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The Economic Burden of the Cold War

May 31, 2002

The Fifty-Year Wound: The True Price of America’s Cold War Victory. By Derek Leebaert. (Little, Brown & Company, 2002, 750 pages) $29.95.

The upshot of the 1960s was more than just LSD, Haight-Ashbury, and the Kennedys in the White House. This era was also largely munificent in bestowing upon Americans the greatest burdens of Cold War vice.

The Kennedy White House became headquarters for a young and dashing new president who challenged his fellow citizens to "pay any price, bear any burden, meet any hardship, support any friend, oppose any foe," according to author Derek Leebaert in his new and massive Cold War narrative, The Fifty-Year Wound: The True Price of America’s Cold War Victory.

Leebaert, who seems neither Left nor Right, but perhaps neoconservative sympathetic, has written a non-authoritative and revisionist account of the United States and its Cold War "glory." Though not an accomplished historian, Leebaert does provide the reader with first-rate anecdotal storytelling combined with a fact-reinforced chronology spelling out just how far state worship went in bringing forth a disordered and warmongering society.

In chronicling the Kennedy era, the most noteworthy of the Cold War years, there is an abundance of out-and-out blunders from which to choose. Most remarkable is John Kennedy’s candid mission to fund a gigantic global crusade against imagined enemies in a more or less universal civil war. After all, Kennedy came into office extolling the virtues of Cold War expenditures while railing against his predecessor Eisenhower’s lack of commitment to military might and Cold War spending.  

He championed his cause of "closing the missile gap" with the U.S.’s Soviet counterparts before he was even elected to office. Within months of inauguration, as Leebaert points out, Kennedy’s assorted intimates authorized $808 million for military construction and $1 billion in special Lockeed monies to confer graciousness upon hometown elected representatives. Defense spending escalated as a percentage of GDP under Kennedy that had gone unequaled in Eisenhower’s days.

In addition, the immediacy of defense manpower called for the bloat of the Defense Department and the military’s Joint Staff. The anecdotal--though telltale--numbers rattled off by Leebaert are surely an indication of good times ahead for Kennedy & Company.

Leebaert is priceless in noting events such as Kennedy’s first State of the Union address, which he refers to as "a wartime speech without a war." He correctly acknowledges that perhaps there was no one better than John Kennedy "for exalting the glamour and authority of the State." War or no war, hot or cold, John Kennedy was the epitome of a political generation that was entrenched within a global superpower mentality in which any and all crises could be contrived as a basis for the furtherance of the State and its assorted powers.

The Kennedy years gave roost to an allegedly healthy economy that was dabbling in Keynesian blasphemy. A premeditated trade surplus with Japan was continuing, while budget overruns were the norm. And while Kennedy was proclaiming that freedom meant putting your trust in his assembled little group of elites headed up by Secretary of Defense Robert McNamara, he was also claiming that good fiscal policy meant letting congressional militarists spend the country into the red for purposes of stimulating faith in U.S. currency, and faith in the economy in general.

Meanwhile, Keynesian figureheads complained of a balance of payments problem in Western Europe due to U.S. expenditures overseas on foreign aid and defense welfare. Western Europe was becoming less and less faithful in terms of accommodating the diminishing value of the dollar. And it was never a viable option, of course, that the foreign aid flooding Western Europe could end up on the cutting room floor, to be put back into Americans’ pockets. And in more priceless banter, our author contemplates that "Western Europeans, for their part, hoped that the missiles and B-52s would just fly over their heads. So why should they raise expensive armies?" Indeed, another Cold War reality.

In the interim, it was Robert McNamara who saddled us with the Mutual Assured Destruction (MAD) principle, one that ensured the maintenance of a sizable and deadly nuclear arsenal not subject to cost-benefit assessment. In other words, plug the idea that the population could best be protected by leaving it vulnerable so long as the other side faced immediate destruction upon one’s own destruction. Therefore, he who maims first gets to die last. What a deal.

Leebaret even points out that Cold War stealth operations, namely those of the CIA, soon began to avoid GAO budgets, as monies were swept into covert operations, of course, in the name of freedom. Covert CIA operations and espionage, after all, carried with them the burden of defending freedom for all Americans. Mr. Leebaert hints that the CIA became a huge plodding monster during the Kennedy days; that Brothers John and Robert held a special zeal for counterintelligence, spy games, and especially, anything James Bond. By early 1961, paramilitary plans, fostered via the advent of the Cuban crises, meant "the budget for the Cuba venture jumped to $46 million."

The engineering and science technology sectors were two of the bigger benefactors of a Cold War gone mad. In the name of advancing defense capabilities, private-sector advances were stifled to pave way for all innovations to benefit the war machine first and foremost. Leebaert points out:

Innovation for the moment may have been accelerated by public money, as the budget of the National Science Foundation, for example, went from $100,000 in 1951 to $100 million ten years later, with federal R & D spending going from $1.1 billion in 1950 to twelve times that in 1963.  This spigot would not have been even halfway so loose without the Cold War.

In a move away from useful technology, Leebaert explains that a new American enterprise, of sorts, had become big bucks on Wall Street, thanks to Cold War hysterics: the shelter business. "Wall Street," the author says, "expected shelters to be a $20 billion business in 1962, should that year come to pass." The government funded this boom sector by building fallout shelters for government offices from the Pentagon to the National Gallery of Art. 

Public schools and hospitals were turned into shelters, as were public buildings throughout the land. Outside of government monies appropriated for "shelter management studies" and "post-attack research," there were private needs as well. Homeowners and businesses flocked to shelter-building companies for a little psychological comfort from Khrushchev’s depicted pretense for excesses. The race was on to prepare for the post-apocalyptic domino effects thought to come.

Had John Kennedy not met his fate in Dallas, he would have been poised for certain re-election, and as the author surmises, he probably would have engulfed us deeper into the Vietnam quagmire, for he was incalculably threatened by China. In fact, Leebaert states:

By the time of Kennedy’s death, around one million U.S. servicemen were stationed at more than two hundred foreign bases. The Cold War was by then so huge in its global range and its apparently even higher stakes that it operated more on dangerous generalizations and less in pursuit of specific objectives.

McNamara, meanwhile, for his role in putting America on the brink of war in the cold sense and committing us to a prolonged war in the hot sense, later moved on to the World Bank, then received the Presidential Medal of Freedom (with Distinction), the Albert Einstein Peace Price, and the Franklin D. Roosevelt Freedom from Want Medal. In one last precious blurb from Mr. Leebaert, he quotes management guru Tom Peters as stating, "My entire life is an effort to exorcise the demon of Robert McNamara from society."

The Kennedy years, in particular, created a great new global economic burden, and set the stage for the LBJ venture into the Vietnam graveyard. As Leebaert puts it, "The country got a veneer of Theodore Roosevelt: vibrant, long-term possibility running down into a set of exhausting divisive crises. It was becoming a strenuous life indeed for Americans."  And Derek Leebaert does a penetrating job of telling the story of the Cold War and its sham crises.Karen De Coster


Karen De Coster, CPA and freelance writer, is a former Big Nine auditor and a Business Consultant in the Midwest. Send her MAIL and see her Mises.org Articles Archive.

 


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