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Tuesday, February 01, 2011

American model of empire bound by fate

Prescient writers like the late Chalmers Johnson have spoken about the "boundaries of empire" which confound and constrain the expansion of empires. Is the U.S. model bound to historical precedent, or are we exempt--what's known as "exceptionalism"? As much as we may want to believe we're different, history says different.

Think about it: every empire in history has perished. In their heyday, all these empires impressed people worldwide. Look at the Romans: their feats were legend, imperial wealth unsurpassed, its military forces unbeatable, and engineering far ahead of it time.

I'm sure the Romans thought in their heyday that they were an exceptional, and wouldn't go the way of empires that had come and gone before them. Perhaps arrogance is an unavoidable characteristic of ascendant civilizations.

Then little things began to go wrong. Perhaps it wasn't a strategic defeat that set the Romans--or great empires in general--back. Empires tend to decline over time, to slowly squeeze their citizenry for more and more until eventually, inevitably, support for the empire evaporates.

The Romans did a lot to postpone the end. They incorporated many of the frontier tribes they conquered into their armies. Roman legions were the best trained in the western world. At what at the time was considered exceptionally tall--5 feet, ten inches--height requirements stood 'til the (Western) empire's final days (link).

Masters of diplomacy, the Romans lured many to their side to enjoy the many benefits of increased trade. The economic benefits of inclusion brought new luxuries to everyone within Roman borders. Unification was further encouraged by roads and aqueducts that stand to this day.

Why is the history of the Romans so important? Well, it's not so much the Romans per say, despite all the parallels drawn to present day imperial America. Instead it's the imperial model of governance that needs to be fully understood by anyone with an interest in the future since the factors precipitating a decline tend to be held in common by all empires.

All empires die. No matter how great their accomplishments, no matter how long they reign supreme, sooner or later they will fail. For the things that make empires great are often their greatest weakness. The luxuries, for instance, that flowed into Rome from the east cost the empire great sums. The Roman Emperor Pliny the Elder scolded Roman women for their costly silk imported from China (link).

As long as the Roman empire could maintain a transportation network necessary for trade, it offered those within the empire security and opportunity. But centralized power, essential to maintaining an empire of vast size, can become a vulnerability. If all decisions are made by a central authority, the empire is bound to good decisions as well as bad ones. Sometimes the empire's fixation on control can breed ludicrous results, like when the Soviet Union mandated all time zones to be on Moscow time. That'd be like starting one's day in Los Angeles at what is now 5 AM (or in Russia's case, 8 time zones east from Moscow wouldn't exist).

Like all empires, Rome had its share of bad rulers. It's actually a miracle the empire didn't collapse based on the quality of leadership, which strayed from pettiness and vulgarity into outright madness, typified by the Emperor Caligula. What we can draw today from Rome's past is the lesson that source of imperial authority lies not with the quality of the people who run it but rather the willingness of the masses to submit to the central authority. For the interest of peace and stability which were key to economic security, it made sense to be loyal to the empire. By mutual cooperation and sacrifice on the part of its citizens and slaves, the Roman empire was able to stay together.

Rome was a known. Anarchy and barbarism were also well known, and not much of an alternative. In the shadow of a strong military, Roman citizens (a privilege not extended to the many) could live in a lifestyle far more stable and predictable even than that of people living during the Middle Ages centuries later. As long as tribute kept flowing into Rome, and Roman armies stayed across the Rubicon (a symbol for avoiding civil war), Rome could flourish, with economic strength at the heart of its vitality. And with the size and stability came multiculturalism and other progressive values.

Remember the empire needs to be outward focused, to bring in new participants on its fringes. The inclusion of new markets keeps the empire growing. Stagnation signifies not the attainment of economic achievement but the beginning of decline. People are drawn to greatness--it's exceptionalism that sets empires apart from lesser forms of government. To be believe in the strength of empire, arrogance may be required, and a dose of denial as the empire weakens. One of the most obvious signs of decline is the strength of the empire's currency. In ancient times, the best measure of fiscal fortitude was the raw amount of silver or gold in the coins of the realm.

Over the centuries, things went wrong with the Roman denari. The costs of maintaining expensive fortifications and standing armies rose to unsustainable levels. As the empire ran into fiscal difficulties, it proceeded to water down the proportion of silver in its coins, then force the newer, less valuable replacement currency upon the people.

To collect the older coins, Roman authorities demanded, on penalty of death, that all citizens turn in their older, more valuable coins to the treasury. This autocratic measure allowed Roman rulers force people to acceptnew, intrinsically less valuable currency.

Had the old coins been retained in circulation, we'd have seen Gresham's Law, which states that older, more valuable coins disappear when newer, less valuable coins (in terms of their intrinsic value) are introduced. Of course, some of the older coins with higher silver content did disappear, but under these penalties few would dare use the coins as a medium of exchange within imperial boundaries. No doubt many more intrinsically valuable coins made their way to lands beyond the empire, where most were likely melted down (although apparently not all, as coin collectors would have nothing to collect.)

The value of the empire's money is a big deal because economics offer a clear indicator of the empire's wealth, and the stability of imperial model. A decline in the value of the empire's currency signifies pending decline not just of the empire's economy but its sociopolitical health.

Remember for purposes of analysis that it's not whether the empire is American, or Roman, or Greek that matters from an economic perspective. To work, the empire needs to be not perfect but a source of stability and opportunity.

And when the empire overextends itself, its financial circumstances worsen. And the overarching cause of imperial overextension is, as those in the Austrian school of economic know well, military adventurism. As an example during the Roman years, endless Punic wars brought no direct benefits to the empire, only financial drain. Perhaps earlier in the history of the empire, during its rise, the wars would have strengthened public support and developed self-confidence that the Roman empire was the right side to be on.

Odd how it is that history repeats itself. With oru country, today, we've reached this crescendo of military overextension that seems to do little to preserve our security or stabilize our economy. Instead, we've taken to the dangerous precedent of lashing out at those we perceive to be our enemies, with virtually nothing to show for it.

For the purposes of historical comparison, we need to factor out emotional bonds to the empire and decide in a purely objective fashion what is in our interest and what isn't. Of course there Romans, just like there were Austrians, or Russians, who knew their empires were pursuing needless wars of conquest that only drain the resources of the empire. And perhaps no one understand the perils of large standing armies than our Founders. They knew that constant meddling in the affairs of other nations would lead to wars, which in turn would damage the fiscal stability and economic prospects for our new country.

American model

Moving forward, we've created a distinct form of capitalism. We need to ask ourselves in this age whether our style of capitalism enjoys the popular consent it once did. Or is the US model thrust upon the people of the world, like it or not?

For decades, American multinational businesses have set the supreme example of capitalist achievement. We became the ideal. Our standard of living ranked as the envy of the world. No one can beat us on the battlefield. Like the Romans, perhaps our military supremacy parallels our economic ascendancy. If so, then from Vietnam forward we're on a mostly losing course. But about our economic power, there was no doubt: we were supreme.

Then came 2008. We know well all the turbulence that has followed. More than the economic damage, and eventual recovery, is the introduction of doubt into the capitalist model, or at least the American version which depends on consumer spending and borrowing. 2008-9's market collapse continues to impact the markets even as they've rallied in the aftermath.

From a budgetary perspective, the US is already doomed. Maybe analysts--this one included--have grown too bearish on the inevitability of failure. Bears do tend to dwell on negativity. Maybe what some consider an impending collapse in the value of the dollar is but a passing correction. After all, the dollar's value isn't that much weaker-in purchasing power vis-a-vis commodities perhaps, but so too have other currencies faltered so in relative terms neither has been devalued. It's an easy thing to run the printing presses: there are no older, more valuable coins to collect on penalty of death. Supplanting the older, more valuable currency with a newer, cheaper one is a far easier exchange.

Mass psychology depends on people drinking the Koolaid. Adherents to free market ideology are as likely to believe that "it's different this time" as those who believe in the infallibility of a long lost ancient empire. If enough people--not necessarily Americans but people who buy into our style of capitalism--lose faith in the system, it peaks. The culmination of economic ascendancy can spell maturity or perhaps something far darker--impending decline or even collapse. After all markets are built on popular perception; when confidence in the system drops, market participation falls. And individual investors have abandoned the US market--quite a contrast from the rip roaring 90's.

Of course this recent crisis isn't the first time that Americans have doubt in their capitalist system. Bankers have long been distrusted and blamed, with political forces coalescing in opposition to money interests since the days of Andrew Jackson, who disbanded a national bank, and before. And during the Depression, economic stress was so great as to bring into question the worthiness of capitalism itself: millions were drawn to communism, socialism, and other political ideologies that terrify those in power.

Even with a "jobless recovery" we can't say that doubt in the equity and sustainability of our economic system has been overcome, despite what the market fundamentalists constantly preach. People will see what they see and right now, persistent unemployment is draining confidence in the system. Young people in particular (like those demonstrating in the streets of Cairo) have the most to lose in a system that offers the uncertainty of low-paying jobs and rising taxes without a corresponding guarantee of security in old age.

Nowdays the young in America seem curiously unaffected by political mobilizations occurring in other parts of the world. Is it because they don't believe political movements can have an effect?

If Americans were better informed by the media--or their friends, or parents, or whatever the source--about what's really happening, popular opinion might be more likely to be galvanized against a cabal of wealthy who game the system as the most grow poorer. Maybe it's the inability of so many to think critically, a skill abandoned in our industrial-style education system. Or maybe it's just a lack of belief that the political unification of self-interest can actually lead to the betterment of all's interest. Then again, Obama's campaign did mobilize young people. Then again his post-election performance may have done more to engender cynicism in the process and politicians in general than was gained during the period of higher expectations that preceded his victory.

One hallmark of the rat race that our money-is-everything system is that everyone is in it for themselves. Concepts of steady, consistent efforts have been replaced with get-rich schemes created at the top of the system, largely centered on the mortgage industry. The role model of choice is Wall Street's Gordon Gecko, who said infamously that "greed is good." OK, so we tried that and many grew rich, but most simply grew poorer, culminating in 2008's correction.

The capitalists know they need to reestablish confidence in the system that continues to enrich them, even as the majority grow poorer. The Horatio Alger story--rags to riches--may not be enough to convince people that unregulated, debt-based hyperconsumption really works, at least in the long term. For many immigrants, the concept that one could get ahead by simply working hard was a shining beacon, bringing many to our shores.

If America doesn't present the opportunity to get ahead, then it's surely in decline. This shrinks the time frame between economic peak and decline. Social mobility--the chance you'll live better than your parents--is actually below Europe's. As much as government might try to redistribute wealth, the have's seem to always have more, while those with little lose even what little they have, a Biblical foretelling (Mark 4:25).

If this model is to last, it'll have to enlist the help of non-Americans. And what kind of message are we sending? Look no farther than 9-11 for the origins of much distrust by non-Americans. Our reaction to 9-11 revealed to the rest of the world how cruel we can be, and the fundamental disconnect between doing what is right and how we've treated our enemies. Torture became commonplace, alongside extrajudicial killings in Iraq. All the while we' pretended we were the good guys, and justified our actions as vital to our security. I'm sure the Romans were equally dismissive of the plight of their enemies, or the collateral damage that resulted from the wanton waging of war.

However much control over the mass media the elite have, they can't sell faerie tales and myths forever. The economy has peaked, and already Americans are turning to the war economy or public trough for their sustenance. Just look at the headlines: "Gov't to create jobs" or "spending to generate growth." Neither of these goals is the task of government. Once we concede control of the economy to the public sector, the private sector begins a slow death. This inevitability is rooted actually in public borrowing, which is deferred taxation, plus interest. Eventually the unsustainable won't be sustained, but in the meantime government will borrow, then tax all it can.


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