The Empire Strikes Out

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America's
WAT (War Against Terror) was a subject of discussion at the Foundation
for Economic Education conference I attended in Las Vegas.

"We
have to pursue this thing," said a panelist, or words to that
effect. Speaking for what may well be a majority view, he suggested
that "the U.S. should launch pre-emptive strikes at Iraq…Syria…and
even China!"

The
logic was impeccable. These countries may want to do us harm. We
have the means to stop them. What's standing in our way? Not much.

"Beginning
in 1899," explains Gary North, "the United States has
steadily replaced Europe in the expensive, risky business of empire.
Our carrier fleet patrols the world's seas. Now we have become the
primary target of hatred and revenge. People don't like to be pushed
around by foreigners, whether in Greece in the era of the Athenian
League, or today."

By
431 BC, Athens had become a empire, with subject states throughout
the Aegean. In that year, on some pretext I can't recall, the first
Peloponnesian War began — between Athens and its allies… and Sparta.

Pericles
decided that the best offense was a good defense. He brought the
Athenians within the city's walls — hoping that the enemy would
exhaust in futile attacks.

But
bubonic plague broke out in the besieged city and killed a quarter
of the population — including Pericles. Thence, a nephew of Pericles,
Alcibiades, stirred the Athenians to an offensive campaign. A great
armada was assembled — to attack Syracuse, a city in Sicily allied
with Athens' foes.

The
campaign was a complete disaster. The armada was destroyed and the
army sold into slavery. Sensing a shift in the wind, other Greek
city-states broke with Athens and went over to Sparta. In 405, the
remaining ships in the Athenian fleet were captured at the battle
of Aegospotami. Not long after, Athens' walls were breached and
the city became a vassal state to Sparta.

We
recall this history of the Peloponnesian Wars because Athens was
probably the first empire in the western world. Since America seems
lured to empire, what happened to Athens might be of interest.

In
early April, the International Herald Tribune reported that it is
now respectable to describe the U.S. as an empire.

"Today,"
said the IHT, "America is no more superpower or hegemon, but
a full blown empire in the Roman and British sense."

"No
country has been as dominant culturally, economically technological
and militarily in the history of the world since the Roman Empire."
adds columnist Charles Krauthammer

But
Paul Kennedy goes further, pointing out that the imbalance is even
greater than in the Roman era. "The Roman Empire stretched
further afield, " he points out, "but there was a another
great empire in Persia and a larger one in China."

Today
China is no competition. It is just another country on America's
hit list.

Being
a citizen of a Great Empire is not all bad. Most people incline
their chins a degree skyward at the mere thought of it. And minding
other peoples' business can be distracting and entertaining…as
evidenced by the editorial pages of the world's newspapers.

But
since American liberty is being sacrificed to the security needs
of maintaining an empire, we can't help but wonder — is it worth
it?

For
an answer, we turn to Marc Faber who addressed the subject in a
recent issue of his excellent, Boom, Gloom and Doom Report.

Faber
gives us a passage from Robert Kaplan's book: Warrior Politics:
Why Leadership Demands a Pagan Ethos:

"Our
future leaders could do worse than be praised for their tenacity,
their penetrating intellects and their ability to bring prosperity
to distant part of the world under America's soft imperial influence.
The more successful our foreign policy, the more leverage American
will have in the world. Thus, the more likely that future historians
will look back on the 21st century United States as an
empire as well as a republic, however different from that of Roman
and every other empire throughout history."

Even
after 227 years, dear reader, America's stock continues to rise.
That it has gotten dangerously high has been the subject of the
last few of our Daily Reckonings.

The
modest republic of 1776 has become the great power of 2002 — with
pretentions to empire than need no longer be denied. That its citizens
will not be freer is understood. But will they not be richer under
an empire than they would have been under a humble republic? Will
they be safer? Will they be happier?

If
so, pity the poor Swiss. In their mountain fastnesses, they have
only had themselves to boss around…and only their own pastures,
lakes and peaks to amuse their eyes…and only their own industries
to provide employment and sustenance. And their poor armed forces!
Imagine the boredom…the tedious waiting for someone to attack.
What glory is there in defense? Oh, for a foreign adventure…!

But
would the Swiss really be better off if they, too, had an empire
to run?

All
of the available evidence — from history — suggests an answer: no.
If the past is any guide, early military successes are inevitably
followed by humiliating defeats. Financial progress is always trailed
by national bankruptcy and the destruction of the currency. And
the good sense of a decent people is soon replaced by a malign megalomania
which brings the whole bunch to complete ruin.

But
who cares? It is not for us to know the future…or to prescribe
it. Instead, we get out our field glasses and prepare to watch the
spectacle.

A
great empire is to the world of geo-politics what a great bubble
is to the world of economics. It is attractive at the outset…but
a catastrophe eventually. We know of no exceptions.

After
the battle of Pydna in 168, Rome became the leading empire of the
western world. Here, we turn back to Marc Faber for his description
of the Roman Empire.

“Until
the rule of Augustus (who was installed as the first ruler of the
Roman Empire in 27 BC), the Romans only used pure gold and silver
coins. In order to finance his vast infrastructure expenditures,
Augustus ordered that government-owned mines in Spain and France
should be exploited 24 hours a day, a measure which increased the
money supply significantly and also led to rising prices. (It is
estimated that between 27 BC and 6 BC, prices in Rome doubled.)
In the second half of his reign (6 BC to AD 14), Augustus reduced
coinage drastically, as he recognized that the expanded money supply
had led to the rise in prices.

“Upon
his death in AD 14, his stepson Tiberius, whom Augustus had married
off to his colorful daughter Julia (who pursued a very successful
career of nymphomania), was installed as emperor. Under Tiberius,
the rate of new coinage was far inferior to that during Augustus’s
reign, which inevitably led to a real scarcity of money in the empire,
but, at the same time, to a vast surplus in the coffers of the royal
treasury (fiscus). Thus, when Tiberius was assassinated in AD 37,
he left his successor, the insane Caligula, 700 million denarii
in the royal treasury – about 30 times the sum Augustus had left.

“Caligula,
whose spending had been lavish and necessitated the expropriation
of the properties of a number of wealthy families he falsely accused
of plotting against him, was then succeeded by the equally mad Claudius,
and upon his death by Nero. By then, the accumulated fiscal surpluses
of Rome had been spent and the large trade deficits Rome maintained
with its colonies led Nero to debase Rome’s currency. In AD 64,
he proclaimed that henceforth the aureus would be 10% lighter in
weight. So, whereas in the past, 41 aurei had been minted from one
pound of gold, the ratio now become 45 aurei to a pound of gold.

“Nero
then tried to force the re-minting of the old coinage, debasing
in the process the aureus by 10% and the denarius by 25%, but this
was only partially successful because the well-to-do either hid
their wealth or emigrated to remote provinces where they hid from
the Roman tax collectors. “However, Nero had set a precedent. Between
his being deposed in AD 68 and the sacking of Rome in the second
half of the 5th century by the Visigoths, Ostrogoths, and Vandals,
a succession of emperors continued the practice of increasing the
supply of money in the empire by debasing the denarius, which in
the end only had a 0.02% silver content!”

Fighting
terrorism in the Roman era was expensive — as it is today. Rome
became dependent on imported capital and imported goods — just as
America is today. But Rome must have had its own Alano Greenspanus
— for each new emergency was met with more cash…just as it is
today.

Were
the Romans better off for it?

May
16, 2002

Bill
Bonner [send
him mail
] is the president and CEO of Agora Publishing
and the author of the daily e-mail The Daily Reckoning. Click
here for your free subscription.

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