Living (and Dying) Beyond Our Means – pt.2

By A.D. 180 the Pax Romana was coming to an end. Emperor Marcus Aurelius had died and the following century was to see a succession of nearly 25 rulers, most of them either unable or unwilling to deal with the problems of Empire.

What historians refer to as the “Crisis of the 3rd Century” was not the end of the Roman Empire.  But it was most assuredly the beginning of the end.  This period in Roman history was characterized by a rapid growth in the Roman government, a growing unsustainablity of its military commitments, increased levels of taxation upon its citizens, an inability to control the Empire’s borders, a debasing of the currency, and a social deterioration fueled by a growing level of political corruption, economic decline, a decline in traditional religious beliefs, and a growing detachment from the shared ethic and values that had previously given such meaning to the term “Roman Citizen”.

Spinoza said “If you want the Present to be different from the Past, study the Past.” I realize that it is less fashionable these days to teach/study actual history. Our schools, both public and private, prefer the teaching of “social studies” and cultural diversity instead. But it would be wise for us to heed Spinoza at least to the point where we recognize the possibility that history can, indeed, repeat itself.

The U.S.A. in 2011 is not the Roman Empire. Yet the historical lessons of the Empire’s decline can be instructive.  Certainly the parallels are rather alarming.

Like Rome, America has seen a dramatic increase in the size and scope of its government. Even as the private sector of our economy lost more than 7 million jobs since 2008, employment by government at all levels actually increased until the current budget year, when the flow of federal “stimulus” money ended. (BTW, is it any wonder that the Obama Democrats directed more than $300 billion dollars in stimulus monies to the preservation of public sector jobs? After all, the public sector unions contributed more than $400 million dollars to Obama and the Democratic Party in the 2008 election cycle. What was sold to the American people as an economic stimulus bill could just as accurately be characterized as a political favor to the Democratic party’s most faithful source of campaign funds.)

Diocletian divided the Roman Empire in the late 4th century, and his move is often seen as a response to the perception that the Roman Empire was essentially too big to govern.  In fact, by 384 A.D. the Empire had shrunk considerably from its greatest expanse under Emperor Trajan in 117 A.D. What was wrong was not the size of the Empire so much as the way in which it was being governed, and the inability of the massively centralized government to respond effectively and flexibly to new challenges.

Flash ahead to our current situation in 2011, if you will. Like 3rd century Rome, we have a massive, centralized government that is unable or unwilling to recognize and respond to America’s problems (and to consider that part of a necessary response is not to become part of the problem itself).

Like Rome, our currency has been debased by inflationary monetary policies, trade imbalances, and out of control borrowing. (Since the founding of the Federal Reserve in 1913, the U.S. dollar has lost 96% of its value, mostly due to inflation.)

Like Rome, we are overextended militarily.  Currently, the US has troops stationed in 135 countries worldwide. We have more than 50,000 troops in Germany, 66 years after the end of World War II and 20 years after the end of the Cold War. We still have more than 35,000 troops in Japan, 28,500 troops in Korea more than half a century after the end of that conflict.  And we have 150,000 troops in Iran and Afghanistan as a result of those wars. The troops that Bill Clinton sent to both Bosnia and Haiti on short term missions in the 1990s are still there. Meanwhile, we are unwilling to secure our own borders closer to home. (I won’t even go into the lunacy of Operation Fast & Furious where the US government sold sophisticated automatic weapons to Mexican drug cartels – that’s for another column).

Like Rome, we maintain policies that discourage long term economic planning and risk taking. Forget about corporate jet tax breaks (which Obama and the Democrats included in the stimulus bill, BTW) – that’s just chump change. But why is the U.S. corporate tax rate a whopping 35%?  This is twice as high as Canada’s and well above the rates in EU member states. And the cost of business regulations and taxation discourages the creation of new jobs at a time when they are desperately needed.

Other aspects of our corporate tax codes are just as unfathomable to me.  How did GE get away with paying ZERO federal taxes last year? And why do we encourage further exportation of U.S. jobs by the imposition of uncompetitive regulations on domestic industries?

Obama is fond of saying that he inherited an economy that had been “driven into the ditch”. Well, you don’t get out of a ditch by digging a deeper hole.

The current brouhaha in Washington, D.C. is about increasing the ceiling for the national debt. But the “federal debt” only covers what the government owes to its creditors, both the investing public and foreign countries (read:China). When you take into account what is owed to senior citizens, veterans, and retired government employees, the federal government currently has more than $61.6 trillion dollars in unfunded obligations, approximately $534,000 per household. When you look just at government employees, the situation is even more unsustainable.  The federal government has promised pension and health benefits worth more than $700,000 per retired civil servant. The key asset supporting this obligation? Not invested contributions, no, it’s federal government I.O.U.s that our children and grandchildren will have to pay.

The current sideshow in Washington, D.C. is just political theater.  Face it folks, we are already broke, most Americans just don’t realize it yet.

The decline and fall of the Roman Empire was primarily economic in nature, abetted by cynical leadership that no longer really believed in the greatness of its enterprise and unwilling to take the steps that might have averted the Empire’s demise.

Are we headed in the same direction? Draw your own conclusion, but I’m just sayin’…

Before you dismiss me as one who is willing to complain about a problem without offering anything in the way of a solution, I will give you this:

What needs to be done?

1)  Americans need to stop thinking that every problem in their lives requires the application of a government-run solution. Sometimes government itself can be part of the problem.

2)  When, over a reasonable period of time, a government program is found to be ineffective, it should be scrapped, not enlarged. Diamonds are forever, but not government bureaucracies.

3)  We need to simplify and redefine our understanding of the proper role of the federal government, as follows:

  • To defend and protect the liberty of the American people by  a) ensuring the internal and external security of American and b) by securing our borders;
  • To maintain social justice by  a) ensuring equality of opportunity, not by imposing equality of results and  b) by ensuring equality before the law;
  • To foster conditions for economic progress and growth by  a) maintaining the strength and integrity of the currency and  b) by not incurring an immoral burden of debt that future generations of Americans must pay.

Then the government should get out of the way and set the energy and ingenuity of the American people free once again.

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