- "The decline of Rome was the natural and inevitable
effect of immoderate greatness. Prosperity ripened the principle of decay;
the causes of destruction multiplied with the extent of conquest; and as
soon as time or accident had removed the artificial supports, the stupendous
fabric yielded to the pressure of its own weight."
- Edward Gibbon The Decline and Fall of the Roman
Empire
-
- After ruling much of the known world for centuries, Rome
fell due to a number of factors that, historians believe, would not have
been fatal in isolation, but that proved terminal in combination. Military
overspending and overreach, an untenable economic system, and currency
debasement all played a role. As has been well documented, the Roman emperors
attempted to distract the populace from the increasingly dire reality of
their situation by providing bread and circuses. But entertainments could
not stop the nation-state from yielding to the pressure of its own weight.
-
- There are numerous parallels between the end of the Roman
Empire and the path the 226-year-old American republic is now on. One difference
in these fast-moving times is that empires can rise more rapidly, but are
also likely to decline more rapidly.
-
- Conquest & Overreach
-
- "The decay of trade and industry was not a cause
of Rome's fall. There was a decline in agriculture and land was withdrawn
from cultivation, in some cases on a very large scale, sometimes as a direct
result of barbarian invasions. However, the chief cause of the agricultural
decline was high taxation on the marginal land, driving it out of cultivation.
Taxation was spurred by the huge military budget and was thus 'indirectly'
the result of the barbarian invasion." Arthur Ferrill The
Fall of the Roman Empire: The Military Explanation
-
- The Roman Empire's economy was based on the plunder of
conquered territories. As the empire expanded, it installed remote military
garrisons to maintain control and increasingly relied on Germanic mercenaries
to man those garrisons.
-
- Ultimately, as its territorial expansion waned and began
to contract, less and less booty became available to support the empire's
widespread ambitions and domestic economy. The outsourcing of the military
and the cultural dilution from the bloated empire led to lethargy, complacency,
and decadence amongst the formerly self-reliant and hard-working Roman
citizenry.
-
- In the modern context, as the only major power whose
productive capacity was not destroyed during World War II, the American
Empire emerged from the ashes of that conflict.
-
- The parallels with Rome do not repeat, but they do rhyme.
-
- Rather than plunder, the U.S. used its unique status
to dictate terms that made the U.S. dollar the world's de facto reserve
currency and positioned its robust new manufacturing sector to supply the
world with the cars, machinery, appliances, and electronics it so desperately
needed. The U.S. trade surplus with the nations of the world led to escalating
U.S. wealth and prosperity.
-
- Meanwhile, the U.S. military, about which I'll have more
to say in a moment, was increasingly asked by the nation's politicians
to take on the role of the world's policeman, leading to action in dozens
of conflicts. And even where no direct military role was taken, the U.S.
has shown a keen willingness to exert coercive power including threats,
sanctions, and even assassinations if it was seen to advance American
interests.
-
- Simply, in the 20th century, the U.S. became an empire
in all but name.
-
- Bread and Circuses
-
- "Already long ago, from when we sold our vote to
no man, the People have abdicated our duties; for the People who once upon
a time handed out military command, high civil office, legions - everything,
now restrains itself and anxiously hopes for just two things: bread and
circuses." Roman Poet Juvenal 77 AD
-
- British historian Andrew J. Toynbee convincingly argues
that the Roman Empire had a rotten economic system from its inception and
its institutions steadily decayed over time.
-
- The government didn't have proper budgetary systems,
and so it squandered resources maintaining the empire while producing little
of value. When the spoils from conquered territories were no longer sufficient
to cover its many expenses, it turned to higher taxes, in effect shifting
the burden of the immense military structure onto the back of the citizenry.
The higher taxes forced many small farmers to let their land go barren.
To distract its citizens from the worsening conditions, Roman politicians
played the populist card by providing free wheat to the poor and entertaining
them with circuses, chariot races, and other entertainments.
-
- The American Empire has reached the point where it now
faces similar structural imbalances, but to pay its bills, it has largely
chosen to borrow from foreign countries in recent years. And the bills
are large.
-
- The $765 billion of annual military expenditures by the
United States equals the military expenditures of the rest of the world
combined.
-
- The social safety net put in place over the decades by
politicians attempting to get reelected has resulted in a large number
of Americans now almost totally dependent upon the almighty state for their
well-being. Threatening to rip apart the country's social fabric, the "new
American" will vote for anyone who promises to sustain his dependency
even as the nation increasingly struggles under the weight of $56 trillion
of unfunded liabilities.
-
- The non-farm workforce in the United States totals 133
million people. Of that number, the government directly employs 22.5 million.
Millions more are employed by industries heavily dependent on government
spending, such as defense, construction, and healthcare. The annual maintenance
cost of the country's safety net now costs American taxpayers hundreds
of billions.
-
- Medicare and Medicaid annual spending $682 billion
- Social Security annual spending $612 billion
- Food stamps & other food programs $60 billion
- Federal unemployment payments $45 billion
-
- America has evolved from a nation of savers to a nation
of consumers with a throw-away mentality and driven by little more than
the desire for instant gratification. Worse, large segments of our society
are convinced that they are owed something. To most, civic duty has become
a quaint, outmoded concept. Happy to accommodate in exchange for
a reliable vote come election time the government keeps the public
satiated and sedated by providing them with an ever-increasing list of
"public services."
-
- Roman poet Juvenal described how the Roman citizens abdicated
their duties to the state and turned to bread and circuses. The programs
listed above represent just some of the bread that American citizens now
feel entitled to.
-
- Here in America, we know how to provide circuses on a
grand scale. Roman citizens were satisfied with a good chariot race. In
these modern times, Americans can find entertainment and distraction with
24-hour-a-day cable TV, the Internet, iPhones, iPods, Blackberries, 1.1
million retail stores, 1,100 malls, 17,000 golf courses, Britney Spears,
Kim Kardashian, Housewives of Orange County, New York, Atlanta, and New
Jersey, American Idol, Survivor, Rock of Love, Flip That House, 660 stations
with nothing on, Las Vegas, Disney World, MLB, NFL, NBA, NHL, WWF, porn,
and mega-churches all competing to fill the void in people's lives.
-
- There isn't enough time in the day to take in all of
the circuses, but with what little spare time we have available, we are
now able to check our email anywhere on Earth and stay in constant contact
with the office even in the middle of the night or, more typically these
days, in the middle of dinner. And we can text and twitter our every thought
to our circle of friends and followers, providing next to no lasting purpose
or benefit to anyone.
-
- Approximately 12% of the U.S. population (36 million
people) is considered poor, and many of them are totally dependent upon
the state. Yet that term seems out of sync with the fact that many of those
individuals have cell phones ($500/yr.), cable TV ($900/yr.), Internet
access ($500/yr.), cars ($5,000/yr. lease), houses ($6,000/yr.), eat fast
food ($1,000/yr.), and can smoke a pack a day ($1,500/yr.).
-
- How can this be?
-
- For the answer, look no further than Alan Greenspan,
Ben Bernanke, and the Federal Reserve, in cahoots with the financial geniuses
on Wall Street, who made it standard practice to create money out of thin
air and encourage anyone with a heartbeat to avail themselves of it in
the form of low-cost loans no proof of income or assets required.
-
- The arrangement worked just fine until the banks could
no longer hide the bad debt or sell it to the greater fool. Now it has
collapsed onto the backs of American taxpayers.
-
- Debasement
-
- "The supply of foodstuffs in the cities declined.
The people in the cities were forced to go back to the country and to return
to agricultural life. Consequently, the emperors made laws against this
movement. There were laws preventing the city dweller from moving to the
country, but such laws were ineffective. As the people did not have anything
to eat in the city, as they were starving, no law could keep them from
leaving the city and going back into agriculture. The city dweller could
no longer work in the processing indus tries of the cities as an artisan.
And, with the loss of the markets in the cities, no one could buy anything
there anymore." Ludwig von Mises Human Action
-
- Economist Ludwig von Mises argued that flawed economic
policies played a key role in the impoverishment and decay of the Roman
Empire. He contended that interventionist economic policies, including
price controls that resulted in prices substantially below their free-market
equilibrium levels, ultimately led to inflation.
-
- Further, Rome was spending more than it could afford.
The free food rations for the poor of Rome and Constantinople as
well as the many entertainments were costing a fortune. The purchasing
of exotic spices, silks, and other luxuries from the Orient bled Rome of
its gold gold that didn't return. Soon Rome didn't have enough gold to
produce coins. And so it debased its coins with lesser metals until there
was no gold left.
-
- To cover the trillions it is spending each year propping
up its empire, the U.S. government is now increasingly forced to rely on
printing and borrowing the funds to do so, steadily debasing the currency
in the process.
-
- But the nation's currency debasement is nothing new.
Rather, it began in 1913 with the creation of the Federal Reserve. It accelerated
when FDR confiscated all the gold in the country in the 1930s. When Richard
Nixon took the U.S. off the gold standard in 1971, the show really got
on the road, as that freed the Federal Reserve to print unlimited amounts
of dollars. As a result, the dollar has lost 93% of its value versus gold
since 1970.
-
- The Military Complex
-
- Lessons from ancient Rome regarding the cost of maintaining
a far-flung empire have been ignored. Today, U.S. boots stomp on the ground
of over 117 countries. Even the use of mercenaries, in the form of thousands
of Blackwater guards and other private contractors filling roles formerly
left to the military, has become commonplace.
-
- Using military assets to pursue political goals, as is
the norm in empire building, has led to unintended consequences and wasted
opportunities.
-
- One of the most egregious of those lost opportunities
came following the bankruptcy and collapse of the Soviet Union. The United
States had won the Cold War, but failed to recognize the cautionary signs
on the path ahead.
-
- As the only remaining superpower on earth, America fell
into the same trap that has befallen previous empires. Instead of concentrating
on proactively confronting domestic challenges, such as unfunded Social
Security and Medicare liabilities, and developing a comprehensive energy
plan to wean ourselves off Middle East oil, we continued to intervene in
costly foreign adventures.
-
- Including, among many others, supplying both Osama bin
Laden and Saddam Hussein with weapons and money during their fights against
our enemies, leading to unintended consequences we live with to this day.
-
- Seeking to maintain its widespread interests and to defend
itself from the many enemies created by building and protecting those interests,
the American military complex has grown to the point where it now spends
an amount equal to 44% of all taxes collected from its citizens.
-
- Since 1991 alone, the U.S. has interceded in Kuwait,
Somalia, Bosnia, Sudan, Afghanistan, and Iraq, among others. In no case
has Congress fulfilled its obligation of declaring war. Instead, it has
delegated sole responsibility for waging war to the president, weakening
the structure of our three-branch government. Over that period of time,
the U.S. has spent $7 trillion on defense.
-
- The National Debt in 1991 was $3.2 trillion. Today, it
is $11.6 trillion, a 360% increase in eighteen years. In 2001, spending
on defense was 17% of the government budget. In 2008, defense, Homeland
Security, and war spending accounted for 26% of government spending.
-
- Collapse
-
- Economic history books will likely mark 1980 as the year
that the rapid phase of the decline of the American Empire began. That's
when the first wave of the Baby Boomer generation reached the age of 35
and turned its attention to living the American dream on borrowed
money. Since that year, household debt has surged from $1 trillion to $14
trillion, while the savings rate has plunged from 12% to below 0%.
-
- There are many ways to use credit, some quite intelligent
and practical. Rotating credit card debt to buy the latest non-necessity
does not fall into that category. Today in America, there are $956 billion
of credit card debt outstanding, or $9,000 per household. The average American
has nine credit cards. A credit card allows every person to live above
their means for awhile... just as did the home equity loans taken against
artificially elevated house prices anchored on mortgages people couldn't
afford.
-
- This is where reality and fantasy meet. People can only
borrow and spend if the Federal Reserve and bankers provide the funds to
do so, and without asking a lot of questions about suitability. By creating
money out of thin air and handing it out to people with no legitimate means
of repaying it, the financial elite and their friends in Washington have
played an essential role in bringing the U.S. and even the global economy
to its knees.
-
- Yet, for all the evidence, a large swath of Americans
still believes the nation hasn't gone off course. These people consider
borrowing in order to live beyond their means a rational choice. They expect
the government to save them when they get into trouble and think that taxing
the rich to pay for a bigger and bigger safety net is a reasonable idea.
-
- In a truly free-market society, this sizable segment
of the public would have already learned a brutal lesson they'd remember
for the rest of their lives. Instead, the brutal lesson is being learned
by people who played by the rules and didn't take ridiculous risks, but
who are now being coerced by the government to pay for the misdeeds of
the over-indebted fools who did.
-
- The crushing levels of debt resulting from decades of
excess; the far-reaching military presence; the politically motivated social
safety net and other popular but unaffordable programs have now reached
the point that the economic decline of the American Empire is a foregone
conclusion.
-
- The current downturn is not going to be like previous
recessions that lasted on average 16 months. Even as the government responds
by trying to borrow and spend the country back to prosperity, there is
no ignoring that the economic base has been gutted and the future social
program liabilities have essentially bankrupted the country.
-
- As was the case in the final stages of the Roman Empire,
the unsustainable military, social, and political excesses have reached
the point that, in combination, they are now likely to prove catastrophic.
-
- A Final Thought
-
- "For over a thousand years, Roman conquerors returning
from the wars enjoyed the honor of a triumph a tumultuous parade.
In the procession came trumpeters and musicians and strange animals from
the conquered territories, together with carts laden with treasure and
captured armaments. The conqueror rode in a triumphal chariot, the dazed
prisoners walking in chains before him. Sometimes his children, robed in
white, stood with him in the chariot, or rode the trace horses. A slave
stood behind the conqueror, holding a golden crown, and whispering in his
ear a warning: that all glory is fleeting." George C. Scott
as Patton [emphasis added]
-
- Which begs the question, who is now standing behind the
current political leadership, reminding them that their elevated positions
are temporal? Unfortunately, the excesses they have created, and the dislocations
caused by those excesses, will be with this country for generations.
- Reprinted with the permission of Casey Research.
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- © 2009 James Quinn
- Editorial Archives
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- Bio - James Quinn is a senior director of strategic
planning for a major university. These articles reflect the personal views
of James Quinn. They do not necessarily represent the views of his employer
and are not sponsored or endorsed by his employer.
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