Editor’s Note: This is adapted from a speech given at the Mont Pelerin Society Meeting at Fort Worth, Texas, on May 21, 2019. The Mont Pelerin Society is a classical liberal organization that was started in 1947 in Switzerland. The first attendees included free-market economists Friedrich Hayek, Milton Friedman, and George Stigler. Hayek was later an honorary fellow with the Hoover Institution and Friedman and Stigler later became Hoover Institution senior fellows. At the same meeting, Tim Kane, the JP Conte Fellow in Immigration Studies at Hoover, delivered a talk in support of an activist foreign policy, which will be adapted and published in Defining Ideas in the coming weeks.
It is always a propos for us to ask whether it’s a good idea for the U.S. government to intervene militarily in other countries’ affairs. That’s why I chose my topic. It’s particularly appropriate this week, now that Acting Secretary of Defense Patrick Shanahan has talked of sending as many as an additional 120,000 troops to the Middle East if the Iranian government attacks American forces in the Middle East or speeds up nuclear development.
I come at the question of military intervention wearing two hats. I’m an economist and I’m a classical liberal.
I‘ve been an economist for 45 years. The more I’ve learned, the more I’ve seen what a powerful insight economist Ludwig von Mises had over 70 years ago when he pointed out that many government interventions lead to unintended consequences that then lead to further interventions. Take Nixon’s 1973 price controls on oil. Please. They caused us to waste hundreds of millions of dollars in time lining up for gas. That led the U.S. government to dictate the fuel economy of cars. The fuel economy laws caused auto companies to make lighter cars, causing a few extra thousand deaths a year. The gasoline lines also caused people to be more sympathetic to intervening in the Middle East.
In foreign policy also, when government intervenes, it creates problems that it tries to solve by intervening further. Take Iraq. How did we get to the point where the Bush government invaded Iraq? As Ronald Reagan used to say, let’s take a trip down memory lane.
In 1963, the CIA helped a young Iraqi ally who, along with other plotters, overthrew General Adbul Qassim. You may have heard of this young Iraqi ally; his name was Saddam Hussein. Five years later, the CIA backed another coup that made Saddam Hussein deputy to the new military ruler. Then, in 1979, Hussein took his turn as dictator.
Hussein proceeded to wage a long and costly war on Iran. Although many people, correctly, point to this war as evidence of Saddam Hussein’s evil, they rarely mention one highly relevant fact: the Reagan administration supported this invasion with billions of dollars in export credits and with satellite intelligence. Saddam Hussein was evil for initiating and fighting that war. How, then, should we evaluate the U.S. government officials who actively supported him?
But my main purpose is not to question the morality of war, even though that’s worth doing. Rather, it is to point out how one intervention leads to another. The U.S. government supported a man who eventually took over Iraq’s government and who later became, in the eyes of the U.S. government, the enemy. The U.S. government’s interventions of the 1960s led indirectly to its 2003 intervention.
But why did the U.S. government support Saddam Hussein in his war on Iran? Because Iran had become an enemy of the U.S. government after the Ayatollah Khomeini took over and after the Iranians had taken Americans in the U.S. embassy hostage in 1979. One reason many Iranians hated the U.S. government was that the CIA, with Kermit Roosevelt and Norman Schwarzkopf Sr. leading the charge, had helped depose the democratically elected premier, Mohammed Mossadegh, in 1953 and helped reinstall the shah of Iran.
The shah created a secret terrorist police force, SAVAK, that tortured its own citizens and imprisoned political opponents. The CIA helped train SAVAK. On domestic policy, the shah undertook a highly inflationary monetary policy that caused the value of the Iranian currency to plummet. Inflation, torture. For some reason, that upsets people.
Interestingly, In August 2003, when James Woolsey, former director of intelligence for the Clinton administration’s CIA, spoke at the Naval Postgraduate School, where I was a professor, he addressed the 1953 uprising in response to a question from me. During his speech, Woolsey had stated that the war with militant Islam had begun in November 1979 when some Iranians took over the U.S. embassy. I asked him whether he didn’t think it might have begun in 1953, when the CIA helped depose Mossadegh. Laughing, Woolsey replied that, as Winston Churchill had said, when it came to the Middle East, the Americans, after doing many wrong things, would always end up doing the right thing. In other words, Woolsey seemed to admit CIA complicity, but dismissed the idea that this mattered because the U.S., at some point, (he didn’t specify when) had gotten it right.
But Woolsey’s answer evades the issue: did the U.S. government’s 1953 actions have bad unintended consequences? The consequences of the U.S. government’s 1953 intervention—more and more enmeshment in the Middle East—have been bad and cannot be laughingly dismissed.
Or take the unintended consequences of U.S. government intervention in Afghanistan. Although the U.S. government now fiercely opposes the radical Muslims who, until 2001, ran the Afghan government, it helped put them in that position in the first place. Zbigniew Brzezinski was the national security adviser to President Jimmy Carter. Brzezinski bragged (in an interview in Nouvelle Observateur) about the fact that, in 1979, he persuaded Carter to destabilize Afghanistan’s pro-Soviet government so that the Soviets would invade. In December 1979, Brzezinski got his Christmas wish: the Soviets invaded Afghanistan. Then the CIA proceeded to recruit radical Muslims to fight the Soviets. One other person who helped fund these Muslims was named Osama bin Laden.
Incidentally, after Sept. 11, 2001, the Bush administration tried hard but unsuccessfully to find a link between Osama and Saddam. The link is hidden in plain sight: in the 1980s, both were allies of the U.S. government.
Unfortunately, the basic lesson about intervention has not been learned by the people who need to learn it most: the makers of U.S. foreign policy. A large number of them still seem to believe that they can design the world any way they like and that even if there are unintended consequences, these will be less negative than the positive they hope to achieve. In that sense, they have what Mont Pelerin Society founder Friedrich Hayek called the “fatal conceit.” Hayek applied the term to people who believed that governments could plan economies with many good results and few bad ones. But the term applies just as much to the conceit of foreign policy makers.
In his classic 1945 article in the American Economic Review, “The Use of Knowledge in Society,” Friedrich Hayek drove the final intellectual nail in socialism’s coffin by pointing out that, in the absence of a price system, a central government body could not have enough information to plan an economy. The information is decentralized in bits and pieces in millions of minds.
Although Hayek never applied this thinking to foreign policy, it does apply. A government that intervenes in another country’s affairs faces a similar information problem. The small number of government policy makers at the center have even less information about the foreign country than they have about their own country. The problem, then, becomes one of knowing which countries they should intervene in and, beyond that, even if they appear to have good grounds for intervening, how to intervene.
One of our members, economist David Friedman, pointed out that when a fairly liberal government like that of the United States wishes to intervene, it often must choose between two or more illiberal dictators. Writing in 1973, in The Machinery of Freedom, he gave a concrete example:
In practice, an interventionist policy almost inevitably involves alliances with the Shah of Iran, or the present government of China, or Joseph Stalin, or Ferdinand Marcos, or, in the case of the actual policy of the US over the past 45 years, all of the above.
In order for the policy to work, it is necessary to correctly figure out which countries are going to be your enemies and which your allies ten years down the road. If you get it wrong, you find yourself unnecessarily blundering into other people’s wars, spending your blood and treasure in their fights instead of theirs in yours. You may, to take an example not entirely at random, get into one war as a result of trying to defend China from Japan, spend the next thirty years trying to defend Japan (and Korea, and Vietnam, . . .) from China, then finally discover that the Chinese are your natural allies against the Soviet Union.
Former Wall Street Journal reporter Jonathan Kwitny, in his book Endless Enemies, recounted how U.S. government officials made major decisions about foreign policy with little knowledge of the countries for which they were making the decisions, often with disastrous consequences. One of his examples is about how U.S. government officials in 1960 did not understand the Congo. It was a few hundred mini-nations whose people’s main daily challenge was avoiding starvation. But U.S. officials saw everything through the lens of their own Cold War with the Soviets. This lack of “local knowledge” extended to cultural differences. C. Douglas Dillon, President Eisenhower’s Under Secretary of State, claimed that the Congo’s Prime Minister, Patrice Lumumba, was an “irrational, almost psychotic personality.” Dillon’s evidence was that Lumumba “would never look you in the eye.” Kwitny points out that Dillon didn’t seem to know that many Africans believe that avoiding eye contact is deferential. Because of these officials’ negative assessment of Lumumba, President Eisenhower ordered the CIA to have Lumumba murdered. As it turned out, another faction in the Congo murdered Lumumba, but Ike’s opposition was clear enough that the other faction knew Ike’s wishes. It was important for officials to understand Lumumba’s true character and personality. A major decision was made, based in part on incorrect information.
That noted foreign policy analyst, humorist Will Rogers summed up the information problem in foreign policy nicely:
Now you can’t pick up a paper without reading where the Marines have landed to keep some nations from shooting each other, and if necessary we shoot them to keep them from shooting each other. . . . Seven thousand miles is a long way to go to shoot somebody, especially if you are not right sure they need shooting and you are not sure whether you are shooting the right side or not.
Had I more time, I would point out how Woodrow Wilson’s intervention in World War I, caused huge negative unintended consequences, especially for Germany and Russia, and may have led to World War II. I would also point out that the case for the United States getting into World War II is not as strong as many people think and that the United States could have avoided getting attacked at Pearl Harbor by not squeezing the Japanese with restrictions on oil exports to Japan and freezing of Japanese assets in the United States. I would also point out that the famous “lesson of Munich,” which is to intervene early so that someone like Hitler is stopped early, is not an argument against non-intervention. Indeed, what people object to, quite rightly, is Neville Chamberlain’s intervention in Munich with Hitler in which he threw Czechoslovakia under the bus.
Loss to Our Freedom
Now I want to address the question as a classical liberal who cares about freedom.
As Robert Higgs points out in his book Crisis and Leviathan, when the U.S. government entered World Wars I and II, it took on powers and reduced freedom, and when the wars ended, not all the powers end and not all the freedom returns. So not only is there a loss of freedom during the war but also there is a long-term loss of freedom. Thus, for example, before the U.S. entered World War I, the top income tax rate was 15 percent. By 1918, the last year of the war, it had reached 77 percent. By the end of the 1920s, even after Treasury Secretary Andrew Mellon’s cuts in tax rates, the top rate was 24 percent and it never went lower. Similarly, an early form of started in World War I, paving the way for a more complete Prohibition in 1920.
And although the idea of a national police force, with its ominous implications for liberty, was anathema to the Founding Fathers, one outgrowth of World War I was an increase in the size and duties of a national police force called the
For decades, it was run by a power-hungry man, J. Edgar Hoover, whom the Wall Street Journal attacked for running roughshod over people’s civil liberties. Also during World War I, and when they were denationalized after the war, they never, until 1980, had the same freedom of action they had had before.
World War II gave us a top tax rate of 94 percent, and it wasn’t until 1964 that the top rate fell from 91 percent to 70 percent. We also got, which is still with us today. Also the federal government imposed price controls and New York city’s rent controls, imposed as a temporary measure, are still with us today, with all the destruction they have wrought. The early 2000s Bush wars have also brought their share of freedom reduction, especially in the area of civil liberties, with the USA PATRIOT Act and NSA surveillance of American citizens.
Those who advocate liberty must take a serious look at the wars the U.S. government gets into and should cast just as skeptical an eye on those wars as they do on other government interventions.
Classical liberals value freedom more than other people do and we see more clearly than others how governments reduce it. Governments do so also in war. Moreover, we have a coherent story about how much destruction various governments do to the domestic economy. That destruction does not suddenly disappear when government engages in war.
So we should be the natural leaders in the movement against interventionist foreign policy. I’ll end by asking you to join me as such leaders.