O que é este blog?

Este blog trata basicamente de ideias, se possível inteligentes, para pessoas inteligentes. Ele também se ocupa de ideias aplicadas à política, em especial à política econômica. Ele constitui uma tentativa de manter um pensamento crítico e independente sobre livros, sobre questões culturais em geral, focando numa discussão bem informada sobre temas de relações internacionais e de política externa do Brasil. Para meus livros e ensaios ver o website: www.pralmeida.org. Para a maior parte de meus textos, ver minha página na plataforma Academia.edu, link: https://itamaraty.academia.edu/PauloRobertodeAlmeida

Mostrando postagens com marcador economia. Mostrar todas as postagens
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sexta-feira, 2 de agosto de 2019

A ignorância econômica de Olavo de Carvalho - Ricardo Bergamini

Que Olavo de Carvalho fosse  um total inepto em relações internacionais isso já sabíamos, com seu antiglobalismo primário e paranoico, ao qual só uma personalidade perturbada e desequilibrada como Ernesto Araujo poderia aderir.
Agora estamos descobrindo como ele é também um total ignorante em matérias econômicas, e que desconhece completamente com funcionam os mecanismos tributários e de subsídios no Brasil.
Ou se conhece, é um desonesto e mau caráter exemplar.
Paulo Roberto de Almeida

No Brasil, ninguém joga limpo, seja qual for a sua paixão política. 

Premissa maior

Olavo de Carvalho negou nas redes que filme de Josias Teófilo receberá dinheiro público.

Premissa menor

Se a afirmação da premissa maior fosse verdadeira, não haveria necessidade da participação da ”Ancine” no projeto. A captação seria direta pelo produtor do filme, junto às empresas doadoras.

Conclusão

A participação da “Ancine” no projeto existe para que seja data autorização a empresa doadora, para deduzir tributos devidos ao governo. A maldita renúncia fiscal prevista para 2019 de R$ 306,4 bilhões (4,12% do PIB), conforme quadro demonstrativo abaixo:





OLAVO PROVA DO VENENO DE SEUS SEGUIDORES

Escritor negou nas redes que filme de Josias Teófilo receberá dinheiro público

01/08/2019 - 08:00 / Atualizado em 01/08/2019 - 13:29

VIRGÍNIA, EUA, 06.10.2017 - OLAVO-CARVALHO - Retrato do escritor, conferencista, ensaísta, jornalista e filósofo brasileiro, Olavo de Carvalho. Ele é um dos principais representantes do conservadorismo brasileiro. Olavo na casa de um dos seus filhos em Petersburg, na Virgínia (EUA). (Foto: Vivi Zanatta/Folhapress) Foto: Vivi Zanatta / Agência O Globo

Olavo de Carvalho provou do veneno destilado há tempos por seus seguidores.

O escritor foi às redes para explicar que o filme do diretor olavista Josias Teófilo não ganhará recursos públicos por meio da Ancine, e sim que recebeu a autorização da agência para captar recursos privados.

Por anos, os próprios olavistas têm acusado a Lei Rouanet de financiar filmes de cineastas e artistas da esquerda.

terça-feira, 9 de julho de 2019

Thomas Sowell: Happy Birthday (89): o maior e melhor economista americano

Thomas Sowell: A Birthday Appreciation

As I mentioned last month in an homage to one of his regular features, my intellectual hero is Thomas Sowell. Today is Dr. Sowell’s 89th birthday. Since turning 80, he has published Intellectuals and Race, Wealth, Poverty, and Politics (with a second revised edition coming a year later), a couple of new editions of his Basic Economics, and Discrimination and Disparities. I read Sowell’s memoir, A Personal Odyssey, in one sitting when it came out, and I’ve never read a Sowell book and thought it a poor use of my time.
The essence of Sowell’s approach to the world is evident in this clip from Milton Friedman’s Free to Choose series:
Consider what he’s saying here: “I think we’re talking at cross purposes. On the one hand, we’re talking about results that we’re hoping for. On the other hand, we’re talking about processes that we’re setting in motion.” It’s the essence of the Conflict of Visions he would write about in his 1987 book of that title, republished in 2007. He explains the conflict of visions here:
Conflict is part of an (informal) trilogy that includes The Quest for Cosmic Justice and the book with the best subtitle I’ve ever read, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy. These books had a profound effect on me as a graduate student and young faculty member in the 2000s. They hold up well even after several decades, and, I think, they should be studied carefully by every social scientist and commentator.
While he retired from writing his regular column several years ago, he remains an active participant in the Great Conversation. In addition to his books, he is a regular guest on the Hoover Institution’s “Uncommon Knowledge,” where he is usually discussing a new book or a new edition of one of his older books, as in the video below where he discusses Discrimination and Disparities. It’s not a bad record for someone who is turning 89.
Sowell’s work continues to challenge me. This is obviously true in the case of issues like immigration on which I disagree with him and other issues like “cultural” practices and individual prosperity where I don’t want to agree with him, but it’s also true even when we’re talking about old standbys like basic economic ideas—price controls, for example, where he writes with clarity and insight few authors can match.
Happy birthday, Dr. Sowell, and may you have many more.

sábado, 13 de abril de 2019

Governo Bolsonaro: entre o mediocre e o desastroso - seminário IBRE-FGV/Estadao


Realmente preocupante que o governo, com pouco mais de 3 meses, já esteja sendo classificado entre o medíocre e o desastroso.
Paulo Roberto de Almeida


Mediocridade estável ou ruptura?
Fernando Dantas 
O Estado de S. Paulo, 12 de abril de 2019 | 21h37

No seminário “100 dias do governo Bolsonaro”, realização conjunta do FGV/Ibre e Grupo Estado, predominou uma visão bastante sombria sobre as perspectivas do Brasil no mandato do atual presidente.
O seminário “100 dias do governo Bolsonaro”, realização conjunta do Grupo Estado e FGV/Ibre, não foi exatamente animador para a plateia que acorreu nesta sexta-feira (12/4) ao auditório do Centro Cultural da FGV, no Rio, para ouvir a análise de especialistas do Ibre e outros convidados. A mediação dos debates ficou a cargo dos jornalistas do Grupo Estado Celso Ming e Adriana Fernandes.
Talvez, para mostrar de forma mais clara o pessimismo predominante, seja preferível começar pelos pontos positivos do governo até agora apontados pelos participantes – e em seguida indicar como o lado negativo sobrepuja amplamente os primeiros.
Assim, verificou-se quase consenso entre os debatedores, a partir do diagnóstico inicial de Armando Castelar, do Ibre, de que houve uma surpresa positiva em relação a Paulo Guedes e sua equipe econômica, que se revelaram mais competentes e disciplinados do que se entrevia no fragor da campanha.
Uma área também considerada satisfatória – embora bem aquém do prometido – foi a de concessões e privatizações. De fato, como notou Manoel Pires (Ibre), não havia a menor chance de privatizar R$ 1 trilhão no primeiro ano, como prometido. Mas houve avanços nas concessões e não foi nessa seara que o governo tropeçou nos seus 100 primeiros dias.
A reforma da Previdência, um copo meio cheio e meio vazio, é um bom tópico para passar dos acertos para os muitos erros e problemas acumulados por Bolsonaro neste início de governo.
Houve consenso no seminário na previsão de que o Congresso aprovará uma versão substancialmente desidratada do projeto enviado pelo governo, e que a aprovação final tomará bem mais tempo do que gostaria a equipe econômica – talvez em torno de um ano, na visão de Pires.
Alguns debatedores, como Bruno Ottoni (Ibre), opinaram que teria sido melhor tentar aprovar rapidamente, no início do governo, o projeto de Temer que já tinha passado na Comissão Especial da Câmara.
O raciocínio é que o nível de desidratação da proposta de Bolsonaro – que na forma original visa economia fiscal de R$ 1,1 trilhão em dez anos – acabará levando o ganho para perto dos mesmos R$ 600 bilhões do projeto de Temer aprovada na comissão.
Então, para que perder tempo? Esta é uma pergunta relevante dado que, como notou Silvia Matos (Ibre), a onda de otimismo com a eleição de Bolsonaro no final do ano passado se esvaziou.
Os prognósticos de crescimento do PIB em 2019 saíram de 2,5% para 2%, e têm cara de estar rumando para 1,5%. Castelar notou que o momento em que as projeções começam a cair fortemente do patamar de 2,5% coincidiu com a recente briga entre Bolsonaro e o presidente da Câmara, Rodrigo Maia.
Um sinal de que a incerteza sobre a Previdência – e, consequentemente, sobre o futuro da solvência pública – está pesando na confiança de investidores e consumidores, e freando a já combalida recuperação econômica. Nesse sentido, a perspectiva de que a aprovação vai demorar, sem que saiba qual o teor de desidratação da versão final, deve prolongar incertezas e machucar ainda mais a economia.
Isto, por sua vez, tende a piorar a popularidade de Bolsonaro, que caiu muito rapidamente e já está num nível bastante baixo para um presidente que supostamente estaria gozando da sua lua de mel com o eleitorado.
O que nos leva à política, a área em que o quase consenso do debate foi de que as coisas estão indo muito, muito mal.
Tanto Carlos Pereira quanto Octavio Amorim Neto, ambos cientistas políticos da Ebape, consideram um erro gravíssimo de Bolsonaro ignorar as regras do jogo do presidencialismo de coalização e tentar governar sem uma base estável no Congresso.
Para Pereira, é grande insensatez demonizar o que considera como “moedas de troca legítimas” do presidencialismo multipartidário na relação entre Legislativo e Executivo: distribuição, proporcional ao peso dos partidos na base, de cargos no Ministério e na burocracia federal; e liberação de emendas orçamentárias de interesse local para os parlamentares da base. Bolsonaro nem base montou.
Discutiu-se, no encontro, sobre como o Congresso pode estar ocupando o vácuo deixado pela não participação do governo na “velha política”, com a emenda – aprovada em tempo relâmpago nas duas Casas – do Orçamento impositivo (e como isto acaba com uma das “moedas de troca”).
E cogitou-se que Bolsonaro talvez esteja conseguindo, de fato, jogar um pouco sobre o Congresso a responsabilidade pela aprovação da Previdência, mas numa estratégia temerária, já que ao fim e ao cabo é o Executivo que acaba recebendo a conta de perda de popularidade se a economia vai mal.
Neste ponto, Roberto Fendt, secretário-executivo do Conselho Empresarial Brasil China – e único dos debatedores com uma visão menos pessimista – sustentou que Bolsonaro estaria efetivamente, e com razão, forçando o Congresso a assumir também sua parte de responsabilidade pela gestão do País. Mas foi uma posição isolada no debate.
Pereira notou que a literatura de ciência política mostra que presidentes populistas como Bolsonaro são bem-sucedidos apenas no início de mandato em emparedar o Congresso, com apelos plebiscitários à população, para conseguir a aprovação de suas medidas. O mais grave neste início de governo para o pesquisador, no entanto, é que nem esse poder inicial Bolsonaro parece ter conseguido. O capital político derrete sem nenhuma vitória com a estratégia plebiscitária.

O Velho e o Mar
Já Amorim Neto foi muito feliz ao usar como metáfora o conto “O Velho e o Mar”, de Hemingway, para definir o que seria uma suposta “vitória” de Bolsonaro na reforma da Previdência e na agenda liberal, com a estratégia de formar maiorias no varejo a cada votação no Congresso. Nesse caso, os parlamentares ficam livres para “encarecer” os seus votos à cada nova rodada.
“O governo vai lutar muito para pescar o Marlim, mas quando o barco voltar a porto só vai chegar o esqueleto, porque os tubarões de sempre terão, de naco em naco, devorado toda a carne”, disse o cientista político.
Os “tubarões” são uma óbvia referência aos grupos de pressão que lutam para manter seus privilégios no âmbito das mudanças na Previdência e outras medidas de teor liberal (como o combate aos subsídios).
Mas se, de fato, o pessimismo predominante no seminário se confirmar, onde vai desembocar o governo Bolsonaro?
Para Pessôa, vai dar numa mediocridade com baixo crescimento, mas sem “ruptura”, porque há quatro importantes amortecedores: grandes reservas internacionais (com posição líquida em dólares do setor público), baixos juros e inflação, a provável aprovação de uma reforma da Previdência (ainda que muito desidratada) e a emenda do teto dos gastos.
Veloso, no entanto, contrapôs que a previsão de mediocridade estável de Pessôa está olhando apenas o mercado. Na opinião de Veloso, um eventual (e bastante possível) fiasco do governo Bolsonaro, numa situação de penúria econômica e grandes tensões sociais, tem boas chances de levar a um desfecho desastroso. Pessôa concordou que sua visão de estabilidade olhava fundamentalmente para o mercado, e não para a sociedade.
Fernando Dantas é colunista do Broadcast
Esta coluna foi publicada pelo Broadcast em 12/4/19, sexta-feira.

segunda-feira, 8 de abril de 2019

Keynes e o art. 231 do tratado de Versailles - Edward W. Fuller (Mises)

Keynes and the Versailles Treaty's Infamous "Article 231"

Mises Institute, April 5, 2019

April 7, 2019, marks the hundredth anniversary of Article 231 of the Treaty of Versailles — the infamous war-guilt clause. Although the treaty was not signed until June 28, the Supreme Council approved the notorious article on April 7, 1919. Thus, April 7 is the proper day to mourn the centenary of the calamitous war-guilt clause of the Treaty of Versailles.
After giving some background, this article presents documents that prove John Maynard Keynes, along with John Foster Dulles, was the author of Article 231. Next, it is argued that the war-guilt clause was unjust because Germany was not solely responsible for the war. Finally, the article draws some lessons to be learned from the war and the peace treaty. The most important is that the free market economy is the only way to lasting world peace.

The Prehistory of Article 231

Article 231 of the Treaty of Versailles required Germany to admit responsibility for starting the First World War. The clause reads:
The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.
The history of the article starts with President Woodrow Wilson’s Fourteen Points. Points seven and eight stipulate, “Belgium, the whole world will agree, must be evacuated and restored,” and “All French territory should be freed and the invaded portions restored.” The term “restored” is significant, for it meant France and Belgium could seek compensation from Germany for the invasion.
In October 1918, President Woodrow Wilson urged Britain, France, and Italy to offer peace terms to Germany based on the Fourteen Points. In late October, Colonel Edward House, Wilson’s advisor, met with Allied leaders in Paris to discuss the Fourteen Points. The British had one major objection to Wilson’s proposal: the Fourteen Points did not allow Britain to make claims against Germany for compensation.
The war on the western front was fought entirely on French and Belgian soil. And the Fourteen Points only called for the restoration of territory Germany had invaded. This was unacceptable to the British. David Lloyd George, the British prime minister, told his private secretary Philip Kerr:
She [Germany] must pay ample compensation for damage and that compensation must be equitably distributed among the Allies and not given entirely to France and Belgium. Devastated areas is only one item in war loss. Great Britain has probably spent more money on the war and incurred greater indirect losses in, for instance, shipping and trade, than France. She must have her fair share of compensation.1
On October 30, Lloyd George suggested the following addition to Wilson’s proposal: “Compensation will be made by Germany for all damage done to the civilian population of the Allies, and their property (by the forces of Germany?), by land, by sea, and from the air.”2 On November 1, the European leaders changed “by the forces of Germany” to “by the invasion by Germany of Allied territory.”3 The European leaders approved this language on November 3. But the British were afraid the term “invasion” might rule out their own claims for compensation. On November 4, the British insisted that the revised phrase be changed to “by the aggression of Germany.”4
Thus the famous Lansing note of November 5, 1918, emerged: “Compensation will be made by Germany for all damage done to the civilian population of the Allies and their property by the aggression of Germany by land, sea and from the air.”5
This passage was included in the Armistice of November 11, which ended the First World War. The term “aggression” in the Armistice is significant because it was later used in Article 231. The term was suggested by Kerr (also known as Lord Lothian).6 Thus, the use of the loaded term “aggression” in Article 231 must be attributed to the British and their drive for compensation from Germany.
With the Armistice, Germany agreed to make compensation to the Allies. However, this agreement did not constitute an admission of guilt. Furthermore, by signing the Armistice, the Germans only agreed to make compensation for property damaged as a result of military action. The Armistice did not include claims for war costs and reparations.
Given the way the Armistice read, the British claims to German compensation were the most precarious. Hence, Britain certainly had the most to gain from language such as that which became Article 231. As noted, Germany had already agreed to compensate France and Belgium for property damage, and the Americans never planned to seek compensation. Since their claims to compensation were the most questionable, the British were the hardliners on the issues of war guilt and reparations at the Paris Peace Conference.7
The Paris Peace Conference of 1919 commenced in early January. Initially, the Americans argued that the Allies could not seek reparations for all damage caused by the war. The American John Foster Dulles wrote on February 4, “Reparation would not be due for all damage caused by the war unless the war in its totality were an illegal act.”8 However, the British opposed the American position and argued that Germany must pay reparations. They claimed on February 10, “The war itself was an act of aggression and wrong; it was, therefore, a wrong for which reparation is due.”9
Unfortunately, the Americans acquiesced. On February 21, Dulles drafted a proposal that is widely considered a precursor of Article 231: “The German Government undertakes to make full and complete reparation, as hereinafter provided, for damage as hereinafter defined, done by the aggression of Germany and/or its allies to the territories and populations of the nations with which the German Government has been at war.”10 Although drafted by Dulles, the proposal reflected the British position. Furthermore, the Dulles draft did not require Germany to accept responsibility for the war. Hence, it was less severe than the final article.

John Maynard Keynes

John Maynard Keynes is the most influential economist in modern history. Like many of the most celebrated and reviled personalities of the twentieth century, Keynes emerged out of the pandemonium of the First World War. He began working in the British Treasury in January 1915, and he was the third-highest-ranking official in the Treasury by the end of the war. In January 1919, he was sent to the Paris Peace Conference as the Treasury’s chief representative. He famously resigned from the British delegation in June 1919, and he publishedThe Economic Consequences of the Peace in December.11 This book made Keynes an international celebrity, and it laid the foundation for his enormous influence in the following decades.
According to the traditional wisdom, Keynes was a great opponent of German reparations. For example, the Keynesian economist Don Patinkin stresses Keynes’s “passionate disagreement with what he considered to be harsh clauses of the Versailles Peace Treaty.”12 Robert Skidelsky claims in his authoritative biography: “Keynes had no personal reason to feel guilty about the ‘harsh’ peace at Versailles, since he had opposed it.”13
In reality, Keynes was a chief draftsman of Article 231 and other financial sections of the Treaty of Versailles.14
From inside the British Treasury, Keynes was already planning for reparations by late 1915. On January 2, 1916, he submitted an official Treasury memorandum with William J. Ashley entitled “Memorandum on the Effect of an Indemnity.”15This memo shows that the idea to impose long-term reparations on Germany originated with Keynes and Ashley. Lloyd George confirmed that “Professor Ashley and Mr. Keynes are thus the joint authors of the long-term indemnity which was incorporated in the Treaty.”16
It was Keynes’s tragic idea to not fix the amount of reparations in the treaty. The key document is his memorandum of March 11, 1919, entitled “Reparation and Indemnity.” This vital document is reproduced in the appendix. In this memorandum, Keynes argues Germany must be forced to pay reparations. However, he claims it is impossible to determine how much Germany can pay each year. Therefore, he recommends the Allies leave the amount of reparations unfixed in the treaty. Rather than fixing the liability, the Allies should establish a commission to decide each year how much Germany should be forced to pay. He writes, “A Commission shall be set up including representatives of European neutral nations to fix year by year the sum payable annually by Germany for a period of thirty years.”
Unfortunately, the Allies took this advice. Keynes’s policy meant the Germans were forced to sign a blank check, and they felt condemned to indefinite slave labor. This tragic idea poisoned European politics in the interwar years. Shockingly, Keynes hypocritically attacked his own idea in The Economic Consequences of the Peace.17
Given its similarities to the Dulles draft of February 21, Keynes’s memo must be considered a precursor to Article 231. Furthermore, the extremely harsh terms in his proposal show that Keynes’s passionate opposition to reparations is pure mythology:
Germany is liable up to the full extent of the injury she has caused to the Allied and Associated Nations…. The Allied and Associated Governments demand accordingly that Germany render payment for the injury which she has caused up to the full limit of her capacity…. Germany shall hand over immediately (a) the whole of her mercantile marine, (b) the whole of her gold and silver coin and bullion in the Reichsbank and all other banks; (c) the whole of the foreign property of her nationals situated outside Germany, including all foreign securities, foreign properties and business and concessions.
The war-guilt clause began to take form in late March, and Keynes was Britain’s chief draftsman. By April 2, the draft committee had nearly arrived at Article 231: “The Allied and Associated Governments affirm the responsibility of the enemy states for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of the Enemy States.”18 Keynes’s copy of the April 2 draft shows his suggested revisions in his own handwriting.
fuller1.png
Image published with permission of Proquest. Further reproduction is prohibited without permission.
The April 2 draft comes extremely close to Article 231. Still, it lacks the severity of the final clause. In the April 2 draft, the Allies “affirm the responsibility of the enemy states.” But this draft does not stipulate that Germany must accept responsibility for starting the war. For this reason, the final clause incorporated in the treaty is harsher than the April 2 draft.
With Keynes’s help, Article 231 was achieved by April 7.19 His copy of the draft is reproduced below. As shown in his own hand, Keynes inserted the war-guilt language “and the Enemy States accept” responsibility. This addition is crucial. The Supreme Council approved the article on April 7.20
repar.JPG
Image published with permission of Proquest. Further reproduction is prohibited without permission.
The draft committee made one minor change to the article after its acceptance on April 7. On April 21, the language “Enemy States” was changed to “Germany and her allies.” With this change, the final article was achieved. Keynes and Dulles were responsible for the change.21 As all this shows, Keynes and Dulles were the chief draftsmen of Article 231. Keynes bears much responsibility for the most disastrous diplomatic article in modern history.
Keynes’s problematic role in the history of Article 231 has been almost totally neglected by historians. Roy Harrod’s official biography suppresses his involvement, as does Skidelsky’s hagiographical biography. In fact, Skidelsky distances his hero from the problematic article by incorrectly attributing the war-guilt clause to Philip Kerr.22 Donald Moggridge is the only Keynes biographer to admit his involvement: “The significant draftsmen of the clause were Keynes and John Foster Dulles.”23
After the conference, Keynes maintained that Germany was responsible for the war. He writes on the first page of The Economic Consequences of Peace: “Moved by insane delusion and reckless self-regard, the German people overturned the foundations on which we all lived and built.” He repeats in 1920:
Persons in power in Germany deliberately provoked the war and intended that it should commence when it did. If this be so, the accepted standards of international justice entitled us to impose, at Germany’s expense, any terms which might be calculated to make good some part of the destruction done, to heal Europe’s wounds, to preserve and perpetuate peace, and to terrify future malefactors.24
Keynes utterly failed to predict the disastrous consequences of his war-guilt clause. He argued the article was harmless, and he even had the audacity to give his draftsmanship a compliment in The Economic Consequences of the Peace: “So far, however, all this is only a matter of words, of virtuosity in draftsmanship, which does no one any harm, and which probably seemed much more important at the time than it ever will again between now and judgment day.”25

Was Germany Guilty?

Article 231 played a momentous role in European politics between the world wars. The war-guilt clause was loathed in Germany, and it became the focus of German opposition to the treaty. Adolf Hitler made Article 231 the great symbol of the injustice of the Versailles Treaty, or Diktat, and it was a major cause of his rise to power. We must ask on the centenary of this tragic article: Did Germany actually start the war? And was Article 231 unjust?
Article 231 was unjust because Germany was not solely responsible for starting the war. It is illegitimate to blame any single nation for starting the First World War. All the major European powers were at fault. To blame Germany, or any one combatant, for the war is to fundamentally misconstrue the basic causes of modern wars and the First World War in particular.
To understand why Germany does not bear sole responsibility for the war, it must be realized that all modern wars are commercial, or economic, in origin. President Woodrow Wilson declared in 1917:
Why, my fellow-citizens, is there any man here, or any woman — let me say, is there any child here, who does not know that the seed of war in the modern world is industrial and commercial rivalry? … This war, in its inception, was a commercial and industrial war. It was not a political war.26
The First World War was the result of Europe’s imperialistic intervention in foreign trade. Britain and France had gained imperial control over significant markets in Asia and Africa long before the German unification of 1871. Unfortunately, the British and French did not allow free trade in the foreign markets they controlled. Powers like Germany were shut out of foreign markets. Thus, Germany felt imperial expansion was the only way to open new markets for German goods. Like the British and French, the Germans failed to allow other imperial powers to trade freely in German-controlled territories. The fundamental cause of the First World War was Europe’s adoption of the principle of imperialism over the principle of free trade. All of the major powers were guilty of this charge, meaning they were all responsible for the war.
Keynes was a zealous imperialist, and the following statement by him is an excellent example of the common European attitude toward imperialism before the war:
It is only during the present reign that we have begun to realize the responsibilities of the Empire and to see our duties to subject races. We have begun to see that Great Britain may have a high destiny and a great future before her. We have before taken up “the white man’s burden” and we must endeavor to wield the power of Empire with more lasting effect and to greater good than the mighty empires that have risen and fallen through the course of history.27
The European powers believed they had the right, and even the duty, to exercise imperialistic control over less developed peoples. But the imperialistic mindset inevitably creates antagonism between nations. The following passage from Keynes reflects the bellicosity bred by the ideology of imperialism:
We, who are imperialist … think that British rule brings with it an increase of justice, liberty, and prosperity; and we administer our Empire not with a view to our pecuniary aggrandizement…. Germany’s aims are not such.… [S]he looks rather to definite material gains.… [W]e distrust her diplomacy, we distrust her international honesty, we resent her calumnious attitude towards us. She envies our possessions; she would observe no scruple if there was any prospect of depriving us of them. She considers us her natural antagonist. She fears the preponderance of the Anglo Saxon race.28
Imperialistic sentiment prevented the Allies from establishing a just and durable peace at the Paris Peace Conference. The great problem with the treaty was that it enshrined British and French imperialism. The Allies carved up the world and created new but unsustainable nation-states with government coercion. Imperialists like Keynes maintained, “The setting up of a great many of these states was, in my opinion, justified.”29 The imperialistic inclinations of Keynes and other Allied delegates prevented the Allies from establishing a just peace based on genuine national self-determination. The Second World War was the inevitable result.

Lessons for the Future

On the centenary of the infamous war-guilt clause, it is appropriate to contemplate the lessons to be learned from the First World War and the Paris Peace Conference. The first lesson is this: everyone loses in modern wars. Even the winners are worse off after a great war. Although victorious, the war cost Britain its superpower status. Britain’s economic might and financial dominance were the foundation of its massive empire. By destroying the economic basis of the empire, the First World War was the beginning of the end of British world hegemony. Britain was one of the greatest losers of the war.
If anyone benefited from the Great War, it was the United States. The war passed hegemony from Britain to the United States. Still, the war and its aftermath have haunted the United States ever since. First, the war set the stage for the Great Depression of the 1930s. All of the current financial problems facing the United States have their origins in the Depression. Thus, the financial effects of the war and the resulting Depression are still with us today.
Moreover, all of the United States’ greatest foreign-policy struggles over the last hundred years must be traced to the First World War. The war and the Allies’ peacemaking produced Nazism in Germany, militarism in Japan, extremism in the Middle East, and communism in Russia, China, Korea, and Vietnam. Thus, the Second World War, the Cold War, the Korean War, the Vietnam War, and the ongoing wars in the Middle East all resulted from the First World War. These conflicts have squandered vast resources that could have been used to improve living standards in the United States.
The second lesson is this: victors of modern wars must not write war-guilt clauses. Such clauses only breed contempt between peoples. All peacemaking efforts must be aimed at establishing a durable peace, but the antagonism engendered by war-guilt clauses undermines peace. A just war must result in a just and lasting peace. A war-guilt clause undercuts the peace and thereby calls into question whether the war itself was really just.
But here is the most important lesson: the free market economy is the only economic system compatible with durable peace between nations. All modern wars have one fundamental cause — namely, government intervention in the free market economy. Government intervention in the domestic economy renders domestic producers incapable of competing with foreign producers. Domestic producers then inevitably call on government for protection from foreign producers. In other words, they demand government level the playing field by penalizing foreign producers with protectionist measures. And protectionism leads to international conflict and war. Government intervention in the economy is the ultimate cause of all modern wars.
Those who wish for lasting peace among nations must advocate free trade abroad. But foreign and domestic economic policy must form an integrated whole. Free trade abroad is impossible if the domestic economy is burdened by government intervention. Free trade abroad starts with free markets at home. The free market economy at home and abroad is the only way to lasting world peace.

Appendix: Reparation and Indemnity

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  • 1. Quoted in The Cost of the War, 1914–1919, R.E. Bunselmeyer (Hamden, CT: Archon Books, 1975), p. 82.
  • 2. Reparation at the Paris Peace Conference from the Standpoint of the American Delegation , P.M. Burnett (New York: Columbia University Press, 1940), vol. 1, p. 393
  • 3. Ibid., pp. 397, 402.
  • 4. Ibid., pp. 407–08.
  • 5. Ibid., p. 411.
  • 6. See Lord Lothian, Philip Kerr, 1882–1940, J.R.M. Butler (New York: St. Martin’s Press., 1960), p. 73. Also see The Cost of the War, 1914–1919, R.E. Bunselmeyer (Hamden, CT: Archon Books, 1975), p. 82.
  • 7. Keynes deceptively portrayed the French as the hardliners on reparations in The Economic Consequences of the Peace. According to Margaret MacMillan, “The picture painted so vividly by Keynes and others of a vindictive France, intent on grinding Germany down, begins to dissolve.” See Paris 1919: Six Months that Changed the World, M. MacMillan (New York: Random House, 2002), p. 192.
  • 8. John Maynard Keynes: Fighting for Freedom, R. Skidelsky (New York: Viking, 2000 [2001]), p. 27.
  • 9. Quoted in My Diary at the Conference of Paris, D.H. Miller (New York, 1928), vol. 19, p. 268.
  • 10. Reparation at the Paris Peace Conference from the Standpoint of the American Delegation , P.M. Burnett (New York: Columbia University Press, 1940), vol. 1, p. 600.
  • 11. Skidelsky describes Keynes’s work as “one of the most influential books of the twentieth century.” See John Maynard Keynes: Hopes Betrayed, R. Skidelsky (New York: Viking, 1983 [1986]), p. 384.
  • 12. Anticipations of the General Theory and Other Essays on Keynes, D. Patinkin (Chicago: University of Chicago Press. 1982), p. xx.
  • 13. John Maynard Keynes: Fighting for Freedom , R. Skidelsky (New York: Viking, 2000 [2001]), p. 27.
  • 14. For a detailed critique of Keynes’s actions during and after the war, see “Keynes and the First World War,” E.W. Fuller and R.C. Whitten, Libertarian Papers (vol. 9, no. 1, 2017), available at: http://libertarianpapers.org/fuller-whitten-keynes-first-world-war/.
  • 15. The Collected Writings of John Maynard Keynes (London: Macmillan and Cambridge University Press for the Royal Economic Society, 1923 [1971]), vol. 16, pp. 311–34.
  • 16. The Truth about the Peace Treaties, D. Lloyd George (London: Victor Gollancz, 1938), p. 446.
  • 17. The Collected Writings of John Maynard Keynes (London: Macmillan and Cambridge University Press for the Royal Economic Society, 1919 [1971]), vol. 2, pp. 85, 99. Marc Trachtenberg agrees: “It was British policy, especially British intransigence on figures, that was ultimately responsible for the failure of the Treaty to include a fixed sum.” See “Reparation at the Paris Peace Conference” in The Journal of Modern History (vol. 51, no. 1, 1979), p. 39.
  • 18. John Maynard Keynes: Fighting for Freedom , R. Skidelsky (New York: Viking, 2000 [2001]), p. 27.
  • 19. Ibid, p. 847.
  • 20. Ibid, p. 857. Also see p. 847.
  • 21. Ibid, p. 964.
  • 22. John Maynard Keynes: Fighting for Freedom , R. Skidelsky (New York: Viking, 2000 [2001]), p. 27.
  • 23. Maynard Keynes: An Economist’s Biography , D. Moggridge (London: Routledge, 1992) pp. 308, 331.
  • 24. The Collected Writings of John Maynard Keynes (London: Macmillan and Cambridge University Press for the Royal Economic Society, 1920 [1977]), vol. 17, p. 52.
  • 25. The Collected Writings of John Maynard Keynes (London: Macmillan and Cambridge University Press for the Royal Economic Society, 1919 [1971]), vol. 2, p. 96.
  • 26. The Papers of Woodrow Wilson (Princeton, NJ: Princeton University Press, 1990), vol. 63, pp. 45–46.
  • 27. The Collected Writings of John Maynard Keynes (London: Macmillan and Cambridge University Press for the Royal Economic Society, 1919 [1971]), vol. 2, pp. 85, 99. Marc Trachtenberg agrees: “It was British policy, especially British intransigence on figures, that was ultimately responsible for the failure of the Treaty to include a fixed sum.” See “Reparation at the Paris Peace Conference” in The Journal of Modern History (vol. 51, no. 1, 1979), p. 39.
  • 28. Keynes was a passionate British imperialist, but Skidelsky, in an effort to protect Keynes, vigorously maintains that Keynes was not an imperialist: “Keynes was neither a jingoistic imperialist, nor an economic imperialist.” See Keynes in Canada, 2001, available at: http://www.skidelskyr.com/site/article/keynes-and-canada/
  • 29. The John Maynard Keynes Papers (Cambridge, UK: King’s College), PS/2/51. Skidelsky admits, Keynes “did not object to the territorial or military clauses.” See John Maynard Keynes: Hopes Betrayed, R. Skidelsky (New York: Viking, 1983 [1986]), p. 371.