupt administration and a failed foreign policy. Eisenhower delivered a quieter time. The modern welfare state was put in place in the 60s and 70s.Why did we move from limited government to galloping statism? Are we really better off having government experts running things? Men like John Dewey helped push us into collectivism. Great uncertainty for business was created by new federal agencies. Unfounded fears about running out of simple resources like timber served to expand governmental control. Conservationists have never understood the concept of value versus economic behavior.Lecture 4 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

4. Crisis and Liberty

WWI was the culmination of progressivism. It was possible to impose prohibition. The creation of the Fed and the passage of an income tax allowed warfare socialism to rage and liberties to be lost.Government reallocated resources by taking money from citizens and then purchasing war goods. Inflation was a stealth tax that fooled people. Most thought inflation was the fault of markets rather than governments. Patriotic hoopla was needed to persuade young men to be cannon fodder. Draft riots did not happen because many simply did not register for the draft and the Army had learned from earlier resistance to take themselves out of the visible draft activity. Recruiters made the system look like community defense efforts. The Brits invented war propaganda to induce Americans to come into the war.Industry was mainly guided by a War Industries Board, using businessmen from various sectors as public servants. They tried to substitute their judgements for what should have been reliance upon the price system. The mess being made would have been obvious had the war continued much longer. Central planners can do something but they can’t know the opportunity lost costs. They can’t satisfy economic rationality. They can’t know how much they wasted.Lecture 5 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

5. Crisis and Liberty

The New Deal was not as widely popular as many stories about FDR might suggest. The Depression began about midway through 1929. Prices fell for four years. Unemployment was as high as it had ever been, and for a long time. Construction work disappeared.Many Americans thought that it was wrong to go on the government dole. But most became willing to change both this moral view and their character. Many were desperate by the time FDR took office and the New Deal was put into practice. They felt the market machine was busted and only the government could now provide for them.The New Deal is not a logical, coherent thing. Many of the programs warred with each other. FDR’s braintruster was a wannabe communist. He wanted central planning of everything. Many strange bedfellows appeared. Bernard Baruch convinced many that WWI had been a successful government project and that the New Deal was another fine project. He felt that raising pricing – or reflation – or restricting supply - was a solution. That policy was guaranteed to fail.Much government activity, that had only been local, was now centralized at the Federal level like welfare and relief. Many farmers became debtors and required mortgage relief. Businessmen clamored for bailouts. The National Industrial Recovery Act imposed 750 codes binding businesses to cut competition. The NIRA was declared unconstitutional in 1935.The vitality of markets had been killed just like industry under Mussolini.A great number of the New Deal programs had to do with finance. Gold was nationalized in 1933. Bank holidays were declared. Other programs had to do with labor and labor unions.The New Deal scared the investor class so badly that net investment was negative for a decade.Lecture 6 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

6. Crisis and Liberty

WWII was the most terrible, most deadly war of all mankind. As early as 1919 WWII was seen as inevitable because of the destructive details of the Versailles Treaty. In 1939, when WWII began, less than ten percent of Americans wanted anything to do with another war.Roosevelt’s objective was simply to retain power. He was no ideologue. The 1940 easy German invasion of France made the pro-war argument stronger. By the 1941 attack by the Japanese on Pearl Harbor, the US had greatly beefed up its military. The draft was begun in 1940. Local civilian boards did the dirty work. Draft evasion carried a fine of $10,000. Ten million men were drafted. Many voluntarily joined to avoid infantry duty.Through War Powers Acts, the President acquired dictatorial-like powers. Price controls of ordinary goods and services were enacted with the usual consequences of scarcity and bad quality. Prices were not the result of market rationality. Ration booklets were issued to every man, woman, and child. Counterfeiting boomed. Key commodities – steel, copper and aluminum – were controlled. 300,000 airplanes were manufactured in five years.Private investment almost disappeared because of the high risk of making contracts with government. Government invested about one hundred billion dollars, including bases and training grounds, weapons and ammunition. This war boom is a gigantic fiction. Government output should be subtracted from GDP.The tax system that had been created for the government to fund the war turned out to be a wonderful way to fund a welfare state once the fighting was over. Marginal tax rates reached 72%.WWII gave us the legacy of people thinking that federal governments accomplish amazing things. Confidence in government was never higher.Lecture 7 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

7. Crisis and Liberty

The post-WWII operation of the national security state has been a major avenue for the expansion of government. A tremendous military-industrial-Congressional complex built up during the war. Some 40% of GDP was devoted to military purposes. The US in 1945 was the world’s military superpower.Rather than dismantle those forces, the US created a policy of containment of Stalin’s Soviet Union that required those forces in a cold war against what was seen to be an evil empire, even though Russia had been allied with us. Central and Eastern Europe was under Soviet control. Truman took readily to this cold war, but the paying Americans did not. Red Army threats were built up. Tensions rose. The Soviets closed off land access to Berlin in 1948 and the US decided to airlift cargo into Berliners. War was averted.Congress reorganized the military, creating the Department of Defense, the Army, the Navy, and a new Air Force. The same Act created the National Security Council with its own staff. The Central Intelligence Agency also emerged.Outbreak of war in Korea promoted a huge buildup of military that was then used to justify our permanent Cold War. The Korean action ended in a stalemate that continues today. Like Russia, North Korea made atomic bombs. For fifty-five years these situations continue to smolder.  Today’s Cold War is the War on Terrorism - a permanent war that can never be won. Two other events were part of the Cold War that made Americans extremely angry: Vietnam and the 1980 hostage taking in Tehran.Lecture 8 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

8. Crisis and Liberty

The growth of government since WWII was along non-military lines. These years were crisis years from about 1963 to 1974. Turmoil, conflict and uncertainty were commonplace. Assassinations were numerous. Johnson and Nixon were presidents. The welfare state expanded.The Civil Rights movement stirred sit-ins, protests, and challenges. Voter registration of blacks surged. This political action was new. Anti-Vietnam protests were part of most campuses especially after 1968 and in the Democratic Party. Hippies and anti-establishment long-haired young people dropped out of old respectability.Other groups like environmentalism and feminism spilled over from the protest groups. The War on Poverty was a Johnson welfare policy. The Food Stamp program grew quickly. Head Start was tried in the schools. Medicare was created, bulging seven times beyond projections, even though socialized medicine had been rejected all along. Demand was unlimited and doctors gamed the system. The program is a gigantic boondoggle.Consumer protection laws like Truth in Lending and Product Safety Act had the effect of reducing innovation and raising costs. Environmental Impact Statements stopped projects across the country. Anti-pollution laws slowed productivity way down.Nixon understood that wage and price controls were futile, but he enacted them in 1971, with a total freeze for three months. He closed the gold window, too. Gas lines cropped up in 1973 because of price controls and an OPEC embargo. Lines and problems disappeared as soon as those artificial controls were removed.Medicaid and social security were two programs that became huge, unsustainable programs after 1980. Defense spending was finally overshadowed by welfare transfer payments. A new addition, prescription drugs, will soon take up 90% of the federal budget.Lecture 9 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

9. Crisis and Liberty

The attack on September 11, 2001, showed us what we can expect from any fresh crisis. Military forces were assigned to domestic police activities. Police state surveillance was expanded. But, wiping out terrorism cannot be done. The ultimate result is Big Brother.The USA Patriot Act – more than 400 pages that Congress never read – creates new categories of domestic terrorists. Many ordinary activities are criminalized. Asset forfeiture – theft of property – is liberally encouraged.The US response was to do what they know how to do – drop bombs. Bombs fell on Afghanistan, although the terrorists were mainly from Saudi Arabia. Approval of government had been low, but when the towers fell, people demanded that the government do something. They wanted to feel protected. By 2002, the 500 page Homeland Security Act was passed. It mainly reorganizes agencies, which gives them more budget clout as a big unit. It had 170,000 employees already in 2004.Two distinct forces in the growth of government are structural, like urbanization, and ideological, like socialism imported from Germany.  Lecture 10 of 10 from Robert Higgs&#39; Crisis and Liberty: The Expansion of Government Power in American History.

10. Crisis and Liberty

Robert Higgs presents a series of ten formal lectures on topics of American history that examine the role of crisis, emergency management, and the military in the emergence of the Leviathan state and diminution of liberty.Download the complete audio of this event (ZIP) here.

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Crisis and Liberty: The Expansion of Government Power in Ame...

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