Fifty years on, we are all still paying for Vietnamby Tom Streithorst / March 10, 2015 / Leave a comment
Look at them, streaming ashore, the first American combat troops landing in Danang, fifty years ago this month. The sons of men who defeated the Wehrmacht and the Imperial Japanese Navy, they would never have imagined that a decade later their allies would be hanging off the skids of helicopters, fleeing Saigon, the mighty American military defeated by a rag tag third world army.
If future historians write the decline of the American empire, Vietnam will be chapter one. In 1965, Americans knew their country was the best in the world, able to create a Great Society at home, fight a war half way around the planet, and put a man on the moon, all without raising taxes. Back then, the United States was the font of modernity, the low cost, high value producer of just about everything. Its technology, its consumer goods were the best on the planet. Ten years, 50,000 American and 2 million Vietnamese lives later, that confidence was gone.
Before Vietnam, America had never lost a war. Before Vietnam, America was the world’s largest creditor. Before Vietnam the dollar was as good as gold. Before Vietnam, Americans trusted their politicians. We all know the effects defeat in Indochina had on the American psyche. Apocalypse Now, Platoon, and the Deer Hunter told us, more than thirty years ago, how America had lost its innocence in the jungles of South East Asia.
The psychological effects of Vietnam were real and damaging but fifty years on, we can also observe its practical consequences. Least noted are its economic costs. In 1965, the American economy was booming. GDP grew almost 9 per cent, stimulated both by increased government spending and the residual effects of the Kennedy tax cuts. Unemployment was falling and inflation less than 1 per cent.
With the economy producing close to its full employment potential, the spending required to wage the Vietnam War ($140bn over the entire war, close to $1 trillion in today’s currency) inevitably caused inflationary pressure. Had President Lyndon Johnson been willing to enact a tax increase to pay for the war, that inflation could have been contained, but he wanted war on the sly, didn’t want to call attention to its expense.…