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The Military and the Economy

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I wish to follow up on my blog post of yesterday, where I wrote about how the vast U.S. military establishment is a major contributing cause of America’s economic problems.

Let’s consider North Korea, a nation in which the military plays a dominant role in society and the economy, just as the military does here in the United States.

Like here in the United States, North Korea’s vast military establishment is seen as a permanent part of North Korean life. The primary justification for North Korea’s enormous standing army is “national security,” the same rationale for America’s enormous standing army.

In fact, just as the military establishment and CIA here in the United States constantly keep Americans on edge in fear of a terrorist attack, the North Korean military and intelligence agencies do the same thing in North Korea. The primary difference is that North Korea officials rely not so much on the threat of terrorism to keep people in a constant state of fear and anxiety but rather on the threat of a U.S. military attack on North Korea.

There are two undeniable facts about North Korea: It is a deeply impoverished country, one where many people are starving to death, and it’s been like that for a very long time.

What would American statists say about those two undeniable facts?

They would say that North Korea’s poor economic conditions have absolutely nothing to do with its vast military establishment or, for that matter, with the rest of North Korea’s socialist economic system. They would endorse pronouncements by North Korean officials that the root cause of North Korea’s economic woes lies in famine. Year after year, decade after decade, famine just happens to hit North Korea, sort of like the flu.

But that’s ridiculous. The cause of North Korea’s economic problems isn’t famine but rather the enormous, all-consuming size of the public (i.e., government) sector in North Korea, including the vast military establishment.

Recall what I wrote yesterday — that the key to a prosperous society lies in the private sector, not the public sector. The private sector is what generates the wealth that causes standards of living to rise. The public sector generates no wealth. Instead, it confiscates the wealth that the private sector is producing and it spends it or redistributes it to others.

The private sector is the productive sector. The public sector is the parasitic sector.

Thus, as I argued yesterday, were the U.S. government to confiscate, say, 50 percent of the wealth produced by the private sector, the general, overall standard of living would be drastically reduced.

Well, guess what North Korea did. The government confiscated it all. It destroyed the private sector. And it spent all the money it confiscated. The government then gave everyone jobs — in the public sector. Everyone in North Korea works for the government. And surprise, surprise: People are starving to death. It’s causation, not coincidence.

What is the solution to North Korea’s economic woes? Libertarians would say that the government should immediately fire 99 percent of its workforce, end all of the government’s welfare-state functions (including its versions of Social Security, Medicare, Medicaid, public schooling, and subsidies), repeal all rules and regulations on economic activity, impose no taxes on income, open the borders to the free movement of goods and people, and dismantle the vast military establishment and intelligence forces, sending the troops, along with most everyone else, into the private sector.

What would American statists say about that? They would be as apoplectic as their statist counterparts in North Korea! They would exclaim, “Don’t listen to those libertarians. They’re too radical. Their proposal would bring massive unemployment overnight. People would be dying in the streets from starvation if Social Security, Medicare, Medicaid, public schooling, and subsidies were suddenly ended. You’re on the right track here in North Korea. Just tax the rich. Print up some paper money and spend it. That will stimulate and jump-start the economy and get things humming again. Your statist system can be made to work after all. Don’t give up.”

There is one reason — and only one reason — that North Koreans remain mired in starvation conditions and why Americans remain mired in economic stagnation — statism. It’s a horrible, destructive philosophy, one that brings nothing but dependency, conflict, fear, and impoverishment to a nation.

There is but one antidote to statism, whether we’re talking about welfare statism, regulatory statism, or military statism. That antidote is libertarianism.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.