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The Real Meaning of the 1914 Christmas Truce – Article by Ron Paul

The Real Meaning of the 1914 Christmas Truce – Article by Ron Paul

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The New Renaissance Hat
Ron Paul
December 28, 2014
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One hundred years ago last week, on Christmas Eve, 1914, German and British soldiers emerged from the horrors of World War One trench warfare to greet each other, exchange food and gifts, and to wish each other a Merry Christmas. What we remember now as the “Christmas Truce” began with soldiers singing Christmas carols together from in the trenches. Eventually the two sides climbed out of the trenches and met in person. In the course of this two-day truce, which lasted until December 26, 1914, the two sides also exchanged prisoners, buried their dead, and even played soccer with each other.
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How amazing to think that the celebration of the birth of the Prince of Peace could bring a brief pause in one of the most destructive wars in history. How sad that it was not to last.

The Christmas Truce showed that given the choice, people do not want to be out fighting and killing each other. It is incredibly damaging to most participants in war to face the task of killing their fellow man. That is one reason we see today an epidemic of PTSD and suicides among US soldiers sent overseas on multiple deployments.

The Christmas Truce in 1914 was joyous for the soldiers, but it was dangerous for the political leadership on both sides. Such fraternization with the “enemy” could not be tolerated by the war-makers. Never again was the Christmas Truce repeated on such a scale, as the governments of both sides explicitly prohibited any repeat of such a meeting. Those who had been greeting each other had to go back to killing each other on orders from those well out of harm’s way.

As much as national governments would like to stamp out such humanization of the “enemy,” it is still the case today that soldiers on the ground will meet and share thoughts with those they are meant to be killing. Earlier this month, soldiers from opposing sides of the Ukraine civil war met in eastern Ukraine to facilitate the transfer of supplies and the rotation of troops. They shook hands and wished that the war would be over. One army battalion commander was quoted as saying at the meeting, “I think it’s a war between brothers that nobody wants. The top brass should sort things out. And us? We are soldiers, we do what we’re told.”

I am sure these same sentiments exist in many of the ongoing conflicts that are pushed by the governments involved – and in many cases by third-party governments seeking to benefit from the conflict.

The encouraging message we should take from the Christmas Truce of 100 years ago is that given the opportunity, most humans do not wish to kill each other. As Nazi leader Hermann Goering said during the Nuremberg war crimes trials, “naturally, the common people don’t want war; neither in Russia nor in England nor in America, nor for that matter in Germany.” But, as he added, “the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”

This is where our efforts must be focused. To oppose all war propaganda perpetrated by governments against the will of the people.

Ron Paul, MD, is a former three-time Republican candidate for U. S. President and Congressman from Texas.

This article is reprinted with permission from the Ron Paul Institute for Peace and Prosperity.

How Wilson and the Fed Extended the Great War – Article by Brendan Brown

How Wilson and the Fed Extended the Great War – Article by Brendan Brown

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The New Renaissance Hat
Brendan Brown
November 9, 2014
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As the world reflects on the incomprehensible horror of the Great War which erupted 100 years ago there is a question which goes unasked in the media coverage. How was there no peace deal between the belligerents in 1915 or at latest 1916 once it became clear to all — especially after the Battle of the Somme — that the conflict had developed into a stalemate and holocaust of youth?

While there had been some early hopes for peace in 1916, they quickly evaporated as it became clear that the British government would not agree to a compromise deal. The political success of those who opposed compromise was based to a considerable degree on the argument that soon the US would enter the conflict on the Entente’s (Britain and France) side.

Although the US had allowed the Entente (but not the Central Powers) to access Wall Street without restriction during the first two years of the war, the historical evidence shows that President Wilson had been inclined to threaten Britain with the ending of its access to vital US market financing for its war effort if it failed to negotiate seriously for peace. But Wilson was dissuaded from urging peace on the negotiators by his political adviser Colonel House.

A less well-known story is the role of the then-newly created Fed (which opened its doors in 1914) and its allies within the Wilson administration in facilitating Entente finance. Two prominent Fed members — Paul Warburg and Adolph Miller — had fought a rear-guard campaign seeking to restrict their new institution from discounting trade bills or buying acceptances (largely financing munitions) issued by the belligerents (in practice, the Entente Powers). But, they had been thwarted by the persistence of the New York Fed chief Benjamin Strong (closely allied to J.P. Morgan and others who were gaining tremendously from arranging loans to France and Britain) and the Treasury Secretary McAdoo, the son-in-law of President Wilson. (McAdoo, whose railroad company had been bailed out personally by J.P. Morgan, was also a voting member of the Federal Reserve Board).

Milton Friedman has argued that the creation of the Federal Reserve made no difference to the US monetary and economic outcomes during the period of neutrality (up until March 1917) or during the US participation in the war (to November 1918). The difference, Friedman contended, came afterward when the Fed allowed rapid monetary growth to continue for a further year. Under the pre-Fed regime, Friedman argues, the US would also have experienced huge inflows of gold during the period of neutrality and under existing procedures (for official US gold purchases), and these would have fueled rapid growth of high-powered money and hence inflation. In the period of war participation, the Treasury would have printed money with or without the Fed (as indeed had occurred during the Civil War).

There are two big caveats to consider about Friedman’s “the Fed made no difference” case. The first is that the administration and Wall Street’s ability to facilitate the flow of finance to the Entente would have been constricted in the absence of backdoor support (via trade acceptances and bills) by the new “creature of Jekyll Island” (the Fed). The second is that both camps within the Fed (Benjamin Strong on the one hand, and Paul Warburg and Adolph Miller on the other) were united in welcoming the accumulation of gold on their new institutions’ balance sheet. They saw this as strengthening the metallic base of the currency (both were concerned that the Fed’s creation should not be the start of a journey toward fiat money) and also as a key factor in their aims to make New York the number-one financial center in the world, displacing London in that role.

Without those hang-ups it is plausible that the US would have trodden the same path as Switzerland in dealing with the flood of gold from the belligerents and its inflationary potential. That path was the suspension of official gold purchases and effective temporary floating of the gold price. The latter might have slumped to say $10–14 per ounce from the then official level of $21 and correspondingly the dollar (like the Swiss franc) would have surged, while Sterling and the French franc come under intense downward pressure. In effect the Entente Powers would not have been able to finance their war expenditures by dumping gold in the US and having this monetized by the Fed and Treasury — a process which effectively levied an inflation tax on US citizens.

This suspension of gold purchases would have meant a better prospect of there being a gold-standard world being recreated in the ensuing peace. The exhaustion of British gold holdings during the war ruled out the resurrection of Sterling as gold money. Its so-called return to gold in 1925 was in fact a fixed exchange rate link to the US dollar. The US would have been spared much of the cumulative wartime inflation. The Fed would not have been so flush with gold that it could have tolerated the big monetary binge through 1919 before ultimately being forced by a decline in its free gold position to suddenly tighten policy sharply and induce the Great Recession of 1920–21. That episode led on to the Fed focusing during the 1920s on modern monetary management (counter-cyclical policy changes and price stabilization). The consequences of that focus, ultimately fatal to the gold order, were the Great Boom and the Great Depression.

Brendan Brown is an associated scholar of the Mises Institute and is author of Euro Crash: How Asset Price Inflation Destroys the Wealth of Nations and The Global Curse of the Federal Reserve: Manifesto for a Second Monetarist Revolution. See Brendan Brown’s article archives.

This article was published on Mises.org and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

The Dawn of the Surveillance State – Article by Gary McGath

The Dawn of the Surveillance State – Article by Gary McGath

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The New Renaissance Hat
Gary McGath
September 18, 2014
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We think of mass surveillance as a product of modern technology—applying computing power to scoop up communications and metadata in bulk. But large-scale spying on Americans got its real start in 1917, when the United States entered World War I. The government wanted to build up an apparatus to crush all criticism.

In his 1917 Flag Day speech, President Wilson claimed that Germany had “filled our unsuspecting communities with vicious spies and conspirators and sought to corrupt the opinion of our people in their own behalf.” He warned, “Woe be to the man or group of men that seeks to stand in our way in this day of high resolution.” The next day, Congress gave teeth to his warning with the Espionage Act, which criminalized opposition to the war. In 1918, the Sedition Act made prohibitions on dissent even broader.

The apparatus for searching out people with supposedly disloyal tendencies was already in place. The Council of National Defense, created in 1916, had begun urging the states to create their own Councils of Defense. Some of them paid close attention to everything people were saying and promoted persecution of anything sounding disloyal or foreign. In Iowa, elderly women were jailed for speaking German over the telephone, and a pastor was imprisoned for giving part of a funeral service in Swedish.

In Oklahoma, Governor Robert L. Williams formed an extralegal state Council of Defense, which in turn created an Oklahoma Loyalty Bureau, employing secret service agents to find sedition in communities. The Tulsa County Council of Defense formed a secret organization to look for dissidents.

The Bureau of Investigation (later called the FBI) got into the act, creating the American Protective League (APL)—a private, quasi-official espionage organization. The APL boasted that it was “organized with approval and operating under the direction of the United States Department of Justice, Bureau of Investigation.” Because it was nominally private, the government didn’t have to take responsibility for its actions. Its 1,200 branches put local public schools under surveillance, checked on people who didn’t buy war bonds, and investigated Lutheran clergymen who didn’t express public support for the war. APL members detained over 40,000 people, opened mail, and raided factories, union halls, and private homes.

The federal government did its own share of outrageous searches and seizures. A 1918 pamphlet, “War-time Prosecutions and Mob Violence,” by the National Civil Liberties Bureau, cites numerous raids, with vast amounts of printed materials confiscated, from September 1917 onward. The International Workers of the World (IWW) and the International Bible Students’ Association—a branch of what’s now known as the Jehovah’s Witnesses—were targeted repeatedly.

The Feds also took control of all radio stations when the United States joined the war. Amateur radio was shut down, along with many commercial stations. In 1918 the federal government nationalized telephone and telegraph service, an act that Postmaster General Burleson declared necessary “to prevent communication by spies and other public enemies.”

Most of the surveillance apparatus was dismantled after the war was over, and communications returned to private hands. However, the Sedition Act, which made it all possible, still remains on the books, though in a more limited form. In 1971, it was used to indict Daniel Ellsberg for leaking the Pentagon Papers, which showed that the government had been systematically misleading the public about the Vietnam War. In 2013, it was the basis for bringing charges against Edward Snowden.

And even if most of the organizations created during this wave of hysteria are now defunct, as historian Lon Strauss has written, we can “see the foundation that influenced subsequent decisions…. There’s a direct connection with the type of surveillance state that produced the NSA; that foundation was created in the First World War.”

Mass surveillance might be grabbing headlines, but unfortunately, it’s nothing new.

Gary McGath is a freelance writer and a former editor of the Thomas Paine Review.

This article was originally published by The Foundation for Economic Education.
The History of Early Military Airplanes (2005) – Article by G. Stolyarov II

The History of Early Military Airplanes (2005) – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
July 29, 2014
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Note from the Author: This essay was originally written in 2005 and published on Associated Content (subsequently, Yahoo! Voices) in 2007.  The essay received over 600 views on Associated Content / Yahoo! Voices, and I seek to preserve it as a valuable resource for readers, subsequent to the imminent closure of Yahoo! Voices. Therefore, this essay is being published directly on The Rational Argumentator for the first time.  
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~ G. Stolyarov II, July 29, 2014

**

In 1900, the first Zeppelin airships made their successful flights in Germany, and, in 1903, the Wright Brothers designed the first airplane powered by an internal combustion engine. Not long after, the military advantages of aircraft became evident.

The first use of airplanes in combat occurred in 1911, when the Italian Army used a German monoplane to drop grenades on Turkish fortifications in Libya. In 1912, the Italians also initiated the practice of using Zeppelin airships as bombers. In November, 1912, the Vickers company in Britain equipped its “Experimental Fighting Biplane 1” with a Vickers machine gun, thus creating the first fighter plane.

Despite these advancements, the value of aircraft was greatly underrated at the beginning of the First World War, when great powers such as France only had 140 functional aircraft, most of them serving only reconnaissance roles and not equipped with any weapons powerful enough to engage in air-to-air combat.

During the course of the war, this would change dramatically. By the end of the war, France had produced some 68,000 aircraft, 52,000 of which had been lost in battle, giving an indication as to the immense danger of early air combat and the pitiful life expectancy of early aircraft pilots.

During the war, the British began to field the first efficient bombers, the Handley-Page O/400 planes, which could carry 900 kilograms of explosives and fly at 156 kilometers per hour for as long as eight hours, rendering these planes immensely useful at bombarding strategic German positions and even cities far beyond the front lines.

The early air wars required immense dexterity, marksmanship, and luck on the part of the pilots, and expert pilots were prized by all sides. An “ace,” or someone who had downed five planes or more, was given immense honors and publicity, no matter what side he fought on, and names such as that of Manfred von Richthofen, the “Red Baron,” who had shot down 80 Allied planes during the war, achieved the status of legend.

Despite the extreme dangers of piloting aircraft, the task became seen as an extremely prestigious assignment by soldiers, especially given the “clean” nature of the fighting and the prospects of each night returning to comfortable accommodations near the airfields. Compared to the muck and mass carnage of trench warfare, as well as the expendability of individual ground troops, the daily lives of aircraft pilots were indeed far more pleasant, if only relatively so.

Sources:

http://www.spartacus.schoolnet.co.uk/FWWmachineguns.htm

http://www.uh.edu/engines/epi694.htm

http://www.spartacus.schoolnet.co.uk/FWWbertha.htm

http://en.wikipedia.org/wiki/Big_Bertha

http://en.wikipedia.org/wiki/Mortar_%28weapon%29

http://en.wikipedia.org/wiki/Paris_Gun

http://en.wikipedia.org/wiki/Howitzer

http://en.wikipedia.org/wiki/Krupp

http://www.firstworldwar.com/atoz/bigbertha.htm

http://www.encyclopedia.com/html/K/Krupp.asp

http://www.fluxeuropa.com/war/evolution.htm

http://inventors.about.com/library/inventors/blgrenade.htm

http://va.essortment.com/handgrenadeh_rgor.htm

http://www.firstworldwar.com/airwar/summary.htm

http://www.firstworldwar.com/features/aces.htm

http://www.northstar.k12.ak.us/schools/ryn/projects/inventors/gatling/gatling.html

http://www.vickersmachinegun.org.uk/

http://www.spartacus.schoolnet.co.uk/FWWbrowning.htm

http://www.firstworldwar.com/atoz/mgun_mg.htm

http://en.wikipedia.org/wiki/Tank

The History of Mortars, Hand Grenades, and Tanks During the Late 19th and Early 20th Centuries (2005) – Article by G. Stolyarov II

The History of Mortars, Hand Grenades, and Tanks During the Late 19th and Early 20th Centuries (2005) – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
July 29, 2014
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Note from the Author: This essay was originally written in 2005 and published on Associated Content (subsequently, Yahoo! Voices) in 2007.  The essay received over 3,600 views on Associated Content / Yahoo! Voices, and I seek to preserve it as a valuable resource for readers, subsequent to the imminent closure of Yahoo! Voices. Therefore, this essay is being published directly on The Rational Argumentator for the first time.  
***
~ G. Stolyarov II, July 29, 2014

**

Innovations in weapons technology produced improved designs of mortars and hand grenades during the late 19th and early 20th centuries. The tank emerged as a weapon during World War I and, from its modest beginnings, would emerge as a formidable force on the battlefield.

The Mortar

Though mortars, muzzle-loading cannons firing low-velocity projectiles at short ranges, had been used since the 15th century, early mortars were primitive, unwieldy (often too heavy to move), and fired at impractically slow rates.

The first portable mortars saw action in the American Civil War, especially in defense of Union railroad and supply lines. During World War I, the mortar’s size was further adjusted to enable a single individual to carry and operate it, thus leading to mass production, distribution, and use of these weapons. Due to their high angle of fire, mortars could often penetrate into narrow trenches close by, which artillery had no chance of hitting, thus being effective means of capturing enemy positions without sending infantry in costly head-on assaults.

Hand Grenades

Primitive hand grenades first saw use in the 15th century, but their employment largely ceased after 1750, as they were quite cumbersome to manage and damaged their users as often as their enemies. As the objectives of war became more closely identified with the infliction of mass casualties in close combat, the grenade was reintroduced and used on a large scale during the Russo-Japanese War and in World War I.

At first, the grenade’s safety record remained atrocious, as there was no mechanism to protect the thrower, and early grenades were even nicknamed “jam bombs,” as they were often constructed by soldiers on the front lines from tin cans formerly holding jam, which the soldiers then filled with stones and gunpowder and attached a fuse at the end. In 1915, the Englishman William Mills invented the Mills Bomb, the first grenade with a safety pin to protect the user. During World War I, the French also invented the “pineapple” design of the grenade largely prevalent today, while the Germans manufactured the “stick” grenade, elongated for more effective throwing.

The Tank

During World War I, the tank was not an optimally efficient weapon, due to the early tanks’ lack of firepower, armor, and maneuverability in the rough terrain of no man’s land. However, the basic concept of the tank was devised during that time and later improvements in tank equipment, speed, and armor would render trench warfare obsolete. The first tank, the Mark I, was developed by the British Army in 1915 and saw action in the Battle of the Somme on September 15, 1916. The first French tank, the Schneider CA1, was developed in 1917.

The British and French first used a mass combination of tanks in a successful attack during the Battle of Cambrai on November 20, 1917. Germans did not extensively pursue tank technology in World War I, but did design armor-piercing bullets that could demolish the flimsy metal coverings of early tanks. Early tanks also lacked the gun turrets typically associated with them and usually had several smaller guns embedded in their main body. Later Allied tanks were given a rhomboid shape and stronger armor to allow them to deflect or stop German bullets with greater ease. Tanks were part of an emerging new technological paradigm that transformed wars of stalemate and attrition to wars of maneuver, speed, and even greater mechanization during the mid-20th century.

Sources:

http://www.spartacus.schoolnet.co.uk/FWWmachineguns.htm

http://www.uh.edu/engines/epi694.htm

http://www.spartacus.schoolnet.co.uk/FWWbertha.htm

http://en.wikipedia.org/wiki/Big_Bertha

http://en.wikipedia.org/wiki/Mortar_%28weapon%29

http://en.wikipedia.org/wiki/Paris_Gun

http://en.wikipedia.org/wiki/Howitzer

http://en.wikipedia.org/wiki/Krupp

http://www.firstworldwar.com/atoz/bigbertha.htm

http://www.encyclopedia.com/html/K/Krupp.asp

http://www.fluxeuropa.com/war/evolution.htm

http://inventors.about.com/library/inventors/blgrenade.htm

http://va.essortment.com/handgrenadeh_rgor.htm

http://www.firstworldwar.com/airwar/summary.htm

http://www.firstworldwar.com/features/aces.htm

http://www.northstar.k12.ak.us/schools/ryn/projects/inventors/gatling/gatling.html

http://www.vickersmachinegun.org.uk/

http://www.spartacus.schoolnet.co.uk/FWWbrowning.htm

http://www.firstworldwar.com/atoz/mgun_mg.htm

http://en.wikipedia.org/wiki/Tank

The History of Big Guns in World War I (2005) – Article by G. Stolyarov II

The History of Big Guns in World War I (2005) – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
July 26, 2014
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Note from the Author: This essay was originally written in 2005 and published  on Associated Content (subsequently, Yahoo! Voices) in 2007.  The essay earned over 5,400 page views on Associated Content/Yahoo! Voices, and I seek to preserve it as a valuable resource for readers, subsequent to the imminent closure of Yahoo! Voices. Therefore, this essay is being published directly on The Rational Argumentator for the first time.  
***
~ G. Stolyarov II, July 26, 2014

*

Perhaps the most dramatic demonstration of the increase in the sheer force that could be unleashed on the battlefield due to technological improvements of the early 20th century can be seen in the development of the large-scale artillery pieces up to and during the time of World War I.

The “big guns” of the time period were immensely heavy, needed to be transported in multiple parts (each part often occupying the equivalent of several train wagons), and time-consuming to assemble on the site of firing. Nevertheless, their range, far exceeding the extent of a human being’s sight and reaching many kilometers past the enemy’s front line, as well as the sheer impact wrought by their massive shells, was thought to compensate for their size and awkwardness.

The most famous of the big guns of World War I were employed by the German Army and manufactured by the Krupp family firm, the largest German weapons producer, owned by one of the wealthiest families in the world. The Krupp firm produced numerous models of howitzers, or long-range, large-caliber artillery capable of firing both at high and low trajectories.

The famous howitzer, Big Bertha, was designed 1904 for the Krupp firm by the inventor Louis Gauthmann. The Big Bertha was a movable siege mortar capable of firing projectiles weighing 820 kilograms for as far as 15 kilometers, at as high a trajectory as 80 degrees (thus explaining the mortar designation). Four Big Berthas were produced in all, and used in the German offensive of 1914. Their most distinguished use, however, was in August of 1916, during the German assault on the twelve-ringed fortifications at Liege, Belgium. Over the course three days (from the 12th to the 15th of August) two Big Berthas were installed within firing range of the fortress and inflicted such massive devastation as to bring about either the destruction or surrender of all the Belgian defensive positions in the area.

While the Big Bertha was renowned for its sheer mass and firepower, other German big guns of the time period also focused on achieving firing distances that far exceeded that of Big Bertha. These weapons were called “railway guns,” as they were designed to be mounted on and supported by railroad tracks for greater stability and more efficient assembly, since their parts were delivered to the battlefield by train and could be put together on the precise spot of arrival.

A common railway gun design was known as the “Long Max,” which the Germans used to shell French positions some 25-30 kilometers behind the front lines. However, the Germans were able to modify the Long Max design to create a far longer-ranged weapon, the famous Paris Gun (or the Kaiser Wilhelm Gun), which could fire on the city of Paris itself from the German front lines. Though its shell was substantially smaller than that fired by the Big Bertha, weighing only 92 kilograms, it could be hurled 130 kilometers from the gun, and reached heights as far as 40 kilometers above ground level, thus making the shells fired by the gun the first man-made objects to reach the stratosphere and there encounter minimal air resistance, enabling them to travel at supersonic speeds.

ParisGunThe Paris Gun was first installed on March 21, 1918, and required some 80 crewmen to assemble and operate. It fired some 320-367 shells during its lifetime, killing 250 people, injuring 620, and causing considerable property damage in Paris. Though its shells were fairly small and could not be aimed precisely at targets smaller than city size, the gun’s primary purpose was psychological, to convince the French government and citizens that they were not safe from the German army even in their capital. The gun proved powerless to stop the Allied advance of 1918, however, and the Germans destroyed it during their retreat, to prevent its design and parts from falling into Allied hands. The Paris Gun was the largest weapon ever built up to its time and would only be exceeded in caliber by German railway guns of World War II.

Sources:

http://www.spartacus.schoolnet.co.uk/FWWmachineguns.htm

http://www.uh.edu/engines/epi694.htm

http://www.spartacus.schoolnet.co.uk/FWWbertha.htm

http://en.wikipedia.org/wiki/Big_Bertha

http://en.wikipedia.org/wiki/Mortar_%28weapon%29

http://en.wikipedia.org/wiki/Paris_Gun

http://en.wikipedia.org/wiki/Howitzer

http://en.wikipedia.org/wiki/Krupp

http://www.firstworldwar.com/atoz/bigbertha.htm

http://www.encyclopedia.com/html/K/Krupp.asp

http://www.fluxeuropa.com/war/evolution.htm

http://inventors.about.com/library/inventors/blgrenade.htm

http://va.essortment.com/handgrenadeh_rgor.htm

http://www.firstworldwar.com/airwar/summary.htm

http://www.firstworldwar.com/features/aces.htm

http://www.northstar.k12.ak.us/schools/ryn/projects/inventors/gatling/gatling.html

http://www.vickersmachinegun.org.uk/

http://www.spartacus.schoolnet.co.uk/FWWbrowning.htm

http://www.firstworldwar.com/atoz/mgun_mg.htm

http://en.wikipedia.org/wiki/Tank

The Single Bullet That Killed 16 Million – Article by Edward Hudgins

The Single Bullet That Killed 16 Million – Article by Edward Hudgins

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The New Renaissance Hat
Edward Hudgins
June 27, 2014
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A century ago, on June 28, 1914, Serbian nationalist Gavrilo Princip shot and killed Archduke Franz Ferdinand, heir to the emperorship of Austria-Hungary, along with his wife, on their visit to Sarajevo.
Gavrilo Pirincip fires on the Archduke and Archduchess, June 28, 1914
Gavrilo Pirincip fires on the Archduke and Archduchess, June 28, 1914

World War I led to 16 million military and civilian deaths, plus nearly 20 million wounded. And the misery and horror of that war resulted in another casualty: confidence in the Enlightenment enterprise and human progress.

Enlightenment Europe

In the late seventeenth century Isaac Newton’s discovery of the laws of universal gravitation dramatically demonstrated the power of the human mind. Understanding of the world and the universe—what we call modern science—became a central Enlightenment goal.

At the same time, the struggle for Parliamentary supremacy in England led John Locke to pen his powerful treatise on individual liberty. Creating governments limited to protecting life, liberty, and the pursuit of happiness also became a central Enlightenment goal, which culminated in the creation of United States.

Enlightenment values were not limited to Britain or America. They were universal and created a European-wide culture of individualism, freedom, and reason.

Collectivist anti-Enlightenment

But Enlightenment thinkers and activists not only had to fight entrenched oligarchs and rigid religious dogma. Starting with Jean-Jacques Rousseau, a school of thought—if thought it could be called—arose that opposed individualism with the good of “society,” or the group, and rejected reason in favor of emotion and instinct.

The French Revolution starting in 1789 saw Enlightenment ideas losing ground to reactionary and collectivist forces. The result was the Terror and the guillotine, dictatorship and a new monarchy, and the carnage of the Napoleonic wars–the first great modern global conflict, which ended in 1815 at Waterloo.

In the century that followed Europe suffered only short regional conflicts, most relating to the unification of Italy and of Germany. The Industrial Revolution was creating prosperity. Governments were granting citizens rights to political participation and were recognizing their civil liberties. By the early twentieth century, continued progress seemed inevitable.

Pernicious nationalism

But the pernicious collectivist ideology combined with a major European cultural defect: nationalism. This form of collectivism meant more than just an appreciation for the aesthetic achievements—art, music, literature—of the individuals in one’s ethnic group. It meant putting one’s group or one’s country, right or wrong, ahead of universal values and principles. Kill for King or Kaiser!

There’s an irony in the fact that poor Franz Ferdinand wanted to recreate Austria-Hungary as a federation in which the minority groups—that were always either dominated by Viennese elites or at one another’s throats—would have autonomy similar to that enjoyed by the American states. If only Princip had waited a while.

Unfortunately, the volatile combination of nationalism, an interlocking treaty system, and the Britain-Germany imperial rivalry only required a spark like the Sarajevo assassination to set off a global conflagration.

Collectivism vs. collectivism

After World War I, individualism and “selfishness” got much of the blame for the conflict. And science was no longer associated only with progress. It had created machine guns, tanks, and poison gas, and made possible a fearful slaughter.

Idealists created the League of Nations to prevent such wars in the future. But they tried to cure the problem of nationalism with more nationalism, simply accentuating the problem. Indeed, Hitler used the principle of self-determination of peoples as an excuse to unify all Germans into one Reich by force. His form of collectivism also entailed enslaving and wiping out “inferior” races.

The catastrophe of World War II was followed by a Cold War, which saw the Soviet Union asserting another form of collectivism, pitting one economic “class” against another. Western Europe opposed the brutal Soviet kill-the-rich socialism with a kinder, gentler, loot-the-rich democratic socialism. The Soviet Union with its communist empire collapsed in 1991, and Western European democratic socialism is going through a similar disintegration in slow motion.

Still recovering from the Great War

Today, Enlightenment values are making a comeback. The communications and information revolutions, and the application of new technologies in medicine, transportation, and other fields, again demonstrate the power of the human mind and the benefits it confers.

Furthermore, many of the new entrepreneurs understand that it is they as individual visionaries who are transforming the world. And while their achievements benefit everyone, they strive because they love their work and they love to achieve. They pursue happiness. They hold Enlightenment values—though in many cases their politics still need to catch up.

The world is still digging out from the consequences of that single bullet a century ago, which led to the deaths of millions. Putting our country and the world back on the path to liberty and prosperity will require a recommitment to the Enlightenment values that created all the best in the modern world.

***

Dr. Edward Hudgins directs advocacy and is a senior scholar for The Atlas Society, the center for Objectivism in Washington, D.C.

Copyright, The Atlas Society. For more information, please visit www.atlassociety.org.

Not Enough Inflation? – Article by Tyler Watts

Not Enough Inflation? – Article by Tyler Watts

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The New Renaissance Hat
Tyler Watts
July 15, 2012
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Two wrongs may not make a right, but a second dose of poison might just cure the first dose. That’s at least what Paul Krugman, America’s most prominent left-wing economic pundit, is saying about an untapped remedy for our economic woes. In his April 5 New York Times column, “Not Enough Inflation,” Krugman repeated his claim that “a bit more inflation would be a good thing, not a bad thing.”

If you’re wondering how progressively higher prices for everyday goods could help any household get ahead economically, let alone contribute to overall economic recovery, you’re in good company. As all econ-principles students know, inflation is caused by an increase in the supply of money relative to money demand. The increase in consumer goods prices—that’s how the layman defines and experiences inflation—is really just a symptom of the reduced purchasing power of money caused by the increase in its quantity. The higher prices for all goods in turn mean lower real incomes for consumers—which is all of us—not to mention that inflation is also typically symptomatic of the boom-bust business cycle and can cause significant widespread economic damage. In its most severe forms, inflation can wipe out people’s monetary wealth and bring commerce to a halt.

But smart guys like Professor Krugman aren’t mere monetary cranks. They know that high inflation is economically dangerous. What they’re asking for is just a small, temporary dose of fresh money to inject some new life into the economy. There is a kernel of truth to this inflationary prescription. As the Scottish philosopher David Hume explained in his 1752 essay Of Money, prices for different kinds of goods react differently to new money entering the economy. Generally speaking, commodities or consumer goods prices will rise faster than wages. So for a manufacturing entrepreneur, for instance, who employs many workers, inflation will cause output prices (revenue) to increase relative to wages (costs), bringing an increase in profits that will induce an increase in output. Therefore, in Hume’s terms, an increase of money “must first quicken the diligence of every [entrepreneur], before it increase the price of labor.”

This “sticky wages” effect is what economists like Hume, John Maynard Keynes, and Krugman have in mind when advocating inflationary stimulus. Krugman also notes that “parts of the private sector continue to be crippled by the overhang of debt accumulated during the bubble years,” and that “modest inflation . . . by eroding the real value of that debt . . . [would] help promote the private-sector recovery.” So higher inflation not only increases the demand for labor, but can also help clean up companies’ and individuals’ balance sheets, giving them the ability to ramp up their hiring and spending. What’s not to love about this miracle elixir?

There are two big problems with inflationary stimulus. The first involves the process dynamics of the market economy. The inflationists tend to omit the rest of the story, which involves the long-run effects of new money. New money will eventually increase all prices—even wages—meaning the stimulus effect can only be temporary. For if entrepreneurs read the price increases not as mere inflation, but higher demand for their products (as the inflationists hope), they are liable to make investments to expand their production capacity. Once the inflation effect peters out, once rising wages eventually push profits back down, they find that extra production is no longer profitable. The expansion can’t be sustained without more inflationary stimulus.

In a rising inflation environment, moreover, people will eventually come to anticipate further price increases. Workers demand upward wage adjustments in advance, and entrepreneurs anticipate rising costs and thus scale back their expansion plans. Once people catch on to inflationary stimulus in this fashion, larger and larger money injections (that is, higher inflation rates) are needed to merely maintain output levels. At some point, the high, rising, and volatile inflation rate itself becomes a drag on the economy. Miscalculation of next year’s, or even next month’s, inflation rate could spell disaster for entrepreneur and worker alike. As inflation heats up, it can actually drag investment down, as people seek to shelter their wealth in “sterile” assets like gold. Inflation, instead of a stimulus factor, becomes a source of economic confusion and frustration. Iconic images of people hauling wheelbarrow loads of money to buy a loaf of bread in post-World War I Germany remind us of the potential economic turmoil of unchecked inflation. This of course is not what Krugman has in mind, but we should not forget that the mightiest river begins as a trickle.

The second big problem with inflation is a moral one. Along with causing economic confusion, inflation redistributes wealth. The key fact here, again, is that not all prices rise immediately when new money enters circulation. People who are first to receive the new money get to spend it before prices go up. Those last in line see prices go up before their own incomes do. Inflation also redistributes wealth from lenders to borrowers, as Krugman indicated, by reducing the real value of debt. But Krugman conveniently ignores the corresponding fact that, whenever a borrower’s real debt burden is eased, a lender’s asset value is eroded. Thus to use inflation as a partial bailout for borrowers is to harm lenders and investors. This is happening already—even at “mild” inflation rates that are too low for Krugman’s tastes, real returns on investments like bank CDs are driven into negative territory.

Through these redistributions of purchasing power, inflation acts like a tax: a tax on savers, on investors, on those at the very end of the monetary policy food chain. Ironically for Progressives like Krugman, this inflation tax arguably hits the poor and uneducated hardest. Educated, economically sophisticated people know the warning signs of inflation and know how to shelter their assets—as attested by the flurry of gold bullion dealers’ ads on cable news and AM radio. The poor are much more likely to be wage earners whose incomes tend to lag inflation, or pensioners who, even with annual cost-of-living adjustments, can still see consistent reductions in their purchasing power.

Nonetheless, Krugman and the inflation party don’t understand the free-market camp’s arguments against inflation. He accuses us of “obsessing” over inflation, while he thinks the Fed should focus on curing unemployment. Even conceding that inflation can provide a temporary, halting employment stimulus, the objection remains strong. It comes down to the fact that inflation is a big lie—or, should we say, a million little lies, because inflation distorts all prices and thereby hinders their crucial function of giving entrepreneurs and workers the correct information and incentives on which to make the best economic decisions. Inflation’s promises of faster growth and greater wealth are illusory. Like alcohol or drug abuse, every high begets a crash that demands larger and larger doses to maintain the effect. Inflation is a dangerous medicine that stands to do the patient more harm than good.

Tyler Watts is an assistant professor of economics at Ball State University and the winner of the 2012 Beth A. Hoffman Memorial Prize for Economic Writing.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.