Robert Higgs on War, Taxes and Economic Crises
By David J. Theroux • Friday February 27, 2009 12:52 PM PDT • 9 Comments
With Barack Obama’s delusional belief in massive expansions in government spending and power as a means to overcome the economic recession and create human welfare, Senior Fellow Robert Higgs‘s discussion on war, taxes and economic crises could not be more timely and instructive. Dr. Higgs is the author of the award-winning Institute book Depression, War, and Cold War, and his presentation was made before a January conference of the Mises Circle in Houston.
Tags: American History, Bailouts, Books, Budget and Tax Policy, Business, Constitution, Economics, Employment, Fascism, Federal Reserve, Great Depression, Money and Banking, Nationalization, Politics, Presidential Power, Regulation, Socialism, Taxation, The State, Video, War 
Professor Higgs,
I’m a graduate student at Cal State University associated with the National Security Studies program. Currently, I’m looking into PhD options now, and Economics is one area of focus up for consideration. I wanted to share with you that I really enjoyed your presentation this evening. I will be visiting the Independent Institute during my next business trip into Oakland, so I can swing in and purchase your new book. As you mentioned, I am interested in where I could find the “...Larry Neills – War Finance” source material? Possibly I have misspelled his name incorrectly, but I was not able to locate his work via the internet. Can you help point me a direction?
Sean Fischer
Sean Fischer | Feb 27, 2009 | Reply
Sean,
You are looking for Larry Neal, professor of monetary and finance history of the University of Illinois at Champaign-Urbana. He is such a great professor, with very deep understanding of the subject.
Best wishes,
Ronald | Mar 1, 2009 | Reply
http://books.google.com/books?id=oRFkAAAAIAAJ&dq=intitle:war+intitle:finance&lr=lang_en&as_brr=0&as_pt=ALLTYPES&pgis=1
Larry Neal War Finance Google Books link.
T L Holaday | Mar 1, 2009 | Reply
Hello Sean, I replied to your question as a separate comment because I did not see the “reply” button until too late. On the off chance that you will be notified of replies, here’s the link to WorldCat for Larry Neal’s War Finance:
http://www.worldcat.org/oclc/30700905&tab=holdings?loc=10024#tabs
T L Holaday | Mar 1, 2009 | Reply
I first heard Professor Higgs on EconTalk, and since then I have following his arguments very closely, because I think we share most of the same priors, but I am still not completely unpersuaded by his arguments. Professor Higgs says Keynesian theory predicts that we should have lapsed back into a depression after government war spending subsided at the end of the war. It seems to me that the argument cuts in the opposite direction. Those of us who believe the microeconomy to be key have the burden of proof. We must show that something OTHER THAN government spending is responsible for the economic recovery. If military spending did not lead to recovery, then how do you explain the recovery?
John | Mar 1, 2009 | Reply
John,
If military spending did not lead to recovery, then how do you explain the recovery?
Robert Higgs has already explained the answer to this question in his book Depression, War, and Cold War, and he has a short chapter about the topic in Neither Liberty nor Safety. If I understand him correctly, part of the reason has to do with with the end of the war, which significantly reduced “regime uncertainty” and increased private investor confidence.
Sukrit | Mar 1, 2009 | Reply
A short Robert Higgs essay on when and why the Great Depression ended: “The Great Escape from the Great Depression.”
Eric Hanneken | Mar 2, 2009 | Reply
How we got out of the Depression:
I have listened to economists for years. The one thing everyone seems to agree on is that WWII bailed the U.S. out of the depression. I disagree.
I was born early in 1941. My Dad was on board an LST in both the Pacific and at Normandy. His salary was sent home. My mother made our clothes, had a Victory Garden, and shopped for food using ration stamps. Rosie the Riveter was making planes and putting the money in the bank. We couldn’t buy a car because GM was making tanks. We saved and saved and saved. At the end of the war we were very happy. The world was destroyed but the U.S. wasn’t. We were secure because there was no one left to fight. We bought American because we would never buy from the Japanese (even if it didn’t glow in the dark), England had nothing we wanted, and Germany was destroyed. The point is: our SAVINGS and POWER made us SECURE. We spent money like crazy. I don’t understand how the façade of giant short-term government spending is going to create an increase in individual spending. Once “the bridge” has been built, those folks are unemployed again and we owe a ton of money for years to come on the bonds we sold to pay for it. Didn’t I just live through this with Japan?
I just don’t understand why we can’t eliminate corporate taxes. They don’t put the money in the bank. They spend it! If mortgages are a problem, give everyone a twelve or 24-month mortgage holiday and add it to the mortgage without interest. Everybody eventually gets paid. We become more secure and start to spend money. We have 8,000 banks. We once had 1,600 S&Ls—we now have zero. We still managed. Do we really need Citi and B of A? I don’t understand.
Jack Kenny | Mar 2, 2009 | Reply
Oue economy is industrial but is made follow mercantile rules which destroys our economy. All consumer dolars should be spent not saved or taxed. If so investment dollars wll come out of the woodwork. If the government wants money it can just print it. Banks do not need redidual money but shold be able to lend credit unlimited backed by the goods and services it creates/ The govrrnment shoould not give money to corporations, banks or investment instutions but only to people.
Charkes H. Seitz | Mar 4, 2009 | Reply