Wars, politics, economic collapse. They had running water, sewers, flush toilets, concrete, roads, bridges, dams, an international highway system, mechanical reapers, water-powered mills, public baths, soap, banking, commerce, free trade, a legal code, a court system, science, literature, and a republican system of government. And a strong army to enforce stability and peace .
What the hell happened to Rome?
After 500 years, the famous Roman Republic ended with the dictator Julius Caesar taking power. Four hundred years later his progeny and usurpers ran the Empire into the ground and Rome fell to invading barbarians. The standard explanation for Rome’s decline and fall is that they devolved into dictatorships . They fell to barbarian invasions .
Rome fell because the dictators ruined the Roman economy and the institutions that had made it prosperous. Rome was falling apart before the barbarian invasions. They had what today we call a deficit problem. They did two disastrous things to solve their deficit.
Not caring much about the consequences to the merchants, small farmers, and peasants, they came up with new ways to squeeze money out of their citizens. The government’s response was to double down and implement laws that restricted economic freedoms in order to raise even more taxes. Laws were enacted that forced peasants into virtual serfdom. Gold became scarce.
Gold money was only lawfully available to the government, army, and bureaucrats. Second, they debased the currency which led to inflation. It was the equivalent of printing money to pay for things. The resulting bouts of high inflation destroyed much of commerce and agriculture.
Like most dictators they thought they could stop rising prices by implementing price controls, but that just led to gold and goods disappearing from the economy. Black markets grew despite threats of capital punishment. Their large welfare system kept running short of money. By the time the Goth and Visigoth invaders came along, Rome was so weakened that they could not hold back the waves of invasions.
At the end, Roman citizens saw the government as the enemy and the invading barbarians as their saviors. Rome fell in 410 CE. Much of Rome’s economic history is quite familiar in modern times. Proponents of bad ideas are either ignorant of history or just ignorant.
One bad idea with ancient precedents is Modern Monetary Theory . The idea of MMT takes this one step further. They believe that the government can spend/buy whatever it wants and print pieces of greenish paper to pay for it. Deficits don’t matter because by printing money to pay for stuff they instantly solve the deficit problem.
MMTers claim, with no shortage of arrogance, that they, Oz-like, can fine-tune the mechanics of how the economy is to be run and generate prosperity, prevent inflation, end inequality, and save the planet. They want to break free of old-fashioned concepts such as fiscal integrity, balanced budgets, and monetary stability because they want no limits on their utopian schemes. MMT is a crackpot idea. It’s like asking third graders to invent money.
There is nothing «modern» about Modern Monetary Theory. In every case where governments have printed money to pay for things, the result has been cycles of boom and bust, inflation , economic stagnation, and social disorder. MMTers simply don’t understand what money is or the mechanics of the business cycle or the concept of malinvestment and the destruction of capital. Roosevelt’s New Deal resulted in 25 years of economic stagnation.
Only post-FDR deregulation, more economic freedoms, capital investment, and fiscal and monetary sanity led to economic growth. AOC’s Green New Deal plus MMT would be worse than the old New Deal in that it places no limit on government’s ability to spend which means government can command economic resources and control the direction of the economy. History has shown that governments aren’t very good at that. Absolute power in the hands of the few is a bad idea.
Source: Jeffrey Harding | Mises Institute