the Barbarians' Lines
by Gary North: The
Franz Family: How Parents With Vision Transferred That Vision .
. . and Are Making a Living at It
We know the
phrase, "the barbarians at the gates." It conjures up an image of
imminent destruction. The armed barbarians outside are about to
rape and pillage the sophisticated people inside. The imagery is
based on the story of the fall of Rome.
It was never
that simple in the later Roman Empire in the West. From the point
of view of taxation, the real barbarians were inside the gates.
We face a similar problem today.
What I am about
to describe is not found in the standard textbooks on Western Civilization.
They may talk of heavy taxation and inflation under Rome before
Constantine (312 A.D.), but they do not describe the details of
a widespread tax revolt in Western Rome in the following century.
Beginning no later than the late 300's and continuing until the
fall of the city of Rome in 476, the burden of taxation was so great
that the residents sometimes preferred rule by the barbarians to
rule by Rome.
In 440 A.D.,
Salvian, long identified in the West as "the presbyter," wrote a
book whose title is translated as "The
Governance of God." It contains an assessment of the tax burden
facing Romans. Salvian lived in what was later known as Trier or
Treves. His description of the tax burden deserves wider circulation.
what else can these wretched people wish for, they who suffer the
incessant and even continuous destruction of public tax levies.
To them there is always imminent a heavy and relentless proscription.
They desert their homes, lest they be tortured in their very homes.
They seek exile, lest they suffer torture. The enemy is more lenient
to them than the tax collectors. This is proved by this very fact,
that they flee to the enemy in order to avoid the full force of
the heavy tax levy. This very tax levying, although hard and inhuman,
would nevertheless be less heavy if all would bear it equally and
in common. Taxation is made more shameful and burdensome because
all do not bear the burden of all. They extort tribute from the
poor man for the taxes of the rich, and the weaker carry the load
for the stronger. There is no other reason that they cannot bear
all the taxation except that the burden imposed on the wretched
is greater than their resources.
As he described
it, the tax system was truly regressive. The poor paid; the rich
did not. This was not what modern economists describe as regressive
taxation, which they define as same-percentage taxation, or flat
taxation, as in the case of sales taxes. The modern economist, following
the lead of the modern politician, defines "regressive" as "not
progressive," meaning not graduated. Graduated income taxes force
richer people to pay a higher percentage of their income than the
poor pay, when the poor pay anything, which is rare. This system
so incensed by this system that he dismissed as misguided the argument
that Rome was innocent and therefore the barbarian invasions were
unjust on the part of God. When it came to taxation, the barbarians
were civilized. Rome was not.
we think we are unworthy of the punishment of divine severity when
we thus constantly punish the poor? Do we think, when we are constantly
wicked, that God should not exercise His justice against all of
us? Where or in whom are evils so great except our own? The Franks
are ignorant of this crime of injustice. The Huns are immune to
these crimes. There are no wrongs among the Vandals and none among
the Goths. So far are the barbarians from tolerating these injustices
among the Goths, that not even the Romans who live among them suffer
When the barbarians
arrived in a city, there was widespread confiscation followed by
tax relief. The people rejoiced after the initial pillaging was
in the districts taken over by the barbarians, there is one desire
among all the Romans, that they should never again find it necessary
to pass under Roman jurisdiction. In those regions, it is the one
and general prayer of the Roman people that they be allowed to carry
on the life they lead with the barbarians. And we wonder why the
Goths are not conquered by our portion of the population, when the
Romans prefer to live among them rather than with us. Our brothers,
therefore, are not only altogether unwilling to flee to us from
them, but they even cast us aside in order to flee to them.
This was a
tax revolt. The tax burden had grown so great that military conquest
by barbarians was seen by many residents of the Empire as economic
liberation. Liberty lay beyond the lines of the barbarian hordes.
The Roman Empire
had been centralizing power for five centuries by the time Salvian
wrote. The Republic had long since been replaced by the Empire.
The Empire's revenues had come in the early centuries from conquest.
The defeated peoples paid the bulk of the taxes. The wealthy aristocracy
grew richer from the income derived from the sale of defeated peoples
as slaves. The poor of the city of Rome were increasingly bought
off by the famous bread and circuses, funded by taxes or the largesse
of aristocrats who had grown rich by the conquests and who sought
a day when the parasite begins to drain the strength of its host.
That was what the Empire was doing by the time of Marcus Aurelius
(121180 A.D.), a figure beloved by modern historians because
he was a philosopher. He was also the persecutor of Christians and
the director of an empire which had reached the limits of its profitability.
The centralization that followed was ruinous economically.
for residences of the provinces after Rome fell. Thomas
Schmidt cites Joseph Tainter's book, The
Collapse of Complex Societies (1988). Schmidt writes:
of living of citizens in the new Gothic kingdoms actually ROSE
after the collapse, as the burdens of supporting the central state
disappeared and the citizens taxes went to support local rulers
who did provide some protection in return for their exactions.
One of the
great weaknesses of standard accounts of the Middle Ages is that
they compare the poverty of the provinces with the wealth of the
city of Rome in the early Empire. This is completely misleading.
The comparison should be between the provinces in the first century
with the provinces five centuries or more later. Here, the typical
serf was better off under the manorial system of the so-called "dark
ages" than the slave had been in Augustus' day. Farming was more
efficient, due to crop rotation. Metallurgy was more advanced. Road
building was not, but the roads had been more for military control
Robert Latouche as far back as 1956 argued that, in comparison to
the heartland of Western Europe in the early Roman Empire, economic
conditions were better during the dark ages. Another economic historian,
Rondo Cameron, two decades ago wrote that "medieval Europe experienced
a flowering of technological creativity and economic dynamism that
contrasts strongly with the routine of the ancient Mediterranean
There is no
question that the city of Rome collapsed. There may have been as
many as half a million residents in Rome in the days of Augustus
Caesar in the days of Jesus. By the year 800, there were fewer than
20,000. The manorial system of Western Europe was not favorable
to large urban areas and political centralization. Production was
local. Taxation was local.
lower taxes increase liberty. Liberty encourages economic progress.
But this story has yet to get into the history textbooks.
PRICE OF LIBERTY
Think of a
family in the days of Salvian. The family was locked into its social
position by Roman law, which mandated taxes. It could not escape
these taxes. It could not legally move away from its assigned tax
jurisdiction. Generation after generation was trapped in its legal
status and tax status. Taxes got worse as production fell.
A family might
decide to defect. The husband took his wife and children across
the frontier into the camp of the barbarians. The barbarians might
steal what the family possessed, but on the other side of the line,
there was a degree of liberty unavailable to Roman citizens.
early expatriates. The United States government maintains a claim
on income earned by its citizens, no matter where they live. Wage
income earned outside the borders of the United States that is above
about $90,000 a year is taxed as if it were earned inside the national
borders. In contrast, a family that crossed the line 1600 years
ago escaped the jurisdiction of Rome's tax collectors.
The pain of
taxation in modern times has been insufficient to create anything
like an exodus out of the United States. The voters grumble, but
they do not vote with their feet. There are still poor people trying
to get into the United States and other Western nations. For those
people, crossing into the West is like crossing the line into barbarism
in 400 A.D. Liberty is greater here.
as taxes and controls increase, voters are becoming aware that there
is no escape. Economic growth will not reduce the overall burden
of the modern welfare-warfare state. The politicians always have
plans to spend more money than taxes produce. The government can
continue to spend without raising taxes because there are lenders
who will transfer wealth to the state on the basis of the government's
promise to repay the debt. This transfer increases the likelihood
of monetary inflation, which lets the government roll over old debts
at a below-market interest rate.
of the West content themselves with the illusion of lifetime security.
They believe that their governments' promises are reliable
so reliable that they have made plans for comfortable retirements
at the taxpayers' expense.
in turn expect lenders to provide the resources to meet the mountain
are convinced that there is always an untapped source of wealth
future taxpayers that will enable the government to
The price of
liberty today is the suspension of disbelief. It is seen in the
willingness of hundreds of millions of voters in the West to plan
for the future in terms of a statistical impossibility.
leased from the government by means of borrowed wealth from taxpayers
(Social Security and Medicare), lenders (pension funds and insurance
companies), and central banks (fiat money). Westerners are enjoying
the liberty of the drug addict who relieves present pain by ingesting
a substance that distorts his sense of reality. The more dependent
he becomes on this substance statistical illusion
the more of it he requires to persuade him that the day of reckoning
will not arrive in his lifetime.
ever since December 2007 have vastly increased their level of debt.
Central banks have increased their extension of fiat money to these
governments and their agencies. Lenders have cooperated with this
massive spending by reallocating their investment portfolios. They
have transferred the money under their administration to national
governments on the basis of official promises that clearly cannot
be kept. Why have they done this? So as to avoid the risks associated
with the private capital markets.
bond sector can legally make comparable promises, but not by means
of the trademarked phrase, "the full faith and credit of the government."
These words are to the world of investment the marketing equivalent
of the words, "Of course I will still respect you in the morning,"
the security bond in another highly competitive, even more short-term
In the Western
half of the late Roman Empire, the barbarians were the feared invaders
by those who lived on the tax revenues of the enslaved citizenry.
From the point of view of the taxpayers in the Empire's heartland,
the barbarians were the liberators. They offered a barrier between
ex-Romans and the tax collectors sent by the central government.
line of barbarians was a risky proposition. No one knew how he would
be treated as he crossed through the line. No one knew what kind
of living he could make on the far side of that line. But everyone
knew that the tax burden would be reduced, permanently.
empire of the West has lost control of the frontiers. There are
foreign jurisdictions beyond the borders that offer the same sort
of liberty that the barbarians offered in the fifth century. But
taxpayers are content with their lot today. And why not? They are
living their lives in an atmosphere of debt. Like the opium dens
of China in the nineteenth century, which the British promoted profitably
as a way to reduce the resistance of the Chinese masses, so is the
den of government debt. Governments extend their control over the
lives of their citizens, and they meet little resistance.
has worked magnificently in every nation in which a central bank
has been licensed by the government. The debt expands, the monetary
base expands, the list of promises expands, and the purchasing power
of the currencies decline. The taxpayers are content with the arrangement,
for the bills never seem to come due. The supply of debt is always
available to the users at low cost.
The most addicted
users of all are members of Congress. They extend the reach of the
government without significant resistance. In the name of the people,
and on behalf of the people, as the representatives of the people,
Congress votes for ever-more wealth redistribution. It finances
these expenditures by means of promises and a slogan: "the full
faith and credit of the United States."
Karl Marx was
wrong. Religion is not the opium of the people. Government debt
is. The true faith of the West is not faith in God. It is faith
in faithfulness of governments the United States government
will not flee across the line of the barbarians on the frontier.
They will continue to dream the dreams of the lotus-eaters.
will expand until, one fine day, the price of obtaining fresh supplies
of debt increases. As interest rates rise across the board, in nation
after nation, central bankers will have to decide whether to increase
the source of the illusion: fiat money. The central banks are the
lenders of last resort.
This is a threat:
the addition of fiat money. Like powdered sugar in the heroin stash,
so is fiat money. The kick wears off. The ability of the substance
to reduce the pain of reality is reduced. The rush is less than
intrudes with a vengeance. If the central banks continue to extend
the illusion of wealth, meaning the illusion of cheap capital, the
debt addicts remain in a partial stupor. But the pain does not go
away. The withdrawal has begun, and all the newly added powdered
sugar in the heroin supply cannot defer it much longer.
symptoms became painful in 2008 and 2009, when the hard stuff became
unobtainable at the older price. The central banks added new supplies
of powdered sugar. The pushers went to work. Congress voted two
massive bailouts: in late 2008 and early 2009. Lenders cooperated,
supplying the hard stuff, but the Federal Reserve poured in powdered
sugar as never before. The addicts went back to their dreams.
The users who
at long last do see their predicament are the unemployed. They are
getting their monthly methadone fix from Congress, but the illusion
of safety is gone. They are on pain-maintenance doses, not the sleep
of the lotus-eaters.
of Rome in the West saw their predicament in the fifth century.
The escape route was clear: the barbarian frontier. Some mustered
the courage to cross it. Those who remained in place saw the frontier
move closer. City by city, the citizens of Rome became residents
of pagan lands. The Roman tax collectors ceased to arrive.
regions today are themselves becoming addicted to debt. Asian nations
have their central banks, which are working hard to transfer wealth
to those sectors favored by politicians. The addiction to fiat money
grows. Price inflation follows close behind.
The lotus eaters
will at last discover that the supply of dreams is no longer available.
If you decide
to remain where you are, it would be wise to stop inhaling the smoke
of the dens of debt and to prepare for the withdrawal pains of your
neighbors and colleagues. The withdrawal will come.
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 20-volume series, An
Economic Commentary on the Bible.
2011 Gary North
Best of Gary North