We Picked the Wrong Roman Dictator
By Bill Flax, RealClearMarkets (updated slightly)
From Government Square in Cincinnati, I often sit surrounded by impressive displays of federal invasiveness, and muse that we picked the wrong Roman dictator.
The Federal Building across the street, serving primarily to dispense largesse confiscated from the workers packed into the square below. The brilliantly marbled Federal Reserve branch where regulators seek enhanced power to oversee commerce while recoiling vigorously against any attempt to be scrutinized themselves. And the block long Federal Court House, which unlike the others, has constitutional legitimacy even as its reach and depth far surpass anything our founders would have tolerated.
Taking nothing away from the many hard-working and honorable souls inhabiting these structures, but America has lost its way. My hometown was named for the Society of the Cincinnati. In ancient Rome, citizen-general Cincinnatus put down his plow to save his nation. When the battle was won, he declined a crown and returned to his farm. His self-restraint in the face of overwhelming temptation bequeathed to Rome several centuries of limited, republican government.
George Washington exhibited similar virtue after our independence. He too could have been king, but his self-denial enabled the rule of law to triumph over the rule of men. Our revolution was largely fought to settle the timeless question of whether government is answerable to the law protecting the rights of its constituents – or – are the people subject to government with a malleable Constitution bending to political pleasure.
America once enjoyed a constitutional republic where property rights were sacrosanct, contracts were conscientiously enforced and markets prevailed. Secure property rights channeled our energies into productive enterprise via the profit motive. An impartial application of the law encouraged market development which enhanced specialization and America’s hallmark: an innovative spirit propelling higher living standards for all.
Freedom and prosperity are inexorably linked. Government constrained by law and limited by checks and balances, between both branches and levels of government, birthed an economic juggernaut. Yet, another Roman general has indirectly put a more pronounced stamp on our economy.
Fabius was called to confront Hannibal after the Carthaginian warlord destroyed several Roman armies. Recognizing Hannibal was too strong to confront directly, Fabius conducted a masterful war of attrition. When Hannibal advanced, Fabius retreated. When Hannibal retreated, Fabius advanced always staying safely distant, but close enough to harass the invader. Several times the citizenry grew impatient only for a replacement to hurl the Roman army headlong into calamity.
These “Fabian” tactics became the archetype for a group of sophisticates in late Victorian England. The Fabian Society believed in socialism, not coming by revolution as Marx envisioned, but by evolution. Bored by leisure and rebelling against the strict mores of the time, they sought not to directly confront the existent order, but to undermine it from within.
As prominent Fabian George Bernard Shaw explained, “The Fabian Society succeeded because it … set about doing the necessary brain work of planning Socialist organization for all classes, meanwhile accepting, instead of trying to supersede, the existing political organizations which it intended to permeate with the Socialist conception of human society.”
These ungrateful children of wealth advocated redistribution of other’s property while they resided in decadent luxury. Similar to many intellectuals today, they thought they knew better than we how to live our lives. Unfortunately, Fabians and their ilk became the dominant force in our media and educational establishments, indoctrinating generations of Americans to a perverted view of economics and “social justice.”
The Fabian movement spawned John Maynard Keynes, an advocate of central economic planning. The overriding focus of Keynes’ theory was Aggregate Demand. Loosely defined, aggregate demand reflects the total amount of goods and services consumed at a stable price. Borrowing and spending supplanted classical economic focus on production and savings as the building blocks of prosperity.
Keynesianism was described by Zygmund Dobbs in the illuminating expose, Keynes at Harvard, “The great virtue is consumption, extravagance, improvidence. The great vice is saving, thrift and ‘financial prudence'” because, “If there are no savings there is no private money for investment. Without private investors the government must provide investment capital. If the government provides for investment it has the power to dictate the conduct and processes of those who need investment capital.”
Americans wanting to mollify temporary hardship in the throes of recession resurrected Keynes. Rather than endure uncomfortable surgery guided by the market, government injects cortisone to offset the recession’s corrective reallocations. Subsidies replace efficiency. Bailouts replace business revitalization. Entitlements replace personal savings. Statism replaces self-reliance. All these government proffered “solutions” may ease our immediate discomfort, but perpetuate economic weakness and come at the price of liberty.
Not only is it immoral to confiscate private property through coercion to redistribute to political favorites, it’s also ineffective. Market distortions inevitably harm the economy. The more control we retain over our time, resources and abilities the more closely our efforts will be aligned with productive enterprise. A far-off central planner has no ability to effectively steer this process.
We have witnessed Washington assume greater control with each injection of dubious capital. As Henry Hazlitt warned, “Keynes’s plan for ‘the socialization of investment’ would inevitably entail socialism and state planning. Keynes, in brief, recommended de facto socialism under the guise of ‘reforming’ and ‘preserving’ capitalism.”
In the closing months of his presidency, Bush crossed the Rubicon authoring vast intrusions “to save” capitalism. Bush quickened what had been a long, painstaking march to socialism. Then a new Caesar immediately began to sprint. We elected not “change,” but acceleration.
Only eunuchs were permitted to guard the harem. Entrusting power to the ambitious personalities attracted to government inevitably augments the state to our detriment. Keynes admitted his theories, “can be much easier adapted to the conditions of a totalitarian state than … a large degree of laissez-faire.” We must never abjure our God-given rights to the arbitrary whim of professional politicians in exchange for economic safety-nets.
Incessantly higher spending and increasingly burdensome regulatory controls proved too much. Americans now fear this headlong rush into government expansion. Poor Obama was fooled by an adoring press. He misread the signs and awakened the masses. We weren’t yet so effete to be bought by bread and circuses.
The Fabians underestimated the resiliency of free markets and Obama over-estimated his demagoguery. Cincinnatus might be forever gone, but Fabius can still be stopped.