May 1, 2012
Santiago, Chile
Friedrich von Hayek, a major figure in the Austrian school of economics, wrote in his seminal work the Road to Serfdom,
“By giving the government unlimited powers, the most arbitrary rule can be made legal; and in this way a democracy may set up the most complete despotism imaginable.”
It’s hard to ignore Hayek’s prescient warning when you hear about the US government’s newest (and 17th)
spy agency that it wants to roll out… because hey, 16 spy agencies just isn’t enough.
Or the Transportation Security Administration ‘aggressively screening’ a 7-year old girl with Cerebral Palsy at JFK Airport in New York (
causing the family to miss their flight)… and then later issuing a statement defending its agents’ actions.
Or Congress authorizing the IRS and State Department to revoke US citizens’ passports on suspicion of tax delinquency; as of last week, the bill has passed both the House and Senate, and is now awaiting a final agreement before going to the President for signature.
Then there was the National Defense Resources Preparedness executive order that President Obama signed last month– an order which gives the federal government autocratic power to seize and redistribute all agricultural resources in the event of a national emergency.
When you step back and look at the big picture, the writing on the wall seems so clear, so obvious. In Western Europe and the United States in particular, bankrupt, insolvent governments will resort to any means necessary in order to maintain the status quo: keeping them in power at our expense.
This means continuing to reduce personal liberty, eliminate economic freedom, vanquish privacy, debase the currency, stifle innovation, eradicate financial opportunity, and destroy the savings and livelihoods of millions of people.
These tactics are not new, this time is not different. Empires on the slide have always resorted to cannibalism– feeding off the productive class in order to keep the party going a little while longer.
In the fourth and fifth centuries (AD), for example, the Western Roman empire resorted to centrally planned labor allocation, price fixing, rapid currency devaluation, capital controls, civil asset forfeiture, and tax rates that were so high that the few citizens who remained welcomed the invading barbarian hordes with open arms.
Most of the smart, productive Romans had already moved on to greener pastures long before. As the situation worsened, more and more people began to leave until there was a mass Exodus of over 90% of western Rome’s population in its final decades.
Similarly, the Ottoman Empire, having reached the zenith of its expansion in the 16th century, established a massive, unsustainable bureaucracy that was far more costly than any other administrative hierarchy in history, including Rome’s.
Soon Ottoman bureacrats began to see the people as existing to provide them with position… rather than their position existing to support the people. Sound familiar?
Huge spending in the Ottoman Empire gave way to a massive public debt (on which they defaulted in 1875), which eventually begat currency debasement, inflation, an absurd tax system, and a substantial reduction in civil liberties.
History shows that freedom is almost always the price that societies pay to maintain the status quo and keep their rulers in power. When the system finally collapses under its own weight, though, things can go from bad to worse as the people cry out for CHANGE.
The French, for example, traded an absolute monarch in Louis XVI for an absolute dictator in Robespierre. Similarly, the Russians traded the empire of ‘Bloody’ Tsar Nicholas II for the Red Terror of Soviet Russia.
As the Russian Marxist revolutionary Leon Trotsky said in 1937, “The old principle of ‘who does not work shall not eat’ has been replaced by a new one– who does not obey shall not eat.”
Two words: Screw that.
Everybody has a choice to make. On one hand, we can either bury our heads in the sand, pretend that everything is OK, and continue being the boiling frog in the pot… just like the poor schmucks who stuck around Rome until the 5th century getting taxed out of their minds and watching their livelihoods inflate away.
On the other, we can recognize that the rise and fall of empires is part of history’s normal cycle… that it’s been happening for millennia, and this time is no different. We can look to the rest of the world and understand that, for all of the turmoil, this is one of the most exciting times to be alive and that the world is full of incredible opportunities.
Just like the Romans who left for Byzantium, the Ottomans who left for Europe, the Europeans who left for North America, there are always regions in the world that are rising while others are falling.
It’s the people who get there first after acknowledging reality and basic historical truth that can reap the greatest reward.
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