Will US repeat the welfare death of the Roman Empire?
Every society is building its strength on a moral ground. In the US that moral has been written into the Constitution granting the citizens law and or-der, as well as, a sincere respect for all citizens’ property and income.
When the representatives believe that they by the power of the government apparatus unpunished can plunder certain citizen groups on their incomes and property, they are fatally mistaken.
In ancient Rom social welfare support was in-troduced by Gajus Gracchus (158-122 BC), on a large scale. All citizens of Rome were entitled to buy a monthly ration of grain at a fixed price. The subsidized staple food of Rom became immedi-ately the weapon of choice for the ruler to stay in high favor with the crowd and to maintain control over the political power.
Cheap grain was initially sold without any means test to every individual willing to queue up. From the beginning about 50,000 people used this benefit. The free food policy evolved gradually over a long period of time. Since the inception of the system the number of people living on public social assistance increased and few rulers in power dared to put an end to it. The first ruler to make an attempt was the great commander Lucius Cornelius Sulla (138-78 BC), but it was stopped by severe social riots forcing him to retreat. Then no less than 200,000 Roman citizens received public social as-sistance and did stand up in defense of their right to cheep basic food.
CAESAR AND HIS PREDECESSORS
At the time Julius Caesar seizure of power (49 BC) the number of people living on social welfare assis-tance had increased to a staggering 320.000, in a city with 1 million inhabitants. Publius Clodius Pulcher abolished the charge in 58 BC, and began distributing the grain for free. The result was a sharp increase in the influx of rural poor into Rome, as well as the freeing of many slaves so that they too would qualify for the dole. Ceasar man-aged later to introduce a means test that squeezed down the social welfare population to 150.000.
After his death followed several weak rulers, causing the number to again reach 320,000, a num-ber that Gaius Julius Caesar Augustus (from 31 BC) by a new means test managed to squeeze down to 200,000. The welfare system had by then become a well-established institution by its own power that withstood every attack during the com-ing centuries.
One notable act of Marcus Ulpius Nerva Traianus, commonly known as Trajan (98-117 AD), was his formalization of the Alimenta, a wel-fare program that helped orphans and poor chil-dren. It provided general funds, as well as food and subsidized education.
Under Septimius Severus (193-211 AD) free oil was also distributed. Subsequent emperors added, on occasion, free pork and wine. A mile-stone in evolution was made 274 by emperor Lu-cius Domitius Aurelianus commonly known as Aurelian (270-275 AD) who not only made the right to social welfare hereditary but also boosted welfare benefits considerably by providing baked bread instead of corn supplemented by pork, olive oil and salt.
The Romans did not only demand cheap basic food but also subsidized culture. The emperors assumed the responsibility of providing the citizens with publicly funded entertainment and arts pro-grams. One historian estimates the modem equiva-lent of $100 million a year was poured out in cir-cuses and gladiator duels alone.
None of the emperors, not even Caesar or Au-gustus, dared to circumscribe the Roman’s welfare privileges. Indeed they had access to the Praetorian Guard having power to crush any insurrection. However, they preferred to be generous and to keep the crowd in a good mood. They wanted to be greeted with enthusiasm by the crowd of people at the public celebrations and entertainments. Ova-tions and cheers was sweet music for the emperors that they where willing to pay a very high price for.
INFLATION
The development of Rom to an empire was created by an expensive military power and plentiful of stupendous palaces and monumental buildings. Combined with immense costs for free food and entertainment the emperors need for incomes be-came insatiable. The expenditures grow fare above the tax revenues, a problem the government solved by reducing the value of the money value. By other words inflation was created.
In absence of a modern monetary system, where the printing press for banknotes could be used, the rulers had to deteriorate the coin.
The silver coin denarius was introduces 268 BC and contained 94 percent silver. Nero reduced the silver content to 90 percent. Trajan (98-117 AD) reduced the silver content to 85 percent. De-basement continued under the reign of Marcus Au-relius (161-180 AD), who reduced the silver con-tent of the denarius to 75 percent, further reduced by Septimius Severus to 50 percent. By the middle of the third century AD, the denarius had silver content of just 5 percent and year 268 AD the con-tent was reduced to only 0,02 percent, a reduction by 1/4700. The decline in the silver content to the point where coins contained virtually no silver at all was countered by the monetary reform of Aure-lian in 274.
It sound a lot, but the price increase was only 1.6 percent per annum. For us it looks almost like as close to a stabile money value you can get. However, the inflation ratio increased, as it use to do in a welfare state. And during the hundred years beginning 200 AD to 300 AD and the price for an artaba (approx 77 lbs) wheat from 12 to 120,000 drachma, i.e. 10 000 times the original value. At that time Rome was going fast on the downhill slope, with stark increase in prices, averaging 10 percent per annum. Since prices were rising too rapidly it became impossible to count on an imme-diate proportional increase in the fiscal revenue, because of the rigidity of the apparatus of tax col-lection.
Of course, people having savings where hit harsh by the inflation, particularly small savers in coins. Such inflations are in reality working as a systematic plundering of the savers assets and dis-courage the desire to save.
THE PLUNDERING OF THE PRODUCTIVE
During the centuries prior to Christ’s birth, when the Roman Empire evolved, the society’s financial base was created on a healthy model that stimu-lated entrepreneurship and productivity. Without a free market economy with free production and trade no development would have taken place. Taxes and duties where favorable to businessmen and the agriculture blossomed. The farmers devel-oped a capacity big enough to provide Rom with all staple food needed. Artisanship and commerce flourished and enterprises grow.
Then came the redistribution of wealth, trans-forming Rom to a welfare state, with free bread and entertainment, as well as, with extensive gov-ernment support for a place to live at, child support (due to the low nativity), and lots of jobs in the constantly expanding public sector. This develop-ment was not possible to slow down, as it created its own unstoppable force. Oppression and extor-tion began early in the provinces outside Italy and reached later fantastic proportions. The mob of Rome and the palace favorites produced nothing, yet they continually demanded more free gifts.
This was gradually leading to taxation on the citizens living in Italy, and later leading to an intol-erable tax burden on the productive classes, as they earned good money and often managed to buildup considerable fortunes. Emperor Nero once de-clared, “Let us tax and tax again. Let us see to it that no one owns anything!” Later, more unscrupu-lous emperors like Domitian (81-96 AD) would use trumped-up charges to confiscate the assets of the productive entrepreneurs. Most emperors con-tinued the policies of debasement and increasingly heavy taxes, levied mainly on the productive and wealthy.
The war against wealth was not simply due to only fiscal reasons, but also as a conscious policy of exterminating the Senatorial class, to eliminate any rival to the emperor. As the private wealth of the Empire was gradually plundered away though confiscatory taxes, an increasing number of entrepreneurs could not manage their businesses any longer. This caused the economic growth to slow to a virtual standstill.
Once the productive were no longer able to pay Rom’s bills, the burden fell onto the working class. Evidently average people suffered severely from the deteriorating economic conditions.To prevent businesses from shutting-down, resulting in mass unemployment, the government was increasingly nationalizing the economy. This caused a total breakdown of the division of labor.The entrepreneur’s difficulties were not only caused by high taxes but also by massive govern-ment regulations. At this point 301 AD, the Em-peror Diocletianus, commonly known as Dio-cletian, took action in order to subdue the increas-ing civil unrest. He attempted to stop the inflation with price controls on all services and commodi-ties. Despite the fact that a brutal death penalty applied to violations of the price controls, they were a total failure. Goods disappeared from sale, resulting in shortages and destitution.
Every kind of price control where the pro-ducer is prevented from charging the price the con-sumer is willing to pay for is thieving from the producer. This kind of plundering and assault did severely discourage the producers desire to pro-duce. Businesses were literally pulverized under the burden of this public hostility.
THE DECAY OF THE STATE
Under Emperor Aurelian (270 AD) Rom had one million inhabitants. But here the curve is turning down. The financial assault on the businessmen and the farmers caused the supply to decline. The legal market with controlled prices and shortage was replaced by a black market with sky-high prices. Businesses and people where forced to move to the provinces, basically leaving Rome as an economic empty shell. The money economy finally completely broke down.
In the end, there was no money left to pay the army, build forts or ships, or protect the frontier. It was an easy task for he barbarian German chieftain Odoacer to pushed aside the last Roman emperor, Romulus Augustulus, and installe himself 476 AD as the new authority. The end came rather anti-climactically in 476, when the German chieftain Odoacer pushed aside the last Roman emperor, Romulus Augustulus, and installed himself as the new authority and liberator of a corrupt and decayed ideology.
America’s new progressive rulers are now elevating the government’s power and influence and have on a morally rotten and corrupt ideology started to plunder the productive citizen groups on their incomes. The county’s moral code written into the US Constitution is now at stake. The Pro-gressives are now prepared to sacrifice the freedom of choice and the respect for citizens’ right to dis-pose over most of their income. The increased taxation on the productive citizens’ will at the end cause the same welfare death that Rome made 1500 year ago.
About the Author
He has extensive experience in new business start-ups and development. Proven entrepreneurial skills in introducing leading edge technologies, including strategic planning, market analysis and fundraising.
He holds a Masters of Laws Degree (LL.M.) from the Lund University in Sweden
