WHY ROMAN EMPERORS WERE THROWING MONEY AT PEOPLE. WHY THEY EVISCERATED THE ROMAN ECONOMY. HOW IT RELATES TO THE PRESENT USA.
Abstract: Property grows from itself, by itself, exponentially (it is a pure mathematical phenomenon). Thus great property always had to be taxed more to maintain the statu quo ante. Hence any would-be plutocracy (money-power) has always viewed the people power (demo-cracy) with deep hostility and wanted to dismantle the tax structure. In the Roman empire, the plutocracy was born, grew, and festered precisely because it dismantled the tax structure, and exerted exaggerated political control. American plutocrats have gone down the same process ever since Reagan. Obama should not accommodate them, and, instead, he should increase taxes, especially on the rich, but also on very bad habits, to create huge real work, a huge new economy, in infrastructure, while keeping future deficits and possible inflation as low as possible. Obama will not want the USA to fall into the plutocratic black hole Rome fell into (which included simultaneously socioeconomic collapse and inflation, while fighting an eternal war in the Middle East).n
My main economic advice to Obama: please do not imitate the Roman empire, and its death by a thousands tax cuts. Appeasing people by throwing money at them is not what they need in the fullness of time. What the people need is their republic back, with meaningful and productive employment empowering them again (as they used to have). This is the life saving turn imperial Rome did not take. Instead, Rome was steered into oblivion by a small minority at the top that exploited it to death.n
Obama does not have to feel bound by promises made when the economy was still cruising in choppy seas. Now the economy is sinking, and it’s not a cruise anymore. The morality appropriate for cruising has to be changed, so that the ship does not end at the bottom of the ocean. Obama was going to be captain of the ship of state, instead he finds himself in command of a sinking wreck. All hands should be on deck, everybody has to understand the gravity of the situation, so everybody should sacrifice.n
A thousand dollars of tax rebate will be mostly spent to buy stuff in Asian factories set up by US plutocrats. These rebates do not help create an economy at home, they just help the infernal machine that suck jobs out of the USA. Trade with Asia is good, but right now all governmental money should be reserved to create an economy at home. Without the later, there will not be any trade looking forward, anyway.n
These tax rebates, long the main weapon of those who wanted to weaken the state, are akin to the distributions of money Roman emperors were making to the populace, the “vulgum”. Throwing money at the people bought people off in Rome. Of course, two years later, those same people were worse off, and the economy had sunk further, because no meaningful long term investments had been made, since all the disposable money had been thrown at people, or invested in cheap projects and activities, such as games (similarly some huge chunks of taxpayer money ostensibly given to save banking activity (“TARP”) was used to pay for games in the USA, by financing American football shown on TV; a lot of the rest, dozens of billions at least, was used to make the hyper-rich even richer).n
Imperial Rome went on like this for a long time, sinking ever lower; throwing money at people, and games, engaging in military adventures in the Middle East… Meanwhile the hyper-rich was getting ever richer. Under the empire, and in total opposition to what happened during the Roman REPUBLIC, Roman investments in factories, engineering and industrial infrastructure were actively discouraged, although grandiose economically useless projects were still engaged in (such as displacing the capital city to Byzantium). Also the Roman empire spent ever more on the military, and, the more the army grew, the more insecure the empire was (because giant military spending and silly military adventures weakened the economic core of the empire, whereas the drafted army of the Roman republic had been used mostly as needed, when needed, with much more impact, because it had a good reason to fight and the economy backing it up was very strong.)n
The Roman empire became characterized by a dying off of the central state, as more and more money was sucked by rich, increasingly provincial plutocrats, who manipulated the system so that they paid ever less taxes (think about today’s US hedge fund managers and other money manipulators with their 15% maximum tax rate, and enormous tax evasion overseas by the richest US citizens; think about the privileged access the rich have to the political system in the USA).n
After decades of this, the industry and production of the core of the Roman empire was eviscerated. Even the health care system went down, and Rome was struck by severe epidemics (in the Third Century, when the political mess was maximum during the continual turmoil of the “barrack emperors”). The Roman plutocracy enforced that economic weakening of the core, and especially of the city of Rome and Italy, completely intentionally. The overall aim of the Roman imperial plutocracy was to prevent a revolt against itself, and a return to the republic. Weakening the Populus Romanus was a must. Putting people out of work in the center of the empire while throwing money and games at them was the key method the plutocracy used. (Thus the feudal system progressively appeared, although emperors were endowed with ever greater nominal powers, and the Roman Senate gave “counsel” for centuries more; power was increasingly in the hands of the nobles as the plutocrats decided to call themselves.)n
The American plutocracy has embarked on a very similar course, ever since Reagan. It is death of the republic, by a thousands tax cuts. As the state relatively shrinks, essential services that cannot be provided by the free market die off, and the later starts to freeze, because it needs those services to function (dying public services are health care, education, basic industrial infrastructure, etc…). A difference between the USA and Rome is that, whereas Rome stood in magnificent isolation for three centuries of quiet decay, the USA is far from being alone, so the decay of the USA will be much faster, if counter measures are not imposed swiftly.n
The first thing to do is not to persist with the contempt of the Roman emperors, giving their subjects crumbs to keep them happy from one day to the next, as if they were birds.n
The second thing to do is to free the subjects by giving them real work (thus real power, the power of accomplishment, the power of strike). There is plenty of work to do, it’s capital and the will to use it that is missing. Obama at this point is the last person in command of plenty of capital, as long as he does not waste it on crumbs (or directly on the plutocracy as a lot of the TARP has been wasted so far). What is now needed is the will, direct from the President, to create as much of an economy as possible, as soon as possible. Massive long term profitable investments are what create a sustainable economy. The occasion will not show up again, it’s a one time shot.n
An important thing to understand is that, whereas the economists that talk in the name of the plutocracy claim that the state should not grow, there is no theory of the ideal size of the state. After a giant military built up by Bush, the entire US State (Federal plus States) is 36% of GDP. Big European states such as Britain and France are exactly at 45% of GDP (with a smaller military spending). Now Europe is doing much better than the USA in the present crisis. Conclusion: the US Federal State should grow, a lot, and that means new taxes. For all. An obvious one should be a higher gasoline tax. As it is, roads cost 107 billion dollars more than what the gas tax brings.
P/S 1: This is not the first time we express this general opinion (although the particular angle of the analogy with Roman decay is new). In an editorial in the NYT, Paul Krugman supports this, and points out that there are other savings to be made. Obama has long said that there was 15 billion dollar of US federal financial support to private insurance insuring Federal health care. Krugman claims that the financial Federal support of private insurance amounts to the much higher number of 100 billion dollars. The 107 billions for roads is a brand new 2009 Bush administration number. The gas tax was initially legislated to pay for roads, so the government has been derelict here, even according to its own obsolete ideology.
P/S 2: The Obama economic team itself admits that throwing money at the people (“jump starting” as Obama says and Krugman criticizes) will exhaust itself within two years. Then what? Instead HUGE ENGINEERING projects will not exhaust themselves quickly. HIGH SPEED RAIL needs YEARS of engineering planning, followed by years of construction (I personally know one of the top engineer of the high speed rail line connecting Milan to Turin, which is going to be completed in 2009; he was working on it more than 10 years ago (and that line is short, in a completely flat plain)). The French, the Swiss and the Italians, have been working for years on three tunnels for high speed rail, the longest in the world, each worth much more than ten billion dollar, to be completed not sooner than 2016… Governments pay for them, private industry build them. France is also building four new high speed train lines, with many more in the early works. n
Some people will say high speed rail is no solution for the USA, ignoring the fact that most US large cities and economic areas are in a few clusters whose diameters are smaller than France. In Europe, rail is faster and preferred by people, for all travel less than 4 hours. Air France, the world largest airline by revenue, is going to buy the latest high speed train sets, the AGV, to survive internally in Europe. Some Americans will say the USA is too big, but Siemens’ high speed trains have reached 250 miles per hour in standard operation with standard train sets. At this rate the train would go from downtown LA to downtown New York in ten hours. In any case, all of Europe is equipping itself with high speed electric trains, even gigantic Russia.
P/S 3: Obama has been repeating the plutocratic credo that he does not want to grow the state. But the Oriental Part of the Roman empire, headed by Constantinople, survived for a millennium with a big heavy bureaucratized state, and would have probably kept on going if it had not been attacked treacherously and conquered by the hyper-violent, rapacious Franks [1204 CE].
P/S 4: The Milton Friedman credo was that there was no such thing as a bad tax cut. All Neoconservatives and Reagan, free markets, fanatical plutocratic lovers, have been repeating that credo ever since as an incantation. Accepting this mantra of theirs, means accepting their -erroneous- world picture. Although Friedman got the Nobel prize in economics, for some technicalities, as part of the plutocratic conspiracy, he thus demonstrated his misunderstanding of the big picture of economics. Economics was not created at the University of Chicago. Economics is a subject of reflection that was, after all, named and created by Greek philosophers, not pata-mathematicians on the plutocratic payroll (rich, private US universities are in the hands of the plutocracy, Socrates would have pointed out with strident disgust and reprobation).n
The fact is that MARKETS DO NOT AN ENTIRE ECONOMY MAKE. Markets are crucial to the economy, true, but so are many structures behind them, that make them possible in the first place. If one lowers taxes too much, these fundamental structures (also known in old English as “the Commons”) cease to exist. Then the free markets cease to exist too. The “Commons” even allow free markets to be born. For example, there would not have been a triumphant British economy in the nineteenth century without the British Navy and the British government, both of the later clearly not marketable (and that won enormous free markets, mostly against natives and the French, much earlier, during the eighteenth century).
Closer to us, the French government paid for the first high speed train line, and its train sets. That line became so profitable that high speed trains have been self funding ever since, according to the free market model (except now for the afore mentioned giant tunnels, one of which will be well over 50 miles of combined tunnels and bridge; private capital was used for the “chunnel” below the sea between France and England, and that did not work at all for the investors; thus the return to big state funding for giant tunnels).
P/S 5: Roman decay in the end became more mental and technological than economic. The economy was still going up, but the minds were going down. Even then the technological decay was relative: although Roman technology was slowly improving, the military technology of the barbarians was improving faster (in part by copying Rome and then innovating aggressively; for example Roman armor became unable to cope with Central Asian arrows shot from enormous composite bows). Rome’s relative and absolute decays finished in a brutal series of invasions by the Germans, and the Persians. An effort by Constantine was to increase the fascism, by making it more intellectual, giving full powers to Roman Catholicism. But that made the situation worse, because the Roman leadership became ever more superstitious, hence stupid, and started to lose huge battles because it fought them in an extremely stupid way (the initial huge defeats by the Visigoths and later the Arabs being striking examples). Arabs pounced on the weakened empire, all this complicated by the internal terror of rabid Christianity as the mob revolted, and intellectuals fled to Persia or distant, autonomous parts of the empire (Franks, British Isles: Eire, Northumberland).)