Lew Rockwell on NOW with Bill Moyers

Lew Rockwell appears on NOW with Bill Moyers. Lew discusses Bush, Iraq, and the US economy. Originally broadcast on March 7, 2003.

“We have to educate ourselves, and educate others about our own history, our real history, about what’s actually going on these days, about real economics, and the principles of liberty. And I think that is: if we have any salvation, it’s through that, and certainly in secular terms.”

MOYERS: Welcome to NOW. If you’re thinking about money, bills, the job and your pension and not just the war you belong to the largest party in America, the party of angst. The economy’s sputtering, the DOW is down, oil prices and health costs are soaring. And over eight million people are unemployed.

The other day the Wall Street Journal ran a page one story on a worker who had sent out over 700 resumes without landing a job. What’s clear is that all the talk about tax breaks stimulating the economy is only stimulating fear about deficits. Even the White House now estimates the budget deficit will hit a record $304 billion this year. And that’s without figuring in a war, whose cost the government refuses to reveal.

With me now to talk about all this is Lew Rockwell. Mr. Rockwell is a libertarian free market conservative and President of the Ludwig von Mises Institute. That’s the organization he founded to advocate and promote the philosophy that the solution to our fiscal and social woes begins with smaller government.

Mr. Rockwell has been a congressional aid, a book editor, a magazine editor, and is now the editor of his own web site. Welcome to NOW.

ROCKWELL: Bill, great to be with you.

MOYERS: Business pundits and the government have been saying for 20 months that this is not really a recession, it’s just kind of stumbling a bit. (LAUGHTER) The economy is stumbling a bit. Is it a recession?

ROCKWELL: You know, I remember back when Alfred Kahn, very funny economist, who worked for Jimmy Carter. And he referred to depression and was taken to the woodshed by Carter over this. And when he talked to the reporters afterwards he said, “I’m never gonna say that word again. I’m only gonna say the word banana. But, you know, we’re in a banana.” (LAUGHTER) So…

MOYERS: So are we in a banana?

ROCKWELL: Sure, we’re in a banana.

MOYERS: We’re in a bunch of bananas.

ROCKWELL: We’re in very serious recession. And it’s true…

MOYERS: And what does that mean?

ROCKWELL: Well, it means that the economy is shrinking. If we look at the government’s own statistics, and you have to subtract the increase in government spending, which is bad for the economy, not good.

We’re getting poorer as an economy. That’s what a recession means. For us regular people it means we’re getting poorer. And we’re gonna continue to get poorer. And I think we can all feel it. Even aside from the statistics we all feel the fear for retirements and our savings. We’re worried about our jobs. We see businesses closing.

We’re getting poorer. And if the Bush administration set out to do everything possible to make the recession longer and deeper and maybe turn it into a depression they’d be doing exactly what they’re doing now.

MOYERS: What’s keeping you awake at night?

ROCKWELL: Well, first of all, you mentioned the $304 billion deficit figure, but that’s actually a fib. Because what we always need to pay attention to is how much the national debt is going up by, which is always much more significant than the official deficit. Because the government spends money so-called off budget. And it doesn’t count in the official budget deficit.

So if we look at the actual deficit that’s going on right now it’s over $400 billion. That is the difference between income and outgo for the federal government. And again that’s without the war and the economy is heading downhill. So I think it’s very, very worrisome. Who knows what the deficit could actually be in the next fiscal year, $600 billion, $700 billion.

MOYERS: Yeah, one of my associates just handed me this story from the New York Times. The budget President Bush submitted last month should have come with a warning they’re back, deficits are reemerging as a major problem. Goldman Sachs recently raised its estimate of the federal budget deficit to $375 billion. You’re saying it could be more than that.

ROCKWELL: Oh sure. It could be — it’s already a lot more than that. And these figures are all available at the treasury, although they don’t have a nice chart to make it easy on you. But these figures are all available. It’s already more than $400 billion, the actual deficit.

I mean, just take the example of foreign aid that Bush has promised to Turkey if they come along with him on the war. That money would come out of the exchange stabilization fund as a loan. But that would not count in the official budget deficit even though it’s a debt of the federal government. So it’s again the national — the increase in the national debt and it’s very, very worrisome.

MOYERS: What does this mean to ordinary people? I mean, the words like deficits and recession come and go among economists and newspaper headline writers. But what does it mean to ordinary working people?

ROCKWELL: Well, it means trouble. Because, I mean, sometimes Republicans and the Democrats for that matter like to pretend that there’s some way to fund the government other than the two ways of taxation and inflation. Those are the only two ways they can postpone it through borrowing.

But all those have negative economic effects. And when we have deficits this size first of all it means that everybody’s worried that these are gonna be monetized.

MOYERS: Which means?

ROCKWELL: That the federal reserve will in effect print money to pay them. And that has all kinds of bad effects besides rising prices. It’s what brings on the business cycle for example. That’s what the fed did in the 1990s, the reason that we now are in the longest deepest recession since the Cold War.

MOYERS: You worked in Washington four years as a congressional aid. Do you think everyone in Washington is in denial over the shipwreck that’s coming on this issue of deficits? Or is there a conspiracy to look the other way when the emperor passes with no clothes on?

ROCKWELL: Well, there’s both of that. But I also think the fact that, you know, these are not necessarily bad for the government. It’s bad for the people. But I think the government in these things has a very different interest. Usually in fact the opposite of what the people’s interest is.

So however they can expand government spending, and they switch between the various methods of borrowing, taxing and inflating, depending on the political climate, they are benefited. They in the interest groups who receive the dough.

MOYERS: Is this however, what free market libertarian conservatives have been wanting to put the government so much in debt that it can’t possibly raise more money to support more government spending? I mean, the conservative activist Grover Norquist was here where you’re sitting not long ago. And he says he wants to shrink the government until it can be drowned in the bathtub. And the best way to do that is just to strangle the source of money.

ROCKWELL: You know, I think this is a Republican fib as great a guy as Grover Norquist is. Because of course the government keeps growing. President Bush has expanded the federal budget by 30 percent. I mean, this is the biggest spending administration since Mr. Johnson. And it may be…

MOYERS: You wrote somewhere that Lyndon Johnson and George W. Bush have a lot in common, they like to spend money.

ROCKWELL: Yeah, they do.

If we look at the facts and not the rhetoric, Republicans expand the government much more than Democrats do. If you look at the Reagan administration, the Nixon administration, both Bush administrations, there all big government operation. The smallest government guy in recent times, Jimmy Carter. Even Clinton was a smaller government guy than George Bush.

MOYERS: You advocate low taxes. Do you support Bush’s tax cut?

ROCKWELL: Well, you know, I’m all for tax cuts. I think taxes, I mean, the shorthand for taxes is wealth destruction. So certainly the fewer taxes we have the better. On the other hand the government spending has to be paid for somehow. So if he’s expanding the government at the rate that he is, at a huge rate, to talk about tax cuts it seems to me is, you know, is irresponsible. Probably the most destructive way to fund the federal government is through inflation through the federal reserve.

So actually I hate to say taxes are better than that, but yes taxes are less economically destructive than inflation. So for him to be — I think it’s highly irresponsible. I think it’s a trick to fool people. After all his previous so-`called tax cuts have yet to come into effect. They don’t even come into effect until next year. And my prediction is they won’t come into effect. They’ll be some sort of, you know, war emergency and they won’t be able to bring them into effect.

MOYERS: There is some talk in Washington that the huge expenditures on a war against Iraq would actually boost the economy by circulating all that spending on defense. What about that?

ROCKWELL: Well, I mean, I know that’s the claim. The French economist in the nineteenth century Frederic Bastiat talked about the broken window fallacy. A boy tosses a rock through a baker’s window and everybody’s very sad for the poor baker. And then the guy in the — maybe an economist in the crowd say, oh, don’t worry, you know, this is gonna be great. It’s gonna be money for the glazier, then he’ll buy a new suit and everything, you know, will multiply and we’ll be all better off.

But that, you know, first of all leaving aside property rights and morality questions it ignores what that money would have been spent on otherwise. So to take vast sums out of the private productive economy and spend it on things that are anti-productive, weapons of mass destruction and so forth, that have no economic purpose far from being a help it’s a disaster.

I mean, you can think of the U.S. military as that little boy with the rock.

MOYERS: But didn’t World War II actually pull the country out of the depression? Didn’t the spending on that vast military effort stimulate the economy, give people jobs and enable us to get over the depression in a way that FDR’s New Deal programs never did?

ROCKWELL: Well, sure, the New Deal didn’t work. And really we didn’t get out of the depression until probably 1948 or 1949. What the war did do was help the unemployment statistics by killing a lot of the unemployed. I mean, it did do that.

In fact he, you know, he drafted 20 percent of the workforce at one point or another into the military. So when you had — when you started out with a 12 percent unemployment rate, yes, I mean there was much less unemployment. But the vast expenditures on non-productive goods, the erection of a command to control economy, not that dissimilar from the Soviet economy. Price and wage controls. No, that was not economically good. It was economically bad.

MOYERS: What do you think this war will do to the economy?

ROCKWELL: Well, it’s very bad for the economy. It’s a vast transfer of wealth from the productive economy into the government sector into what after all is a socialist enterprise, the U.S. military. And therefore economically disastrous.

So you have all kinds of money taken out of productive private savings and investment to build bombs and missiles that it’s economically dangerous. And then it of course like every single war in our history it empowers the government to suppress dissent, to abolish civil liberties, to grow. That’s one of the reasons governments love a war. Because it does enable them to grow and to brand anybody who disagrees with them as unpatriotic.

MOYERS: But the fact that it’s a socialist institution, the military, doesn’t make it a disposable institution. I mean, you wouldn’t want to live in a country that didn’t have a strong military to defend you would you?

ROCKWELL: No. Of course you have to have soldiers, and you have to — you want defense absolutely. Whether this particular arrangement in this vast centralized, you know, the biggest — of course the biggest military empire in the history of the world, the U.S. I mean, far surpassing, I mean, our budget is bigger than the next 27 countries.

MOYERS: Do you feel safer because of that?

ROCKWELL: No, I don’t feel safe at all. I mean, none of it is spent on defense, for example. It’s all spent on offense. And there’s very little defense. It’s all, you know, involved in running other people’s lives, running other people’s countries.

MOYERS: You opposed the war in Vietnam.

ROCKWELL: Yes.

MOYERS: And you oppose this war.

ROCKWELL: Well, I oppose any war that’s not absolutely necessary, and absolutely moral and defensive. So that, for example, killing — we don’t know how many — three, four thousand people in Afghanistan to go after the Taliban, who are after all, the descendents of the exact same guys that Ronald Reagan was funding during as Mujaheddin, when they went up against the Soviet Union, yeah. No, I don’t think that’s good.

And I don’t think there’s, you know, any proof that they had anything to do with 9/11. I think it was just striking out. And I think it’s very unfortunate. I think it’s just killing.

MOYERS: This morning I heard a chilling report on National Public Radio about how Saddam Hussein tortures people. I mean, he’s clearly a demonic man himself. Couldn’t you concede that Bush really does believe he’s on a moral mission to rid the world of a monster?

ROCKWELL: I’m sure Saddam Hussein is not a good guy, after all he’s a politician. But it is the most liberal regime in the Arab world in many senses. You can get a drink in Baghdad. Unlike in Saudi Arabia. Women don’t have to wear any particular kind of clothing. Christianity is tolerated.

There are high officials of the Iraqi government who are Christians, unlike in any Arab government that we’re pals with. So you can — there was a very interesting story on Morning Edition the other day about a gun…

MOYERS: NPR, right?

ROCKWELL: Yeah, a gun shop in Baghdad. And how there was a run on everybody buying guns. And the fact that you can buy a gun in downtown Baghdad, which of course you can’t do in Manhattan is, you know, also an unusual peek into this regime. I mean, we only know what the government is telling us.

MOYERS: But doesn’t Saddam Hussein who is obviously himself a megalomaniac, doesn’t a Saddam Hussein armed with biological and chemical weapons potentially nuclear weapons, doesn’t that scare the hell out of you?

ROCKWELL: Yeah. I mean, I don’t like the fact that George Bush has all those things too. And of course we know there’s only one government in the world that’s ever dropped atomic bombs on civilians and it’s not Iraq. So, you know, there are a lot of governments that are run by bad guys. I mean, look at the people who are in Rwanda and killed millions of people by machete. I mean, hard to conceive of anything much worse than that.

So, yes, I don’t like the idea of any government like this having those kinds of weapons. But, you know, is it really the job of the U.S. government to run the world? I mean, a lot of my…

MOYERS: Well, what would a libertarian actually say about what the President should do about Saddam Hussein?

ROCKWELL: I think read a book. Think about helping the American people. Think about taking the burden off us. Think about what he could do to lessen this recession that Mr. Greenspan has brought on us. That is by cutting government, not expanding government. Cutting the military, cutting the welfare budget. Cutting the regulations. He’s of course vastly increased regulations on business.

MOYERS: But, do you really believe there’s nothing the government can do to improve our lot but to get out of the way?

ROCKWELL: Yeah, that’s about it. Certainly, that’s true in the economy. I mean, now that we’re in this recession that’s all it could do. And certainly, that’s what Mr. Bush ought to be doing. That is, cutting spending, cutting taxes, cutting regulations, get the heck out of the way.

MOYERS: But what about such things as unemployment benefits, all those eight million people, that guy who wrote the 700 letters and can’t find a job? I mean, don’t we have some — doesn’t the moral imperative in all of us, collectively, want to try to help people like that while they’re in distress?

ROCKWELL: You know, this illustrates the basic fallacy at the heart of the welfare state. That it seeks to — that it subsidizes what it seeks to prevent, or pretends to cure. So, it subsidizes unemployment.

I remember when Mr. Bush, Sr., when he was running for re-election, and there was concerns about the unemployment rate, and so he passed a vast expansion of unemployment benefits, and gee, just amazingly enough, the unemployment rate went way up when people could get more money for a longer period of time staying unemployed.

So, if the government is subsidizing unemployment, no I do not think that’s a good thing. I think it’s very socially destructive.

MOYERS: Well, I obviously, as you know, disagree with so much of what you’re saying, although I learn from people with whom I disagree more than I learn from people with whom I agree. I just cannot imagine what kind of society it would be if it is every man for himself.

ROCKWELL: Well, but it’s not. I mean, that’s, you know, that’s the what the market brings about, social cooperation. We work together in company.

MOYERS: Didn’t bring it to the 30s…

ROCKWELL: The 30s was of course a terrible time, brought about as a result of Federal Reserve inflations during the 1920’s, and then the rotten Hoover Administration, which actually was the first part of the New Deal. So, we had again, exactly like in the 90s, we had a boom during the 20’s, artificially generated by the Federal Reserve.

And yes, it caused immense human suffering. And again, the Roosevelt Administration, and the Hoover Administration, did everything wrong. It’s almost — it was not their intention — but it was almost as if they set out to lengthen and prolong the Depression. And again, that we have Herbert Hoover Bush doing exactly the same thing now.

MOYERS: You are consistently against the warfare state and the welfare state, right?

ROCKWELL: Yes, sir.

MOYERS: But in this discussion, you’ve been so critical of the Republicans that… am I to assume you’re going to enroll as a Democrat next year?

ROCKWELL: Well, you know, there’s a professor at Harvard, Jeffrey Frankel, who’s…

MOYERS: Yeah, I know Jeffrey.

ROCKWELL: …written a paper arguing that the two parties have switched positions ideologically, and that the Republican Party is, despite rhetoric, is today the party of big government, and the Democrats are the party of lesser government. It’s very interesting.

I was raised a Republican. I suppose it bothers me more because they use some of the rhetoric that I believe in to cover up the opposite of what I believe in. So, it’s, you know, we’ll have to see. I mean, it’s possible. If the Democrats are smart, they would indeed come out on a more pro-peace, smaller government side, and that of course is the history of the Democratic Party in the 19th century. It was the good party.

And the Republican Party, the party of Lincoln was a party of militarism, of aggressive war, of inflation, of big business, big government partnership, of suppression of civil liberties and all the other things we’re all too familiar with.

MOYERS: There are people who would disagree with you that in the 1950’s, the Democratic Party, which upheld slavery and segregation in the South was the good party.

ROCKWELL: Well, I think, you know, I’m not saying that any political party is all good. Obviously, there were bad things about the Democrats. And I wish George Washington hadn’t owned slaves either. We’ve had this unfortunate business in our country for a very long time.

MOYERS: But with all due respect, you didn’t answer my question. Are you going to enroll as a Democrat?

ROCKWELL: Well, no, because I must say I’m non-partisan. I don’t like any of the parties. So, I also don’t think politics, electoral politics is our salvation. I don’t.

MOYERS: Well, where do people go, who want to be — who are morally and politically agents?

ROCKWELL: Well, I think, you know, if people want to be in politics, you know, that’s their own business. It’s just for me, it’s not the right thing, and I think that we have to educate ourselves, and educate others about our own history, our real history, about what’s actually going on these days, about real economics, and the principles of liberty. And I think that is: if we have any salvation, it’s through that, and certainly in secular terms.

MOYERS: If people want to know more about your ideas and your work, what can they do?

ROCKWELL: Well, they can look at the Mises Institute web site. And that’s M-I-S-E-S.org. And I have my own daily news site, too. It’s lewrockwell.com. L-E-W, Rockwell.com.

MOYERS: Thank you very much, Lew Rockwell.

ROCKWELL: Oh, pleasure.