Slouching Toward Empire

Watching the news is a bit like watching a bad opera. You can tell from all the shrieking that something very important is supposed to be happening, but you don’t quite know what it is. What you’re missing is the plot.

Let us begin by noticing that this is a comic opera that seems as though it might veer into tragedy at any moment. The characters on stage are familiar to us – consumers, economists, politicians, investors, and businessmen. They are the same hustlers, clowns, rubes, and dumbbells that we always see before us. But in today’s performance they are doing something extraordinary, they are the richest people on the planet, but they have come to rely on the savings of the world’s poorest people just to pay their bills. They routinely spend more than they make – and think they can continue doing so indefinitely.

They go deeper and deeper in debt, believing they will never have to settle up. They buy houses and then mortgage them out – room by room, until they have almost nothing left. They invade foreign countries in the belief that they are spreading freedom and democracy, and depend on lending from Communist China to pay for it.

But people come to believe whatever they must believe when they must believe it. All these conceits and illusions that we find so amusing in The Daily Reckoning, come not from thinking, but from circumstances. As they say on Wall Street, “markets make opinions,” not the other way around. The circumstance that makes sense of this strange performance is that the United States is an empire – whether we like it or not. It must play a well-known role on the world stage, just as you and I must play our roles, not because we have thought our way to them, but simply because of who we are, where we are, and when we are. Primitive people play primitive roles. They are no less intelligent than the rest of us, but they would be out of character if they began doing calculus.

They have their parts to play just as we do. Sophisticated people play sophisticated roles. They are no smarter than anyone else, but you still don’t expect them to wear bones through their noses. We, citizens of the last great empire, have our roles to play too, and the empire itself, must do what an empire must do.

Institutions have a way of evolving over time – after a few years, they no longer resemble the originals. Early in the twenty-first century, the United States is no more like the America of 1776 than the Vatican under the Borgia popes was like Christianity at the time of the Last Supper, or Microsoft in 2005 is like the company Bill Gates started in his garage.

Still, while the institutions evolve, the ideas and theories about them tend to remain fixed; it is as if people hadn’t noticed. In America, all the restraints, inhibitions, and modesty of the Old Republic have been blown away by the prevailing winds of the new empire. In their place has emerged a vainglorious system of conceit, deceit, debt, and delusion.

The United States Constitution is almost exactly the same document with exactly the same words it had when it was written, but the words that used to bind and chaff have been turned into soft elastic. The government that couldn’t tax, couldn’t spend, and couldn’t regulate, can now do anything it wants. The executive has all the power he needs to do practically anything. Congress goes along, like a simpleminded stooge, insisting only that the spoils be spread around. The whole process works so well that a member of Congress has to be found in bed “with a live boy or a dead girl” before he risks losing public office.

American businesses are still capitalistic. They operate, as everyone knows, in the most dynamic, however, free, and open economy in the world. A recent press item reports, that General Motors will never be able to compete unless it ditches its crushing health care costs. Why does it not just cut the costs? It seems to lack either the nerve or the right, but the author has a solution: Nationalize health care! Meanwhile, CEO pay has soared to the point where the average chief executive in 2000 earned compensation equal to 500 times the average hourly wage. Stockholders, whose money was being squandered, barely said a word. They were still under the illusion that the companies were working for them. They had not noticed that the whole capitalist institution had been trussed up with so many chains, wires, red tape, and complications, it no longer functioned like the freewheeling, moneymaking corporations of the nineteenth century. Meanwhile, corporations in China – a communist country – had their hands and feet free to eat our lunches and kick our derrieres.

The entire homeland economy now depends on the savings of poor people on the periphery to keep it from falling apart. Americans consume more than they earn. The difference is made up by the kindness of strangers – thrifty Asians whose savings glut is recycled into granite countertops and flat-screen TVs all over the United States.

But these ironies, contradictions, and paradoxes hardly disturb the sleep of the imperial race. They have permitted themselves to believe so many absurd things that they will now believe anything. In the fall of 2001, people in Des Moines and Duluth were buying duct tape to protect themselves from terrorist “sleeper cells ready to attack the Midwest.” In the fall of 2004, they believed the Chinese were manipulating their currency by pegging it to the dollar for nearly ten years! Like Alice, they were expected to believe six impossible things before breakfast and another half dozen before tea: Real estate never goes down! You can get rich by spending! Savings don’t matter! Deficits don’t matter! Let them sweat, we’ll think!

We can’t help but wonder how it will turn out.

We find ourselves often tracing the footsteps of the West’s greatest empire – Rome – searching for clues. In Rome, too, the institutions evolved and degraded faster than people’s ideas about them. Romans remembered their Old Republic with its rules and customs. They still thought that was the way the system was supposed to work long after a new system of consuetude fraudium – habitual cheating – had taken hold. Rome’s system of imperial finance was far more solid than America’s. Rome made its empire pay by exacting a tribute of about ten percent of output from its vassal states. There were few illusions about how the system worked. Rome brought the benefits of Pax Romana, and subject peoples were expected to pay for it. Most paid without much prompting.

In fact, the cost of running the empire was greatly reduced by the cooperation of citizens and subjects. Local notables, who benefited from imperial rule, but who were not directly on the emperor’s payroll, performed many costly functions. Many functions were “privatized,” says Ramsay Mac- Mullen in his Corruption and the Decline of Rome.

This was accomplished in a variety of ways. Many officials, and even the soldiers stationed in periphery areas, used their positions to extort money out of the locals. In this way, the cost of administration and protection was pushed more directly onto the private sector. Commoda was the word given to this practice, which apparently became more and more widespread as the empire aged.

MacMullen recalls a typical event:

“From Milan, a certain Palladius, tribune and notary, left for Carthage in 367. He was charged with investigating accusations of criminal negligence – ‘if you don’t pay me, I won’t help you’ – brought against Romanus, military commandant in Africa. Because of Romanus’s inaction, the area around Tripoli, had suffered attacks by local tribes, without defense from the empire. But the accused was ready for the inquisitor, and when Palladius arrived unexpectedly at military headquarters in the African capital – carrying the officers’ pay – he was offered . . .under the table . . . a considerable bribe. Palladius… accepted it. But he continued his investigations, accompanied by two of the local notables whose complaints had launched the inquiry.

“He prepared his report to the emperor, telling him that the charges against Romanus were confirmed. But the latter threatened to reveal the bribes he had accepted. So Palladius reported to the emperor that the accusations were pure inventions. Romanus was safe. The emperor ordered that the two accusers’ tongues be torn out. As time went on, the empire came to resemble less and less the Old Republic that had given it birth. The old virtues were replaced with new vices. Gradually, the troops on the frontier had to depend more and more on their own devices for their support. They had to take up agriculture.

“The effectiveness of the troops was diminished as they became part-time farmers,” says MacMullen.

Gradually, the empire had fewer and fewer reliable troops. In Trajan’s time, the emperor could count on hundreds of thousand of soldiers for his campaigns in Dacia. But by the fourth century, battles were fought with only a few thousand. By the fifth century, these few troops could no longer hold off the barbarians.

The corruption of the empire was complete.

If you deny that the United States is now an empire, you are as big a fool as we were. For a very long time we resisted the concept. We did not want the United States to be an empire. We thought it was a political choice. We liked the old republic of Jefferson, Washington, the U.S. Constitution…the humble nation of hard money and soft heads; we didn’t want to give it up. We thought that if the United States acted as though it were an empire it was making an error.

What morons we were. We missed the point completely. It didn’t matter what we wanted. There was no more choice in the matter than a caterpillar has a choice about whether to become a butterfly. This was an important insight for us. Until then, all of the blustering and slapstick pratfalls on stage seemed like “mistakes.” Why would the United States run such huge trade deficits, we wondered. It was obviously a bad idea; the nation was ruining itself. And why would it launch an invasion of Iraq…or begin a war on terror – both of which were almost certain to be costly blunders. It was as if the United States wanted to destroy itself – first by bankrupting its economy, and second by creating enemies all over the globe.

Then, we realized, that of course, that is exactly what it must do. We repeat, people come to believe what they need to believe when they need to believe it. America is an empire; its people must think like imperialists. In order to fulfill their mission, the homeland citizens had to become what George Orwell called “hollow dummies.” An imperial people must believe that they deserve to be the imperial power – that is, they must believe they have the right to tell other people what to do. In order to do so, they must believe what isn’t true – that their own culture, society, economy, political system, or they themselves are superior to others.

It is a vain conceit, but it so bright and so big it exercises a kind of gravitational pull over the entire society. Soon, it has set in motion a whole system of shiny vanities and illusions as distant from the truth as Pluto and as bizarre as Saturn. Americans believe they can get rich by spending someone else’s money. They believe that foreign countries actually want to be invaded and taken over. They believe they can run up debt forever, and that their debt-laden houses are as good as money in the bank. That is what makes the study of contemporary economics so entertaining. We sit at our telescopes and laugh like a divorce lawyer looking at photos of a rich man in flagrante delicto; we know there’s money to be made.

Bill Bonner
The Daily Reckoning

The Daily Reckoning