Thursday, 2 June 2011

Rome and America - Differences and similarities

A lot has been written on this topic, one contribution more controversial than the other. Many of those just focus on one aspect of society, usually the pet topic of the author. In five paragraphs I'm describing different aspects of both societies: Science, technology and manufacturing, Military spending, Health, Democracy and civil rights and finally Currency debasement and hyperinflation.

Science, Technology and Manufacturing
The Romans have been excellent engineers, unrivalled in road constructions, aqueducts, palaces and amphitheaters. They were however mediocre scientists and philosophers (in those days one used to combine both as there was no firm distinction) in the shade of their Greek predecessors. J. Caesar managed to burn down (accidentally?) the great Ptolemean Library of Alexandria during the siege of the city. While centuries before the fall of Rome, this proved to be a certain setback. During antiquity scientific breakthroughs were not determining technology progress to the extent they are now. The loss of scientific knowledge did not stop Roman society. A gradual decline of technology set in after the expansion of the empire ended, during the 2nd century AD. The Pantheon in Rome, with the largest dome built during antiquity was reconstructed in this period (126 AD) after the original temple (27 BC) had been ravaged by fire. Construction technology was lost and the next large dome built in the Western world was to be that of the Florence cathedral in the 15th century (Brunelleschi).
Scientific knowledge is no longer concentrated in few writings, appreciated only by an elite of philosophers, having enough other revenues to dedicate themselves to scientific study. America has always been attractive for foreign researchers to start a career. Shortage of scientific staff is well compensated by Asian and European scientists joining ranks. Yet while it is engineers and entrepreneurs what made America great, their number in the workforce is dwindling as is the share of manufacturing industry in the American GDP. Instead we raise generations of lawyers and economists many of whom end up as overpaid civil servants and politicians.

Military spending
American military spending accounts for about 40% of the aggregated worldwide military spending. In relative terms it accounts for close to 5% of GDP, over twice the European average and surpassed in relative terms only by Israel and a few Arab oil nations.

While not the only reason, big military spending is what helped bringing down Rome. One important difference so far is that Rome had an entirely mercenary army during the last two centuries counting only few Roman citizens in its ranks. Loyalty to the flag (or to the ‘Standard’ in those days) was no longer comparable to the era of J. Caesar. Manufacturing and agricultural output declined, making military efforts less sustainable. Is America on the same path?

Health
Jerome Nriagu, a geochemist, argued in a 1983 book that "lead poisoning contributed to the decline of the Roman empire." In my opinion this is a much understated factor that contributed to an inevitable decline or Rome. Drinking wine from lead beakers and using a vinegar based fish sauce stored in lead sealed bottles would have been the major sources of lead intake. What made it worse is that the quantity of lead intake and therefore the propagation of Saturnism was more or less proportional to wealth and social status, decimating the elite over the centuries. On the contrary, slaves -fed on bread and onion soup- only had a marginal lead intake. The theory is questioned as some writings are claiming that at least some of the elite were aware of the potential danger of lead beakers, vessels and plumbing.
Increasing migratory flows brought about the spreading of emerging diseases into the Roman Empire. Rome itself has been depopulating from the third century AD onwards. The declining agricultural output would have been insufficient to sustain the large urban population.

While migratory flows favour the spreading of new viruses and bacteria even more than during antiquity, our improved health care system and pharmaceutical industry have been able to cope with them. But for whom and for how long? Health care amounts to a considerable share of GDP with health insurance cost spiralling out of control and ever more people falling through the Medicare / Medicaid maze. Implementation of the generalized healthcare insurance ("Obamacare") is being torpedoed by a hostile Congress, protecting thereby the health insurance companies and effectively locking in an overly expensive health care system.
Modern America (and ever more countries around the Globe) are fighting Obesitas, making us slow and less healthy. Cancer, some of which is Tobacco related, also burdens medical facilities. Recreational drug abuse makes too much of our youth underperform. What differs with Rome  is 1) that we are aware, 2) that the impacts are not targeting the elite specificly.

Democracy and civil rights
The Roman Republic (until 31 BC) used to be considered democratic. We need to take this with more than a grain of salt. The elected leading persons were two consuls, serving a one year term. This implies an almost continuous electoral period. Only the very wealthy aristocracy could possibly run for a term as consul, unless one was supported by somebody very wealthy, eager to obtain the favors of the consul elected. Nepotism was the rule, not the exception. (How far are we off with the monstruous amounts of money raised to spend on any caucus or election campaign.) The Senate was not elected but rather composed of former consuls, censors and other officials. While the senate was a well respected advisory board during the Republic, it lost its splendor during the Empire. The Roman codex has been the main reference for the legal system even until Renaissance. However civil rights were less respected as the Republic neared its end and not at all during the Empire, with persecution of Christians… or anyone daring to question authority of the Emperor.

While civil rights, upheld by the Constitution are beyond compare with those of Roman citizens, some erosion at the fringes cannot be denied. 'Excuses' are the war on terror to make people accept ever increasing interference of public force. Stigmatization of authors to overstated categories of 'public offenders' contributes to editors scrutinizing articles and to auto-censorship among journalists. Freedom of press is less absolute and ever more points of view are considered unacceptable. 'National security' is a pretext covering an ever wider range of documents and items classified secret. Pervasive CIA actions and pressure on foreign governments make life difficult for organisations like Wikileaks and even more for the people they collect information from.
The racist undertow throughout the police force combined with an increasing inclination to using guns against unarmed citizens, has been causing violent uprising after a series of casualties caused by inappropriate and unjustified police violence. This has compromised the reputation of the police force, which is jeopardizing the credibility and the working conditions of a majority of policemen devoting their best efforts. 
Reduction of criminality has come at the cost of having the highest proportion of inmates in the western world. Shop lifting may bring you to jail, whereas the conspiracies and machinations in the financial sector on inter-bank lending rates or on the currency exchange market -thereby skimming the wealth of millions of citizens- remains without punishment: at worst banking corporations implicitly accept responsibility and end up paying a fine. Moreover the 'Justice Department' doesn't really deserve its name as public prosecutors are 'political figures' whose promotion largely depends on the number of 'cases' they can successfully bring to justice. Catching a 'Big Fish' is a trophy for a prosecutor, leading to abuses such as what Martin Armstrong went through: held detained without trial for seven years... and I haven't even mentioned Guantanamo.

Currency debasement and Hyperinflation
The Roman denarius had been introduced as a trade coin in the late third century BC as the local ‘As’, a large cast copper coin, was not suitable for trade purpose. Budget deficits and high military spending had been around in the late Republic, plagued by civil unrest and often violent political rivalry. While initially set at 10 As (because of this it carries the name denarius), it was revalued to 16 As by Julian decree and its silver content was set to 3.9 g. Silver content of the denarius was to decline and its size was to shrink gradually, even starting from the era of the first emperor Augustus.
Imperial Rome has been running a trade deficit for centuries. Luxury items were highly appreciated, especially the use of rare spices and wearing silk tissue were what discriminated the elite from the masses.  Those products only got more popular after Rome had emerged from a regionally leading city to the world power it became during the first century BC.  The trade deficit was not problematic while the silver and gold needed to pay for the imports was widely available.  Mining output however gradually deteriorated (Ugo Bardi).
Until after the reign of Marcus Aurelius before the end of second century AD, political instability seemed remote. While some factors undermining Roman society had been in place for a while, others had yet to evolve. By 180 AD, Rome had grown to a million city, prosperity started declining, the taxation base eroded and political instability surged, with a series of 'ex-officer emperors', few of which died from natural cause...
Not surprisingly massive currency debasement and hyperinflation made their way. During the third century, the silver content of the denarius dwindled from close to 80% to a silver plated coin with a core consisting almost entirely in copper. New denominations replaced the denarius later on. Yet, the empire was finally to collapse only two centuries later.
After the FED was founded in 1913, America stayed on the gold standard until 1933, when gold coins were withdrawn, gold bullion ownership was made illegal and the USD was devaluated to $35 /oz. This official gold price was to remain till revoked by Nixon in 1971. The USD is a fiat currency no longer backed by precious metals ever since. Inflation surged, peaking in 1980 during the second oil shock. The 'Rome-empire style ingredients' for a currency collapse have been in place for some time. Today's purchasing power of the USD is less than that of a 1913 nickel, its loss of purchasing power is comparable to that of the 3rd century denarius.
Extra liquidity was funneled in a series of asset bubbles from the late 1980’s onwards, contributing to a gradual disinflation. The bursting of asset bubbles have been undermining savings of the majority of middle class, contributing to the ever increasing disparity of wealth in today’s society. Globalization brought about a shift in the working force from full time well paid manufacturing workers to precariously remunerated part time jobs in retail and catering. Elderly citizens are inclined to postpone retirement since years of 'zero-interest rate' policy has wiped out their capital revenues needed to provide for expenses higher than the legal retirement benefits.
In America:
  • Prosperity has started declining;
  • The tax base is eroding because of the stagnation of median income, with wages below the poverty threshold;
  • Political instability ? Well, we have the 'Tea-party' and the 'Occupy Wall Street' movements: that may just be the start of it.
 And yet, we only just start facing the odds that brought down Rome...

Further reading:



3) The Telegraph (UK) Is America the new Rome?


5)  THE CLASSICAL INFLUENCE THAT SHAPED OUR NATION http://constitutioncenter.org/rome/ and http://www.constitutioncenter.org/rome/walkthrough/


7)   Download the above book from the Foundation for Economic Education website (www.fee.org) at "Are we Rome ?"

8)  FreedomFest 2013: “Are we Rome ?” Video coverage on Kitco.

9)  The Roman Empire & The Power of Money

11)  The History of the Decline and Fall of the Roman Empire (Edward Gibbon, 1776-1789)
The complete text of this 18th century book (the different chapters were published seperately) can be read on-line at Project Gutenberg EBook of The History Of The Decline And Fall Of TheRoman Empire

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