The Price of Liberty or Politics of Latin America

The Price of Liberty: Paying for America's Wars

Author: Robert D Hormats

In a bracing work of history, a leading international finance expert reveals how our national security depends on our financial security

More than two centuries ago, America’s first secretary of the treasury, Alexander Hamilton, identified the Revolutionary War debt as a threat to the nation’s creditworthiness and its very existence. In response, he established financial principles for securing the country—principles that endure to this day. In this provocative history, Robert D. Hormats, one of America’s leading experts on international finance, shows how leaders from Madison and Lincoln to FDR and Reagan have followed Hamilton’s ideals, from the greenback and a progressive income tax to the Victory Bond and Victory Garden campaigns and cost-sharing with allies.

Drawing on these historical lessons, Hormats argues that the rampant borrowing to pay for the war in Iraq and the short-sighted tax cuts in the face of a long-term war on terrorism run counter to American tradition and place our country’s security in peril. To meet the threats facing us, Hormats contends, we must significantly realign our economic policies—on taxes, Social Security, Medicare, and oil dependency—to safeguard our liberty and our future.

Publishers Weekly

Exploring the idea that the need to pay for wars often drives financial innovation, Goldman, Sachs & Co. managing director Hormats traces the fiscal decisions made in American wars from the revolution to today's war on terror. Customs duties often fall off with hostilities, he observes, leading to increased reliance on excise and other consumption taxes. These cut civilian demand, freeing up resources for war, but may be unduly burdensome on the poor, who also do most of the dying. Taxes on businesses and the rich are more popular, he notes, but don't reduce consumption and may discourage energetic investment in war industries. Printing money is easy, but stimulates demand and inflation. Borrowing requires faith in the ability of the government to prosecute the war and its willingness to honor the debt afterwards. If broad-based, debt can cement support for the war, but if not, it can create a class of creditors with excessive political power. Hormats shows that, despite their differences, each treasury secretary seems to pick up where his predecessor left off, refining the old ideas and adding new wrinkles. Moving from history to current events, the author strongly criticizes the Bush administration for failing to adhere to the principles that have paid for 230 years of American liberty. (May 1)

Copyright 2007 Reed Business Information

Kirkus Reviews

A vigorous account, by a Goldman Sachs VP and presidential adviser, of the high cost of combat. From the nation's beginnings, leaders have worried about the burdens the citizenry would have to take up in order to pay for their military, with George Washington warning that debts "which unavoidable wars may have occasioned" should not be charged to future generations but paid for as soon as possible through taxes, however hated taxes might be. A sense of fairness governed presidents until recently; during the War of 1812, for instance, Madison approved a $3 million direct tax on slaves to be paid for by their owners, while during the Civil War the federal government imposed a tax-called a duty to skirt constitutional issues-of three percent on all incomes over $800. "It was a victory for the populists and advocates for working poor and farmers," Hormats observes, since the average income was only $150. The government raised further funds by printing rather than minting money, risking inflation but solving the short-term problem and retiring the Civil War debt within a few years. During World War II, the mix included a tax on corporate profits and the elimination of special privileges for the rich. All that changed, though, with the Cold War, since an army had to be maintained at constant readiness; the Defense Department was kept on a diet at first, with Eisenhower wisely remarking, "the current problem in defense spending is to figure how far you should go without destroying from within what you are trying to defend from without." That lesson, Hormats concludes, is lost on the present administration, which threatens through its uncontrolled spending and giveaways to the wealthy to leavefuture presidents "without the resources, the military capacity, the intelligence capabilities, or the homeland security apparatus required to thwart or cope with a dangerous new security threat."A careful study in economic history that deserves wide airing.

What People Are Saying

"Bob Hormats has taken on the impossible: making lively history of the fiscal side of America's wars. Taxes and spending, economics and politics, all mixed up together in times of national crisis, from the Revolution and Alexander Hamilton to Iraq and both George Bushes. There are lessons to be learned and too often forgotten, even for the financing of the new 'War on Terror.'"
---Paul Volcker, former chairman of the Federal Reserve

"The Price of Liberty is both a superb history and an urgent call for appropriate fiscal policy in the current campaign against terrorism. Hormats shows that, time and again, how wars were paid for determined how wars were fought--and won or lost. An important and timely book."
---David M. Kennedy, author of Freedom from Fear

"Robert Hormats mounts a compelling argument that America faces large-scale economic catastrophe due to lack of a long-term, fiscally sound strategy for meeting military and security needs as well as domestic obligations. The Price of Liberty is a fascinating book and its messsage is hard to ignore.
---Henry Kissinger

"Hormats links economics with history and politics in a must-read for anyone who would understand the fundamentals of America's national security. Lucid and engrossing, The Price of Liberty provides a new and vital perspective for students of national security."
---General Wesley K. Clark, former Supreme Allied Commander Europe

Table of Contents:

Introduction: A Country Born of War and Debt     XIII
Hamilton's Vision: Securing the Nation's Finances     1
The First Great Test: Financial Sabotage and the War of 1812     28
The Fiery Trial: A Tax to Save the Union     56
Capitalizing Patriotism: Progressive Finance During World War I     94
A Righteous Might: Shared Sacrifice During World War II     134
"A Prolonged and Complex Struggle": The Threat of American Bankruptcy in the Cold War     173
"Hard and Inescapable Facts": The Great Society Versus the Vietnam War     207
Bankrupting Communism: The Reagan Rearmament and Deficit Finance     227
New Enemies: Asymmetrical Threats and the Long War on Terrorism     251
Conclusion: The Price of a Long War     280
Notes     300
Selected Bibliography     328
Acknowledgments     331
Index     332

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Politics of Latin America: The Power Game

Author: Harry E Vanden

Politics of Latin America, Second Edition, explores both the evolution and the current state of the political scene in Latin America. Distinguishing itself from more traditional works on Latin American politics, this text demonstrates a nuanced sensitivity to the use and abuse of power and the importance of social conditions, gender, race, globalization, and political economy. The first section of the book presents relevant information about the region's geographic setting, history, economics, society, people, and religion, setting the stage for a more detailed analysis of the politics, democratization, political culture, political movements, and revolution in Latin America. The second part of the book consists of carefully constructed case studies of nine representative Latin American nations: Guatemala (Susanne Jonas), Mexico (Nora Hamilton), Cuba (Prevost), Brazil (Wilber Albert Chaffee), Argentina (Aldo C. Vacs), Chile (Eduardo Silva), Venezuela (Daniel Hellinger), Colombia (John C. Dugas), and Nicaragua (Prevost and Vanden). Each case study traces the historical development of key political actors and institutions, analyzing contemporary power configurations.
Keeping pace with the rapidly changing events in each country, this expanded second edition provides fresh material throughout, including more information on interamerican relations and the successes and failures of democracy in Latin America. Along with two entirely new chapters on Venezuela and Colombia, it also features sections that thoroughly discuss democratic versus authoritarian political culture, the role of the United States, and the power game in Latin America. The thematic chapters offer updatedbackground analyses--including a discussion of the 2002-2005 electoral triumphs of several presidents who were critical of the neo-liberal agenda, the new movements that have deposed presidents--and additional sections on U.S.-Latin American relations. Incorporating maps, tables, chronologies, bibliographies and clear indications of key players, Politics of Latin America, Second Edition, is indispensable for students and other readers wishing to gain a deeper understanding of this complex, dynamic, and rapidly changing region of the world.