This Won’t Be the First Time
“A great civilization is not conquered from without until it has destroyed itself within. The essential cause of Rome’s decline lay in her people, her morals, her class struggle, her failing trade, her bureaucratic despotism, her stifling taxes, her consuming wars.”–Will Durant
If the United States were the first in history to experience a debt crisis with deficits that are about to bring this nation to its financial knees, government officials might have some excuse for what they’ve done.
The most frustrating thing about this mess is that our elected leaders knew where this would end from the beginning and if they didn’t know they have no business running a lemonade stand let alone a nation. If it’s ignorance that got us here we have a bone to pick with our education system and its failure to teach history. Because historical precedents for what we are now experiencing are many and should be part of every high school curriculum
Every country that has spent beyond its means has spiraled to disaster. The crash the US is about to experience has been experienced many times before.
Three successive Roman emperors, Caligula, Claudius, and Nero, all emptied their treasuries to pay for lavish ceremonial feasts, luxurious villas, elaborate temples, servants who never served, and bribes to the army and praetorian guard to ensure loyalty. When the money ran out, these arrogant rulers raised taxes, seized the assets of wealthy citizens, or expanded the money supply by remitting old coins using more base metal and less gold and silver.
What they got from this manipulation was severe inflation. In one thirty-year period during the third century A.D., the price of wheat rose 100,000 percent! A loaf of bread that cost the equivalent of $2.00 at the start of the period cost $2.000 at the end. By the time Rome collapsed high taxes had already destroyed Roman commerce. Cities and towns were reduced to ruin by lack of investment in their maintenance, the population was impoverished and dwindling, and riots and rebellion were commonplace.
Thirteen hundred years later, Spain, which had been one of the mightiest countries in Europe, began running huge deficits to pay for wars, a bloated civil service, and endemic corruption. By the end of the sixteenth century, revenues covered only half the state’s spending. Sound Familiar? Repeated currency devaluations, growing inflation, and a murderous tax burden killed off Spanish industry and agriculture. Impoverished, Spain lost its global influence as its empire contracted to a fraction of former size.
America In Ruins
Some economists think if the U.S. is very, very lucky it can fix its debt/deficit and suffer no more in the process than Great Britain has in the last thirty years. Great Britain’s economy didn’t so much crash as run aground. In 1976, the British government had to ask the IMF for help in servicing its debt, an acute embarrassment to the once mighty kingdom. In 1979, with inflation nearing 14%, British elected Margaret Thatcher to right the ship. Her platform stressed fiscal conservatism, lower taxes, and a reduced public sector. Thatcher’s unpleasant task was to remind Brits that though the public might make unlimited demands on the government for services, the government’s resources were still finite.
If the United States has its own Margaret Thatcher, We haven’t elected him or her to national office yet.
One thing is certain in these troubling times: What we do now will determine what happens to us later, both as individuals and as a nation. Little time remains for us to act, and, even then, our actions must be decisive, bold and radical if they are to prove effective. Forestalling the demise of our country requires the commitment and participation of all of us.
And it has to start now.