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Monday, 5 December 2011

Lessons from History: The Fall of Rome

The Welfare State was born from the shared experience of the Second World War. The events pulled the community together to achieve a common goal in war. They admirably attempted to preserve this spirit in peacetime. They succeeded but only as long as those people who had experienced the horror of war remained alive to pass on their hard earned wisdom.

Rome fell over centuries, a catalog of avoidable errors
bought it to its knees. The same mistakes are being made
in the Western World today.
The people who fought and lived at that time are dying out, now largely only those who were just children remain. The experience of the later generations has been substantially different; they have suffered no hardship, they have not been drawn together in the same way as a community.

The Welfare State has failed to adapt to the modern social conciousness. A perfect example of this has been provided by philanthropist David Kirsch whose Christmas gift of £100 to every person in Jersey has been abused - with every person over 70 taking the money even those who have absolutely no need of it. That is the problem with entitlements, if you are entitled, you take, irrespective of need.

It is this combined with a lack of responsibility for oneself and blind faith in the government and the welfare state that is, in my opinion, the cause of its undoing. Humans are by nature, lazy (it is a biological imperative to conserve energy). We can come together in times of peril, but in the absence of peril there is the absence of community.

Government has removed the peril from our lives, but like many individuals has become obsessed with its own concerns at the expense of the general good. It has entered into debt to bribe voters. Its decisions are for sale to the highest bidder.

We are at a time of unsound economies, military build-up, rising taxation, increasing restrictions on personal freedoms... just as happened at the end of the Roman Empire. Can you be certain that the results will be any different now to those that history have shown to occur?

Economist Ludwig von Mises argued that unsound economic policies played a key role in the impoverishment and decay of the Roman Empire. According to them, by the 2nd century AD, the Roman Empire had developed a complex market economy in which trade was relatively free. Tariffs were low and laws controlling the prices of foodstuffs and other commodities had little impact because they did not fix the prices significantly below their market levels. After the 3rd century, however, debasement of the currency (i.e., the minting of coins with diminishing content of gold, silver, and bronze) led to inflation.

The price control laws then resulted in prices that were significantly below their free-market equilibrium levels.

According to von Mises, artificially low prices led to the scarcity of foodstuffs, particularly in cities, whose inhabitants depended on trade to obtain them. Despite laws passed to prevent migration from the cities to the countryside, urban areas gradually became depopulated and many Roman citizens abandoned their specialized trades to practice subsistence agriculture. This, coupled with increasingly oppressive and arbitrary taxation, led to a severe net decrease in trade, technical innovation, and the overall wealth of the Empire

The beginning of debasement can be traced to the reign of Nero. [Debasement began in 1971]

The emperors increasingly relied on the army as the sole source of their power, and therefore their economic policy was driven more and more by a desire to increase military funding in order to buy the army's loyalty. [No attempt to reduce military spending even though no one to fight/defend against]

By the 3rd century, the monetary economy had collapsed. But the imperial government was now in a position where it had to satisfy the demands of the army at all costs. Failure to do so would result in the army forcibly deposing the emperor and installing a new one.
Therefore, being unable to increase monetary taxes [just like now], the Roman Empire had to resort to direct requisitioning of physical goods anywhere it could find them [think $160 billion frozen assets from Egypt & Libya]- for example taking food and cattle from farmers. The result was social chaos, and this led to different responses from the authorities and from the common people.

The authorities tried to restore order by requiring free people (i.e. non-slaves) to remain in the same occupation or even at the same place of employment. Eventually, this practice was extended to force children to follow the same occupation as their parents. So, for instance, farmers were tied to the land, and the sons of soldiers had to become soldiers themselves. [Think employment laws binding you to your place of work]

Many common people reacted by moving to the countryside, sometimes joining the estates of the wealthy, and in general trying to be self-sufficient and interact as little as possible with the imperial authorities. Thus Roman society began to dissolve into a number of separate estates that operated as closed systems, provided for all their own needs and did not engage in trade at all. [Think move to green and libertarian philosophies]

The presence of large communities of immigrants within the Empire and the army who eventually rebelled and the drastic climate change of 535 AD (probably caused by a volcanic eruption) also undermined the structures of Empire.

Can you see any similarities?