Why We Lost Vietnam
Jude Wanniski
September 23, 1998


Memo To: Joseph L. Galloway, USNews&WorldReport
From: Jude Wanniski
Re: "Who Lost Vietnam?"

I read your review of Jeffrey Record's book, Why We Lost in Vietnam, in the Sunday NYTimes Book Review section. Your critique is reasonable in that Record tries to replay the military history in a way that suggests if we had fought the war differently, we would have won. Well, sure. Still, both the book and your critique, I'm afraid, are at such a low level of abstraction that the conclusions have no analytical utility. In the past, I've called this "foxhole history," which attempts to explain a great war from ground level. It is like asking GI Joe to write a history on why we succeeded at the Normandy invasion. Even Eisenhower's commentary at one of the highest levels of abstractions will not satisfy the historian of the 21st century who looks back on why we won instead of losing.

I've studied the history of our involvement in Vietnam against the broadest of canvases and concluded that it really was not a "war" as much as a "battle" in the Cold War. We lost the battle, because we chose the wrong path in terms of ECONOMIC POLICY. If you would take a look at my book, The Way the World Works, published first in 1978, you will find that I saw that we forced the South Vietnam government to adopt economic policies that destroyed its economy. It was very simple. We told the government of Ngo Dinh Diem we would withdraw military and economic aid unless they did what we told them to do. We told them to raise taxes on the rich and use the revenue to win the minds and hearts of the people with social giveaway programs. The tax rates were so high that the rich left the country with what capital they could assemble and went to Paris. As the urban economy fell apart, revenues collapsed. This occurred in January 1962. Six months later the U.S. economic team returned and told the government that it had to devalue the currency, the piastre. The consequent inflation wiped out what was left. That destroyed the urban economy. The rural economy was destroyed by "land reform" plans we shoved down the government's throat. Big farms were broken up into little farms, the owners given government bonds that soon became worthless. The peasants who took over the little farms could not earn enough to pay for them. In a few years, the only land that remained loyal to the government was land that had not been "reformed." When capitalism is destroyed, the people turn to socialism.

Our political establishment to this day refuses to accept the godawful truth that 58,000 American men and women were killed and 300,000 seriously wounded because of the Kennedy and Johnson administration's experiments in neo-Keynesian economics. It is the same political establishment that poisons the developing world with the same nostrums, via the International Monetary Fund. Check it out. My book only devotes a page to this hypothesis. The economic origins of the Vietnam War deserves an entire book and some day soon I hope it will be written. The Kennedy experiment in Vietnam, encouraged by the Catholic Church, by the way, was another example of the road to hell being paved with good intentions. We didn't lose the war because we didn't kill enough Viet Cong fast enough or with more clever military strategies.